Shifting Views on Globalization: Adapting Private Sector Strategies to Finance and International Programs
In today's competitive global economy, strategic partnerships between public institutions and the private sector have become critical for driving sustainable economic growth and technological innovation. President Biden's recent visit to Angola, highlighting U.S. investments in a trans-African rail project, underscores a strategic opportunity to advance American economic diplomacy. By mobilizing development finance, the United States can support infrastructure development, foster regional economic integration, and reinforce its global leadership. To explore these dynamics, Meridian brought together leading development finance experts to analyze emerging trends in international project financing.
Featured speakers included: T.H. Alice Albright, Chief Executive Officer, Millenium Challenge Corporation; T.H. Alonzo Fulgham, Executive Vice President, VIATEQ Corporation; David Bohigian, Acting President and Chief Executive Officer (2019), Overseas Private Investment Corporation; Jane Rhee, Chief of Staff, U.S. International Development Finance Corporation; and Mark Simakovsky, Deputy Assistant Administrator, U.S. Agency for International Development.
These Were the Top Takeaways from the Program
1. The Art of Showing Up
By 2050 around 80% of the world’s population will be living in cities, with many African cities leading this trend. Already home to the fastest-growing populations, many African cities are grappling with critical challenges: inadequate urban infrastructure, climate adaptation pressures, and the urgent need for comprehensive workforce development and skills training to create sustainable employment pathways. To address these challenges, U.S. international development agencies have become critical catalysts for economic transformation. The Millenium Challenge Corporation (MCC) has delivered substantial economic and social benefits to nearly 400 million people in 47 different countries, while the U.S. International Development Finance Corporation (DFC) has invested nearly $50 billion in the last 5 years to drive strategic progress. These agencies have prioritized accelerating high-impact investment projects and expanding their operational reach. The MCC’s Candidate Country Reform Act, which broadens the potential pool of countries for engagement, represents a strategic approach to enhancing U.S. influence in fostering long-term economic growth.
2. Better, Faster, Cheaper: The Strategy of Prioritizing
Since its inception in 2013, China’s Belt and Road Initiative (BRI)—a massive infrastructure project that aims to connect multiple continents by land and sea, increase trade, and boost connectivity—it has offered cheaper and faster infrastructure projects to its connected regions. However, many of these shallow investments have come to fruition at the expense of the environment, social and political tensions, or have resulted in transparency and debt sustainability concerns. U.S. development projects tend to have higher social and environmental standards that benefit the local communities, but also tend to be slower to implement. Delivering higher quality development projects at a faster rate will be vital to the U.S.’s approach, providing an opportunity for public-private partnerships to play a fundamental role. Experts suggest that U.S. development agencies could accelerate infrastructure investments by streamlining approval processes and strategically embracing calculated risk. Moreover, reimagining the private sector's role in development finance could unlock new pathways for advancing American strategic interests abroad.
3. Standing with Ukraine
Since Russia’s invasion of Ukraine, the U.S. Agency for International Development (USAID) has provided $2.6 billion in humanitarian aid, $5 billion in development assistance, and more than $30 billion in direct budget support. This war has brought China and Russian closer through economic collaboration, joint military initiatives, and coordinated practices, highlighting their common strategic goals in the region and shared opposition to U.S. influence. Countering Chinese influence and economic aggression in Ukraine is critical to promoting transparency, good governance, and economic sovereignty. USAID has strategically invested in Ukraine's infrastructure, economic development, and energy security to bolster both national resilience and regional stability. As of December 2023, the World Bank estimates that the total cost of reconstruction and recovery in Ukraine is $486 billion over the next decade. Regardless of the war's outcome, China and the U.S. are poised to significantly influence Ukraine's reconstruction, potentially shaping its geopolitical and democratic trajectory as profoundly as the conflict itself.
4. The Whole is Greater than the Sum of its Parts
A coordinated, multi-agency approach is critical for effective U.S. international development finance, enabling USAID, DFC, and the U.S. State Department to align resources, expertise, and strategic priorities in delivering targeted investments that promote sustainable growth and advance American economic and geopolitical objectives. However, government institutions, by design, function alone and often struggle to develop a coordinated and aligned approach. There is a need to better integrate staff and reform processes, not only to make them faster but also to avoid duplicative work. The U.S. military’s concept of interoperability serves as a relevant example for the development finance community, both within agencies and across allied countries. Developing a common, systematized approach to conducting due diligence reviews among partnered countries could be a crucial first step—not only to expedite development projects but also to ensure that partner countries and agencies working toward a shared goal are better aligned and synchronized in their efforts.
5. The Power of U.S. Investments: Reducing 45 days to 45 hours
President Biden’s trip to Angola, the first by an American President, exemplified the scale and impact that U.S. development projects can have for local communities. The U.S. will finance up to $553 million to upgrade the Lobito Atlantic Railway. The loan will support the rehabilitation and operation of the mineral port in Lobito and an approximately 1,300-kilometer rail line in Angola. The project is considered transformative for securing critical mineral supply chains, increasing rail transport capacity, and reducing freight transit times and costs significantly, from 45 days to 45 hours. This investment exemplifies the significant impact that well-coordinated development finance projects can achieve. This is not only a strategic move to counter China's dominance in Africa's infrastructure sector by providing a transparent and sustainable alternative but also a step toward enhancing regional economic integration, advancing U.S. geopolitical interests, and securing supply chains critical to the global energy transition.
This Program was Made Possible with Support from:
Project summary
| Shifting Views on Globalization: Adapting Private Sector Strategies to Finance and International Programs | December 2024 | |
|---|---|
| Impact Areas: | Business and Trade |
| Program Areas: | Corporate Diplomacy |
