A 'stingy' US? Hardly

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The other day, a United Nations official accused the United States of being "stingy" in terms of aid to tsunami victims in South Asia. After criticism from the State Department, the official clarified his position: Americans are not being stingy in helping tsunami victims, only stingy in terms of overall foreign aid as compared with other countries.

This is a familiar attack, which comes up annually when the foreign aid appropriations bill is before Congress. But let's look at the facts. According to the Organization for Economic Cooperation and Development in 2003, the world's major countries gave a total $108.5 billion in foreign aid. Of this, the US contributed $37.8 billion, or 35 percent of the total. The next largest foreign aid contributor was the Netherlands, which gave $12.2 billion, following two years in which it was actually a net recipient of foreign aid.

The claim of stinginess, however, comes from a different calculation - foreign aid as a share of national income. In 2003, US foreign aid came to just 0.34 percent, well below the world-leading Dutch at 2.44 percent. Other big contributors are Ireland (1.83 percent), Norway (1.49 percent), and Switzerland (1.09 percent). The US would have to triple foreign aid just to reach the lowest of these contributors.

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The first thing one notices when looking at the big foreign aid contributors is that they all spend very little on national defense. According to the Stockholm International Peace Research Institute, in 2002, the Netherlands spent just 1.6 percent of its gross domestic product (GDP) on defense. Norway spent 2.1 percent, Switzerland spent 1.1 percent, and Ireland spent a piddling 0.7 percent. By contrast, the US spent 3.4 percent - and this was before the Iraq war. It's easy to be generous with foreign aid when another country is essentially providing your defense free of charge.

Another thing one notices is that the foreign-aid data only reflect "official" (i.e., government) aid. The data are sketchy, but by all accounts Americans are far more generous in terms of charitable contributions than the citizens of any other country.

A 1991 study found Britain to have the second-largest percentage of private charitable giving. But in 2003, charitable giving amounted to £8.6 billion, or 0.8 percent of GDP, in Britain, according to the Charities Aid Foundation, compared with $241 billion, or 2.2 percent of GDP, in the US, according to the American Association of Fundraising Counsel.

But even this estimate of charitable giving by Americans is low because it counts only cash contributions and omits volunteer work.

In the area of international aid, the official data also exclude private transfers, such as remittances by foreign workers in the US. According to the Inter-American Development Bank, remittances to Latin America alone amounted to $38 billion in 2003 - more than all official assistance combined. And $31 billion of that came from the US. In some countries, foreign remittances came to more than 10 percent of GDP, thus having a significant impact on economic growth and poverty alleviation.

Carol Adelman, a former US Agency for International Development official, attempted to calculate a total of all private foreign aid in 2000 in a 2003 Foreign Affairs magazine article. She found that private foreign aid greatly exceeded that provided by the US government. Official aid came to $22.6 billion that year, but private aid came to $35.1 billion, including $18 billion in remittances, $6.6 billion from private voluntary organizations, $3.4 billion in aid from churches, $3 billion from foundations, $2.8 from corporations, and $1.3 billion from universities.

But even this understates the extent to which Americans help developing countries, because it excludes private investment and trade. According to the Institute of International Finance, in 2003, Americans invested $124 billion in emerging market economies, three-fourths in direct investment such as plant and equipment, and the rest in stocks and bonds.

Americans also buy a considerable amount of goods from developing countries. This year, about a third of all our imports will come from developing countries, providing jobs and incomes for millions of poor people. This is probably less than most protectionists think. The bulk of our imports still come from industrialized countries such as Canada, Japan, and Germany.

In short, the charge of stinginess is unfounded. The United States carries much of the world on its back, providing other nations with security, aid, and much of their investment and income. It also pays for a fourth of all the salaries of UN bureaucrats.

Bruce Bartlett is a senior fellow with the National Center for Policy Analysis in Dallas. © 2004 Creators Syndicate, Inc.

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