The U.S. Agency for International Development (USAID) is an independent agency of the U.S. Government that works closely with the State Department and receives overall foreign policy guidance from the Secretary of State.  It promotes long-term and equitable economic growth and advances U.S. foreign policy objectives through programs in the fields of development, economic growth, agriculture and trade, global health, democracy, conflict prevention and humanitarian assistance.

Though formally established on November 3, 1961, by President John F. Kennedy, USAID’s origins trace back to the Marshall Plan of reconstruction of Europe after World War II and the Point Four Program established by President Harry S Truman.  Prior to the 1961 Foreign Assistance Act, political and military aid were not distributed separately from economic and development aid.  Although the two functions remain distinct, various USAID programs address both security and development objectives.

When asked why the United States should develop its foreign assistance program, President Kennedy stated:

“The answer is that there is no escaping our obligations: our moral obligations… our economic obligations… and our political obligations… To fail to meet these obligations now would be disastrous; and, in the long run, more expensive A program of assistance to the underdeveloped nations must continue because the Nation’s interest and the cause of political freedom require it.”

Since that time, USAID has undergone many changes, one of the most comprehensive in 2006.  That year, President George W. Bush announced that he would name Ambassador Randall Tobias as the nation’s first Director of U.S. Foreign Assistance (DFA), who would serve concurrently as Administrator for USAID. 

The DFA has a rank equivalent to that of Deputy Secretary of State and is responsible for ensuring that foreign assistance is used as effectively as possible to meet broad U.S. foreign policy objectives. In addition to direct responsibilities for USAID and Department of State foreign assistance funding and programs, the DFA provides strategic direction and guidance to all other foreign assistance programs delivered through the various agencies and entities of the U.S. Government, including the Millennium Challenge Corporation and the Office of the U.S. Global AIDS Coordinator.

USAID remains an independent organization, but in giving a single individual both jobs, Secretary of State Condoleezza Rice said she hoped to “see the best of both worlds,” that is, to integrate the strengths of the State Department with those of USAID, align the two agencies’ priorities and foreign assistance activities, improve their effectiveness and ensure efficient use of their funding, all with the goal of better meeting America’s overseas development challenges.

Reaction to this major change in the administration of USAID was mixed.  While some argued that making the Administrator of USAID concurrently Director of Foreign Assistance boosted the status, effectiveness and viability of the aid agency, others considered the action a “stealth merger” with the State Department and have expressed concern that USAID’s long-term development goals would be compromised.

USAID Abroad

USAID operates programs in nearly 100 countries divided into five geographic regions: Europe and Eurasia, Latin American and the Caribbean, Sub-Saharan Africa, Asia, and the Near East. From its headquarters in Washington, D.C., USAID works with more than 3,500 American companies and over 300 U.S.-based private voluntary organizations. USAID also partners closely with indigenous organizations, universities, international agencies, other U.S. agencies, and other governments. A trend towards heavy reliance on contractors to implement programs has been reversed as USAID has increased the relative size of its direct-hire staff.

Each country program is different, but many address similar issues. The relatively large USAID program in Indonesia, for example, focuses on six areas:

e.g., emphasis on improved quality of teaching and learning, effective local management of schools, increased education relevance and workforce skills.
Democratic governance:
e.g., elections and political processes, conflict mitigation, justice sector reform, legislative strengthening, democratic culture promotion, local government support, trafficking in persons reduction.
Basic Human Services:
e.g., support for maternal and child health, disease surveillance and control, food and nutrition, clean water.
Tsunami Reconstruction:
e.g., rebuilding shelter and key infrastructure, restoring livelihoods and basic services, strengthening capacity and governance.
Economic growth:
e.g., improving trade and investment climate, increasing competitiveness, reforming the financial sector.
MCC threshold program:
Assist Indonesia to achieve full Millennium Challenge Corporation eligibility by reducing corruption and increasing immunization rates.

In today’s interdependent world many of the major problems facing developing countries have their origins beyond national borders and often have broad impact, sometimes affecting the entire world. Refugee flows, HIV/AIDS and other health issues, terrorism, and instability caused by failing states are some of the concerns high on the global community’s agenda that are being addressed by USAID today.

For information about democracy and humanitarian aid, as well as the Millennium Challenge Account, visit the "Transnational Issues" segment of this website.