AboutMax Kimball Expertise I'll be glad to answer any question related to US politics, regarding domestic or international issues.
Experience I've studied US history and politics for nearly 20 years. I'm currently also volunteering in the American, European, and Medieval history categories.
Expert: Max Kimball Date: 11/25/2007 Subject: foreign policys
Question Please explain the foreign aid policy of the USA. Is it true that most if not all foreign aid grant money sent to a foreign country has to be spent on American made goods? Thank you.
Answer Hi Bob,
I'll be glad to help with your question.
The US provides foreign aid for a variety of reasons, including strengthening security ties, enhancing the recipients' economy, and assisting with health concerns. Israel and Egypt receive most US foreign aid, aside from Iraq.
The US gives more than other countries in absolute dollars, but less than most industrialized countries as a proportion of its GDP.
While it is not true that American aid conditioned on it being spent on American goods, it is true that many recipients do spend the assistance money with US companies. For example, Israel's and Egypt's military use American-made aircraft and other technology, which they can afford partly because of US aid. Similarly, when American aid is sent to improve a country's health, some of that money will surely be spent with American-made drug companies.
One of the premises of the Marshall Plan, which provided massive economic aid to Europe in the wake of WWII, was that the money sent to Europe wouldn't just benefit European economies directly, but also would improve the American economy, since a lot of the money would be spent with American companies. So, economic aid as an indirect stimulus to American companies is not a concealed function. However, in most cases that is not the primary purpose of it. If it was, then more would be spent.
