Congress and Development
Since the onset of the Marshall Plan in 1948, there has been much congressional
debate concerning the best way that growth and development can be stimulated and
sustained. Large amounts of foreign aid have been provided to developing nations
(though not nearly as much in real dollar terms or as a share of the donor countries’
economy as in the decade starting in 1948).1 The persistence of poverty,
malnutrition, disease and illiteracy in developing countries has been a continuing
source of concern to many donor and recipient countries.
In recent decades, Congress and the Executive Branch have proposed a variety
of new programs which many thought would be effective in promoting development.
The programs specified a wide variety of different goals which ought to be pursued.
In 1989, a task force of the House Foreign Affairs Committee found that the basic
law undergirding the U.S. bilateral foreign aid program (the Foreign Assistance Act
of 1961) contained 33 different goals for the U.S. bilateral aid program and the U.S.
aid program identified 75 priority areas which should be emphasized.2 Others have
been enacted since that time. Similarly, a broad variety of goals and policy concerns
have been written into the two basic laws (the International Financial Institutions Act
of 1977 and the Bretton Woods Agreements Act) which govern U.S. participation in
the International Monetary Fund and the multilateral development banks. The
variety of U.S. goals in these bilateral and multilateral programs has sometimes
blurred the focus and encouraged confusion about the priorities, design and
evaluation of the development aid programs funded by these agencies. The strong
arguments which often occur during discussions about foreign aid and development
policy often seem rooted in differences over goals and priorities and much of the
disagreement stems from conflicting views about the nature of development and the
best way it can be measured and achieved.
CRS-3
3
See CRS Report RS21209, The Millennium Challenge Account: Bush Administration
Foreign Aid Initiative, by (name *redacted), June 21, 2002.
In 2003, Congress will consider legislation authorizing U.S. participation in new
multilateral funding plans for the International Development Association (IDA) – the
concessional aid window of the World Bank – and other multilateral aid programs.
This includes contributions of $2.85 billion over three years to IDA and roughly $1
billion over several years to the other multilateral programs. Questions about the
effectiveness, priorities and goals for IDA and the other MDB programs are likely
to be important considerations in those deliberations. There has been considerable
controversy, over the years, about the policies, priorities and relative success of
multilateral bank programs.
In 2003, Congress will also likely consider legislation which would change
some key elements of the U.S. bilateral assistance program. President Bush is
expected to propose that the United States should provide an additional $5 billion in
targeted foreign aid in 2006 – over and above the regular U.S. aid program – to
promote economic growth and fight poverty in the world’s poorest countries. A
limited number of countries which meet strict eligibility and performance
requirements would be targeted. To qualify, countries will need to be promoting
good governance, fighting corruption, respecting human rights and adhering to the
rule of law. They should be investing in people, through adequate health and
education programs that meet the needs of their population. They should also be
pursuing policies aimed at fostering private enterprise and entrepreneurship,
promoting open markets and maintaining sustainable budgets. Under the MCA
program, aid would be targeted to countries that are “good performers,
“ apparently
without regard to other U.S. foreign policy or strategic objectives.3
Manyexpect that, when the MCA proposal is submitted to Congress, efforts will
likely be made by the House and Senate to reconsider some of its basic criteria.
Some say more emphasis should be given to social factors (see below) and to poverty
alleviation. Others argue that more attention should be given to the needs of people
in poor countries which fall short of the MCA eligibility requirements.
Disagreement about U.S. foreign policy goals and U.S. interests will likely be
an underlying factor in the debates about the multilateral banks, the MCA and other
development programs. However, disagreement about the appropriate standards and
criteria for assessing the effectiveness of development aid programs will also likely
be an important consideration. This report seeks to provide background and
information which may be of use to Congress in that context.
