Senate Committee Examines US Economic Assistance, Asks How to Get It Right

July 13, 2016

US foreign aid can take many forms, from disaster assistance to democracy support. And historically, the reasons for dispensing it have run the gamut from humanitarian need to political priority. The Senate Foreign Relations Committee recently took an interest in one key form of foreign aid—US economic assistance—convening a hearing to investigate the topic. We had high hopes going in and were pleased to hear all three of the hearing’s witnesses—Jeffrey Herbst, Alicia Phillips Mandaville, and CGD’s Todd Moss—champion the use of rigorous analysis, evaluation, and selectivity in aid to promote economic opportunity in developing countries.

The hearing covered a lot of ground that, in an election year, has implications for the next presidential administration as much as the current one. But emerging from witnesses’ statements and members’ lines of questioning were a number of common themes. Here’s what we took from the back-and-forth:

Analysis and coordination are a starting point for economic growth

Aid is most likely to be effective when it’s appropriately targeted and responds to the needs and wants of recipient countries. US aid agencies should work closely with partner countries and use analytical tools like cost-benefit analysis and growth diagnostics to inform investment decisions. After all, as Alicia Philips Mandaville noted, broad-based investment is about more than sustaining developing country growth—it’s about cultivating an enabling environment in which such growth can even take place.

Using these diagnostics to determine priorities and select the tools and instruments up to the task (hint: it’s not always about aid) can help ensure projects are tailored to achieve desired outcomes. Development finance, as Todd Moss explained, is well suited to promoting market solutions to poverty and insecurity. And if committee members’ comments were any indication, they, like us, believe it will be a big part of the future of US development policy.

Evaluation is critical for maximizing development impact

Diagnosing country needs, of course, is a separate matter from evaluating foreign aid programs. To ensure that these programs are accomplishing the goal of promoting economic growth, they must be subject to rigorous evaluations based on good metrics and a sound process for assessing what works and what doesn’t. Our colleagues have written before about how USAID would benefit from a top-to-bottom review of its programs—one that uncovers program strengths and weaknesses and, in turn, helps the agency adapt its capabilities and resources to the trends reshaping global development today.

Selectivity is a useful principle for guiding bilateral relationships

Discovering what works and what doesn’t gives rise to a tricky question: how does the United States manage its bilateral relationships with recipient countries when those relationships have evolved beyond existing aid programs? To be sure, ineffectual programs and disinterested governments should not receive taxpayer dollars indefinitely. But the answer is not to take a hacksaw to existing aid programs. A more prudent approach is for the United States, on the front end, to be selective in the countries and sectors it provides aid to and, on the back end, to adjust flexibilities and directives or encourage country reforms based on (you guessed it!) rigorous analysis and evaluation.

In previous posts, we’ve used “timely,” “thoughtful,” and “bipartisan” to describe many of the committee’s recent hearings. Following this latest hearing, we might also add “engaged” to the list, as six members participated in a robust discussion on how the United States can leverage its development toolkit to promote growth abroad. With just over six months to go before a new US president takes office, an engaged committee is exactly what we want to see.


CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.