One of the main concerns about foreign aids is how to allocate the resources to get the best result.  Both private sector and public sector have to work together to end global poverty to achieve maximum effectiveness. To understand the importance of the joint effort between these two entities, one first needs to understand what effect these two sectors have on the economy.

In the book “A Life Half Lived: Surviving the World Emergency’s Zone”, the author, Andrew McLeod, discussed the differences between these two sectors and proposed the solution for their cooperation.

The private sector has many constraints to enter the developing countries. The first constraint is the high risk of investment.  The second constraint is the policies in developing countries in welcoming potential investment from international firm.

The developed countries do not want to invest in developing countries because they do not see that their helps are making improvement in the developing countries; therefore, the diplomacy between developed countries and developing countries need to be improved to create better opportunities for the private sectors to enter the poverty countries.

To achieve this objective, public sector should work together with the private sector to discover private sector’s needs and understand its structure. When international firms see the potential positive return on the investment, they will want to create branches in the developing countries. When these firms enter the countries’ market, they bring along jobs, expertise and capital. With these available resources, developing countries can spur their economic growth and the foreign aids from developed countries will reach the maximum potential.

For example, if an international company wants to enter China, the United States can direct its fund toward getting favorable policies from Chinese government. At the same time, the foreign aids can be guided toward improving education level for Chinese citizens so that they will become skilled labor to fit the needs of the industrial revolution.

In “A Life Half Lived: Surviving the World Emergency’s Zone,” the author expressed his opinions after the half of the life time in his foreign aid campaign and went into detail about the importance of the cooperation between public and private sector in the war against global poverty.

– Phong Pham

Sources: Goodreads, Booktopia, CSIS
Photo: UTest