The Global Poverty Act of 2007, currently before Congress, is
superfluous, misguided, and dangerous: Superfluous in that it
ignores current U.S. government development goals and strategies,
which already include the elimination of global Poverty; misguided
in that it focuses on foreign aid as the pathway to global
development at a time when aid flows, large as they are, are
insignificant in size and impact compared to the massive resources
available to developing countries from trade, foreign direct
investment, and remittances; and dangerous in that its exclusive
focus on one goal for U.S. assistance-poverty eradication-risks
undermining the many other vital roles played by U.S. assistance in
promoting the safety and security of America and her interests
around the world.
The Global Poverty Act (H.R. 1302 and S. 2433), would require
the President to "develop and implement a comprehensive strategy"
to promote "the reduction of global Poverty, the elimination of
extreme global Poverty, and the achievement of the Millennium
Development Goal (MDG) of reducing by one-half the proportion of
people worldwide, between 1990 and 2015, who live on less than $1
The primary tool envisaged by the co-sponsors is apparently a
massive increase and re-focusing of U.S. foreign aid. Surprisingly,
the facts of global development undercut the legislation's
rationale and focus. Indeed, the bill is oddly out of touch with
the Millennium Development Goal it purports to embrace.
The latest report from the United Nations indicates that the
goal of halving the proportion of people worldwide who live on less
than $1 per day between 1990 and 2015 was already 80 percent
achieved by 2004, 11 years before the deadline.  According to the
U.N., "the MDG target will be met." U.S. contributions toward this
achievement are substantial. The U.S. is the largest source of
foreign direct investment in developing countries, the largest
recipient of developing country exports, and the largest provider
of development and humanitarian assistance to developing countries.
In a world economy that is increasingly market-oriented and
globalized, unprecedented levels of resources are flowing to
developing countries. The share of these resources coming from the
private sector, primarily through the mechanisms of trade,
investment, and remittances, dwarfs official aid flows.
In the context of such robust development progress and the heavy
U.S. engagement in contributing to it, the Global Poverty Act adds
little of value but could mistakenly convey implicit U.S. support
for the broader range of statist economic bromides in fashion at
the U.N., chief of which is that developed countries should provide
0.7 percent of their gross domestic product annually to developing
countries. Such a commitment would require U.S. taxpayers to fund
foreign aid at more than quadruple current levels, at an amount of
$100 billion per year. There is scant evidence that such a sum is
necessary or, if provided, would actually promote development.
The Millennium Summit and Millennium
Leading up to the end of the 20th century, there was widespread
dissatisfaction with the progress being made toward development and
Poverty alleviation in the developing world. For decades, the
United States and other donor nations had tried to catalyze
economic growth in poor countries by providing trillions of dollars
in bilateral and multilateral development assistance. Between 1960
and 2006, the U.S. and other developed nations spent more than $2
trillion (in 2005 dollars) to promote development through bilateral
and multilateral grants and loans. Few if any development
successes could be attributed to this assistance.
The United Nations General Assembly decided to designate its
55th session in 2000 as a "millennium assembly" to "provide an
opportunity to strengthen the role of the United Nations in meeting
the challenges of the twenty-first century." As part of the
millennium assembly, the UN held a Millennium Summit in September
2000 that brought together the world's largest gathering of heads
of state to "tackle major global challenges such as how to pull
over 1 billion people out of extreme Poverty, reverse the spread of
HIV /AIDS and protect the environment."
At the Millennium Summit, the participants adopted a Millennium
Declaration that addressed a wide range of problems related to
peace, security, and development. On development, it included a
number of specific targets such as halving, by the year 2015, "the
proportion of the world's people whose income is less than one
dollar a day and the proportion of people who suffer from hunger
and, by the same date, to halve the proportion of people who are
unable to reach or to afford safe drinking water." It also included
the goal of ensuring by 2015 that "children everywhere, boys and
girls alike, will be able to complete a full course of primary
schooling and that girls and boys will have equal access to all
levels of education" and the goals of reducing "maternal mortality
by three quarters, and under-five child mortality by two-thirds, of
their current rates."
Not content with the actual words agreed to unanimously by the
member states of the U.N., the UN Secretariat decided that it
needed to repackage the Millennium Declaration, or at least part of
it, into the Millennium Development Goals. The product, never
submitted explicitly to member states for approval, selected 17 or
18 (depending on how you count) development related targets or
pledges from the document and grouped them under eight headings
determined by the Secretariat. The result, the "Millennium
Development Goals," while capturing the imagination of the general
public and serving as a useful fundraising tool for the UN and
development-oriented governmental and non-governmental agencies, by
all accounts falls far short of an actual development plan or
The widespread failure of poor countries to develop despite
extensive foreign aid and concern that the objectives of the
declaration would not be met led donor nations to meet and
reevaluate the Millennium Declaration's development strategies at
meetings such as the 2002 Monterrey Conference on Financing for
Development, the June 2005 G-8 meetings, and the 2005 U.N. World
Summit. While these meetings have produced voluminous documents
filled with admirable goals, they have failed for the most part to
confront the failure of past aid efforts.
Despite numerous economic studies showing that good governance,
economic freedom, and the rule of law are key factors in economic
growth, specific goals and targets in these areas have been
strongly resisted by developing countries in UN negotiations and
are thus missing from UN plans and strategies, including the
Millennium Development Goals. Their absence is remarkable when one
considers that economic growth is a key overarching goal. Without
economic growth, countries will lack the resources to support
efforts to improve the lives of their citizens.
The Bush Administration's Delicate
The Bush Administration has been very careful to express its
support for the objectives of the Millennium Declaration
without specifically endorsing many of the specific indicators or
documents that the Declaration has spawned. For instance, the U.S.
has consistently couched its commitment to increase aid as part of
a pact with developing countries to adopt policies that would
create an economic environment more conducive to growth. Both the
2000 Millennium Declaration and the 2002 International
Conference on Financing for Development emphasized the
responsibilities of developing countries in the development
partnership. As noted by Ambassador John Bolton:
In Monterrey, Mexico in 2002, we all made commitments to fight
Poverty through development. We agreed that we had to change the
models of the past, which focused primarily on resource transfers,
to solutions premised on the proven methods of good governance,
sound policies, the rule of law, and mobilization of both public
and private resources.
Another example is the much-criticized efforts of Ambassador
Bolton to change the draft outcome document of the World Summit in
the summer of 2005 to remove explicit requirements for aid targets
and insert text to emphasize the importance of policies improving
governance, the rule of law, and economic liberalization.
However careful the Administration has been, even its limited
endorsement of the "Millennium Development Goals" has been
interpreted as a promise by the U.S. to meet the specific
indicators and commitment to dramatically increase its development
assistance, which the UN and others have asserted is necessary to
meet the MDGs.
Concerns about the Global Poverty
Congress and the Bush Administration should be wary of
committing the U.S. to an aid-focused development strategy or a
strategy that accords Poverty reduction pride of place among
assistance objectives. Such a policy would implicitly downplay the
many other goals and objectives of U.S. foreign assistance and
inappropriately focus on the MDGs as the lens through which to view
U.S. aid policy.
Alleviating extreme Poverty is one of America's many objectives,
and the United States is a vital player in this worldwide process
of growth and development. The U.S. is the largest source of
foreign direct investment worldwide, with a direct investment
position in developing and other non-OECD (Organization for
Economic Cooperation and Development) countries of over $585
billion in 2006. The U.S. is the largest recipient of
developing country exports, sending over $694 billion in 2006 to
developing countries in exchange. And the U.S. is the
largest provider of development and humanitarian assistance to
developing countries. Official U.S. development assistance was
$27.9 billion in 2005, almost triple the amount in 2000, and more
than double the amount provided by the next-largest donor.
The Department of State/USAID Strategic Plan for FY 2007-2012
declares that "helping poorer countries share in the virtuous
circle of development and achieve rapid, sustained, and broad-based
growth is also in U.S. vital national security interests. Economic
growth is essential to allow countries to reduce and eventually
eliminate extreme poverty."
As important as alleviating Poverty or supporting the MDGs may
be, those objectives are not and should not be the primary goals of
U.S. assistance as the Global Poverty Act seemingly would intend.
Among the many objectives of U.S. foreign assistance are promoting
representative government and the rule of law, encouraging economic
growth and trade, supporting America's allies, protecting the
environment, supporting education and training, improving access to
health services, providing assistance to victims of disasters and
conflict, fighting corruption, improving agricultural production,
and many others. Some of these priorities fit within the MDG
framework, others do not. Yet each has been adopted by successive
Congresses and Administrations as an objective because it supports
It would be a mistake for the U.S. to abandon its broad-based
vision for development assistance, and even worse to link itself to
a flawed UN development strategy emphasizing the Millennium
Development Goals. The Bush Administration has been correct to
avoid supporting the MDGs without caveats and clarifications and
should eschew efforts that would tie the U.S. more closely to
Development Requires Policy Changes in
Developing Countries, Not More Aid
Numerous studies indicate that policy changes that create a more
conducive environment for economic transactions, bolster a free and
fair legal system, and strengthen government accountability and
responsiveness are far more important to development than the
amount of aid a country receives. Unfortunately, the idea that
development requires greater aid flows is omnipresent in U.N.
documents like the World Summit "outcome document," which welcomed
the "increased resources that will become available as a result of
the establishment of timetables by many developed countries to
achieve the target of 0.7 per cent of gross national product for
official development assistance by 2015."
Indeed, the notion that developed countries made a "commitment"
to provide 0.7 percent of GNP in development assistance has
attained iconic status in the UN and in the aid community, despite
repeated refusals by the United States and others to endorse it.
For instance, the United Nations Development Program asserts:
The commitment to provide 0.7% of gross national product (GNP)
as official development assistance was first made 35 years ago in a
General Assembly resolution, but it has been reaffirmed repeatedly
over the years, including at the 2002 global Financing for
Development conference in Monterrey, Mexico.
The idea of linking development assistance to the gross national
product of donor countries rather than to any demonstrated need by
developing countries or evidence that such aid could be used
effectively is illogical on its face. Even staunchly pro-aid groups
have questioned its relevance. For example, as explained by experts
from the Center on Global Development:
The international goal for rich countries to devote 0.7% of
their national income to development assistance has become a cause
célèbre for aid activists and, lately, politicians.
However ubiquitous and durable, the target of 0.7% was never meant
to represent the 'right' level of aid needed by poor countries. A
look at its history shows that it was calculated using methods with
little relevance to today's understanding of the development
process, and actually reaching 0.7% of income in aid was never
agreed to by any government or international body prior to 2005.
Originally intended as a political tool to goad rich countries to
modestly increase their aid budgets, the specific figure of 0.7%
was a compromise between educated guesses based on economic
conditions in the early 1960s and on a crude and deeply flawed
model of growth. Despite these origins, "0.7%" has taken on a life
of its own and become a powerful rallying cry for aid proponents.
Indeed, in 2005, advocates are demanding that rich countries reach
this specific target (and with some success). But there has been
little reflection on whether 0.7% is the right figure, where it
comes from, and exactly what the international agreements
pertaining to the goal say and do not say.
[O]ver time 0.7% has gained prominence well beyond its initial
intention and gained credibility as the correct aid goal that it
does not deserve... We find that if we apply the same assumptions
that went into the original formulation to conditions present
today, that the updated target would be 0.01% of rich country
income-well below current aid levels for all major donors.
The emphasis on levels of aid endures despite numerous economic
studies, including studies conducted by the World Bank and the
International Monetary Fund (IMF), that have concluded that
economic assistance is not a key component of economic
development.  The U.S. should not hesitate to reject
the false claims of past "commitments" to the 0.7 percent target or
other unsupported aspects of the MDGs.
What the United States Should Do
The goal of reducing Poverty is admirable and is rightly
included among the priorities of U.S. foreign assistance. However,
the U.S. should not adopt a policy, as set forth in the Global
Poverty Act, of elevating poverty-alleviation efforts above other
priorities for U.S. foreign assistance or on achieving the
Millennium Development Goals.
Strict adherence to the MDGs or the goal of eliminating Poverty
would leave little discretion for the U.S. to distribute or
withhold aid based on country performance or political priorities.
As important as alleviating Poverty or supporting the MDGs may be,
those objectives are not and should not be the primary goals of
U.S. assistance as the Global Poverty Act seemingly would intend.
Successive Congresses and Administrations have established numerous
objectives and purposes for U.S. assistance over decades. Not all
of these objectives are equal, but each has been determined to be
important for various reasons. The Global Poverty Act, by failing
to recognize or even mention these other purposes, would implicitly
downgrade these priorities in favor of alleviating global
Moreover, while many individual MDG targets are desirable, they
focus on the symptoms of Poverty rather than the causes. If the
U.S. is to help poor countries to develop, it should emphasize the
importance of good policy in development, including economic
freedom, good governance, and the rule of law. Numerous economic
studies have concluded that these policies are key drivers in
promoting economic growth and reducing poverty. Without economic
growth, countries lack the resources to support efforts to improve
the lives of their citizens or to meet the Millennium Development
Goals.Yet good governance, economic freedom, and the rule of law
are conspicuously absent from the MDGs and undermine their
relevance as a development strategy.
Finally, the MDGs are more than a simple declaration of intent
to invest in efforts to improve selected indicators in developing
countries. The MDGs have been linked to a host of political,
economic, or social objectives that deviate significantly from
those outlined in the 2000 Millennium Summit. Few of these
objectives have been specifically endorsed by the United
The goal of reducing Poverty is admirable and should be
supported by the U.S., but focusing on arbitrary development
indicators like the Millennium Development Goals and aid targets
that are only indirectly related to reducing Poverty does little to
advance that objective. The U.S. should maintain the independence
of its foreign assistance programs, including its Poverty
alleviation efforts, by rejecting the policy recommendations of the
Global Poverty Act.
Ambassador Terry Miller is
Director of the Center for International Trade and Economics and Brett D. Schaefer is Jay
Kingham Fellow in International Regulatory Affairs in the Margaret
Thatcher Center for Freedom at The Heritage Foundation.
House version of the bill was sponsored by Representative Adam
Smith (D-WA) with 84 co-sponsors and was agreed to by voice vote on
September 25, 2007. The Senate version of the bill is sponsored by
Senator Barak Obama (D-IL) with 14 co-sponsors and was ordered to
be reported out of the Foreign Relations Committee favorably with
amendments on February 13, 2008.
United Nations, The Millennium Development
Goals Report, 2007
Significantly, while the Millennium Declaration
included calls for democratic and participatory governance, respect
for the rule of law, action against international terrorism,
redoubled efforts to counter the world drug problem, and respect
for human rights and fundamental freedoms, the UN Secretariat, for
reasons it has never chosen to explain, left these out of the MDG
Bolton, U.S. Ambassador to the U.N., open letter on the draft
outcome document, August 30, 2005.
draft document called on developed nations "to achieve the target
of 0.7 per cent of gross national product [GNP] for official
development assistance by no later than 2015 and to reach at least
0.5 per cent by 2009." U.N. General Assembly, "Revised Draft
Outcome Document of the High-Level Plenary Meeting of the General
Assembly of September 2005," August 5, 2005, at www.un.org/ga/59/hlpm_rev.2.pdf.
Those strongly advocating the MDGs have
consistently argued that a significant increase in foreign
assistance is necessary if they are to be achieved. For instance,
the U.N. Millennium Project, commissioned by U.N. Secretary-General
Kofi Annan in 2002 to assess what is necessary to meet the MDGs,
advocated "a big push of basic investments between now and 2015 in
public administration, human capital (nutrition, health,
education), and key infrastructure (roads, electricity, ports,
water and sanitation, accessible land for affordable housing,
environmental management)." See U.N. Millennium Project, Overview
Report, 2005, p. 19, at www.unmillenniumproject.org/reports/index_overview.htm.
Another example is Jeffrey Sachs, special adviser to the U.N.
Secretary-General on global poverty, asserting that developed
countries must transfer "about $100 [billion] to $180 billion per
year for the period 2005 to 2015" to meet the MDGs and that "Africa
needs around $30 billion per year in aid in order to escape from
poverty." See Jeffery D. Sachs, The End of Poverty: Economic
Possibilities for Our Time (New York: Penguin Press, 2005), pp.
298-300 and 309.
Department of State/USAID Strategic Plan FY
Kim R. Holmes, Edwin J. Feulner, and Mary
Anastasia O'Grady, 2008 Index of Economic Freedom
(Washington, D.C.: The Heritage Foundation and Dow Jones &
Company, Inc., 2008), Executive Summary, at www.heritage.org/research/features/index/chapters/
pdf/Index2008_ExecSum.pdf. For a paper discussing and
citing other economic studies, see Brett D. Schaefer, "How the
Scope of Government Shapes the Wealth of Nations," Heritage
Lecture #925, March 07, 2006, at www.heritage.org/Research/TradeandForeignAid/upload/94713_1.pdf and
Brett D. Schaefer, "How Economic Freedom Is Central to Development
in Sub-Saharan Africa," Heritage Lecture No. 922, February
03, 2006, at www.heritage.org/static/reportimages/567143F8AB78688371E21D8274F593E7.pdf.