Select Committee on International Development Minutes of Evidence

Letter to the Chairman of the Committee from USAID

  Thank you for your letter of 24 April 2002 regarding the preparatory process and outcomes of the UN Conference on Financing for Development. I hope you were as pleased as we were with the renewed commitment to partnership by both developed and developing countries in Monterrey, Mexico, to achieve concrete development results.

  Administrator Natsios requested that I respond on his behalf to the three questions posed in your letter.

  1.  0.7 per cent ODA/GNP target: The US has never endorsed the UN target of providing 0.7 per cent of our GNP in the form of Official Development Assistance (ODA). This target was developed in the late 1960s, an era in which ODA was the primary source of capital flows to developing countries and capital flows were perceived to be the driving force of development. In today's world, neither of these conditions remains true.

  In the 1960s, over 70 per cent of all financial flows from the US to developing countries were in the form of ODA. Today, 80 per cent of US financial flows to developing countries are private flows, including investment, philanthropy (eg corporate, NGOs, foundations) and remittances. In terms of volume, ODA is no longer the dominant force it once was.

  Experience and our current development theory tell us that development largely depends not on the volume of capital flows, but on the efficiency with which they are used. Efficient resource use is accomplished through improvements in policy and institutional environments, investments in people, and the adoption of new technology. The most appropriate role for ODA today is to effect these changes.

  2.  MDGs: The US has not officially endorsed the Millennium Development Goals (MDGs) as outlined in the UN document "Road map towards the implementation of the United Nations Millennium Declaration". It should be noted that the MDGs have not yet been brought before any international forum for formal endorsement of the International Development Goals (IDGs), the subsequent endorsement of the IDGs at the 1998 G-8 Summit, and the signing of the Millennium Declaration in September 2000. Though substantively similar, the MDGs do not correspond exactly to the range of goals agreed in these other forums.

  The US does believe that indicators for measuring progress toward development goals should be distinguished from an official endorsement of principles by the international community. While potentially useful from an analytical perspective, the proposed indicators for measuring progress toward the MDGs should be separated from any future official endorsement of the MDGs themselves.

  3.  Data on private charitable/philanthropic contributions: The US provides data to the OECD/DAC on private charitable and philanthropic donations from the US to developing countries on an annual basis. In 2000, grants by US private voluntary agencies totalled $4,069 million. The second largest donor of these types of funds was Germany, contributing $846 million in 2000. For the US, the 1999, 1998 and 1997 reported figures stood at $3,981 million, $2,906 million , and $2,518 million, respectively, demonstrating a growing interest on the part of US private voluntary organisations in developing issues.

  We do, however, have reason to believe that such figures greatly underestimate actual contributions from private charitable and philanthropic organisations to developing countries. Due to our country's private laws, submission of such data by these organisations to government agencies is strictly voluntary.

  I hope you find these to be helpful answers to your questions. Please feel free to contact us again if we can be of further assistance.

Patrick M Cronin

Assistant Administrator

Bureau for Policy and Program Co-ordination, USAID

May 2002

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Prepared 24 July 2002