Combining public and private donations puts total U.S. development assistance in the range of $35 billion per year, or about 0.32 percent of U.S. income. In other words, for every $3 of income, the United States provides about one cent in development assistance. Even with this broader measure (and using the larger estimate of U.S. private assistance without making a similar adjustment for other countries), the United States ranks, at best, 15th among the top donors.

“Americans Provide Generous Economic Aid Through the Remittances Foreign Workers Send Home to Support Their Families.”
Wrong. The United States hosts many immigrant workers who send home money each month to help support their extended families by paying for school fees, food, housing, job training, and medicine. But these remittances are not aid, and they are certainly not an indicator of U.S. generosity or stinginess.

Remittances stem from market-based labor transactions, not generosity. Workers trade their time and skills for a paycheck in a mutually beneficial exchange. When those workers send the money back home, it is an intra-family transfer, not a charitable gift. Just because these flows help fight poverty does not make them aid. Private bank loans, foreign direct investment, and trade also help reduce poverty, but they are not aid, either.

Consider remittances that flow in the opposite direction. Thousands of Americans work in low-income countries around the world, and many of them send funds back to their families in the United States. But when an American working for Pertamina Oil Company in Indonesia sends money back to his or her grandmother in Florida, that money is clearly not Indonesian foreign aid to the United States.

Some argue that remittances can still substitute for aid, but this assertion is only partially true. One difference is the regional disparities in their destinations. Remittances from the United States are heavily concentrated in Latin America and much scantier in the poorer countries of Africa and South Asia. Of the $28 billion in U.S. remittances to developing countries in 2003, the majority went to middle-income countries, and more than half went to Latin America. Only about $0.5 billion went to sub-Saharan Africa, or about 75 cents per African—hardly enough to ease poverty in a continent where income averages about $500 per year. In addition, government policy only modestly and indirectly affects remittances, so the United States cannot direct them to the neediest countries (in response to a natural disaster, for example), or use them to support U.S. foreign-policy goals. Remittances are an important complement to aid, but they are not a substitute.