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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.
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