02 October 2010
USAID’s Supply-Side Approach
The U.S. Agency for International Development has long been one of the primary units of the federal government to promote private sector involvement in the reconstruction and growth of emergent markets around the world. In the case of natural disasters, it relies on Non-Governmental Organizations to perform the humanitarian and engineering tasks needed to put hard-hit societies back on their feet. In the case of hardships created by our own military interventions, it also relies on NGOs to build institutions that it believes will form the basis of a democratic, U.S.-friendly governmental structure.
The approach it takes to accomplishing this latter objective in societies in transition to economic viability relies also on private American (and possibly other nationality) commercial companies to create the entrepreneurial opportunities that are thought to contribute to improved welfare and, ultimately, to lay the foundation for political stability and justice. This is a top-down, supply-side approach to building a fair and equitable society often in regions of the world that do not have a history of widespread participation in the management of their political or economic affairs. Some USAID resources are devoted to this effort--e.g., education, health care, and micro credit programs. However, impatience with their results and doubt about their ability to forestall civil unrest have prompted attempts to speed up the transformation of those societies through military action or the enlistment of allied profit-making companies.
One recent event staged by USAID to achieve the latter goal was the September 29, 2010, Afghanistan Mining and Business Opportunities Conference in New York. Sadly, the lack of real opportunities for American or other Western businesses in Afghanistan’s long-suspected but never adequately surveyed mineral deposits is mirrored in the disinterest of the country’s traditional tribal society freely to collaborate with foreign enterprises on commercial projects. Such poor odds have never daunted USAID, however. Thirty years ago, it tried to reinforce the Egypt-Israel peace treaty with a private sector enterprise promotion program targeted at U.S. corporate investors. That effort did little to change the public sector and political insider domination of the country’s thriving tourism, oil production, telecommunications, consumer products and government contracting sectors.
Investment promotion, in the extractive sector or in the consumer sector, is a top-down proposition. It doesn’t produce results without demand from local partners or local consumers. Federal government program expenditures on trade and investment promotion will usually fail to increase U.S. business income or to transform the target countries’ welfare and politics unless they directly generate greater demand in those markets. The trick is to assure that those funds are used for purposes that make an immediate difference in the prospects for the investor’s or the exporter’s commercial success. Pulling that off requires clever use of political leverage to compel compliance with standards of performance that are acceptable in the U.S. It will take more imagination than just producing a convincing PowerPoint Presentation.
The U.S. Agency for International Development has long been one of the primary units of the federal government to promote private sector involvement in the reconstruction and growth of emergent markets around the world. In the case of natural disasters, it relies on Non-Governmental Organizations to perform the humanitarian and engineering tasks needed to put hard-hit societies back on their feet. In the case of hardships created by our own military interventions, it also relies on NGOs to build institutions that it believes will form the basis of a democratic, U.S.-friendly governmental structure.
The approach it takes to accomplishing this latter objective in societies in transition to economic viability relies also on private American (and possibly other nationality) commercial companies to create the entrepreneurial opportunities that are thought to contribute to improved welfare and, ultimately, to lay the foundation for political stability and justice. This is a top-down, supply-side approach to building a fair and equitable society often in regions of the world that do not have a history of widespread participation in the management of their political or economic affairs. Some USAID resources are devoted to this effort--e.g., education, health care, and micro credit programs. However, impatience with their results and doubt about their ability to forestall civil unrest have prompted attempts to speed up the transformation of those societies through military action or the enlistment of allied profit-making companies.
One recent event staged by USAID to achieve the latter goal was the September 29, 2010, Afghanistan Mining and Business Opportunities Conference in New York. Sadly, the lack of real opportunities for American or other Western businesses in Afghanistan’s long-suspected but never adequately surveyed mineral deposits is mirrored in the disinterest of the country’s traditional tribal society freely to collaborate with foreign enterprises on commercial projects. Such poor odds have never daunted USAID, however. Thirty years ago, it tried to reinforce the Egypt-Israel peace treaty with a private sector enterprise promotion program targeted at U.S. corporate investors. That effort did little to change the public sector and political insider domination of the country’s thriving tourism, oil production, telecommunications, consumer products and government contracting sectors.
Investment promotion, in the extractive sector or in the consumer sector, is a top-down proposition. It doesn’t produce results without demand from local partners or local consumers. Federal government program expenditures on trade and investment promotion will usually fail to increase U.S. business income or to transform the target countries’ welfare and politics unless they directly generate greater demand in those markets. The trick is to assure that those funds are used for purposes that make an immediate difference in the prospects for the investor’s or the exporter’s commercial success. Pulling that off requires clever use of political leverage to compel compliance with standards of performance that are acceptable in the U.S. It will take more imagination than just producing a convincing PowerPoint Presentation.
Comments:
Post a Comment
