Building an America First Development Strategy

Over a year ago President Trump began dismantling the U.S. Agency for International Development (USAID). While bemoaned by many in the foreign policy community as a mistake, in reality the agency had long ago strayed from its initial purpose, namely, helping developing nations establish prosperous and growing free market economies. Indeed, its initial purpose as envisioned by President Kennedy was to bring the economic promise of America to the poorest nations in the world. Just as with our opening to China in 1972, we were confident that democracy would follow.

Yet the tragedy of USAID was its failure to bring a single new market-based economy to life. After several decades it could produce no examples of even having brokered an alliance between a Third World country and the United States. USAID’s annual core operating budget of $22 billion and its ineffective record rightly proved too much for the Trump Administration’s DOGE review.

This state of affairs might be seen as inevitable given that USAID’s initial thesis of how prosperous economies come about was terribly flawed. President Kennedy’s friend, Walter Rostow, provided a plan in The Stages of Economic Growth: A Non-Communist Manifesto that would govern USAID’s thinking until well into this decade. Published in 1960, Rostow’s book is an entirely conjectural effort long on ideas about how development should happen and short on empirical information about how free market economies actually start.

In the post-USAID era, however, the United States cannot afford to appear to withdraw completely from its historic commitment to helping poorer countries achieve sustained growth. Serious alternatives have been slow in coming, largely because “nation-building” has been out of fashion since Iraq.