This report describes how the development landscape has changed in recent decades and how the United States has responded to this new environment. It presents some initial recommendations on the next steps that the United States needs to take to better engage in trade and investment with developing countries. This report complements and builds upon prior CSIS publications on the topic.
The development landscape has dramatically changed over the past 25 years. A set of countries once considered “poor” or “third world” have become more prosperous, freer, and healthier. These countries seek international economic engagement in the form of infrastructure investments, increased trade, and exchanges in science, technology, and innovation. As countries move up the prosperity ladder, they will need less foreign aid (i.e., official development assistance—ODA) and demand more participation as equal partners in a diversified global economy.
The United States has a foreign assistance approach and toolbox that is outdated and has been reactive at best to the changes in the developing world. The United States must think more strategically about how to best engage the developing world, use foreign aid as a catalyst to attract private capital to these countries, and help level the playing field with other foreign players through anti-corruption efforts, procurement training, and trade facilitation. The United States needs an international economic strategy to engage with prospering developing countries as true economic partners. The United States needs to regain its economic leadership in the world. For those countries moving up the development ladder, the “donor-recipient” relationship must transition to a “partnership” approach. The United States needs a new way of engaging the developing world centered on the fundamental question of “what can developing countries and the United States do together?”
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