Country Programs Australia. The principal beneficiaries of Australia's program for economic assistance to less developed areas are its overseas territories in Oceania and the participants in the Colombo Plan. Australian Assistance has included training in Australia of students from less developed areas, sending Australian experts to less developed areas, providing technical equipment and capital aid. The bulk of Australian assistance has been in the form of grants for the administration and development of Papua and the Trust Territory of New Guinea. About one-sixth has been capital and technical assistance extended through the Colombo Plan. Austria. The Austrian aid program is still relatively small, although consideration is being given to its expansion. New long-term loans of $4 million over the past four years were more than balanced by amortization receipts on earlier loans of $9 million. In addition, official consolidation credits were extended to Greece and Turkey. The Austrian Government has also sponsored the work of a number of experts in the less developed countries and has granted scholarships to students from these areas for study in Austria. Belgium. Belgian aid funds are, in principle, fully convertible and not specifically reserved for expenditures for goods and services of Belgian origin. A substantial part of the assistance extended by Belgium in the past was in the form of grant budgetary support for the Congo and Ruanda-Urundi. A part of the proceeds of the "Loterie Coloniale", organized in Belgium, are transferred to these areas in the form of grants. The Belgium program also includes loans at favorable rates of interest of 2% and 3 percent. Loan guarantees have been an important form of assistance provided to these territories. A major form of assistance provided by Belgium is the guarantee by the Belgian Government of loans raised by African territories, mostly in Belgium itself. By the end of 1959, the total of guaranteed loans outstanding amounted to $170 million. Canada. The Canadian program for assistance to less developed areas—almost exclusively grant aid-has been channelled primarily through the Colombo Plan, Commonwealth Technical Assistance, and the West Indies Program. In addition Canada has made special grants for the purchase of foodstuffs. The necessary funds are appropriated annually. Denmark. Although there are no special institutional provisions for the Danish aid program, the question of participation of Scandinavian countries in the economic development of the less developed countries is receiving consideration in the Nordic Council. Denmark, as its other Scandinavian neighbors, has emphasized technical assistance and contributions to multilateral agencies as the technique by which it can make a contribution. It has also made contributions *Excludes loans under 5 years, consolidated credits of whatever term and contributions to International Organizations, IBRD, UNTA, etc.. 1959 through loans to stabilization programs and has participated in consolidation agreements by extending credits from four to seven years at rates of interest from 2 to 31⁄2 percent. France. The French aid program is relatively large. It emphasizes grants for both current and development expenditures. It is concentrated almost entirely on Algeria, overseas territories, and areas having special relationship to France. The main types of official financial flow between France and the rest of the franc area are (a) certain direct administrative expenditures met from the French. metropolitan budget, (b) grants for specific purposes (in particular, advances to price stabilization funds for tropical products) and grants to cover current deficits in local budgets, (c) direct investment expenditures met out of the metropolitan budget, (d) grants to local authorities for investment purposes, (e) loans for investment purposes, and (f) cash advances from the metropolitan Treasury to local Treasury departments. The flow of public funds to less developed countries outside the franc area has been limited. Germany. The German program for assisting the less developed countries was based primarily on government-guaranteed private export credits, some of which were refinanced as long-term official loans when they fell due. The sharply increased program proposed for 1961-1962 will stress in addition long-term loans (some very long-term) to be extended through the Kreditanstalt fuer Wiederaufbau (Reconstruction Finance Corporation). Some of these longterm loans are provided at very low rates of interest. "Finance credits", or non-project loans, are in principle provided to less developed countries with no condition other than a prohibition on procurement in the Soviet bloc. Italy. Italy is now considering the establishment of an agency to be known as the "Italian National Community for International Technical Assistance". This will promote bilateral and multilateral technical cooperation with the less developed areas. In addition, the Italian Government has extended loans, consolidation credits, grants, and other assistance to these areas. The interest rates on Government loans granted in 1958 and 1959 were 3 percent for the bulk of the loans and 5% percent for some loans. The greater part of Italian export credits is financed by a public institution, the Mediocredito. Japan. The program developed by the Government of Japan for assisting less developed areas comprises grants and credits generally tied to the purchase of Japanese goods and services. Loans are made through the Japanese Export-Import Bank. In addition, an Overseas Economic Cooperation Fund is being established to provide supplementary financing for urgent projects in less developed countries which are not eligible for financing through the Japanese ExportImport Bank. Japan is also engaged in providing technical assistance to 27 countries and territories of Asia, Africa, and Latin America. The Netherlands. Most of the grants and loans extended by the Netherlands were directed to the overseas territories of the Kingdom of the Netherlands. Assistance has been extended in the form of grants to cover local budget deficits, and this has provided for general government activities directed toward the development of economic and social infrastructure and the encouragement of primary industry. The loans extended have been at rates of interest below current market rates and for periods of more than 25 years. In addition to aid extended to the overseas part of the Netherlands Kingdom, it has extended to other countries consolidation credits for periods of 4 to 7 years. New Zealand. New Zealand has been engaged for some time in providing capital aid and technical assistance to countries and territories of Southeast Asia participating in the Colombo Plan, and to the Pacific Island territories. The assistance to the Pacific Island territories has been in the form of grants to cover local budget deficits and to finance specific development projects. It also includes proceeds realized from government trading activities which are made available for economic development, and net expenditure on government operated inter-island shipping services. Norway. Assistance extended by Norway has been channeled largely through the Norwegian Foundation of Assistance to Underdeveloped Countries which was established in 1952. In addition to a small loan to Turkey at 5% percent and a consolidation credit to Spain, the major part of the Norwegian aid program has been the establishment of a fishery community development project in the State of Kerala in India, and a contribution to the Scandinavian medical center in Korea. Portugal. All aid extended by Portugal, with the exception of small bilateral loans to Turkey, has been provided to its overseas provinces. This has included grants and loans, some of which are long-term, without specified terms of repayment and completely free of interest. The rest have generally been at rates below the market rates. Sweden. Swedish assistance to less developed countries has been extended principally through multilateral agencies. Aside from three consolidation credits in 1959, its small bilateral aid program has been mainly in the form of grants. It has participated in the Scandinavian Medical Center in Korea, and engaged in various bilateral technical assistance activities. Switzerland. The contribution of Switzerland to less developed countries has been in the form of contributions to multilateral agencies, loans, and consolidation credits. The latter have been repayable from four to seven years with interest rates varying between 2% to 3% percent. The Swiss are understood to be preparing a considerably expanded aid program. United Kingdom. Official bilateral aid extended by the United Kingdom to less developed areas has been almost equally divided between grants and long-term loans. Expenditures are made either from sums allocated from particular Ministries or by specific legislation. With one exception, loans and grants are in fully convertible sterling and may be used for imports from any source or for local expenditures. The exception is loans under Section 3 of the Export Guarantee Act, which must be used for United Kingdom goods and services. The most important contribution to economic development in the colonial areas has been made under the authority of the Colonial Development and Welfare Act. This Act provides for grants and long-term loans mainly for public development programs. Most of the assistance extended by the United Kingdom has been to colonies or members of the Commonwealth. VI. The Impact of Economic Assistance on the United States Economy The effect of U.S. programs of economic assistance on the United States domestic economy are of several kinds, and may occur over varying periods of time. In the past years, the concern was often with the contribution of foreign aid transactions to inflationary pressures at home, the effects of foreign aid on the Federal budget position, and the impact of foreign assistance on levels of consumption and on the output and markets of particular domestic industries. During the years since the foreign economic aid programs have been in operation, a number of detailed and informative studies of these and related effects have been made, both inside and outside the Federal Government.1 These evaluations of foreign aid from the viewpoint of their impact on the U.S. economy considered the aggregate effects of economic and military assistance to other nations. With the sharper distinction between these two forms and objectives of foreign assistance which is part of the new approach to aid, the present concern is limited to the 1 See, in particular, The Foreign Aid Programs and the United States Economy, 1948-1957, a Staff Report by the National Planning Association, May 1958, and The United States Economy and the Mutual Security Program, Department of State, April 1959. |