Private firms stimulate U.S. economy while fighting global poverty

Since 1990, nearly 1 billion people have been released from the chains of extreme poverty. The poverty rate among developing countries has fallen to 20.6% in 2010, from 43.1% in 1990.  This remarkable achievement is being applauded around the globe as a major accomplishment for the governments and international agencies which developed the Millennium Development Goals (MDGs) in 1990.

The measures included in the 1990 MDGs have certainly contributed to the decreasing poverty rates, falling maternal and child mortality rates, and improvements in healthcare and education in developing countries. However, research has shown that these trends are more directly correlated with the roles private firms have played in stimulating economic development in low income countries.  Data supporting this idea could further incentivize American businesses to participate in fighting global poverty, which will highly benefit the U.S. economy by providing domestic firms with overseas market opportunities.

According to investment data compiled by the International Finance Corporation, the fastest growing economies since 1990 (with annual growth rates of over 5%) were also those with the highest levels of private investments.  There was a weak correlation, however, between levels of public investments and rates of economic growth among developing countries.  This trend highlights the growing importance of private enterprise in the fight against extreme poverty, and more importantly, the increasing awareness among American firms that their roles in stimulating economic development in low income countries is critical for both financial success and ending extreme destitution.

U.S. firms are recognizing the benefits of investing in developing countries. In June 2011, over 50 major American corporate leaders in the U.S. Global Leadership Coalition (USGLC), signed a letter urging Congress to support a strong International Affairs Budget to facilitate trade relations between U.S. businesses and developing countries.  In the letter, multinational corporations (including Coca-Cola, Boeing, Google, and Walmart) explicitly stated that fostering relationships with developing countries was indispensable to U.S. private enterprise because America’s fastest growing markets are located in developing countries.

Private investments in developing countries also benefit the U.S. economy overall.Because U.S. economic growth is becoming increasingly intertwined in the global economy, over 20% of American jobs are directly linked to international trade. America’s fastest growing markets include developing countries such as China, Brazil, and India, which receive almost half of all U.S. exports. Establishing markets overseas is quickly becoming critical to the survival of many American businesses, creating a global demand for American products and services, thereby stimulating the economy and creating domestic employment opportunities.

Organizations such as the United Nations Development Programme (UNDP) are embracing American companies’ keen interests in emerging markets to assist in the fight against global poverty. Agencies like UNDP are successfully engaging the private sector in developing countries by creating innovative business strategies with both commercial and development objectives. Essentially, the growing appeal of developing markets to American businesses has spurred massive development initiatives like the UNDP, which have helped bridge the gap between commercial investment and economic development.

Based on the proliferation of American investments in developing countries over the last two decades and the increasing efforts of governments and international organizations in facilitating trade relations with low income countries, it is safe to assume that extreme global poverty will continue to abate, while providing the U.S. economy with countless opportunities for growth.

Chelsea Olivera is a sophomore double majoring in Political Science and History of Art from Miami, FL.