Cutting foreign aid doesn’t help anyone, Americans included

An evidence-based review of implications for US foreign policy, global governance, and avoidable deaths.

Without US foreign aid, preventable deaths will rise worldwide

The last two months have been unprecedented in the history of foreign aid. Both the US and UK have curtailed their aid efforts significantly, as the global geopolitical landscape shifts. The Trump administration claims that USAID programs are not a valuable use of taxpayer money; however, millions of people worldwide rely on these initiatives to survive. Back-of-the-envelope estimates suggest that US aid saves at least 2.3 million lives a year, costing taxpayers approximately $103 per capita.

Take the President's Emergency Plan for AIDS Relief (PEPFAR), for instance, a HIV/AIDS treatment and prevention program, funded by US foreign aid, that has saved over 25 million lives—and brought down the cost of antiretroviral therapies in developing couuntires considerably—since its inception in 2003. In South Africa, alone, cuts to programs like PEPFAR threathen the lives of some 900,000 HIV patients.

In 2024, the majority of USAID funding was directed at humanitarian aid, with obligations estimated at $9.9 billion. The top recipients of this aid included various humanitarian crisis zones, including Ukraine, Palestine, Sudan, and Afghanistan. Prior to aid cuts, the World Food Programme was already struggling to provide food to hundreds of thousands of people in north Gaza. This is on top of the fact that experts have been warning of a shortfall in humanitarian aid for years.

Foreign aid is integral to US foreign policy

On March 10, the US Secretary of State announced that 83 percent of USAID programs have been cancelled, stating that they did not serve the US’s “core national interests.” However, cutting foreign aid will have implications for US foreign policy. Given that it finances fundamentals such as humanitarian relief and public health, countries worldwide will not seize to rely on this aid. Instead, they are likely to look elsewhere for assistance, perhaps even from China.

China already provides assistance, primarily in the form of loans, to each of the top USAID recipient countries listed above, and has a long established history funding projects in Africa. This loss of soft power may be detrimental to future US foreign policy, a fact echoed by American sentiment on Chinese aid.

NYT headline from Anthony Blinken’s 2021 visit to Nigeria

Suffice to say, aid has its flaws, but eliminating its 63 year old legacy is not going to help anyone. Research finds that aid has been effective in achieving basic outcomes in recipient countries such as enhancing food security and access to water and sanitation infrastructure, as well as more complex ones like public sentiment. For example, following the 2005 earthquake in Northern Pakistan, the on-the-ground presence of foreign aid improved local attitudes towards foreigners. Specifically, trust in foreigners decreased by 6 percentage points for every 10 km distance from the fault-line, indirectly achieving the aim of US foreign policy to win “hearts and minds.” Aid also has the ability to improve economic growth, but only in countries with existing good governance with good fiscal, monetary, and trade policies.

Aid has not been the most effective at improving institutions

Research demonstrates that aid is typically targeted at richer parts of developing countries, likely due to the difficulty of implementation in poorer or more remote areas. This is in line with a large-scale study of 126 countries, which reveals that economic development is concentrated in regions where current political leaders are born. Aid tends to fuel this regional favoritism, but only in countries with weak institutions.

However, weakly governed countries are also less likely to receive aid directly from donors. In these settings, donors are more likely to channel aid through non-state actors such as NGOs and multilateral institutions. Bypassing the state can also help alleviate concerns of leakage, as estimates suggest that around 7.5 percent of foreign aid is captured by recipient country elites.

Though much of aid is directed at improving governance in developing countries, this has proven notoriously difficult. In Sierra Leone, for instance, a community-driven development program had positive short-run effects on public goods and economic outcomes, but was unable to improve local institutions. Similarly, in Ghana, a participatory aid program increased participation in local governance and reallocation of resources, but at the cost of socioeconomic well-being.

More coordinated efforts by single donors, however, can help improve governance via reducing corruption significantly. This is demonstrated by a study in Afghanistan, which found that the simultaneous operation of multiple aid agencies in one setting increases corruption.

Perhaps it is too much to expect aid alone to improve institutions in developing countries—the key to achieving this more likely relies on better understanding what drives civil servants. A study in Malawi, for instance, provided 460 elected politicians with information about foreign aid projects in local schools. These politicians were then 18 percent less likely to target school with existing aid. This excess public spending was then allocated to other development programs, suggesting that aid can have large displacement effects on public spending. Donor agencies must take this into consideration when determining the provisions of aid agreements.

The future of foreign aid is bleak but cannot be forgotten

Though the immediate impacts of aid cuts are being felt by recipients, in the long run they could prove devastating to donors as well. From a purely economic view, aid is an investment—not only in resources but diplomacy as well. This was made clear in, former US Secretary of State, Anthony Blinken’s address during a 2021 visit to Nigeria, in which he warned of the predatory nature of Chinese aid.

Aid dependency is a real issue, but is not the fault of individuals that rely on it. To reiterate, over half of this assistance goes towards humanitarian and health aid, in that order. As long as these funds remain unsupplemented, we will see a surge in avoidabe deaths worldwide: from children in Gaza no longer receiving supplies of powdered milk to patients in Pakistan unable to receive early tuberculosis diagnoses. Sooner or later, someone will have to step in to fill the shortfall.