The United States obviously plays a large economic, political and military role in the world today. But, do we also set the bar for international philanthropy (PDF)?

Since 2002, the OECD and the U.N. Millennium Project have attempted to persuade developed nations to commit 0.7 percent of their gross national income (GNI) to developing nations each year. As of 2006, not many countries are meeting that goal. The United States falls far short. In 2006, worldwide Official Development Assistance (ODA) amounted to $94.6 billion. U.S. ODA was $23.5 billion, or 24.8% of the world total.

United States ODA totals only 0.21 percent of America’s GNI.

U.S. ODA includes the budget for USAID, the Peace Corps, refugee and humanitarian programs, contributions to multilateral agencies, among others. Approximately 45 percent of U.S. ODA was given to the Middle East and North Africa, 24 percent to sub-Saharan Africa, and 13 percent to Latin America and the Caribbean.

Iraq and Afghanistan are the largest recipients of U.S. government aid, but less than 30 percent of U.S. ODA went to countries that fall under aid spending for national security purposes. U.S. government aid to sub-Saharan Africa in 2006 reached a record high $5.6 billion as a result of significantly increased assistance for hiv/aids, malaria, and education.

Official Development Assistance doesn’t tell the whole story however, especially when it comes to United States. In 2006, total financial flows from developed to developing countries amounted to $426 billion. As mentioned, worldwide ODA accounted for only $94.6 billion of that amount. The remainder came from private investment and philanthropy ($209 billion) and home-country remittances ($122 billion). Factoring in these flows and the United States takes its accustomed place towards to top of the table.

The break down of U.S. outflows is as follows:

Private Capital Flows:

In 2006, the United States initiated $62.3 billion in private capital flows to the developing world. This amounted to one-third of all international private capital flows to developing countries.

Private capital flows are essentially investments and lending at market terms. As the Hudson Institute report puts it, “it is this capital that creates jobs, raises productivity, transfers skills and technology, and boosts export industries in developing countries—what economists see as the critical factors in creating growth and prosperity.”

American Private Giving:

But American international development aid doesn’t consist only of capitalism and governmental donations. Far from it.

Private and voluntary organizations (PVOs) in the United States gave approximately $10.6 billion to developing countries in 2006.

Religious Organizations in the United States gave approximately $8.8 Billion to developing countries in 2006.

Non-profit Foundations in the United States gave approximately $4.0 billion to developing countries in 2006.

Corporations in the United States gave approximately $5.5 Billion to developing countries in 2006.

Colleges, Universities and other foundations in the United States gave approximately $3.7 billion to students from developing countries in 2006.

In the 2006-2007 academic year, 60 percent of international students came from the developing world. Of this group, 61 percent came from Asia, 18 percent from Latin America, 10 percent from Africa, 5 percent from the Middle East, 5 percent from Europe, and less than 1 percent from Oceania

Volunteers in the United States gave approximately $2.2 billion worth of time in 2006 volunteering for development assistance causes abroad and for international assistance organizations in the U.S. It is estimated that 26.7 percent of Americans volunteered in some capacity in 2006. Among these 61.2 million volunteers, 8.1 billion volunteer hours were dedicated to domestic and international volunteerism.

Remittances

But its a form of financial assistance that most people don’t even contemplate to be financial assistance that might have the most impact in the developing world: remittances from migrants to the developed world. The approximately $20 billion that Mexican immigrants in the United States send home each year amounts to 2.5% of Mexico’s GDP.

Overall, developing countries received $221 billion in remittances in 2006. Developing countries that received the most remittances were: India ($25.7 billion); Mexico ($24.7 billion); China ($23.3 billion), and the Philippines ($14.9 billion).

The United States sent far and away the most remittances to the developing world, totaling $71.5 billion. Countries in Latin America and the Caribbean received $45.3. The Philippines ($7.6 billion); India ($4.8 billion) and China ($4.5 billion) also received significant remittances from the United States.

Remittances from Europe totaled $36.8 billion in 2006. German remittances totaled $6.8 billion, mostly to recipients in Serbia and Montenegro, Lebanon, and Turkey. Spain sent an estimated $4.7 billion in remittances to Latin America.

Remittances from Canada totaled $6.8 billion. Japan sent $3.7 billion and Australia remitted $3.2 billion.

Capitalism, Remittances and Democracy by Christian Schuster addresses the affect that remittances to Mexico have on democracy in Mexico.

Since the majority of remittances are sent to support family members in migrants’ home countries, they tend to rise whenever GDP per capita falls. During the so-called Tequila crisis in 1994, when the peso was drastically devalued, for instance, the number of remittance recipients in Mexico increased from 665,000 to over 1 million within one year. The resulting stability—similar to economic growth and inequality reduction—can contribute to democratic regime durability.

In 2006, remittances were Mexico’s second-largest foreign exchange inflow, equal in value to 70 percent of the country’s oil exports. In contrast to exports of goods, however, exporting labor does not require building up infrastructure that helps develop productive capacity. As labor exports nonetheless lead to remittances and thus foreign exchange receipts, the pressure to undertake reforms needed for export-led growth is attenuated.

At the same time, remittances may weaken the reliance of households on political patronage, thus contributing to electoral victories by opposition parties. Those municipalities which elected opposition parties between 2000 and 2002, for instance, received on average over one-third more in remittances per household than those which remained loyal to the state party, PRI. Elections are a key element of vertical accountability, ensuring the responsiveness of the government to the demands of its citizens. They were vitally important to Mexico’s democratization as the country’s transition came in large part through the ballot box.

While much smaller in absolute terms than family remittances, remittances from hometown associations have a huge impact on communities. These funds represent on average more than 20 percent of the municipal budget allocated to public works in the recipient communities, in part because they are highly concentrated—nearly two-thirds go to the four states Zacatecas, Guanajuato, Jalisco and Michoacán. To encourage this flow, the Mexican government co-finances collective remittances through the “3-for-1 program,” which federal, state and municipal governments each contribute one dollar for every dollar raised by HTAs. This type of public-private partnerships can improve governance in recipient communities by providing a platform for negotiations between migrants, communities and the three layers of government. Mexican migrants, exposed to an established democracy in the U.S., are thought to transmit and demand democratic values and behavior, and this flow of ideas, termed “social remittances,” helps promote a culture of accountability and transparency in their home country.

Conclusion

I’m not really sure I have a conclusion at this point. The numbers seem to indicate that we’re doing alright in so far as giving back to the world. They would also seem to reinforce my preference for private solutions over governmental ones. Somewhat surprisingly, it would also seem to indicate that comprehensive immigration reform would do more for the developing world than any sort of expansion of US foreign aid.

I don’t know. What do you think?

Fun Facts

• American private and voluntary organizations alone gave more aid to the developing world in 2006 than Germany, the Netherlands, and Sweden each gave in government aid.
• Universities and colleges in the U.S. provide more in scholarships and stipends to the developing world than half of all the developed country donors gave in official assistance individually in 2006
• Remittance outflows from the United States to the developing world totaled $71.5 billion in 2006, or 37 percent of total U.S. economic engagement with developing countries. They exceed any other donor country’s government aid program and are equivalent to 68 percent of total ODA from all developed countries.