Focusing Foreign Aid on Entrepreneurial Development
AEI Newsletter

While the United States leads the world in foreign assistance, it has had difficulty meeting the development challenges of the twenty-first century with policies stuck in the twentieth. "There is no question that the United States does not provide aid well," Steven Radelet, a senior fellow at the Center for Global Development, noted at an AEI symposium convened by Mauro De Lorenzo on January 6-7. Other panelists discussed the changing role and significance of U.S. foreign assistance, and they agreed that if and when the Obama administration embarks on an ambitious effort to reform the American foreign aid system, it will face daunting challenges. As Carol Adelman of the Hudson Institute remarked, "this is no longer your parents' foreign aid."

In the past decade, private donors and entrepreneurial philanthropists have played a growing role in American engagement abroad, and donor agencies like the Millennium Challenge Corporation have transformed the way aid is allocated and spent, focusing more on private-sector development and local initiatives. Jonathan Greenblatt, CEO of Good magazine, noted that there is significant "energy and desire to move forward in the [developing world's] private sector." The United States, he said, can take advantage of "the power of leverage to put one dollar in and get ten dollars out."

Panelists elaborated on the issues in a series of topical discussions. Speakers at the trade and development forum, moderated by AEI's Philip I. Levy, stressed the importance of "coherence" in U.S. policy toward the developing world. The United States has tended to treat development as separate from its strategic economic and foreign policy goals. But "development cannot be approached [in] a boutique frame of mind," said Alan Larson of Covington and Burling. Infrastructure, public-private partnerships, and trade policies are equally as significant in fighting poverty and promoting economic growth as humanitarian assistance and food aid.

In a roundtable session on making the private sector work in Africa, a consensus emerged that Africa should be recognized not only for its development difficulties but also for its entrepreneurial ambition. Emeka Okafor, a noted blogger and the organizer of TED (Technology, Entertainment, Design), reminded participants that "we tend to ignore examples [of entrepreneurship] on the ground." Aubrey Hruby of the Whitaker Group addressed the geopolitical dangers of failing to help Africa meet its development needs. She warned that "if we do not take advantage of the opportunities in Africa, China or Brazil will."

But Africa must bring under control its manifold health and security problems before it can unleash the full capacity of its entrepreneurial spirit. During a panel on global health moderated by AEI's Roger Bate, U.S. global AIDS coordinator Mark Dybul reminded the audience of the corrosive impact of HIV/AIDS. "[This] one disease brought down life expectancy in Botswana by three decades," he said. Sustaining programs like the $15 billion President's Emergency Plan for AIDS Relief is "in our self-interest."

Furthermore, the urgency of the global war on terrorism demands a development policy that complements America's national security strategy. In an exercise on development and security, participants presented the "country team" model of U.S. engagement abroad, in which more decision-making power is devolved to the in-country ambassador and his diplomatic, military, and economic counterparts. AEI fellows Thomas Donnelly and Christopher Griffin developed the country team proposal in a 2008 report available at www.aei.org/publication28124. "We need to make an argument for this model," said Samantha Ravich of the National Strategy Information Center. "We can't make all the necessary decisions from Washington."

Participants at the symposium agreed that the developing world has changed significantly since many of our existing development policies were first designed. Tailoring the next generation of policies for new global realities will be a significant challenge for the Obama administration. In today's world, advancing American purposes in the world means not only assuring security and promoting economic growth but also leading the fight against global poverty.

AEI's extensive work on international development includes a project led by De Lorenzo on creating environments in developing countries friendlier to businesses and entrepreneurs. He is also the editor of AEI's Development Policy Outlook series. In the latest issue, Adelman and AEI's Nicholas Eberstadt propose ways to bring the U.S. foreign aid infrastructure up to date.

For video, audio, and more event information, visit www.aei.org/event1857. AEI's Development Policy Outlook series is available at www.aei.org/dpo.

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