Development Assistance

The Bretton Woods Conference also resulted in the establishment of the World Bank, a multilateral institution designed to promote world trade and economic development by making loans to nations that might not otherwise be able to raise the funds necessary for participation in the world market. The World Bank receives its capital from member countries, which subscribe in proportion to their economic importance. The United States contributed approximately 35 percent of the World Bank's original $9.1 thousand-million capitalization. The members of the World Bank hope they will be paid back in full by nations that have used their loans to strengthen weak economies. Eventually, it is hoped, these countries will have developed to such an extent that they can become full trading partners with the more developed countries, manufacturing their own products and trading them for other goods.

Large-scale U.S. involvement in providing development assistance outside the aegis of the World Bank may be traced back to the U.S. decision to help Europe undertake recovery after World War II. Although assistance to nations with grave economic problems evolved slowly, the American people felt a sense of achievement when the Marshall Plan, launched in April 1948, proved successful as a catalyst to European recovery from the war. President Harry S. Truman decided to build on this success by helping developing nations grow along Western democratic lines. Others supported such aid for purely humanitarian reasons. Some foreign policy experts worried about a "dollar shortage" in the war-ravaged and underdeveloped countries, and believed that as nations grew stronger they would be willing and able to participate equitably in the international economy. President Truman, in his 1949 inaugural address, set forth an outline of this program, and seemed to stir the nation's imagination when he proclaimed it a major part of American foreign policy.

The program was reorganized in 1961 and subsequently was administered through the U.S. Agency for International Development (USAID). In the 1980s USAID was still providing assistance in varying amounts to 56 nations. In recent years, USAID programs have moved away from grand development schemes such as building huge dams, highway systems or basic industries. Increasingly, USAID has emphasized food and nutrition; population planning and health; education and human resources; specific economic development problems; famine and disaster relief assistance; and Food For Peace, a program that sells food and fiber on favorable credit terms in the amount of $1 thousand-million annually and makes outright grants to the poorest nations.