Redesigning Foreign Aid

A WORLD TRANSFORMED

Foreign aid was an extremely useful tool of U.S. diplomacy during the second half of the twentieth century. It helped contain the expansion of communism in Asia, Latin America, and Africa; promoted economic and social development in those regions; and provided humanitarian relief in emergencies. Foreign aid will continue to play an important role in the twenty-first century. But its major purposes and priorities will be distinct from those of the last 50 years and will therefore require a new design for both its organization and management.

The 1990s were a decade of enormous change. The Cold War ended with the collapse of the Soviet Union. The pace of globalization accelerated as the revolution in communication technologies reduced barriers to international trade and investment. The number of democratic countries expanded dramatically in the former Soviet sphere, Africa, and other parts of the developing world. Although poverty remained widespread, real economic and social progress began to occur -- especially in Asia and Latin America. And the capacity of many of these governments to manage their economies and open their markets to international capital became greater than at any time in recent history. In short, the traditional purposes of aid over much of the past half-century -- promoting U.S. security and supporting development in poor countries -- are no longer pressing in the post-Cold War world of American dominance and new emerging markets.

These changes have left the United States the sole superpower and acknowledged world leader. They have also raised new challenges and opportunities for U.S. leadership that point to different purposes and priorities for foreign aid. Three are particularly pressing: to help preserve peace, address the challenges of globalization, and improve the quality of life of the many poor and disadvantaged throughout the world.

THE PEACEMAKER