U.S. Foreign aid in the domestic and international environments

This study is an initial empirical investigation of domestic and international environment variables on U.S. foreign aid allocation, from 1947--1990. We hypothesize that both of these environments affect aggregate aid levels, and are therefore important to the aid allocation process as contextual factors that influence the amounts of aid that will be available for allocation among recipient countries. When we test domestic and international environmental models separately, we find each performs quite well. However, in our most stringent test of these hypotheses, in which both international and domestic factors were included, we find that international variables, on the whole, tend to be more important. Variables identifying years in which the U.S. was a participant in war, the degree of conflict in U.S. Soviet relations, and the Marshall plan period are found to have had statistically significant impacts on aggregate levels of foreign aid once other factors are controlled. We also find that the domestic factor of economic hardship, which we measure with a misery index, is associated with fewer funds being devoted to the aid budget. We close by discussing the implications of these findings to U.S. foreign aid allocation, and outline some ideas for future research on foreign aid.