Sue Chu

Capstone-7
Greene
September 20, 2016

Foreign Aid Policies of United States, Japan, and Canada

International aid is a vital mean towards alleviating third world poverty and has been
increasing the progress of developing countries since World War II. Each year, billions of dollars
in donor countries go towards the improvements of society in ( more specific). The foreign aid
policies of the major donor countries are then an important factor deciding between change and
stagnation. Currently, many donor countries have policies that uses donations and resources
inefficiently and these countries should reform their policies for more effective use of
international aid.
The United States, in the volume of aid, is first on the list of major foreign aid donors and
as the leading donor its foreign aid policy (impacts, serves as a )the model for other donor
countries. The United States international aid policy, as stated by (. ) works to promote
democracy and international development along with reducing violence (Milner & Tingley). As
a major donor, one thing the Unite States does well in foreign aid is the process for the
organization and implementation of aid. For example, the USAID is an independent agency(,
USAID is then divided into different programs, such as education, environment, economic
growth, with management officers for each initiative.,) that operates under the secretary of state
and the president. The government revenues used for aid and the distribution of aid can be voted
on by congress. USAID is then divided into different programs, such as education, environment,

economic growth, with management officers for each initiative. An organized program can
ensure the better use of limited donations and resources. The United States foreign aid has one
major downfall, the use of tied aid. Tied aid is aid that is given to a recipient country that has to
be spent in the donor country. In countless case studies, tied aid almost always increase the price
of needed supplies and resource and in 2011, Rwanda led a coalition of African countries in
protest of ineffective and cost inefficient aid (Gering). Tied aid almost always contributes to the
stagnation of a recipient countrys development and economy. By providing only immediate
relief for the developing countries, it inhibits a sense of responsibility and support on the part of
recipient governments for development projects and impedes the integration of the host country
into the global economy (Stokke). Tied aid is also extremely inefficient with the distribution
process. Fifteen Studies have shown that tying aid increases the costs of goods and services by
15%-30% on average, and up to 40% for food aid, reducing the overall effectiveness of aid
flows (Tarnoff). The untying of aid could mean an estimated 30% of increase in foreign aid
given to more countries in need. The use of tied aid contributes to many controversies about
foreign aid creating the opposite effects than the intended purposes for the advancements of the
recipient countries.
Another major foreign aid donor is Japan. Post WWII, Japan slowly emerged as a global
leading power and paired with its rising GDP, the world expects Japan to be a major leader and
contributor in development. Japan is the second in position in terms of capital and voting rights
in the World Bank and International Development Association and Japans foreign aid objectives
remain largely independent of other donor interests (Rix). Its presence is mostly felt in Asia and
the Pacific where Japan is the number one donor for the majority of the countries in that area. It

uses peaceful approaches that support the recipient country in monetary funds. Based on
concepts of diplomacy and cooperation, Japan gives mutual respect to recipient countries and
believes that both the donor and recipient countries works together towards development. Japan
also has the highest percentage of untied loans, loans with low or no interest and no due dates,
which are a great relief countries in debt (Rix). Japans openness and diplomatic structure of aid
policy serves to improve many successful initiatives in recipient countries. But this aid is low
quality and purely monetary which contributes little towards the technical development of a
country. Despite this, foreign aid is underrepresented in the Japanese government and extremely
unorganized. The reason for underrepresentation and disorganization is because of the opposing
viewpoints in the Japanese political and administrative parts of the government. Foreign aid is
set up in a way where each section of the government has a little control over it and compromise
is difficult. Reason contributing to this are historical background and bureaucratic interests(Rix).
The structure of foreign aid policy causes understaffing of the foreign aid programs. Due to
understaffing, 1,690,000 million yen goes unspent each year (Rix). The Japanese government
should place a greater emphasis on foreign aid through the enhancement of aid administration
and the strengthening of representation.
Canada serves as an example of a middle power country providing international aid as a
non-imperial/colonial power. The Canadian foreign aid is a prerogative of the Cabinet and the
Prime Minister had decisive influence over it (Stokke). So, it is more structured than Japans
foreign aid policy. In Canada, the public opinion of the foreign aid are largely consistent with
the government policy which involves the international and humanitarian objective of fostering
development (Stokke). Through a survey, the citizens of Canada believe in the the philanthropic

cause for foreign aid and support the use of tied aid that benefits the donor country economically.
Utilizing the policy environment, encouragement of policy reform locally, Canada helps with
the future development of recipient countries without too much political intervention (Stokke).
Canada implements aid successfully through inter-departmental consultation and international
cooperation displaying respect for sovereignty and Canada as a non-colonial power. Having a
flexible program and the support of local people and governments can increase the chance of
success of foreign aid initiatives and programs. Slowly, the Canadian foreign aid goals are
shifting towards commercial benefits and developmental effectiveness.This is causing issues like
mismanagement and corruption with the rapid expansion of the foreign aid program in
government. But more progress has been made in with the foreign aid policies in Canada through
the fully untying of aid to developing countries.
Each one of these policies have benefits and advantages that future policies can learn
from and these highlights can be used for future programs and organizations to model off of. The
foreign aid policy in any country is not a perfect system and there should be improvements
overall with each of these individual countries as well as developmental programs and agencies.
The future impact of foreign aid depends on the changes made today.

Bibliography
1. Gering, D. (2015, July 24). Rwanda Calls to End Tied Aid from Donors. The Borgen
Project.
2. Milner, H. V., & Tingley, D. H. (2010). The political economy of US foreign aid:
American legislators and the domestic politics of aid. Economics & Politics, 22(2),
200-232.
3. Rix, A. (1989). Japan's foreign aid policy: a capacity for leadership?. Pacific Affairs,
461-475.
4. Stokke, O. (1989). Western middle powers and global poverty: the determinants of the
aid policies of Canada, Denmark, the Netherlands, Norway, and Sweden (No. 64).
Nordic Africa Institute.
5. Tarnoff, C., & Lawson, M. L. (2009, April). Foreign aid: An introduction to US
programs and policy. Library of Congress. Washington DC Congressional Research
Service.