Foreign aid is the ‘soft’ power of a country vis-a-vis the ‘hard’ power of military force. Think blankets with ‘from the USA’ during earthquake relief in Kashmir instead of Abrams tanks in Kandahar. Some also goes to building infrastructure and increasing the standard of living for those in emerging countries. If you boost the income, you boost the buying power and thus boost the total possible market size.
This chart, which supports this article, from the New York Times is simple but effective. Not only does it show the decreasing amount spent in terms of absolute dollars, but also as part of the overall budget. After all, one can, in theory receive a smaller (by angle) slice of pie, but if the size of the pie increases, you net more pie. And who doesn’t want more pie?
Although this is the Republican-led House of Representatives, so the pie is being made much smaller. So…
Interestingly, in Britain, where the right/centre-right Conservatives are in power (with the liberal Liberal Democrats), the government of David Cameron is also cutting spending. But there, areas like defence spending are falling under the axe. One of only two, if I recall correctly, areas not being cut is foreign aid spending. (The other is healthcare.) Furthermore, if I recall, Britain, despite its austerity drive, is actually increasing spending on foreign aid. Maybe the Brits just will have new markets for all that British engineering…
