Building U.S. Support

Earlier this month, President Barack Obama and his administration passed the $1 trillion Omnibus bill in an effort to bolster the economy and prevent further stagnation.  Most surprisingly, this bill contained an allocation of nearly $2.6 billion to multilateral, international agencies such as the IMF (a 37 percent increase from 2011) and $21.5 billion allocation to foreign assistance programs.  This funding comes as a surprise to many developmental analysts who found recently polling of Americans to suggest that "70 percent of respondents said cutting foreign aid would have a large impact on reducing the U.S. deficit."  Perhaps even more concerning was the fact that polls also found that "Americans believed that 20 percent of the federal budget was being spent on aid, when the actual figure is less than 1 percent."

This monumental shift toward globalized, rational funding sends a clear message to the world that the United States is intent on maintaining its influence on the global market.  More importantly, this sends a message that the U.S. is intent on fostering relationships in the global market while focusing on providing aid to those that need it most.  As any policy analysts can attest to, there is always a desired return on social investment.  According to Treasury Secretary Timothy Geithner, the return is "enormous."  In a policy sense, the U.S. is able to ensure that they, "encourage a level global playing field for businesses...apply rigorous social and environmental standards to development projects...and focus more on fragile states, which helps address global security concerns and also advances U.S. security interests abroad."

As the quoted Brookings Institute article frames it, "The amounts involved are a very small fraction of the U.S. budget but can help hundreds of millions of the world’s poorest people."

-Kenneth Louis

SOURCE: The Brookings Institute - Global Economy and Development

Developing Nations Trade Amongst Each Other

Nations like India and China have shed new light on south-south co-operation, developing countries sharing resources. As their economies have grown, these nations have increased their investments in parts of Africa and Asia. Currently, China and India account for one fifth of the global economy, and are said to make up one third by 2025.

The United Nations Conference on Trade and Development estimated that, between 1996 and 2006, developing economies provided more than $17bn of foreign investment in Africa and $27bn of investment in Asia. This is not aid money, but rather an investment that the donor country will benefit from.

This mutual growth cannot happen through market forces and private initiatives alone, however. It is important to have policymaking and government action acting in these new economic ties. For example, China and India’s economic successes were achieved through the notion that domestic factors play a crucial role while market integration creates new opportunity for growth.

By building off one another, developing nations have a real chance for economic success.

-Sami Ressler

SOURCE: THE GUARDIAN