Last Monday, December 10, I had the opportunity to speak at an interagency panel on the topic of Economic Statecraft and Developing Partnerships with the Private Sector.
Spearheaded by Secretary of State Hillary Clinton, Economic Statecraft is a positioning of economics and market forces at the forefront of U.S. foreign policy. The Secretary has stressed that emerging nations are increasingly dealing in economic power rather than military might as their primary means of exercising influence, and the U.S. must be at the forefront, or risk being left behind.
Our USAID Administrator, Dr. Rajiv Shah, opened the event at the Woodrow Wilson Center, with remarks emphasizing the innovative work of USAID in this area – work which may not be as well-known as those in the areas of Global Health, Education and Food Security.
USAID plays a central role in helping to create foreign markets that are competitive, transparent and integrated into the rules-based global trading system. The Agency has been successful in spearheading pro-business reforms in the last decade in six of the top 10 performers in the World Bank’s Doing Business Index. Technical assistance and support has been provided to numerous countries including Georgia, Columbia and Vietnam with reforming their laws and regulations. While a direct correlation is perhaps not possible to make, imports increased four-fold in Vietnam following the course of six years of U.S. assistance with business climate reforms.
In the last 10 years, USAID has formed more than 1,600 partnerships with over 3,000 private sector players, leveraging approximately $19 billion in public and private resources, expertise and technologies. In 2012, USAID’s Development Credit Authority was designed to use loan guarantees to unlock large sources of local capital, and approved 38 new partial credit guarantees to mobilize a record $700 million in commercial capital in 23 countries. In practice, this means that 140,000 small scale businesses will be able to access local finance – impacting more than a million people.
One of USAID’s goals is to create opportunities and economic expansion in developing countries. This approach is increasingly becoming a new model for the Obama Administration, and is one that engages far more broadly with the private sector, delivers more dividends after foreign aid is removed, and demands more transparency and good practices overall.
Our work in this area demonstrates the need to work closer than ever with our interagency partners, several of whom were also my co-panelists at the Economic Statecraft event: the Department of State, the Overseas Private Investment Corporation (OPIC), the United States Trade and Development Agency (USTDA) and the Millennium Challenge Corporation (MCC). As one example of our interagency coordination, this past Fall, USAID entered into a new global agreement with USTDA. The agreement will enable our missions around the world to perform feasibility studies of energy, transportation, and information and technology projects. Mission Columbia is the first buy-in under the agreement, supporting a feasibility study focusing on smart-grid technologies for large power systems. I anticipate many more partnerships between both the private sector and government, as well as within the government itself in moving forward in this undertaking.
More information can be found on the Wilson Center’s website.