Economic Growth and Trade
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Rural
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Economic growth is key to transforming the developing world. It is the only way for poor countries to reduce and eventually do away with extreme poverty. Economic growth is the surest way for countries to generate the resources they need to weather global crises - from unstable markets for finance to those for energy and food - and to address their own illiteracy, poor health and other long-term development challenges. Economic growth in developing countries is important to the security of the United States. Poor countries are more susceptible to conflict, can harbor terrorist activity, and are often sources of illegal immigration, epidemic disease, and international crimes such as the trafficking of narcotics and persons.
USAID works to help developing countries achieve rapid, sustained and broad-based economic growth – the growth needed to ensure their peoples’ well-being over time. USAID’s Economic Growth Strategy, Securing the Future: A Strategy for Economic Growth (April 2008) guides efforts in this area through three program approaches:
- Develop Well-Functioning Markets: USAID programs recognize that economic growth is ultimately based on the ability of enterprises, of all types and sizes, to become more productive. For this reason, USAID works to identify barriers to enterprise growth and to promote legal and regulatory reforms that will ensure a climate for sustained expansion. Emphasis is placed on microeconomic reforms, or reforms that affect enterprises at all levels, from street vendors to family farms to large corporations. USAID also supports macroeconomic reforms, or reforms that affect a country’s national economy, on a more limited basis.
- Enhance Access to Productive Activities: USAID works to ensure that the poor, women and other disadvantaged groups benefit from economic growth. It supports programs that help poor households obtain credit and other financial services needed to start small businesses and undertake other activities that create income. It also provides micro and small enterprises with business services that can improve their productivity and ability to compete in the global marketplace.
- Strengthen the International Framework of Policies, Institutions and Public Goods: USAID supports international research that contributes to economic growth such as the development of new seed varieties that increase crop output and farmers incomes. USAID helps poor countries adopt international standards and practices such as improved procedures for customs and border operations that can lower costs and increase efficiency, and better financial management systems that allow for stronger oversight of government spending and reduce chances for corruption.
Specifically, USAID supports these approaches through efforts to: improve the environment for enterprise growth and competitiveness; strengthen economic policy and
governance; create sound, well-governed financial systems; support business enabling environments; support microfinance programs and business services for micro and small enterprises; and build trade capacity. Other sectors where USAID works to promote economic growth include: agricultural development; infrastructure improvement, including the upgrading of energy, telecommunications and water and sanitation services; workforce development; education; and health.
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