From fragmentation to focus: Revitalizing U.S. development strategy

How can the U.S. redefine its role in global development amid rising fragility and great power competition? A new research volume from AidData explores strategic solutions to advance U.S. national interests and foster global stability.

March 4, 2024
Sarina Patterson
Liberian survivors of Ebola leave their handprints on a wall of the Bong County Ebola Treatment Unit, the USAID-run facility that saved their lives. Once recovered, several Ebola survivors returned to work alongside USAID staff treating patients. Photo by Adam Parr/USAID via Flickr, licensed under CC BY-NC 2.0 DEED.

Liberian survivors of Ebola leave their handprints on a wall of the Bong County Ebola Treatment Unit, the USAID-run facility that saved their lives. Once recovered, several Ebola survivors returned to work alongside USAID staff treating patients. Photo by Adam Parr/USAID via Flickr, licensed under CC BY-NC 2.0 DEED

The world’s humanitarian aid gap is getting bigger. Global aid needs have been pushed to record highs by wars (the last two years have seen more conflict than since the end of WWII), shattered climate records, and post-COVID economic dislocation. Yet donors are pulling back, with last year seeing a record shortfall in global giving. This “polycrisis” is playing out against a backdrop of the decline of Western dominance and markedly heightened competition among great powers like the United States, Russia, and China.

In the face of a rapidly evolving global landscape, the U.S. stands at a critical juncture in its development assistance program. Where and how U.S. policymakers allocate limited time, talent, and treasure to advance American interests and those of counterpart nations toward shared goals—the fundamental purpose of any development assistance program—is more important than ever. 

But by many marks, the U.S. isn’t measuring up. So finds an extensive research volume produced by AidData to inform the second Gates Forum. Held in partnership with William & Mary’s Global Research Institute and the Gates Global Policy Center, led by former U.S. Secretary of Defense Robert Gates, the Forum convened high-level policymakers at William & Mary last December to discuss the state of U.S. development assistance and develop bipartisan policy options for action. It followed on the heels of the inaugural Gates Forum in December 2022, which convened leaders in U.S. foreign policy and national security to propose solutions for reinvesting in America’s strategic communications to match China and Russia. 

The new research volume, which includes an overarching synthesis report and a series of detailed background papers, offers a comprehensive analysis and a clarion call for the U.S. to recalibrate its development assistance. It not only scrutinizes the current state of U.S. efforts but also serves as a strategic blueprint for reforming development assistance to further America’s national interests while effectively improving global stability. 

The synthesis report leverages the collective wisdom from five background papers exploring the evolution of U.S. development priorities; the integration of humanitarian, development, and peace efforts; the strategic positioning of the U.S. against other global players like China; the prospect of mobilizing U.S. private sectors to scale investment; and policy options for the future of U.S. development efforts. The research was authored by Samantha Custer, Director of Policy Analysis at AidData; Ana Horigoshi, a Senior Research Analyst; and Divya Mathew and Bryan Burgess, Senior Policy Specialists.

Key findings underscore the need for an overhaul of development assistance from the ground up. The authors find the U.S. is suffering from a lack of strategic focus, often resulting from ambiguous goals and a fragmented approach across various government agencies; for example, a given country may have as many as 17 USG agencies operating within its borders. 

“Although America has an overabundance of development assistance strategies and plans, there is a dearth of guidance to ensure agency efforts are aligned with these (or other) U.S. national interests, coordinated with each other, and coherent in adding up to more than the sum of their parts,” writes Custer.

The research also sheds light on the competitive edge other nations, notably China, have gained in the realm of development finance. It suggests that the U.S. must redefine its value proposition, emphasizing its strengths in governance, rule of law, and social services, while addressing infrastructure needs in a manner that helps countries mitigate risk and build resilience to negative byproducts from an uptick in debt-financed development. 

But the U.S. should not let narratives of competition overly shape its strategy or seep into its strategic communications, the research finds. “The U.S. government faces [an] uphill battle: overcoming a credibility deficit with foreign leaders and publics about America’s intentions, contributions, and value proposition relative to other development assistance suppliers. Global South leaders are uninterested in a geostrategic tug-of-war between Washington and Beijing or Moscow. They want to hear and see America embrace a pro-development, rather than anti-competitor, strategy,” writes Custer.

Operational challenges are also meticulously examined, revealing a trend towards short-sighted, inflexible, and grant-dependent approaches that often sideline long-term development goals. The researchers advocate for a more nuanced strategy that balances immediate humanitarian needs with enduring development objectives, urging a shift from aid dependency to sustainable growth paths. They emphasize the need for U.S. assistance to engage more with local governments, rather than disproportionately relying on non-governmental organizations, to ensure that development efforts are aligned with the aspirations of partner countries. And they note that the U.S. is failing to effectively synchronize its aid, trade, and investment, making assistance far less sustainable.

“Countries that receive American aid and those that attract trade and investment minimally overlap. This is a missed opportunity. America is the largest supplier of outbound foreign direct investment and the second largest trading partner globally, but it channels few of these resources into emerging markets and fragile states,” writes Custer.

The Forum discussions, enriched by diverse viewpoints, deliberated a series of policy options aimed at addressing structural, strategic, and operational impediments. These include consolidating agencies to reduce redundancy and enhance efficiency; fostering interagency coordination; and increasing the use of funding mechanisms that go beyond traditional grants to include public-private partnerships (financing government projects with private finance), blended finance (using development finance to mobilize private capital flows to emerging markets), concessional lending (offering loans at below-market rates with a grant element) and investment guarantees (protecting investments from non-commercial risks). The Gates Global Policy Center will release a report building upon the Forum discussions and AidData’s research later this month.

“It’s time for a fundamental rethink of how we conceptualize, structure, and deliver America’s development assistance to articulate a clear value proposition in a more competitive marketplace,” said Custer. “By embracing strategic clarity, operational flexibility, and innovative funding mechanisms, the U.S. can ensure its development assistance not only advances its national interests but also contributes to a more equitable and sustainable global order.”

Sarina Patterson is AidData's Communications Manager.