Bureau of Economic, Energy and Business Affairs
September 16, 2008
The United States and International Development: Partnering for Growth
“We lead the world in providing food aid, improving education for boys and girls, and fighting disease. Through the historic commitments of the United States and other G8 countries, we are working to turn the tide against HIV/AIDS and malaria in Africa. To achieve this noble goal, all nations must keep their promises to deliver this urgent aid.”
--President George W. Bush, June 13, 2008
The United States is committed to helping the world's poor. Development depends on strong, accountable governance and economic policies unleashing private sector growth. At the International Conference on Financing for Development at Monterrey in 2002, the world articulated a new model for development, calling on developing countries to establish sound economic and social policies and for developed countries to support these efforts through an open trading system, private capital flows, and additional development assistance. The United States approach to development assistance is based on the belief that foreign assistance is most effective when it supports nations making necessary political and economic reforms.
The U.S. Record
Elements of the U.S. Contribution to Development
From 2000-2007, the Bush Administration dramatically increased U.S. Official Development Assistance. The increase of 118% over eight years is a faster rate than at any time since the period immediately following World War II. In 2007 U.S. ODA was $21.8 billion, a decline of $1.8 billion relative to the 2006 level; $1.6 billion of this change is accounted for by a decline in debt relief activities after major new actions in 2006 and a decline in ODA to Iraq. Iraq and Afghanistan were the largest recipients of bilateral aid in 2007, with $3.7 billion going to Iraq and $1.6 billion going to Afghanistan. This assistance provided for programs in humanitarian relief, economic development, counter-narcotics, good governance, health, clearance of landmines, and other reconstruction assistance. In addition, $4.8 billion went to the world’s least developed countries, and a further $1.6 billion to other low-income countries, not including U.S. regional and global programs. In advance of the 2005 G-8 Summit, President Bush announced that the United States would double its assistance to sub-Saharan Africa from 2004 to 2010. From a 2004 base of $4.3 billion, with planned increases in disbursements, the U.S. is on track to meet that pledge.
In March 2005, the U.S. endorsed the Paris Declaration on Aid Effectiveness, which emphasized that existing aid levels should be used more effectively. The USG reached an agreement in October 2007 with the “Nordic +” group of leading donor countries to work jointly to improve aid effectiveness in selected countries, and in September 2008 endorsed the Accra Agenda for Action to advance Paris Declaration implementation.
Millennium Challenge Account
The Millennium Challenge Account (MCA) is an innovative model in development assistance. It is built on the principle that foreign aid yields better results where sound economic policies and good governance provide an enabling environment for economic growth. The total MCA appropriated funding from FY 2004 through FY 2008 exceeds $7.5 billion. Since its inception in 2004, the Millennium Challenge Corporation (MCC), which implements the MCA, has approved agreements, called compacts, with 18 strongly performing countries — Armenia, Benin, Burkina Faso, Cape Verde, El Salvador, Georgia, Ghana, Honduras, Lesotho, Madagascar, Mali, Mongolia, Morocco, Mozambique, Namibia, Nicaragua, Tanzania, and Vanuatu — totaling $6.3 billion dollars.
To provide further incentive for reform and help additional countries qualify for compact funding, MCC provides “threshold” assistance to help countries address specific areas of policy weakness. To date, MCC has approved threshold programs with 18 countries totaling over $400 million. MCC also created a private sector initiatives office in November 2007 to enhance private sector engagement.
U.S. President’s Emergency Plan for AIDS Relief
In 2003, President George W. Bush launched the U.S. President’s Emergency Plan for AIDS Relief (PEPFAR) to combat global HIV/AIDS – the largest commitment by any nation to combat a single disease in history. By the end of FY 2008, the American people will have invested $18.8 billion in the global fight against HIV/AIDS. On July 30, 2008, President Bush signed into law a bill that will increase the U.S. financial commitment to the fight against global HIV/AIDS, tuberculosis, and malaria, authorizing up to $48 billion more to combat the three diseases for five additional years, from 2009 to 2013. When President Bush launched PEPFAR, approximately 50,000 people in sub-Saharan Africa were receiving antiretroviral treatment. Today, PEPFAR supports lifesaving treatment for over 1.7 million people worldwide, the vast majority of them in sub-Saharan Africa. PEPFAR has also supported care for more than 6.6 million people, including 2.7 million orphans and vulnerable children. To date, PEPFAR has allowed nearly 200,000 children to be born HIV free.
Through PEPFAR, the U.S. Government is the largest single contributor to the Global Fund to Fight AIDS, Tuberculosis, and Malaria, having provided over $2.5 billion since the launch of the Fund in 2002, or approximately thirty percent of the Global Fund’s total resources.
Other Health Initiatives
President Bush announced the President's Malaria Initiative (PMI) in June 2005. A five-year, $1.2 billion program, PMI challenges other governments and the private sector to join the U.S. government in combating malaria, with the goal of cutting the malaria mortality rate by 50 percent in 15 countries in Africa. Through partnerships working in the first three target countries – Angola, Tanzania, and Uganda – PMI reached about six million people in its initial year. In its second year, with an expanded program, an estimated 25 million persons benefited from life-saving prevention or treatment interventions including insecticide-treated bednets, indoor residual spraying, artemisinin-based combination therapies, and preventive treatment of pregnant women. Other target countries added in FY 2007 include Malawi, Mozambique, Rwanda, and Senegal. Benin, Ethiopia, Ghana, Kenya, Liberia, Madagascar, Mali, and Zambia were added in FY 2008. Evidence is beginning to show that this effort is effectively reducing malaria transmission.
The U.S. has also been a strong supporter of tuberculosis (TB) control efforts globally. Between 2000 and 2007, the U.S. Agency for International Development (USAID) provided nearly $600 million for TB programs worldwide, including about $166 million directed specifically to Africa. USAID support has contributed to increased average detection rates and treatment success rates in 19 focus countries, and between 2002 and 2008 the United States supported effective treatment for 10 million people with TB. In FY 2007, USAID provided $5 million to the STOP TB Partnership’s Global TB Drug Facility (GDF), an important mechanism that provides drugs to countries in need, including many countries in Africa. USAID funding to the GDF will increase to $15 million before the end of FY 2008. Additionally, seventeen percent of support for the Global Fund has been dedicated to TB work, and PEPFAR increased its funding from $26 million in FY 2005 to a planned level of $150 million for FY 2008 to address TB/HIV co-infections.
The U.S. is the largest donor country of official humanitarian aid for victims of famine, persecution, war and natural disasters. U.S. humanitarian assistance totaled roughly $3 billion for 2007, and was aimed at helping those affected by disaster through the rapid delivery of food, water, shelter, and health care. The United States is working to help the countries most affected by increased global food prices. As the largest single country providing food aid, the U.S. gave $1.87 billion in food aid in 2007 to help food insecure countries. The U.S. is also the largest single country supporting refugee protection, assistance and durable solutions. In addition, the U.S. provides major resources for ongoing reconstruction efforts to help nations recovering from conflict and natural disasters. The U.S. military, in cooperation with USAID, has been mobilized to deliver life-saving aid to victims of large-scale disasters as quickly as possible, such as after the Indian Ocean tsunami of 2004 and the South Asian earthquake of 2005.
Through the Humanitarian Mine Action Program, the U.S. has contributed over $1.3 billion since 1993 to mine clearance, mine survivors assistance, mine risk education, and research and development on detection and clearance technologies. These efforts have contributed to the steep decline in casualties from persistent landmines and explosive remnants of war, from about 26,000 annually five years ago to approximately 6,000 worldwide in 2006.
At the G8 summit in 2005, the U.S. led efforts to obtain G8 approval of the Multilateral Debt Relief Initiative (MDRI). The initiative called for 100 percent cancellation of heavily indebted poor countries’ (HIPCs) eligible debt obligations to the World Bank, African Development Bank, and the International Monetary Fund.
Nineteen African countries have already benefited from MDRI debt relief and another 14 African countries are eligible to receive similar debt cancellation once they achieve the required standards. With the additional debt relief provided by the Inter-American Development Bank, this initiative has eliminated over $42 billion in current and future multilateral debt service for 25 countries in Africa and elsewhere.
Under the enhanced HIPC initiative, the United States and other creditors together have cancelled an additional $45 billion. Taken together, these international efforts are projected to remove a debt burden of over $110 billion in current and future debt service for 33 heavily indebted poor countries. Another seven countries could eventually qualify under these initiatives.
The U.S. is the world’s single largest contributor to the United Nations and to the multilateral development banks (MDBs). In 2007, U.S. contributions to multilateral organizations including the UN, World Bank, and other MDBs totaled approximately $2.9 billion. Of this total, $692 million was provided to the United Nations. The U.S. has committed $950 million per year to the International Development Association, the component of the World Bank that helps the world’s poorest nations, for 2006-2008. These contributions are to organizations promoting economic growth, poverty reduction, and increased living standards through development and humanitarian assistance. Our assistance leverages tens of billions of dollars from other donors.
Trade is a powerful anti-poverty tool, spurring economic growth, increasing opportunity, and creating new and better paying jobs. In recognition of this fact, the U.S. has led by example in promoting trade with developing countries. The United States is the largest net importer from developing countries at $573 billion in 2007 ($981 billion in imports minus $409 billion in exports). This amount dwarfs the size of other financial flows to these countries, creating jobs for millions of people. Through preference programs including the African Growth and Opportunity Act, the Caribbean Basin Initiative, the Andean Trade Preference Act, and the Generalized System of Preferences, many developing country goods receive zero-tariff access to the U.S. market. The U.S. has taken a bold position in World Trade Organization negotiations, with ambitious proposals that aim to ensure the realization of the development potential of the Doha Round. The U.S. is also a leader in “trade capacity building” programs aimed at allowing developing nations to better integrate into and benefit from the global trading system, contributing $7.6 billion total since 2000.
Other Private Financial Flows
The U.S. is the leading country in private financial flows to the developing world, with net capital flows exceeding $99 billion in 2007. In addition, residents of the United States lead the world in their personal generosity, sending over $48 billion in personal remittances and giving an estimated $12 billion in private charitable contributions in 2007. This funding is not included in total Official Development Assistance figures.
Public-Private Partnerships (PPPs)
USAID’s Global Development Alliance (GDA) was created in 2001 to forge public-private alliances that leverage the skills and resources of non-traditional partners in development efforts. To date, USAID has cultivated over 680 public-private partnerships with 1,700 different organizations, leveraging over $9 billion in partner resources. These 1,700 organizations, including international and local businesses, private foundations, non-governmental organizations, and governments, are alliance partners in every country where USAID works. One such partnership was the South Asia Earthquake Relief Fund, which raised more than $100 million in cash and in-kind contributions for earthquake relief and reconstruction in the affected region of Pakistan. The Overseas Private Investment Corporation, the U.S. Export-Import Bank, and the United States Trade and Development Agency also engage in public-private alliances, implementing programs ranging from increasing access to potable water to providing technology for sustainable environmental protection among the world’s poor.
The U.S. State Department’s Global Partnership Center, launched in December 2007, supports State’s existing partnership activity by building partnerships, providing needed guidance and practical tools, and serving as a point of contact for outside partners' inquiries. State’s broad-ranging public-private partnership program supports a variety of development efforts, including programs that combat AIDS and reinforce official humanitarian mine action.
Peace and Security Cooperation
Peace and stability are critical preconditions for development. U.S. spending on overseas security programs helps build and promote stability and contributes to an environment conducive to sustainable economic growth and poverty reduction. U.S. foreign military financing to developing countries to improve performance of police forces and build partner capacity to contribute to international peace operations was an estimated $2.4 billion in 2007, with another $1.42 billion spent for UN peacekeeping activities. All but $113 million of this funding comes in addition to the $21.8 billion reported as Official Development Assistance disbursed in 2007. The U.S. is also working to integrate considerations of conflict, instability, and state fragility in the new foreign assistance framework and to implement reforms for better collaboration among development, diplomatic, and military partners in complex humanitarian environments.