For decades, strengthening country institutions and developing human capital have been the bread and butter of the development community. Over time, USAID and others have helped countries develop accountable government and civil society services while investing in the health and education of developing country populations. While there is no recipe for reliably delivering sustainable, broad-based economic growth, responsive institutions and strong human capital have always been key ingredients.
But there is another critical ingredient to growth that we have seen in every country that’s grown its way out of poverty: a strong and dynamic private sector. And while USAID has been focused on private sector engagement for years, the development community does not always embrace the encouragement of private sector activity as part of our core mission.
Last week, I gave a speech at our Agency’s Public-Private Partnership forum highlighting how our community could embrace a new wave of enlightened capitalism to help drive the sustainable, broad-based economic growth called for in the President’s Policy Directive on Development and the Secretary’s Quadrennial Review.
I’m not talking about forming partnerships for partnership’s sake or photo opportunities. I’m not even talking about Corporate Social Responsibility or charity work. I’m talking about helping support the work of markets that can deliver profits and create jobs and deliver economic opportunity for women, minorities and the poor.
In the speech, I announced several new steps that I believe will be key to this effort, among them the formation of our new Innovation and Development Alliances Office, the expansion of our use of the Development Credit Authority to support local private sector growth and significantly increase our commercial leverage, the deployment a new cadre of investment officers to boost our field based transactions expertise and a reevaluation of the way we strengthen enabling environments abroad.
A lot of people are currently giving speeches about the need to move beyond foreign aid—you’ve probably heard a few. But I believe the private sector connectivity we drive with developing countries today will determine how much we can trade and partner with them tomorrow, creating economic opportunity for own country.
If we want to truly get to a world that has moved beyond aid, then we need to invest in exactly the kind of developmental and private sector engagement that will get us there.