Foreign Policy of The United States - Foreign Aid

Foreign Aid

Foreign assistance is a core component of the State Department's international affairs budget and is considered an essential instrument of U.S. foreign policy. There are four major categories of non-military foreign assistance: bilateral development aid, economic assistance supporting U.S. political and security goals, humanitarian aid, and multilateral economic contributions (for example, contributions to the World Bank and International Monetary Fund).

In absolute dollar terms, the United States is the largest international aid donor ($22.7 billion in 2006), but as a percent of gross national income, its contribution is only 0.2%, proportionally much smaller than contributions of countries such as Sweden (1.04%) and the United Kingdom (0.52%). The U.S. Agency for International Development (USAID) manages the bulk of bilateral economic assistance; the Treasury Department handles most multilateral aid.

Although the United States is the largest donor in absolute dollar terms, it is actually ranked 17 out of 22 countries on the Commitment to Development Index. The CDI ranks the 22 richest donor countries on their policies that affect the developing world. In the aid component the United States is penalized for low net aid volume as a share of the economy, a large share of tied or partially tied aid, and a large share of aid given to less poor and relatively undemocratic governments.