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How can the U.S. support growth in developing countries

>> Foreign Aid in the National Interest >> >> Chapter 2

Acknowledgements Foreword Overview: Promoting Freedom, Security and Opportunity Chapter 1: Promoting Democratic Governance Chapter 2: Driving Economic Growth Chapter 3: Improving People's Health Chapter 4: Mitigating and Managing Conflict Chapter 5: Providing Humanitarian Aid Chapter 6: The Full Measure of Foreign Aid 46     Jump to Chapter 2 Sections: >> New thinking on drivers of growth >> Income inequality is declining >> More trade and investment mean faster growth >> Increasing U.S. imports through the African Growth and Opportunity Act >> A microeconomic agenda for development >> How can the U.S. support growth in developing countries >> Background papers >> References How can the U.S. support growth in developing countries Several forms of U.S. foreign assistance will likely trump official development assistance in expediting economic growth in developing countries (see chapter 6). These mechanisms include access to U.S. markets, foreign direct investment by U.S. companies, remittances from foreign workers living in the United States, and the actions of U.S.-based or-funded nongovernmental organizations (NGOs). Still, official development assistance has a role to play by: Providing direct financial support for policies, programs, and projects through bilateral assistance, to improve agricultural productivity, implement competitiveness strategies, build infrastructure, and provide scholarships and technical training. Engaging developing countries in policy dialogues, often with the explicit or implicit promise of delivering more aid if policy actions are taken. Producing and disseminating new knowledge about development through economic research or project activities funded by USAID or other U.S. government agencies. Involving the United States in broader, often multilateral, discussions during diplomatic and trade negotiation —helping to open the door to the $10 trillion U.S. economy. Connecting to the U.S. economy through trade and investment provides a vital engine of growth for developing countries. Helping countries build the capacity to trade and to take part in multilateral trade negotiations. The United States should seek to influence development processes primarily by engaging in policy dialogues, producing and disseminating new knowledge, and advocating trade-led growth at home and abroad. Engaging in meaningful policy dialogue requires extensive knowledge of a country’s political economy and capacity for pragmatic policy analysis. Here the U.S. role as a contracting agent can help it access knowledgeable analysts, especially if countries have made a long-term effort to build the research and knowledge base needed to produce and retain such analysts. Policy dialogue and knowledge generation should be thought of as mirror images that require coordinated support over long periods. One of the most important contributions that the United States can make to economic growth in developing countries is to participate in international policy discussions, trade negotiations, and treaty development. page 2

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