Foreign Aid, Development, and US Strategic Interests in the Cold War

Abstract

Abstract Scholars have argued that during the Cold War, the United States gave aid to its allies to reward them for maintaining an anti-Communist foreign policy rather than to promote their economic development. This finding is mostly based on data starting in the 1970s and does not accurately characterize US grand strategy before the 1970s,  when the United States used aid to promote development among its allies in order to strengthen them against Communism. Using original data collected from historical editions of USAID's “Greenbook,” this article identifies the amount of unconditional aid in the United States’ foreign-aid programs in the period 1955–1970. This type of aid was designed to be politically attractive rather than to be developmentally effective. This article also develops an original measure of aid recipients’ geopolitical alignment that draws on hand coding of 466 diplomatic documents. Using these data, this article finds that there was more unconditional aid in the United States’ aid programs to neutral and nonaligned countries than in the United States’ aid programs to its allies and security partners—a counterintuitive finding that shows how different the first half of the Cold War was from the second.1