U.S. foreign assistance is defined as “aid given by the United States to other countries to support global peace, security, and development efforts, and provide humanitarian relief during times of crisis.” In 2019, the United States disbursed a total of $29 billion in foreign aid across all sectors to over 200 countries or geographical areas, amounting to 1% of its total budget. Within each category are many specific sectors, such as agriculture and food security, environment and climate change, gender equality, education, global health and many others. These sectors may overlap, and improvements in one area often lead to improvements in other areas as well, as many of these issues interconnect. Below are five types of foreign aid.
5 Types of Foreign Aid
- Military Aid: Military aid is any type of aid given to strengthen security measures within a country. An estimated 33% of total U.S. foreign aid is dedicated to the military sector. In 2018, $33.1 billion went toward military aid. The country that receives the largest amount of military aid from the U.S. is Afghanistan, which received about $5 billion in military aid alone. The country also received $953 million for developmental and other purposes, according to USAID. Contributing to the financial security of other countries may reduce conflict between nations and improve global security as a result. Military aid allows for nations to build relationships with allies, improve democracy, establish foreign military bases or potentially support counterterrorism efforts in other countries.
- Economic Aid: Economic aid is a general category that describes transfers that support the economies of recipient countries. The donor can either be an independent country or a large international organization. Aid of this type can be in the form of loans, grants or credits. The most common type of economic aid is Official Development Assistance (ODA), in which money goes toward the development of the recipient’s economy. The U.S. dedicated 0.16% of its total Gross National Income (GNI) to ODA in 2018, according to the OECD.
- Humanitarian Aid: The primary purpose of humanitarian aid is to improve the social wellbeing and the living situations for people in the recipient country. This can take place in response to a natural disaster, in which emergency supplies like first aid, water, food and clothing go to a country in need. Organizations may also send services such as healthcare volunteers to help with recovery efforts. In 2018, the U.S. disbursed $6.9 billion in emergency response assistance to foreign countries. For example, the U.S. dedicated about $700 million to Syria during the COVID-19 pandemic, to assist with emergency food, water, sanitation and medical care for vulnerable populations.
- Bilateral Aid: The most simple definition of bilateral aid is when a single country gives aid to another. This is a common occurrence within many countries, in which a developed country may transfer resources to a developing country. The donor country may introduce restrictions in terms of how the other country uses this assistance, such as by designating it to a specific sector. A donor country may offer funding through an international organization, but as long as “decisions regarding fund disposal are on balance taken at the donor’s discretion,” then it is still considered to be bilateral.
- Multilateral Aid: International organizations disperse multilateral aid, rather than a single country. These organizations, such as the World Bank, the United Nations and around 200 other groups, receive their funding from multiple nations and governments. They disburse that money to countries so they can use it for improvements in a variety of sectors.
Other types of foreign aid include “multi-bi” or “non-core” aid, which donor countries give to international organizations to disperse for a specific reason or to a specific area. Despite having separate categories and sectors, different types of foreign aid can influence one another, and no one type is most important.
– Sydney Bazilian