To make significant progress against global poverty, the world needs a partnership of poor and wealthy countries working together. Poor countries are responsible for formulating development plans and goals, allocating resources to achieve the goals, and practicing good governance; wealthy countries need to implement aid, debt and trade policies that support these efforts.
How much would it take to stamp out extreme poverty? Consider what's needed to meet the Millennium Development Goals (MDGs), the international community's targets for significantly reducing poverty and related ills by 2015. According to the UN Millennium Project, the amount of overseas development aid would have to double to $135 billion in 2006, and further rise to $195 in 2015. This would cover the gap between investments that poor countries need to make, and the resources that they have available. These aid flows would then have to be bolstered by fair trade and generous debt relief policies.
The U.S.: Where Does It Stack Up?
As the wealthiest and most powerful country in the world, the United States should be the leader in efforts to improve the lives of the world's poor. Working towards this goal is consistent with American values of creating opportunity for others and relieving human suffering, and necessary to create the conditions for long-term national security and to boost U.S. economic strength through stronger trade relations.
Unfortunately, the United States has not taken up this leadership role. While the U.S. is the single largest international donor in absolute terms, it's one of the least generous countries in terms of aid given per person.
In 1970, donor nations adopted a development assistance target of .7% of GNP, a figure that many experts uphold would enable the world to meet the MDGs. Denmark, Luxembourg, the Netherlands, Norway and Sweden have already reached this target, and six other countries—including the United Kingdom—have committed to timetables to achieve it before 2015.
Meanwhile, the U.S. has failed to establish a timetable to reach this target, and its level of giving remains lagging at around .15% of GNP. In 2002, the U.S. gave $15.6 billion in development assistance, the equivalent of just 13 cents per day per person in government aid, roughly the cost of one cup of Starbuck's coffee a month. In addition, much of this aid has been tied to use of U.S. contractors and goods, which reduces its value.
American aid also often doesn't go to the most needy. Less than half U.S. aid goes to the poorest countries, where people earn less than $2 a day. The main recipients of American aid have traditionally been strategic allies like Israel, Egypt and Russia.
Recent U.S. Aid Initiatives
The Bush Administration has made two important commitments of assistance to poor countries. The Millennium Challenge Account is an initiative to boost aid to poor countries that meet criteria of good governance and open economies by $5 billion per year 2006. Meanwhile, the President's Emergency Plan for AIDS Relief is designed to increase funding to HIV/AIDS programs by $10 billion over five year. While positive steps, both programs have been slow to meet initial funding targets and even criticized as being exemplary of American "go it alone" development policies. Even if fully funded, these programs won't be nearly enough to make the U.S. a leading donor.
What Do the People Say?
While the U.S. government is relatively stingy in its aid allocations, the American people seem eager to spend more – in fact, many think that their government already does. Polls have shown that, on average, Americans believe that the U.S. spends 24% of the federal budget on development assistance, and they would prefer that only 10% be spent this way. In reality, the U.S. spends a little less than 1% of the budget on aid.
Sources:
Center for Global Development, Rich World, Poor World: A Guide to Global Development (briefs from 2004)
UN Millennium Project: Investing in Development: A Practical Plan to Achieve the Millennium Development Goals (2005)
