The US International Development Finance Corporation (DFC) has been operating for less than two years, and already some lawmakers are keen to expand its mandate. On the one hand, it’s good to see such appreciation for the tools of development finance. On the other, we share deep misgivings about proposals that would authorize—and even encourage—DFC investment in upper-middle-income and high-income countries absent a strong developmental objective or justification.
CGD Policy Blogs
If your toolbox is overflowing with precision guided munitions, the problems you will focus on are ones that (arguably) can be solved with precision guided munitions. Our comparatively tepid response to the pandemic is another sign of the longstanding and excessive prioritization of potential violent over present nonviolent threats to national security.
John Norris’ fascinating new book The Enduring Struggle: The History of the US Agency for International Development, provides an authoritative history of US foreign assistance from the end of the Second World War until today. It is packed with anecdotes and quotes from people who were working on projects and working in the halls of Washington (although that many anecdotes and quotes in 300 pages was tough on those of us vainly resisting the transition to bifocals). However it is the book’s conclusion, in particular, that should be required reading for those in Washington who oversee America’s assistance programs.
If B3W is to be the better Belt and Road, it will have to embrace the role of government in infrastructure provision and ensure private sector infrastructure projects are designed and run in the public interest. Otherwise, and despite the denials-, low- and middle-income countries would be right to see it as not about them, but just about China.
The US International Development Finance Corporation has become a Rorschach test for the policy community: when they look at it, everyone sees something different.
These proposals would cost money (and so the need to work with Congress), but all are tied to America’s strategic interests and all would help the world exit the COVID pandemic and global recession with greater speed and resiliency.
As the possibility of a new Cold War between the US and China gains traction in some foreign policy circles, the scale of Chinese development finance has taken center stage. A closer examination suggests the cost to China of this lending is distinctly underwhelming. It would be cheap for the US and Europe to match China’s lending numbers –and in the interest of global development if it was done right.
We need to move forward—or backward—in what we expect development finance institutions (DFIs) to do in terms of financing private sector development in the world’s poorest countries.
In global development, we spend a lot of time thinking about cost effectiveness. But what if we step back and look at the broader picture when it comes to the effectiveness of different tools of foreign policy and engagement including diplomacy and defense? What are our most effective approaches to deliver on US national security and future prosperity? My new book is an attempt to answer that question.
What US Government Initiative Do All Three 2019 Economics Nobel Winners Like? (Hint: It’s at USAID.)
It’s rare that good ideas in economics get such strong bipartisan political support in Washington. Hopefully that’s a sign of a secure future for DIV.