Why does America spend so much on foreign aid? Have you ever wondered? Are there systematic political economy factors that shape preference for foreign aid? How is it benefitting them and what are their gains of giving out foreign aid? Giving foreign aid to other countries has been a key tool of American economic statecraft since World War II (Baldwin, 1986). This instrument has been a primary way for the United States to engage other nations in pursuit of its foreign policy goals. Like other foreign policy tools, such as international trade or economic sanctions.
Let’s start off with Pakistan. Pakistan is a strategically important country for the US. It borders Afghanistan (where US fights its longest ever battle), Iran (which could be the
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Given its proximity to two of the world's major oil reserves - Central and West Asia, US policymakers will want to keep the status quo. The US funding also keeps Pakistan off from growing their relationship with Iran. Additional benefits include allowing the US government to exercise a limited amount of influence of the government of the country to which they lend aid to.
The discourse is mainly theoretical in nature. The idea of funding and aiding countries is grounded on the theory of hegemonic stability which says that there has to be one dominant power in the world which controls global affairs in order to avert political and economic chaos in the world. "There is nothing called free lunch" where ever US invests, they have their strategic in geoeconomic goals. Usually the developing countries which are rich in resources, but extremely backward in terms of technology and resource exploitation are offered technological and financial assistance by their US and with their acceptance of the deal they enter the country and take control of the resource (Example; control on oil exploration industry in the Middle East) In case of extremely backward country US gives loan using channel of IMF and