Agency for International Development, U.S. Summary

  • Last updated on November 10, 2022

The primary purpose of USAID is to implement long-term overseas economic and development assistance. The agency also provides humanitarian relief following disasters and seeks to support the democratization of other nations.

The United States Agency for International Development (USAID) is an independent federal agency, although the secretary of state broadly oversees its work. USAID is responsible for supporting long-term economic growth in developing countries through projects in agriculture, democracy and governance, economic growth, natural-resources management, education and training, and health. In 2008, USAID awarded about $4 billion in federal contracts and grants to American businesses. This money allowed the businesses to administer technical assistance projects and to purchase and distribute commodities and equipment. USAID works through nearly four thousand American companies and nongovernmental organizations (NGOs).Agency for International Development, U.S.

History of U.S. Foreign Aid and USAID

USAID traces its roots to various attempts by the U.S. Congress to address the needs of other nations for military, economic, political, and social stability. The first attempt was the 1948 Marshall Plan, which aided in the reconstruction of Europe after World War II. Successive attempts to create a U.S. international development organization included the Mutual Security Agency in 1951, the Foreign Operations Administration in 1953, the International Cooperation Administration and the Food for Peace program in 1954, and the Development Loan Fund in 1957.

Rwandan Agnes Mukanshijo is participating in a USAID income-generation project. She is growing geraniums in the hope of selling their oil to the perfume industry.


Support by the American public for foreign aid had lagged dramatically by the late 1950’s, owing in part to the 1958 publication of The Ugly American by Eugene Burdick and William Lederer. This novel described arrogant American aid workers in Southeast Asia, and it negatively influenced public perception of aid workers and diplomats generally. This and other issues prompted Congress and the administration of President Dwight D. Eisenhower to refocus U.S. aid toward developing nations, and the subject became important in the 1960 U.S. presidential campaign.

John F. Kennedy, John F.Kennedy became president in 1961 with the promise to repair America’s image in the world, and he made foreign assistance a high priority. Kennedy said that the U.S. response to the world’s poorest nations was inadequate and that it was vitally important that the United States and other industrialized nations help less developed nations become economically self-sufficient.

Spurred by the presidential campaign, on September 4, 1961, Congress passed the Foreign Assistance Act of 1961Foreign Assistance Act, which called for a separation of military and nonmilitary foreign aid programs and the creation of an agency to administer economic assistance programs. One result of the act was the establishment of USAID on November 3, 1961. Congress folded into USAID various operations of the International Cooperation Agency, the Development Loan Fund, the Export-Import Bank of the United States, and the Food for Peace program.

Foreign Aid Philosophy

The American economist and political theorist Walt Whitman Rostow, Walt WhitmanRostow had an influential role in determining how USAID would carry out its work. Rostow was a strong proponent of capitalism and free enterprise and a steadfast opponent of communism. One of the first USAID programs was the 1961 Alliance for ProgressAlliance for Progress, which sought better economic cooperation between the nations of North America and South America. The charter that established the alliance called for, among other things, an annual increase in per capita income of 2.5 percent, the elimination of adult illiteracy by 1970, price stability, land reforms, and equitable income distribution.

Early USAID projects in Africa were designed to provide stability to nations that had newly declared their independence from European colonizers. In Asia, projects were primarily designed to counteract the spread of communism and the influence of the People’s Republic of China.

Reorganizing Foreign Aid Programs

By the early 1970’s, Americans had again become skeptical of foreign aid, in part as a result of disdain for the Vietnam War. Up until then, USAID had managed many large projects that involved building roads, bridges, and schools in developing nations, and it had made direct donations of money and goods to foreign countries. In 1973, the House of Representatives amended the Foreign Assistance Act to stipulate that foreign aid should focus on promoting basic human needs, such as education, basic health maintenance, and agriculture.

An attempt was made to reorganize American foreign assistance projects in 1979, when the International Development Cooperation Agency was established and some programs under the Economic Support Fund program were delegated to the USAID director. Another attempt was made in 1988, when the House Committee on Foreign Affairs sought completely to overhaul the 1961 Foreign Assistance Act. The bill died in committee, however.

The role of USAID in administering U.S. foreign aid was reexamined in 1991, when the administration of President George H. W. Bush sought to rewrite the Foreign Assistance Act. That attempt also failed, when some members of Congress complained that the administration was seeking too much discretionary authority in directing foreign aid. Another attempt to rewrite the Foreign Assistance Act occurred in 1994, during the administration of President Bill Clinton, but the bill was not introduced in the Senate, nor did it pass through the appropriate committees in the House of Representatives.

U.S. foreign aid was again the subject of reform in 2003, when President George W. Bush established the Millennium Challenge CorporationMillennium Challenge Corporation to provide aid to the world’s poorest countries. The mission of the corporation was to reduce global poverty by promoting sustainable economic growth in countries committed to adopting significant economic and political reforms. In 2008, USAID provided economic and other developmental assistance to 120 countries, with a budget of approximately $17.6 billion.

Further Reading
  • Berrios, Rubén. Contracting for Development: The Role of For-Profit Contractors in U.S. Foreign Development Assistance. Westport, Conn.: Praeger, 2000. Contains an overview of the complexities of the consulting market in international development and explains how for-profit firms can do business with USAID.
  • Graham, Carol, et al. The Other War: Global Poverty and the Millennium Challenge Account. Washington, D.C.: Brookings Institution Press, 2003. Explains the Millennium Challenge Account and cautions against the dangers of creating another foreign aid agency.
  • Lancaster, Carol, and Ann Van Dusen. Organizing U.S. Foreign Aid: Confronting the Challenges of the Twenty-first Century. Washington, D.C.: Brookings Institution Press, 2005. Argues that the U.S. foreign aid program is in disarray and offers advice for making it more effective.
  • United States Agency for International Development. USAID Primer: What We Do and How We Do It. Washington, D.C.: Author, 2006. A publication by the agency itself that offers a practical overview of how USAID operates and where it works.

Export-Import Bank of the United States

Government spending

International economics and trade

Marshall Plan

Categories: History