Economic growth and good governance are the center of Romney’s aid policy

Governor Romney delivered a major speech at the Clinton Global Initiative on Tuesday, focusing on foreign assistance, global development, and how U.S. policy should evolve in these fields. He laid out a vision for placing development assistance squarely in the center of the nexus of trade, investment, and policy reforms. He sees the private sector and capitalism at the center of human progress (read "economic growth" for those in the business), and he also stressed the central place of institutions that support political freedom and rule of law (read "democracy and governance" for those who follow this stuff closely). He strongly endorsed 10 years of progress on public-private partnership in development — a major factor in development since the Bush administration, adopted energetically by the Obama administration, and a central focus of the Clinton Global Initiative (so, no, he was not in favor of "privatizing foreign aid," just as no one would say that about Hillary Clinton when she talks about public-private partnerships through her Global Partnerships Initiative, as she does here).

Finally, he emphasized what serious development thinkers have been talking about but have only found limited appetite for within development bureaucracies — a much larger focus on small and medium sized enterprises.

Governor Romney’s speech is by far the most detailed speech by either of the major candidates on development in this electoral cycle and likely the most detailed speech of any candidate during the primaries in this cycle.

There has been a series of responses (including a GREAT post from my friend Paul Bonicelli yesterday and a thoughtful op-ed from Amb. Mark Green and Rob Mosbacher) to Governor Romney’s speech, not surprisingly, as it outlined a bold plan for American assistance moving forward. 

In sum, serious thinkers about development and America’s role in it have been positive in their praise as they recognize the depth of the thinking behind this speech and know that the most serious change and advancement in U.S. development policy have happened under Republican presidents. 

Governor Romney’s strategy would place U.S. assistance on the cutting edge of development theory and practice. By linking greater investments in economic growth and the institutions that promote liberty with a renewed vigorous global trade agenda and pro-growth domestic policies under a Romney administration, along with the sorts of investments in assistance Gov. Romney described in his speech, we are talking about a very powerful combination of forces that are pro-development and help the United States share in that prosperity.

Development theorists and practitioners talk about "private sector led development," but when push comes to shove and the money is allocated, the temptation is always to fund pressing social service delivery projects or photogenic or politically connected causes. At the end of the budget allocation race, policy reform investments that support economic growth, and investments that support democracy and governance –the two sorts of investments that most development practitioners know matter — often get left behind. 

Finally, Governor Romney’s speech recognizes the changed world that we live in and the need to change our development policy, processes, systems, and priorities to reflect this changed world.  First, foreign aid can help but is dwarfed by trade, investment, remittance, and private philanthropy by foundations, individuals, church groups, and corporations. He cited the central fact that U.S. economic engagement has changed over the last 40 years with massive foreign direct investment flows going to middle, lower, and poor countries in massive amounts, the massive flows of remittances and, the massive amounts of private charity. At the same time his description of "corrupt governments" suggests a skeptical view towards various forms of budget support and an interest in aid transparency initiatives.

Another central change from the past is that the United Nations Development Program estimates domestic resource mobilization in low income countries will reach $394 billion by 2015. Compare that to global ODA of approximately $120 billion, and domestic resources are only going to get bigger over time as societies continue to move up the ladder of development. Foreign aid is a minority shareholder in the business of development already. Development practitioners can provide expertise, technical support, and strengthen the institutions that support private sector led growth and democratic governance, but ultimately over time/in due course (please note emphasis here, so no panicked misinterpretations, please) we want to be moving out of the direct social service delivery business and instead have governments themselves "pick up the tab" using domestic resources similar to the way that PEPFAR is evolving.

The global economic situation means that budget austerity is impacting foreign assistance around the world including the Netherlands, Canada, Spain, Ireland, Italy, and possibly the UK. We should assume that the 150 Account (the account in the U.S. budget where foreign aid is housed) which has until now has defied gravity is going to be examined in the light of trillion dollar deficits and $16 trillion in debt. Regardless of the overall topline number, questions about aid effectiveness and development priorities are going to be at the forefront of any U.S. development conversation under any administration just as that conversation is happening in the rest of the "DAC" (the Major League Baseball Commission equivalent for foreign aid donor) countries. Pressing humanitarian needs (such as ending polio in our time) will always be a part of the U.S. foreign assistance policy as the U.S. still stands ready to respond in situations international disaster relief, but long term foreign aid’s role needs to change with the changed global context.

Governor Romney sees foreign assistance as a form of "soft power." It is clear that Governor Romney sees foreign assistance as an instrument of American power and influence and one that we should use to ensure that the 21st century is an American century.

Note: While Dan Runde co-chairs the Romney Campaign’s International Assistance Working Group, the blog post above contains Mr. Runde’s own opinions.