Foreign Assistance

Accuracy of AID Statistics on Dollars Flowing Back to the U.S. Economy Is Doubtful Gao ID: NSIAD-93-196 August 3, 1993

The accuracy of Agency for International Development (AID) statistics on the extent to which U.S. foreign economic assistance flows back to the United States through the procurement of goods and services is doubtful because of major data limitations and the methodologies used to generate the statistics. AID agrees that reflow statistics cannot be verified. The merits of continuing the Buy American Reporting System are questionable because (1) the accuracy of the system's statistics is not expected to improve, (2) AID officials said that the system's data are not essential for any management purpose, and (3) the system is costly and time-consuming. In addition, there is no statutory requirement for reporting reflow statistics. Because the foreign economic assistance program is very small compared with the size of the U.S. economy, the amount that flows back to the United States through the procurement of goods and services appears to have had a negligible impact on the U.S. economy. Even if all AID funds were used to procure 100-percent U.S. origin goods and services, AID obligations would total only one percent of the annual U.S. exports and one-tenth of one percent of the U.S. gross domestic product.

GAO found that: (1) both Buy American Reporting System (BARS) and AID reflow studies rely on imprecise and inconsistent measuring techniques and estimates that cannot be verified; (2) BARS was implemented to respond to congressional requests for reflow statistics, not because AID needed such statistics to manage its program; (3) BARS statistics are not useful for management decisionmaking; (4) BARS is a costly system that places a significant burden on AID staff resources; and (5) the ratio of AID-obligated funds to total U.S. exports of goods and services has declined from 8.2 percent in 1962 through 1964 to 1.2 percent in 1990 through 1992 because exports have grown more rapidly than the foreign assistance program.

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