WASHINGTON -- Just as U.S. President Richard Nixon was able to use his conservative credentials to fend off critics and go to China, President George W. Bush has just announced a policy change that Republicans have opposed for years, but that is long overdue. Over a period of a few years, Bush would increase annual U.S. development aid for poor countries by $5 billion, or about 50 percent. He would rightly channel that increased assistance to countries that have adopted the kinds of sound economic policies that allow them to put the resources to good use.
For years, critics of aid have argued that most assistance to the developing world is wasted. No one quarreled with immunizing children or helping refugees, but many disputed the notion that foreign aid can work more generally. The critics' case was supported by a number of studies finding very weak links between aid flows and economic growth, and by the fact that most of Africa and many other countries that have received lots of aid dollars remain mired in poverty. This record has recently been the subject of much debate among the aid-giving community as well. In part as a result, American foreign aid dropped to the lowest level of any industrial country, measured as a percentage of GDP.
But in fact, critics were distorting aid's record. First of all, its accomplishments in the realm of immunizations and other basic health and education efforts have been remarkable, as proven by improved child-survival statistics, life expectancy, and literacy rates worldwide, with the exception of a few extremely poor countries. And more remains to be done in these areas, strengthening the case for increased aid. Second, the same studies that find no general link between aid flows and growth find that aid does foster economic growth when given to countries with prudent fiscal policy, open trade regimes, sound institutions and relatively clean government. Third, aid is not a huge drain on the U.S. taxpayer. A half penny of each federal dollar is spent on foreign assistance, less than 10 percent of what most Americans believe.