This impressive growth during the decade of the 1970s was a major reason for the decision in 1980 to withdraw bilateral U.S. development assistance from Paraguay . This growth made it difficult to argue for a concessional assistance program on the basis of economic need. The per capita income was over the internationally accepted benchmark of $1,000 for poor countries. Therefore, USAID decided in May 1980 that no new bilateral funds would be programmed for Paraguay after fiscal year 1981. In making this decision, USAID emphasized the desirability of continuing to demonstrate a U.S. interest in the development of Paraguay.
In 1982, Ambassador Arthur Davis requested that USAID reconsider its decision in light of more recent developments. The work at Itaipu was winding down, and the next dam project was not coming on stream as quickly as had been planned. The economy was in a recession and beginning to deteriorate. There was also evidence that the rural poor had not shared in the country's boom. After sending a team from Washington to study the situation, it was agreed that U.S. aid would be phased out by September 30, 1984, but then be included in a new program for Advanced Developing Countries (ADC).
The ADC strategy emphasized working with private sector organizations and private voluntary organizations (PVOs). It stressed human resource development as the number one priority. A USAID project to develop the country's first graduate-level management training program was initiated with the Catholic University of Asuncion. USAID also assisted the Salesian Agricultural Institute's agricultural vocational high school in central Paraguay . Post-graduate academic and short-term technical training of Paraguayans in the U.S. was expanded.
The ADC strategy involved the transfer of technology to the private sector, particularly for agriculture and small business development. Toward this end, grants were given to Accion International/AITEC and the International Executive Service Corps (IESC). Accion International assisted the newly created Paraguayan Foundation for Cooperation and Development to develop a micro-enterprise credit and technical assistance program. IESC provided short-term technical assistance to Paraguayan businesses, utilizing retired U.S. executives and technicians. In addition, U.S. assistance was furnished to promote activities such as child survival, family planning, and environmental protection. Strengthening of the Paraguay-Kansas relationship under the Partners of the Americas program was also part of the ADC strategy.
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