The Roles of Aid in Politics Putting China in Perspective

Having argued that foreign aid from Western donors can help promote economic growth in recipient countries by incentivizing economic reform, but only when the strategic benefits associated with providing aid are small, we have presented evidence consistent with both the cause and the effect of this argument. First, we showed that Western aid has promoted economic reform after 1990 when the strategic benefits of providing aid were relatively small, but not before 1991 when the strategic benefits were comparatively large. Second, we have also shown that foreign aid has promoted economic growth in recipient national economies, but only in the post-Cold War era as the strategic benefits associated with aid provision declined for most Western donors. In response to this evidence, one might argue that increased foreign aid effectiveness in the post-Cold War era can be explained by other factors, namely increased economic globalization and/or the so-called “Washington consensus” that emerged around 1990. It is thus important to discuss why these alternative explanations fail to explain the empirical evidence presented in this paper.

Regarding the possibility that our empirical results stem more from increased economic globalization post-1990 than from the reduced strategic content of Western aid in the post-Cold War era, we offer two responses. First, our statistical model made a strong effort to control for economic globalization in terms of international monetary and trade flows through the Exchange Rate, Exports, and Imports variables. To the extent that these three control variables are insufficient, our model also included a set of year fixed effects, which should have picked up any additional economic shocks and globalization pressures that were common to all units in any given year. Thus, we would argue that our Aid coefficients captured the marginal effect of Western aid when holding constant the effect of economic globalization.

Second, to the extent that there remain unmeasured economic globalization effects that might have been picked up by our Aid coefficients, we would argue that globalization tends to work against finding a statistically significant positive result in the post-1990 period. This argument is based on the understanding that economic globalization has opened up new channels (e.g., commercial bank lending, foreign direct investment) through which capital can move from where it is abundant in rich countries to where it is scarce in poorer ones. And if economic globalization has created more substitutes for the scarce capital once provided primarily by foreign aid, then Western donors should have become less, not more, able to enforce the reform conditions associated with their foreign aid. Indeed, this understanding would suggest that we may have underestimated foreign aid effectiveness in the post-Cold War era given the greater opportunities for developing countries to obtain external capital with expanding globalization.

Readers have also suggested that our empirical results could be explained by the so-called “Washington consensus” that emerged circa 1990 (Williamson 1990). The Washington consensus constitutes a set of beliefs held by policy elites in the United States and in certain other Western governments about what constitutes good economic policy (e.g., trade liberalization, reduced government intervention, and more secure property rights) along with the expectation that policy change in this direction (or what we defined as “economic reform”) would produce economic growth and stability. Thus, foreign aid might have been growth ineffective before 1990 because Western policy elites did not believe in economic reform, but it became growth effective after 1990 due to this new belief.

It is thus important to evaluate this alternative explanation in terms of its causal power. Regarding the relationship between reform and growth, it is hard to see how a new belief in economic reform could directly cause a positive relationship between reform and growth. Reform may lead to economic growth, as argued here, but this would have been true even when Western policy elites (and recipient government elites) believed otherwise. But it is certainly possible that a new belief in the importance of economic reform could cause Western policymakers to insist that aid recipient governments engage in market-oriented economic reform, thus leading to greater economic growth.

But even if it is true that policy beliefs among donor elites have this indirect causal effect on economic growth in recipient national economies, one still needs to ask why Washington policy elites began to believe in reform around 1990, but not earlier. The argument presented in this paper provides at least a partial answer to this question. It would have been hard to believe—at least during the Cold War—that Western aid could leverage economic reform leading to greater economic growth because Western policy elites understood that they could not credibly enforce their conditions for economic reform given their strategic motivations for providing foreign aid. But as these strategic motivations got smaller with the end of the Cold War, Western policy elites came to believe that their aid conditions would become enforceable, thus leading to a new consensus about the value of economic reform. Indeed, based on this logic, one could even argue that the Washington consensus was endogenous to the strategic character of Western aid: when aid was highly strategic as it was during the Cold War, such a consensus was unlikely.

We now conclude with a brief discussion about what our argument about the strategic content of Western aid implies for foreign aid effectiveness post-2001. As our empirical analysis focused on recipient country-years 1965–2001, the geopolitical era sometimes identified as the ‘”war on terror” is out-of sample. However, our model does make a prediction about foreign aid effectiveness after 2001, and it is not a particularly optimistic one, at least not in terms of economic growth and development. As should be obvious, our model predicts declining foreign aid effectiveness after 2001 since certain Western governments may again be in a situation where they can no longer credibly enforce their conditions for economic reform.

To the extent that the U.S. government now finds its foreign aid to be an indispensable policy instrument in its war on terror, then the strategic benefits of providing financial assistance to developing national economies have effectively increased, making less credible its threats to curtail aid when recipient governments do not engage in economic reform. Consequently, donor governments—including, but not limited to, the United States—face a major foreign policy tradeoff: as foreign aid once again becomes more useful for military-strategic purposes, it becomes less effective at promoting economic growth and development. Similarly, if foreign aid is to be effective at promoting growth and development in poorer regions of the globe, Western governments cannot also use it as an instrument to recruit and retain allies in the war on terror.

Beenstock, Michael (1980), “Political Econometry of Official Development Assistance,” in World Development, Vol. 8, No. 2, pp. 137-44, Elsevier Science, Ltd.

The main objective of this paper has been to explore the possibility of modelling the aid-giving process. It is inevitable that a study of this nature will be highly speculative, since this requires the specification of government objectives and constraints which may be unstable over time, unstable between countries or both. Nevertheless, as a first attempt at such an exercise, the results reported in Section 3 are encouraging enough, especially when the decision variable is hypothesized to be net ODA disbursements measured in nominal terms.

Having said this, it is difficult to be more precise in identifying how the constraint variables influence ODA, since a variety of competing specifications proved to be satisfactory from a statistical point of view. Moreover, the incidence of serial correlation among disturbances indicates that it should be possible to improve upon the specifications in future work. One possibility is that the correlation reflects dynamic misspecification, in which case the lag between disbursements and commitments may be relevant. Another is that it is necessary to add further constraint variables and that, while a start has been made in this paper, the political decision-making process is more complicated than has been assumed here. At the very least, the present investigation indicates that factors additional to GNP have an important bearing upon aid performance.

Berthélemy, J-C. (2005), “Bilateral Donors’ Interests vs Recipients’ Development Motives in Aid Allocation: Do All Donors Behave the Same?”, in Review of Development Economics, Vol. 10, No. 2, pp. 179-194.

My results show that most donors behave in a rather egoistic way: all but one partially target their assistance to their most significant trading partners. Nevertheless, most donors take some care of the neediest recipient countries. Moreover, on average, donors target recipients with better governance indicators, such as democracy or absence of violent conflicts. Finally, they act as complement of multilateral financial institutions. All these results suggest that, in spite of the egoism of their policies, bilateral donors also implement some sort of selectivity rules based on recipient needs and merits.

Such average results are very robust and do not change qualitatively from one decade to the other, in spite of the end of the cold war. These results are also very consistent with those found previously by Berthélemy and Tichit (2004), using a random effect Tobit model. In particular, I confirm the negative influence of recipient income per capita and population, and the positive influence of democracy and of trade linkages. But I have also obtained here a host of complementary results, for new explanatory variables (conflicts, indebtedness, multilateral aid, aid of other bilateral donors, and regional dummy variables), which could not be included in the random effect Tobit model for computational reasons.

In this paper, I have also uncovered some striking differences among donors. Switzerland, Austria, Ireland, and the Nordic donors (with the relative exception of Finland, and possibly Sweden) have been so far much more altruistic than other donors. Conversely, Australia, France, Italy, and to a significant extent Japan and the United States, are more egoistic than the other donors. This clustering of donors differs significantly from results obtained by Berthélemy and Tichit (2004), who found that France, Germany, United Kingdom, and United States were relatively altruistic, and that Australia, Austria, and New Zealand were relatively egoistic.

In fact, my list of relatively altruistic countries is consistent with other information available on their development assistance policies. On average, Denmark, the Netherlands, and Norway have over the 1980s and 1990s the highest aid performances, with total aid to GDP ratio close to 0.9%. Ireland, who was initially a much poorer country that [sic] the others, had in the 1980s and the 1990s a relatively small aid budget, but channeled more that 50% of its assistance through multilateral aid, instead of through bilateral aid. Switzerland is yet a different case, with also relatively modest levels of aid budget (0.33% of GDP), and not much assistance channeled through multilaterals. However, in the case of Switzerland, such data should be interpreted cautiously, given that this country became member of the World Bank only in 1992, and of the United Nations only in 2002. Moreover, Switzerland has consistently offered untied aid to developing countries, unlike most other donors. Conversely, Australia, France, Italy, and the United States, are known for frequently tying their assistance.

Berthélemy, J-C. (2007), “Rent-Seeking Behaviors and Perpetuation of Aid Dependence: The Donor-Side Story,” in Aryteey, E. and Dinello, N. (eds.) Testing Global Interdependence: Issues on Trade, Aid, Migration and Development, Cheltenham (UK) and Northampton (US): Edward Elgar Publishing.

A successful transition from aid dependence may be impeded by political factors – that is, by the fact that some rent-seeking economic agents with vested interests in perpetuating aid dependence have a say in aid allocation decisions. I considered here the donor side of the story. I provided empirical evidence consistent with the rent-seeking hypothesis by showing that aid allocation policies implemented by donors, or at least by a vast majority of them, are significantly correlated with their business interests, as measured by trade linkages.

In order to do so, I examined in detail the motives of bilateral aid allocation decisions, as they are revealed by data on bilateral aid commitments. I identified both self-interest motives and recipient needs and merit motives of aid allocation. Bilateral variables which describe self-interest motives are related to economic and political ties between donors and recipients. I then used such variables to define what I call the bilateralism effect in aid allocation decisions, development assistance in favor of relatively good performers. This is, of course, only a second best, because bilateralism in aid allocation is unavoidably blended by motives which have nothing to do with economic development. In any case, such self-interested motives cannot be prevented if one relies on a bilateral aid system, because they are part and parcel of the reasons why most bilateral donors provide assistance to developing countries when they are not the main motive itself.

In such a system, the multilaterals should concentrate their efforts on assistance to the neediest recipients, instead of targeting good performers, to correct the bias of bilateral aid in favor of their major trading partners and their geopolitical allies. If the multilateral agencies focus too much on aid efficiency, the need countries which are not significant political allies of the bilateral donors will be inevitably almost excluded from all aid sources, because almost by definition their poor economic performances reduce their attractiveness as business partners.

This sharing of responsibilities between bilateral and multilateral donors would also avoid a too heavy concentration of aid on a few good performers, that would be inevitable if all donors adopted the same pattern of aid allocation as the multilateral agencies. According to my econometric estimates, this diversification of overall aid allocation would also be reinforced by the fact that there is a negative correlation between the bilateral aid commitments of a donor and aid provided by other donors.

In this framework, one difficult aspect would be the refinancing of the grant element of multilateral agency operations. Their actions are clearly of a global public good nature, with all the classical difficulties arising in global public-good financing. But this problem already exists in the current setting, and the framework that I propose would merely make it more explicit. In fact, making it explicit that the role of multilateral institutions is fully to take care of pure global-public goods might possibly facilitate discussions on their financing. The recent success encountered by global public good schemes such as the Global Fund to Fight AIDS, Tuberculosis and Malaria, and the Global Alliance for Vaccines and Immunization, suggests that this approach has some value.

The database that we have assembled provides a wealth of information and analysis on aid allocation policies implemented by bilateral donors over the 1980s and 1990s decades. Our analysis identifies a number of variables, describing both recipients’ needs and performances, as well as the donors’ self-interests, which have influenced assistance policies. Given the amount of information available, we have also been able to compare aid policies before and after the end of the cold war, and among donors. Our conclusions are as follows:

– Aid budgets have faced an autonomous declining trend at a rate of more than 6% a year, in real terms, since the end of the cold war;

– Overall, aid is progressive, although with a declining intensity over time;

– Although with a declining intensity, the best way to attract bilateral assistance is to go democratic. This is particularly true with regard to the American and Australian assistance;

– Postcolonial traditional links still have a strong, but declining over time, influence on aid allocation policies of the former colonial ruling countries;

– Trade linkages have conversely a growing impact, although still with a small magnitude;

– Small donors, who need to specialize because of the small size of their aid budgets, tend to target their trading partners more than big donors, with the exception of Japan;

– On average, donors condition their assistance on positive social performances of the recipients, particularly after the end of the cold war, but some donors prefer to provide aid to countries with the biggest social needs;

– Good economic performances have on average been rewarded by donors in the 1990s.

Five presidents, twelve congresses, hundreds of public groups, and a substantial proportion of the American people, expressing their views in national public opinion polls, have endorsed and supported foreign aid as a vital element of U.S. foreign policy. Yet, thousands of articulate spokesmen have condemned U.S. foreign aid as a “give-away,” as a waste of resources, as a boondoggle, as support for Communism, as a bulwark of corruption, etc., etc.

Random scanning of the Congressional Record reveals opinions such as these:

It is the road to bankruptcy, and not a very long road at that.

We have no basic international policy, having definitely ignored the 125-year-old Monroe Doctrine. .. In its place has been substituted a hodge-podge of executive orders and gifts of large sums of money to foreign nations, founded upon no principle at all. …

If I believed the expenditure of this amount of money would stop the spread of Communism, I would support it. .. But in the light of history, in the light of facts, how can any Senator rise on this floor and say it will stop Communism. …?

They are deliberating selling America short. … Our Uncle [Sam] in his flirtations has become an easy prey of foreign and domestic grafters, vampires, and gold diggers.

In place of governing ourselves, in place of looking after our own people, we are now trying to bribe and govern the world.

Congress is lost in the dismal swamps of foreign intrigue.¹

The above quotes were not made in 1968. The first three were made in 1948 during the Senate debate on the Marshall Plan. The last three were made in 1950 during the House debate on Point Four.

Why, then, have the American people made available more than $100 billion in military and economic aid during the past generation?

The reasons have been stated thousands of times by thousands of people and in as many different ways. They all stem from the abiding objective of our foreign policy, which is to attain the kind of world projected in the Preamble and Articles 1 and 2 of the United Nations Charter. In the words of the Secretary of State Dean Rusk, this means:

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  A world free of aggression – aggression by whatever means
  
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  A world of independent nations, each with the institutions of its own choice by cooperating with one another to their mutual advantage
  
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  A world of economic and social advance for all peoples
  
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  A world which provides sure and equitable means for the peaceful settlement of disputes and which moves steadily toward a rule of law
  
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  A world in which the powers of state over the individual are limited by law and custom, in which the personal freedoms essential to the dignity of man are secure
  
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  A world free of hate and discrimination based on race, or nationality or color, or economic or social status, or religious beliefs
  
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  And a world of equal rights and equal opportunities for the entire human race
  

The Statement of Policy (Section 102) reads, in part, as follows:

It is the sense of the Congress that peace depends on wider recognition of the dignity and interdependence of men, and survival of free institutions in the United States can best be assured in a worldwide atmosphere of freedom.

To this end, the United States has in the past provided assistance to help strengthen the forces of freedom by aiding peoples of less developed friendly countries of the world to develop their resources and improve their living standards, to realize their aspirations for justice, education, dignity, and respect as individual human beings, and to establish responsible governments.

The Congress declares it to be a primacy necessity, opportunity, and responsibility of the United States, and consistent with its traditions and ideals, to renew the spirit which lay behind these past efforts, and to help make a historic demonstration that economic growth and political democracy can go hand in hand to the end that an enlarged community of free, stable, and self-reliant countries can reduce world tensions and insecurity.

It is the policy of the United States to strengthen friendly foreign countries by encouraging the development of their free economic institutions and productive capabilities, and by minimizing or eliminating barriers to the flow of private investment capital.

Also, the Congress reaffirms its conviction that the peace of the world and the security of the United States are endangered as long as international Communism continues to attempt to bring under Communist domination peoples now free and independent and to keep under domination peoples once free but not subject to such domination. It is, therefore, the policy of the United States to continue to make available to other free countries and peoples, upon request, assistance of such nature and in such amounts as the United States deems advisable and as may be effectively used to free countries and peoples to help them maintain their freedom. Assistance shall be based upon sound plans and programs; be directed toward the social as well as economic aspects of economic development; be responsive to the efforts of the recipient countries to mobilize their own resources and help themselves; be cognizant of the external and internal pressures which hamper their growth; and shall emphasize long-range development assistance as the primary instrument of such growth.

The Statement of Policy also makes reference to “… increased economic cooperation and trade among countries. …” Further, it reaffirms the belief of Congress in the importance of “regional organizations of free peoples for mutual assistance.”

What does all this boil down to in explaining the real reasons for foreign aid? There is a defense rationale, there is an economic rationale, there is a political rationale, and there is a humanitarian rationale.

The Defense Rationale

Between 1945 and 1950 Communist aggression in Europe and Asia subjugated some 14 nations, covering over 5 million square miles and including more than 700 million people. The Free World is still threatened by the most dangerous aggregation of aggressive power in history. The Soviet Union and Communist China maintain the largest collection of men under arms ever assembled in peacetime. They possess nuclear weapons and are striving steadily to increase their nuclear capabilities. They posses or control great quantities of raw materials. Uninhibited by moral or humanitarian considerations, their leaders have imposed a massive system of domination under which all human and material resources are marshaled in pursuit of the extension of Communist power. Their leaders have vowed that their system will eventually dominate the entire world.

The Communist menace lies not so much in its theory as in its practice of using force or threats of force or propaganda or internal subversion to attain its frequently stated goal of world domination and control. Many examples readily come to mind, such as the Berlin Blockade in 1948, the conquest of Mainland China in 1949, the Korean invasion in 1950, the fall of Tibet in 1951, control over North Vietnam in 1954, the invasion of Laos in 1960-61, the Cuban crisis in 1962, and the intensified attempt to take over South Vietnam in 1965-67. These are only a few examples of Communist aggression. A complete list would include other events such as insurrection in the Philippines, Malaya, Burma, and Indonesia following World War II, Communist involvement in the Congo in 1964, Communist take-over in Zanzibar in 1964, and many others.

Beginning in 1947, under the provisions of Articles 51 and 52 of the United Nations Charter, the U.S. began to establish, with other nations, a worldwide network of mutual defense alliances and undertook to assist its partners to increase their strength by providing weapons, equipment, and training, plus essential economic support. The U.S. also sought rights to construct and maintain additional air bases and other military facilities at strategic locations. The U.S. and its partners agreed on a series of trade controls to keep strategic goods from moving to Communist areas.

While the need for military bases has lessened in the missile age, some are still considered vital to the security of the U.S. The need for collective security arrangements and the military and economic strength to support them continues to be in the U.S. national interest. Military and economic aid are necessary to maintain this strength, for they create a shield behind which economic and social development can continue.

The Economic Rationale

The long-range economic well-being of the U.S. requires a continuing and expanding world commerce as well as an increasing supply of imported raw materials. This dual requirement depends in large part upon the peaceful and sustained economic development of other countries. The foreign aid programs of the U.S. and other donor nations help to maintain the security of and promote the economic development of the less developed nations. The recent UNCTAD Conference in Geneva made it abundantly clear that the assistance of the industrial donor nations should not only be maintained but greatly increased. The 77 countries describing themselves as the “developing” nations forcefully went on record that their rates of growth in recent years have been generally unsatisfactory, that sustained development is not possible on the basis of their own resources alone, and that the accelerated growth so urgently needed requires increased efforts by themselves and by the developed countries.

Despite the reliance of the industrial nations upon raw material imports from the underdeveloped areas and the reliance of the underdeveloped areas upon capital good and other manufactures from the developed areas, it is nevertheless true that as a general proposition the greatest trade takes place between the most developed countries. Therefore, if sustained economic growth of the developing nations can be continued, trade will increase, to the mutual benefit of all.

For some years U.S. exports have been expanding, partly, to be sure, as a result of foreign aid shipments (including PL 480 commodities). For many years before foreign aid began, U.S. agriculture exported roughly 10% of its production. This has generally been the margin between a prosperous economy and a recession. With greatly increased agricultural and industrial exports in recent years, not to mention even better prospects for the future, the U.S. economy has a tremendous stake in foreign aid.

An aspect of trade that is often overlooked, or is given inadequate emphasis, concerns our imports. Our dependence upon other areas of the world in this respect is staggering. For some years, the Automobile Manufacturers Association has issued a chart showing the 85 or so imported items that enter into the manufacture of an automobile and their principal sources of origin.

In 1951 the Foreign Commerce Weekly (now International Commerce) published a list of U.S. imports divided into three major categories: (1) articles for which the U.S. is wholly or largely dependent in imports and for which substitutes are nonexistent or not satisfactory (e.g., chrome, manganese, nickel, tin, graphite, industrial diamonds, jute, sisal, quinine, shellac, coffee, tea, cocoa, palm oil); (2) articles which are wholly or mainly imported, but for which, in most or all of their uses, a domestic product can be satisfactorily substituted (e.g., crude natural rubber, cryolite); (3) articles which are largely supplied by domestic production, but for which considerable imports are necessary to supplement domestic production (e.g., cane sugar, wood, wood pulp, copper, lead, zinc).

Commodities in each of the three categories were subdivided into “necessities” (e.g., manganese) and “semi-necessities” (e.g., coffee). A similar listing in 1967 would not be much different from the 1951 list. The important point is that we are vitally dependent upon many areas of the world for a large number of essential imports. Numerous studies, ranging from the landmark report of the Paley Commission² in 1952 to more current ones, indicate that the U.S. is becoming increasingly dependent on external sources for essential raw materials.

The Political Rationale

The basic, long-range goal of foreign aid is political. It is not economic development per se. The primary purpose of foreign aid is to supplement and complement the efforts of the developing nations to enhance their strength and stability and to defend their freedom. Success in these efforts is necessary to counter the spread of Communism. Further, the growth of strong independent nations which are successfully meeting the economic, social, and political needs and demands of their people contributes in many other ways to U.S. interests. A few of many aspects of the political rationale for foreign aid are discussed below.

In the parlance of aid appropriations there are two major categories of economic aid – “development assistance” and “supporting assistance.” The latter term refers to aid which has a strategic or political rationale and usually cannot be justified on economic grounds alone. It is used to protect and advance immediate U.S. foreign policy interests. As stated in AID’s FY 1966 Summary Presentation to the Congress:

It is provided primarily to enable larger defense exports to be undertaken in less-developed nations threatened by Communist expansion and to avert situations of dangerous instability in sensitive areas. In a few instances it is also provided to encourage independence of action in nations susceptible to Russian or Chinese Communist domination, to assure access to U.S. military bases and in other ways to support or promote economic or political stability.

Over 80% of the supporting assistance requested by FY 1966 was intended for Vietnam, Laos, Thailand, and Korea. Jordan and the Congo accounted for some 14% and the small remainder was for small programs in a few other countries. In the event of unforeseen political crises requiring rapid aid infusions, the President’s contingency fund could be drawn upon, although its most frequent use is for emergency relief to victims of national disasters such as floods and earthquakes.

The distinctions between appropriations categories are really artificial and bureaucratic, for “development” aid also serves many political purposes. Regardless of what AID officials say publicly, the political rationale is frequently preponderant in decisions to provide aid. This is a continuing source of friction and disagreement between AID officials and State Department officers. One “good” Communist scare in the past has quickly led to a stepped-up tempo of aid activity. This is so widely recognized, in fact, that government officials in more than a few countries where Communism has not been a problem have asserted that they should “import” 1,000 Communists as a means of getting a larger share of U.S. aid. The Communists are also aware of this political reality. In fact, they have even gone so far as to use it as an argument for a recipient country to accept Soviet aid – that in so doing the country could expect more U.S. aid!

The State Department also places high value on the employment of foreign aid to bolster the incumbency of political leaders believed best for U.S. interests or to tip the balance against recognition of the Chinese Communists or to swing critical votes in international bodies. While it is often stated by high U.S. officials that the purpose of foreign aid is not to buy votes or popularity, it nevertheless must be borne in mind that the UN membership (currently 119) has more than doubled in the past decade or so. In 1950, there were only four UN members from Africa; now there are 39! Each of the newly independent nations has one vote – just the same as the big powers. In the recent past, the “Afro-Asian” bloc and the “77” countries of UNCTAD renown have concerted their efforts to swing votes contrary to the desires of the major industrial countries. While UN votes may not, and should not, be a primary determinant of aid decisions, it is reasonable to assert that they cannot be ignored – nor are they.

From this brief introduction it can be readily seen that there are many aspects to the political rationale for foreign aid. One illustration of the magnitude of this way was the widespread belief, at least by Europeans in the late forties and early fifties, that the Marshall Plan country directors exerted more power than the U.S. Ambassador.

From the onset, U.S. aid programs have always had an underlying humanitarian and ideological basis. In helping others, however, we are acting in our own self-interest. In the words of President Johnson “… the pages of history can be searched in vain for another power whose pursuit of that self-interest was so infused with grandeur of spirit and morality of purpose.”

The humanitarian basis of U.S. government foreign aid stems from the ideals and actions of the American people as they have evolved ever since the landing of the Pilgrim fathers. These ideals and actions were nurtured and developed by the religious, political, and personal freedoms guaranteed under the Constitution and made possible by our heritage of resources and their development, which has resulted in the highest per capita wealth of any nation in the world. The actions of the U.S. government in rapidly meeting emergencies arising from natural disasters, war, and internal insurrection have been inspired by the continuing examples set by the churches and other non-governmental groups over the past century or so. Thus, it has been in the American tradition to help the poor and the needy.

Summary

In summary, then, there are valid reasons for the continuance of foreign aid. If clearly conceived and properly administered, such aid may be expected to serve the interests of the United States by promoting its defense and the security of the Free World, by contributing to its economic growth and spiritual strength, and by helping to develop a world environment of freedom in which the American people may prosper and live in peace.

The rationale of other donor nations of the Free World may be considered not unlike that of the United States, though somewhat narrower in scope. Among significant differences, perhaps, may be mentioned the more limited scope of their aid programs, the greater emphasis on trade in the case of some, and the general absence or subordination of the humanitarian motive. As for Communist aid, the rationale is quite different. Their aid has become an increasingly important element in the Communist geo-strategy of world domination as well as a trade outlet not otherwise capable of achievement.