“This is a large place with a lot of nations, and no question, everything is not perfect,” Mr. Bush said during a brief visit to Benin before arriving Saturday evening here in the capital of Tanzania. “On the other hand, there’s a lot of great success stories, and the United States is pleased to be involved with those success stories.”
Mr. Bush’s short stay in Benin — just three hours, enough time for an airport news conference with President Thomas Yayi Boni and for Air Force One to refuel — made him the first American president to visit that tiny West African nation. It was on Mr. Bush’s itinerary because it represents the kind of success he wants to highlight — how American aid has helped fight poverty and disease in some of the world’s poorest nations.
The administration considers its aid efforts to be one of its successes. In an interview with the Council on Foreign Relations, Steve Radelet of the Center for Global Development offers a mostly positive assessment of the administration's efforts. The centerpiece is the Millennium Challenge Corporation, a program Bush announced in 2002 - Radelet says:
The Millennium Challenge Corporation (MCC) has evolved into what I think is an imaginative and creative new way to think about foreign assistance. It has done many things well, in terms of how it is thinking about foreign assistance, but it has also been quite slow in getting off the ground and dispersing money. What it has done well is recognizing that not all countries are the same and that we should deliver assistance differently to different countries. It separates out those that are better governed, countries that have made choices toward democracy, toward better governance, and toward better health and education policies. It gives those countries the responsibility to set their priorities and design the programs. This is a huge change and a huge step forward in how we think about foreign assistance, to actually give the recipient countries much more responsibility....
They’ve been very slow to disperse the funds so there haven’t been huge benefits on the ground yet. The African countries that have qualified and have signed compacts include Benin, Cape Verde, Ghana, Lesotho, Madagascar, Mali, Morocco, Mozambique. Those are the African countries that have signed compacts for $3.8 billion, which are beginning to be implemented, but it’s still very early in the day. So far, the MCC has only dispersed $150 million worldwide. So, their disbursements have been slow. It still remains to be seen if the great promise of the MCC turns into reality in terms of real benefits for people on the ground.
The structure of the program represents the growing appreciation by economists (and others) of the importance of institutional factors like governance for development.
Since most people do not realize how small a fraction of our income is spent on foreign aid, it is useful to put it in context: According to the OECD, US "Official Development Assistance" was $23.5 billion in 2006. That's a large amount of money, but it is 0.18% of Gross National Income (aka GNP) and less than 0.9% of federal budget outlays - that is, less than one cent from each tax dollar. This chart breaks down American aid by region and category. Although the US is the largest giver by amount, most rich countries give a higher percentage of their incomes in development aid. In percentage terms, Sweden is the most generous (1.02%), followed by Luxembourg and Norway (both 0.89%). In dollar terms, Britain is #2 at $12.5 bn, followed by Japan at $11.2 bn.
But does it do any good? That is the subject of sometimes heated debate. A good starting point on this issue is Nicholas Kristof's review article in the New York Review of Books. Kristof, who is a NY Times columnist, will be speaking at Miami on Mar. 4.