Organizing U.S. Foreign Aid: Confronting the Challenges of the Twenty-First Century

The Nature of Development

programs across the government and the complex and cumbersome way aid is programmed make it difficult for the administration to deploy this tool effectively to address development issues. Organization and processes are truly, in the old bureaucratic cliché, “where the rubber meets the road.” They are also the focus of this book. This study primarily discusses the organization and management of U.S. foreign aid for development and associated purposes. It examines the missions and purposes of foreign aid—the way it is organized within the federal government and the structure and processes of aid giving itself. It addresses the political context of aid in the United States and abroad, including domestic politics; the way other governments have organized their aid; and the emerging environment of aid giving in the twenty-first century. And it concludes with a discussion of issues and options available to the federal government so that its aid effort can better address the challenges ahead. The Nature of Development Surely one of the reasons there have been so many debates about development and foreign aid is that these terms mean different things to different people. “Development,” when applied to societies and countries , has usually included the idea of sustained improvement in the human condition and the changes required to bring about that improvement . In the early decades after World War II, when promoting development in poor countries became part of the U.S. foreign policy agenda, the term “development” was used primarily to refer to economic development. Progress was measured by the rate of economic growth and the level and growth in annual per capita incomes. In later decades, the idea of development was extended to include social progress—improvements in quality of life indicators such as life expectancy, literacy, and child mortality. In the 1990s the term “sustainable development” was used to refer to economic and social progress 4 ❚ ORGANIZING U.S. FOREIGN AID that also preserved the environment and that would continue after donor funding had ended. Also during the 1990s, “development” was increasingly used to encompass democracy, empowerment of the poor, and political freedom. At the end of the decade, Amartya Sen defined “development as freedom”—the ability of individuals to choose fulfilling lives (thus encompassing all the previous definitions and more).5 Asked how they would define development today, most policymakers and practitioners would probably emphasize three things: increases in per capita incomes that lead to a sustained reduction in poverty; an expansion in the physical infrastructure and public services (such as education and health) that are both the means and ends of social and economic progress; and increasingly capable and effective governments that provide for security, the rule of law, responsible economic management, social inclusion, and political freedoms that are also means as well as the ends to improving the human condition. How do countries move from being “developing” to “developed”? Development requires investments in increased production or productivity or both. Investments in turn require productive opportunities , adequate infrastructure, a trained and healthy labor force, and an economic climate supportive of investors (including physical security, the rule of law, the protection of property rights, a reasonable regulatory regime, and a relatively clean and competent government). In order for development to reduce poverty, the poor must have access to services (such as education and health) and assets (for example, land or credit) that enable them to participate in and benefit from economic growth. While foreign aid can provide needed resources, advice, and incentives for reforms, improved growth depends primarily on actions taken by the developing country and its population. Bringing together the necessary components for successful development remains a complex and challenging task, requiring technical expertise (for example, how to strengthen health systems, deliver immunizations in isolated areas, create sustainable microenterpriselending programs, reform banking systems), knowledge of local conditions , and, last, but not least, political savvy. ORGANIZING U.S. FOREIGN AID ❚ 5 ...