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GREEN AND MOSBACHER: Romney plan puts U.S. in the lead
Private sector can lift more people out of poverty
Question of the Day
In his speech to the Clinton Global Initiative on Tuesday, Gov. Mitt Romney outlined a new vision for U.S. leadership in global development, one led by the private sector. Some critics have misrepresented Mr. Romney’s proposals by stating that he wants to privatize U.S. foreign assistance and demote U.S. humanitarian assistance. In fact, what Mr. Romney proposed is a very pragmatic strategy to lift more people out of poverty by developing new partnerships to achieve sustainable economic growth.
Mr. Romney doesn’t seek to privatize assistance, but to make it even more effective in the years ahead.
This strategy is built on two critical assumptions: First, merely relying on the traditional donor-recipient framework of U.S. foreign aid would mean missing an opportunity to launch new partnerships with developing countries where there is greater shared responsibility and accountability for achieving results. Second, the global economy has undergone a seismic shift since the days when our development agencies were created at the beginning of the Kennedy administration. Back then, government development agencies were the only game in town, and the vast majority of capital flows from wealthy to poor countries came from public-sector foreign aid. Today, more than 80 percent of capital flowing into developing countries comes from the private sector. Private-sector investment and growth is the most powerful tool to lift people out of poverty.
U.S. global development efforts need to adapt to a changed global environment. We must start from the premise that development led by the private sector is critical to partner countries achieving ownership and self-sufficiency. The way to support private-sector-led growth is to reorient and reprioritize U.S. assistance to support the creation of a ripe commercial environment in partner countries. To do this requires trade preference programs, trade capacity building, finance and investment tools and traditional development grants. The key is to focus all these tools on the primary obstacles to growth and foreign direct investment in partner countries.
U.S. economic engagement with partners in the developing world would be much more effective and sustainable if we better integrated and leveraged our various development, finance, trade and investment tools. At present, U.S. foreign assistance programs are largely disconnected from the trade preference and investment agreements that we negotiate and implement. This is a huge missed opportunity, as it both limits the effectiveness of our trade and development efforts and fails to provide an effective platform for American businesses that are looking to access these new markets.
None of this means doing away with our development programs. Mr. Romney’s strategy aims to bolster the effectiveness of current humanitarian and development programs by creating new opportunities for private-sector engagement and increased sustainability.
Development finance tools, such as those provided by the Overseas Private Investment Corp., the Export Import Bank and the U.S. Trade and Development Agency, must also be integrated into our development and commercial engagement strategies with partner countries in the developing world. These agencies provide much needed access to credit and risk mitigation tools to support the growth of indigenous commercial sectors and to create new partnership and investment opportunities for American businesses.
While Mr. Romney has called for a new strategy to guide U.S. global development efforts in pursuit of sustainable economic growth, he has repeatedly stated his strong support for U.S. humanitarian and development efforts, such as the President’s Emergency Plan for AIDS Relief and the Millennium Challenge Corp. Both of these programs were created during President George W. Bush’s administration with strong bipartisan congressional support, and both programs embrace a new model of U.S. humanitarian leadership that is focused on accountability and results.
The opportunities for the United States are great in terms of achieving greater development success and building new commercial relationships in the developing world. In order to seize these opportunities, however, the U.S. government must be more strategic, more agile and more integrated in the way it deploys its various development, trade, investment and finance tools. Mr. Romney has articulated just such a vision for U.S. leadership on global development, and his strategy is one that will create greater opportunity and prosperity for our partners in the developing world and here at home.
Mark Green is a former congressman from Wisconsin and former U.S. ambassador to Tanzania. Rob Mosbacher was chief executive officer of the Overseas Private Investment Corp.
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