Why foreign assistance is important to US economy

Too many Americans are just plain wrong when it comes to foreign aid.

In January 2016 a Kaiser Foundation survey showed that 15 percent of the American people believe the foreign aid budget represents more than half of the U.S. federal budget.  The average answer from the survey was that the US spend 31 percent of its budget on foreign aid. Only 3 percent had the right answer: 1-1.5 percent.

 

And now the Trump Administration wants to cut the aid program (and the rest of civilian foreign policy operations) by a third.

Contrary to the attitude that seems to come from the administration and its supporters, the purpose of foreign aid is not to just give away money to make us feel better. In fact, foreign aid is an important factor in improving the U.S. economy.

When poor people in another country start earning more money, they most often use the money to improve the lives of their children by investing in education and health. And once those basic cares are covered, these people then start buying things.

If the country has a free-trade agreement with the United States, that means U.S. products can enter the country with low or no import fees. And that means the U.S. products can be purchased by the emerging middle class.

Helping build a strong middle class in the developing world is part of what development aid is all about. One of the most visible programs in the US Agency for International Development universe is Feed the Future.

I have seen the program in action in Honduras.

Farmers who barely able to grow enough to feed their families were able improve their agricultural output under the Feed the Future program. I saw farmers install healthy stoves — designed to expel the smoke outside the house. The extra income was also used to improve the diets of the families, thereby making the children healthier and better able to learn. And the extra money was also used to educate the children so they can find better paying work when they graduate.

For less than a penny on the dollar, tens of thousands of people in Honduras were brought out of severe poverty — about $1 a day. The lives of these people was improved and their children were given opportunities to improve their future.

And this affects the U.S. how?

By giving young people a viable future, U.S. aid programs keeps them away from gangs — in particular the major syndicates that help move drugs into the United States. Also, by improving the local country’s economy, there are fewer reasons for young people to leave their country for the United States.

And to be clear, Feed the Future is not only for farmers. It works with people who have an idea for a company but who aren’t sure how to proceed.

Norma Linares owns Loma Alta, a thriving food processing enterprise that she and her husband founded in 2014 in their village of Azacualpa, Honduras. The husband and wife team turned about 300 plantains per month into chips, which they sold to local retail outlets. Home-based and family-run, the business started small, generating a net income of around $75 a month.

Soon after Loma Alta’s founding, Linares and her husband started working with a Feed the Future project, where they were introduced to a wide range of training and technical assistance to improve processing efficiency, quality control, and packaging in their business. Feed the Future also helped Loma Alta establish ties with market contacts, giving it year-round access to reliable buyers and a more steady income throughout the year.

Opportunities Sprout from Growing Plantain Business

Eventually the company expanded into other packaged foods and changed from a solely family business to one that hires people to package and sell their goods.

In just a few years this family moved firmly into the middle class in Honduras. And that means they will be able to buy U.S. products. It also means they will be staying in Honduras rather than making the dangerous journey to the U.S. to look for economic opportunities.

For about one cent on the dollar USAID (and the State Department) provide programs and assistance that helps build the economies of other countries, which in turn means more markets for U.S. goods AND reduced immigration.

So what is the more wasteful program: Building a wall and militarizing a border or providing assistance to people to work their way out of poverty?

Common sense says it is clearly the latter.

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Filed under Central America, Connections, Development, Story Ideas

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