The History of Grants: Part III - The Influence of Grants on International Development

Jun 25, 2025 10:00:00 AM / by Mari Crocitto

The History of Grants- Part III- The Influence of Grants on International Development

The United States has a long history of being a major contributor of foreign aid. In 2022, 86% of the United States’ foreign aid was allocated to economic support, while 14% went to military support. Ukraine, Israel, Ethiopia, Afghanistan, and Yemen were the top five nations to receive funding that year. (Haines, 2024). As of 2024, the United States remained the largest donor of governmental humanitarian aid, followed by the European Commission, Sweden, Germany, the United Kingdom, Japan, France, Switzerland, the Netherlands, and Norway (Donare, 2024).

The United States’ modern influence around the world can be attributed to its provisions towards international aid and development, weaving lasting allyship along with its assistance to vulnerable nations. 

IMPACTS OF AID ON THE INTERNATIONAL SCALE: SPECIFIC INDUSTRIES TO LOW- AND MIDDLE-INCOME NATIONS

As the United States developed into a political hegemony in the 20th and 21st centuries, it is important to recognize three major industries that have benefited low- and middle-income countries: education, infrastructure, and health.

Education

U.S. foreign assistance has always prioritized education as a key focus sector. Access to a free, quality education is a right that the general public are entitled to have worldwide. In the fiscal year of 2019, agencies that implemented the highest percentage of educational programs included USAID, the Peace Corps, the Millennium Challenge Corporation (MCC), the Inter-American Foundation, the U.S. African Development Foundation, and the Departments of State, the Interior, and the Army. The Peace Corps, MCC, and USAID would be responsible for over 96% of all education assistance funding (Morgenstern, 2021). Sadly, many governments of developing nations lack the political will or financial resources to meet their citizens’ educational needs and may require parents with low incomes to band together and pay the heavy burden of school fees and other user payments to ensure that their children receive a quality education (Hillman and Jenkner, 2004). Education can also be overlooked in favor of more “vocally” pressing challenges, including the COVID-19 pandemic, high inflation rates, climate change, war, and increased indebtedness in emerging markets (Runde, Bandura, and McLean, 2023).

Boosting the importance of education can ultimately uplift the local community. The Global Partnership for Education (GPE) revealed evidence that lack of investment in education is linked to slower economic growth and reduced long-term stability, as well as reveal that an estimated 263 million boys and girls are not going to school and those in school are not receiving quality education to progress in life (GPE, 2017). Development banks, international organizations, donor governments, and philanthropists, aside from national governments, should support foundational development in low- and middle-income nations through coordinated investment in their communities on the foundational level (GPE, 2017). The UN Trade and Development (UNCTAD) further highlights sustainable development goal (SDG) indicators relating to education and research within low- and middle-income countries: 

  • Raising education completion rates;
  • Providing access to early childhood care and development;
  • Ensuring all children and young people can read and are proficient in basic math;
  • Bolstering scientific research to advance technological capabilities in every nation, 
  • Promoting innovation and boosting funding for research and development, and increasing the number of workers in these areas.
    (UNCTAD)

Birte Snilstveit and others have studied the impact of education programs on learning and school participation in low- and middle-income countries: 87 from Latin America & the Caribbean, 59 from Sub-Saharan Africa, and 51 from South Asia. Their findings revealed that cash transfers had the largest and most consistent positive impacts on increasing school enrollment and completion rates, and structured pedagogy programmes had the largest and most consistent positive impacts on improving learning outcomes. Alternatively, school-based management programs, programs providing education materials, and computer-assisted learning had little to even negative impacts on learning outcomes (Snilstveit et al., 2024).

Infrastructure

To build or rebuild structures to ensure the safety, protection, and security of communities in low- and middle-income countries is also critical. In October 2023, the United States pledged to raise over $200 billion in the next five years for the Partnership for Global Infrastructure and Investment (PGI) to compete with China’s Belt and Road Initiative. Other G7 members pledged to raise $400 billion by 2027 (Lipin, 2023). In May 2024, over 68 countries received investments towards infrastructure projects–322 in total–in 2023, an increase from 260 in 54 countries in 2022 (World Bank Group, 2024).

Positive outputs towards international infrastructure projects would improve the general welfare of low- and middle-income countries. Briceño-Garmendia, Estache, and Shafik (2004) showcase that infrastructure benefits enterprises to expand their markets and ultimately lower costs, leading to economic growth. Concurrently, infrastructure can benefit households through economic growth and spending power (Briceño-Garmendia, Estache, and Shafik, 2004). Henckel and McKibbin (2010) also report that developing countries are particularly aware that infrastructure investments that provide further access to clean water, basic transportation, and energy may mean the difference between life and death. 

The infrastructural advancement of developing countries is universally deemed as a necessary good, but there are unforeseen risks and consequences, regardless of whether funding comes from the government or the private sector. Zurich (2023) states that failures in infrastructure are “due to a lack of investment have significant implications for property and business continuity for city authorities, as well as central government bodies.” Furthermore, with increasing economic development and increasing urbanization, infrastructure spending is predicted to grow to $15 trillion by 2040 to meet the world’s infrastructure needs (Zurich, 2023). 

Abiad, Debuque-Gonzales, and Sy further highlight the macroeconomic impact of infrastructure, stating that low-income countries (LICs) tend to have more pronounced infrastructure shortfalls than middle-income countries (MICs), and suggest that “marginal productivity of infrastructure investment may be larger in less developed countries” (2017). However, due to features such as poor absorptive capacity, a more limited supply of complementary factors of production (i.e., private physical capital or human capital), and a general lower investment efficiency, it may suggest that middle-income economies may have a larger macroeconomic impact (Abiad, Debuque-Gonzales, and Sy, 2017).

If poorly planned or managed, certain long-term ecological impacts can also be negatively affected by infrastructure investments. Wrongly-placed dams can potentially destroy local ecosystems, impact wildlife migration patterns, and leave surrounding communities vulnerable to flooding or drought. Roads or other transportation corridors divide migration routes and habitats, increase vulnerability to control fires, and may be a contributing factor to deforestation and poaching. Harmful infrastructure, which includes mining, gas, and oil facilities, also contributes to overall climate change, air and water pollution, and the disruption of local communities and habitats (World Wildlife Fund).

Health

The health sector is another major priority. In low- and middle-income countries, they “often have underdeveloped and resource-limited health systems and different disease burdens, with research only starting to catch up” (Sharma, et al., 2023). Hence, international intervention is needed. The United States government has been the largest source of funding for health in developing countries since 1990, focusing mainly on HIV/AIDS, maternal health, and newborn and child health, with more than 70% provided through various national government agencies (Dieleman, Graves, and Johnson, 2015).

The United States engages in global health to “help improve the health of people in developing countries while also contributing to broader U.S. global development goals [,...] foreign policy priorities [,...] and national security concerns” (KFF, 2022). Furthermore, the United States plays a multifaceted role in:

  • Conducting research;
  • Operating programs and delivering health services;
  • Providing technical assistance and other capacity-building support;
  • Supporting international responses to disasters and other emergencies;
  • Partnering with governments, non-governmental groups, and the private sector;
  • Participating in major international health organizations through global health diplomacy and other efforts; and
  • Acting as a donor by providing financial and other health-related development assistance (i.e., commodities, like contraceptives, or bed nets for protection from disease-carrying mosquitoes) to low- and middle-income countries.
    (KFF, 2022)

Aside from the United States government, many international humanitarian organizations play a major role in providing health care across the world, especially to low- and middle-income countries. Some include the World Health Organization (WHO) (194 countries), the International Federation Red Cross and Red Crescent (IFRC) (192 national societies), UNICEF (190+ countries), AmeriCares (164 countries), Save the Children (117+ countries), and Catholic Relief Services (100+ countries) (Soken-Huberty). The World Health Organization (WHO), in particular, ensures the protection of people worldwide through universal health coverage and informs audiences of health emergencies (WHO). This organization specially addresses the following in their work:

  • Antimicrobial resistance;
  • Mental health promotion;
  • Human capital across the life-course;
  • Noncommunicable diseases prevention;
  • Climate change in small island developing states, and
  • Elimination and eradication of high-impact communicable diseases.
    (WHO)

The history of the U.S. providing international development aid established a deep, entwining relationship between nations in the course of the past century. Looking to the future of USAID, the Office of Inspector General is working tirelessly to ensure the efforts of federally-funded international aid are put to good use. Check back in the coming weeks for USFCR’s next installment of the series, Part IV: The NSF and the Growth of U.S. Scientific Research After WWII.

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Mari Crocitto

Written by Mari Crocitto

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