On November 10, 2022, the Mosbacher Institute for Trade, Economics, and Public Policy hosted Robert Mosbacher Jr., 9th President and CEO of the Overseas Private Investment Corporation (OPIC), and Nancy Lee, a senior policy fellow at the Center for Global Development and a senior advisor at the Center for Strategic and International Studies, to discuss the important role development finance plays in U.S. economic diplomacy. This event at the Bush School DC was the final lecture of the Mosbacher Institute’s three-part Economic Diplomacy Lecture Series, which aims to highlight tools of U.S. economic diplomacy that are key to advancing the strategic and security interests of the United States.
The night’s featured guest speakers, Robert Mosbacher Jr. and Nancy Lee, spoke to the importance of development finance in how it complements and extends U.S. aid and trade policies that promote entrepreneurial capitalism and the free market rule of law approach to economic growth. Both speakers brought constructive insight as experienced development finance practitioners. From 2005 to 2009, Mosbacher oversaw operations at OPIC, an independent U.S. government agency that has facilitated over $25 billion in investments in developing countries around the world. Since then, he played a leading role in creating the BUILD Act of 2018, which helped reform U.S. development finance by creating the new U.S. International Development Finance Corporation (DFC) and granting it the tools needed to more effectively invest in developing countries.
Mosbacher spoke about how the U.N. Sustainable Development Goals and China’s Belt and Road Initiative increasingly compel the need to strengthen U.S. development finance capabilities. The U.S. DFC has contributed to this mission by raising the limit to how much money can be committed to development finance from $29 billion to $60 billion and reducing bureaucratic obstacles to U.S. development finance project success. The DFC focuses on stimulating sustainable economic growth by increasing access to financial services to advance small and medium-sized business propositions and financing critical infrastructure projects in regions of strategic importance.
Lee, who formerly served as CEO of the Millennium Challenge Corporation and also CEO of the Multilateral Investment Fund at the Inter-American Development Bank, shared her extensive experience with multilateral development banks (MDBs) and development finance institutions. Lee spoke to the strength of MDBs as they lend to governments and the private sector, leverage capital, and operate with technocratic credibility, with records proving to be financially sustainable and generally profitable. She also spoke about their weaknesses and the challenges both MDBs and the DFC face today.
Mosbacher and Lee answered questions from the audience regarding the repercussions of straddling the DFC with two sometimes conflicting challenges: advancing U.S. strategic foreign policy objectives and implementing development goals in low-income countries. They allayed these concerns with claims that increased development in middle-income countries brings positive benefits for neighboring countries when investment is strategically applied, implying that the two do not always have to be mutually exclusive. As the world continues to endure a host of global issues demanding development finance investments, they encouraged the creation of a U.S. agency that can successfully pipeline DFC’s efforts with grant-making agencies and increased partnerships with regionally-focused MDBs worldwide.
This lecture on the role of development finance in economic diplomacy can be viewed on the Bush School YouTube channel.