CGD Transitional Memos Point White House To Foreign Aid Issues

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SEATTLE — In light of the recent election, scholars from the Center for Global Development (CGD) have drafted transitional memos for incoming president-elect Donald Trump.

The memos are designed to point the new administration to global issues that should be addressed over the next four years. On the economic front, these proposals address effective use of USAID funding, immigration and the reinvigoration of multilateral institutions.

The CGD’s Rethinking U.S. Development Policy, Global Health and Gender teams drafted these memos before the election as part of a bipartisan approach to foreign aid. The goal is to position the United States as a power player in global development in a time of transition.

Per the report, the researchers “present concrete, practical policy proposals that will promote growth and reduce poverty abroad. Each can make a difference at virtually no incremental cost to U.S. taxpayers. Together, they can help secure America’s preeminence as a development and security power and partner.”

The capacity in which developing nations need foreign aid from the U.S. continues to change as countries rise out of extreme poverty. Aid strategy, however, has remained largely the same.

According to CGD experts, Ben Leo and Todd Moss, “U.S. efforts have not been deployed in an efficient or strategic manner because authorities are outdated, staff resources are insufficient and tools are dispersed across multiple agencies.”

Foreign aid funding in the U.S. still hinges on the donor-recipient relationship. European developmental finance institutions, on the other hand, provide more nuanced services to recipient nations. Such services include technical aid, integrated business finance and debt coverage because many countries now need strategic partners.

At this point, the majority of the U.S. aid money is spent on health and education initiatives. To build strategic partnerships, CGD recommends that the incoming administration direct aid to infrastructure, frontier markets and the development of financial policy. In order to do so, organisations like the Millennium Challenge Corporation (MCC) must be restructured through congressional funding instead of relying on the current grant-based model.

Another aid strategy is the use of immigration as a tool for development. CGD experts argue that immigration could help struggling nations in a way that doesn’t stretch the foreign aid budget.

The key here is the use of remittances. According to Michael Clemens and Nabil Hashmi, “Remittances sent from the United States to Latin America and the Caribbean ($32 billion per year) are more than five times the combined U.S. economic and military assistance to the same countries (less than $6 billion per year).”

Remittances account for $500 billion per year in foreign aid worldwide, whereas funding from all donor countries combined only accounts for $130 billion. When immigrants start new lives in countries like the U.S., they send money home. This system is, of course, predicated on the development of new migration legislation.

The World Trade Organization (WTO) is designed to defend vulnerable nations against predatory trade practices, but recent regional trade trends are putting those nations at risk with discriminatory deals. To address the trend, it is recommended that the U.S. leaders carry out the following procedures:

  • Participate in restructuring the WTO.
  • Ensure regional trade deals do not operate at the expense of poorer nations.
  • Promote unilateral deals by importing more goods from the poorest countries.
  • Create a cohesive governing body to address global development.
  • Reevaluate the use of USAID.

USAID evaluation is part of a larger recommendation to lead foreign aid spending away from the donor-recipient model and toward strategic partnerships. Foreign assistance must become agile as countries climb the developmental ladder.

Since 1995, there has been a 33 percent decrease in low-income and lower-middle-income countries worldwide. As these countries leave extreme poverty behind, their needs change. Instead of focusing solely on health and basic sustenance, foreign aid money can be more effectively spent on infrastructure, policy development and economic reform in countries that can now better support their people.

As times change, so do the needs of countries that thrive with support from world’s most influential leaders. The decrease of extremely impoverished countries worldwide denotes that foreign aid operations are integral to global development.

By reevaluating the roles of aid institutions and pivoting to address the problems presented in these transitional memos, the U.S. can continue playing an important part in ending global poverty.

Madeline Distasio

Photo: Flickr

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