The Role of the U.S. Government in Promoting Private Sector Development Solutions

Editor's Note: This brief is part of the 2013 Brookings Blum Roundtable Policy Briefs, which details the role of the private sector in the post-2015 development agenda. Read the full policy brief here.

EXECUTIVE SUMMARY

A series of seismic changes are fundamentally altering how we can best think about the relationship between public and private flows of funds targeted at promoting development. This shift is reflected in the policies of the Obama administration, yet U.S. assistance programs have not sufficiently evolved to take advantage of the new development landscape. Most members of the development community, including those in the private sector, still tend to behave as if those firms and nonprofit organizations that are responsible for the 87 percent of private flows to development need to figure out how to work with the 13 percent of U.S. government flows, rather than the other way around. A new mindset should focus on where U.S. official development assistance uniquely adds value. This is likely to be where official U.S. assistance can complement other, larger private flows. U.S. assistance will need to both effectively partner with the private sector on joint development initiatives in agreed-upon areas and also serve as a constructive force in shaping a more enabling policy environment that ultimately draws in more private capital. The former may include sharing development know-how and good practice with private sector partners. The latter may include investing in infrastructure, market making and strengthening institutions.