Harnessing Aid and Trade in a Time of Fiscal Austerity
By Jonathan White and Kathryn Ritterspach
The Marshall Plan helped facilitate Western Europe’s economic integration and revival through market-oriented policies, leaving behind the protectionism of the 1930s. The European Coal and Steel Community – the precursor to the European Union – further encouraged European integration, pooling these much-needed resources among Western European countries. The EU expanded membership to countries in the East after the Cold War, offering aid, market access and a common regulatory framework. The Marshall Plan and the European Union, while not perfect by any means, are considered among the most successful development programs.
One lesson from these initiatives has been that to get a bigger bang for your buck, you need the alignment of aid, trade and investment policies toward a unified objective – in this case the rebuilding of Europe. Both the Bush and Obama Administrations have sought to foster vibrant private sectors that complement critical health and education programs in the developing world. In that spirit, the U.S. Presidential Policy Directive on Global Development and the U.S. Feed the Future initiative seek to harness both aid and trade to help lift countries out of poverty and become reliable trading partners.
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