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Foreign Aid Fails to Open Borders to Trade

© Bryan Johnson

(Editor's Note: Proponents of foreign aid often argue that the program has three major goals: 1) to promote economic growth, 2) to promote U.S. foreign policy goals, and 3) to promote U.S. exports. In the first two articles presented on this page, each one took on a specific one of aid's missions. So far I have addressed the economic growth and foreign policy goals. This article addresses the commercial interests goal. It is important to realize that the author does not endorse the specified goals as stated in AID's mission documents, or espoused by its director, J. Brian Atwood. They are taken on in this series of articles to demonstrate aid's failures at its stated objectives. The views expressed here are those of the author and not necessarily representative or attributable to the Heritage Foundation.)

When pressed with evidence demonstrating that foreign aid has a poor track record in helping the world's poor, and that it actually is more likely that foreign aid has helped nations become poorer, proponents of foreign aid often divert attention from the record by arguing that U.S. foreign aid directly promotes the commercial interests of the United States in less-developed countries. Indeed, this was the tactic often employed by proponents of foreign aid lobbying Congress during the appropriations process for fiscal years 1996 and 1997. The inference was, even if the program does not help recipients, it helps businesses in your district. Thus, it warrants your support.

J. Brian Atwood, administrator of the Agency for International Development (AID), stated , "[f]oreign assistance . . . fosters an enabling environment for U.S. trade and investment in developing nations by helping secure open environments for trade." This unsubstantiated claim, which implies that foreign aid helps to open markets abroad for U.S. exporters, has been echoed even by countless business associations that profit off of the program. An even larger sham is how many of these same business groups are called on to testify before Congressional funding hearings on the merits of the U.S. foreign aid program. Thus, you have businesses that directly profit off of the program being offered as witnesses to testify on how foreign aid helps the poor. Consequently, it is understandable that some members of Congress and the American public wrongly assume that foreign aid benefits the United States by increasing U.S. exports.

New bills like the African Growth and Opportunity Act (H.R. 1432) often include language asserting that increases in U.S. foreign aid will promote U.S. exports to and economic growth in certain less-developed countries. But the evidence does not support these assertions. U.S. foreign aid has not been shown to benefit the United States either economically or commercially. The opposite is more often the case. Most recipients of U.S. foreign aid have the highest barriers to trade in the world, they import fewer U.S. goods and services than non-foreign aid recipients, and larger recipients of U.S. aid import less U.S. goods and services than smaller recipients of aid. This is particularly true in Africa, which erects more barriers to U.S. exports than any other region in the world.

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