The Lessons of the Marshall Plan

Lael Brainard
Lael Brainard National Economic Advisor - National Economic Council

June 4, 2007

The Marshall Plan is acknowledged as one of America’s greatest achievements in the twentieth century. It was also America’s first full-blown foray into the enterprise of development and a turning point for our engagement in foreign lands. Amidst war-induced poverty, economic destruction and despair, the Marshall Plan fostered growth and development, new enterprise and hope. In the face of an imminent political threat—communism—the Marshall Plan built a bulwark and sowed the seeds for democracy, freedom, and market economies.

Now, 60 years later, what are the lessons we can draw for U.S. foreign assistance from the Marshall Plan? How can we reinvigorate our foreign assistance mission and programs to mitigate global challenges while sharing America’s spirit of goodwill and generosity?

Today we face the same complex mix of motives and interests that existed at the time of the creation of Marshall Plan: a moral impulse and strong desire to defend against a perceived threat to our national security, as well as an interest in developing economic relationships that are critical to enhancing and sustaining growth.

This shared foundation should remind us that foreign assistance is a critical instrument of America’s soft power and a powerful determinant of the face of America seen by poor people around the world. As the Marshall Plan proved, foreign assistance variously serves to advance national security, national interests, and national values. It works best when there is clarity about the strategic objectives it is designed to serve and well aligned with the other instruments of American power: military power, economic exchange, and diplomacy. Unfortunately, at present that sort of clarity and alignment is the exception rather than the rule.

Reflecting on the Marshall Plan, we can see that the effectiveness of our aid dollars matters just as much as the volume. When designed and executed well, foreign assistance is not just soft power but smart power. To achieve effectiveness, we must set tightly focused objectives and build structures and programs to carry these out.

A Brookings-led task force on foreign assistance reform issued a shortlist of recommendations exactly along these lines, including:

  • Create a unified framework that fuses America’s objectives—supporting the emergence of capable foreign partners and countering security, humanitarian and transnational threats—with differentiation based on the governance and economic capacities of poor nations. This requires integrating the national security perspective of foreign assistance as a soft power tool with that of a development tool allocated according to impact and human needs.
  • Prioritize development so it is given equal footing and independent standing alongside defense and diplomacy—not just in rhetoric but in reality.
  • Restructure our foreign assistance so that the focus is on the quality of our aid dollars rather than just on quantity. Instead of the 50 separate offices that currently manage U.S. aid programs, we should have one integrated operational agency. Instead of the 50-odd objectives these offices currently pursue, we should have no more than five strategic aid priorities.

These steps would go a long way in making U.S. foreign aid more strategic and effective during a time of intense global need and would also help showcase America’s true spirit. On this 60th anniversary of the Marshall Plan—at a time when our friends and partners abroad are looking to America to show a more compassionate and cooperative face—the time to act is now.

Dr. Lael Brainard is editor of Security by Other Means: Foreign Assistance, Global Poverty, and American Leadership, and vice president and director of Brookings Global Economy and Development. She holds the Bernard L. Schwartz Chair in International Economics at Brookings.

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