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May the Force of Broad-Based Economic Growth Be with You

Cara Santos Pianesi's picture

 If the world has a stage, the annual September gathering of the UN’s General Assembly is it. There, world leaders have an opportunity to address their colleagues (and, by media extension, global constituents) in a somewhat long-format speech. At the General Assembly, Premier Khrushchev banged his shoe. And, with understandably less attention, President Obama had this to say about development at this year’s High-Level Plenary Meeting (a.k.a. the Review Summit on the Millennium Development Goals):

“…To unleash transformational change, we’re putting a new emphasis on the most powerful force the world has ever known for eradicating poverty and creating opportunity. It’s the force that turned South Korea from a recipient of aid to a donor of aid. It’s the force that has raised living standards from Brazil to India… 

     The force I’m speaking about is broad-based economic growth… We know that countries are more likely to prosper when they encourage entrepreneurship; when they invest in their infrastructure; when they expand trade and welcome investment.  So we will partner with countries like Sierra Leone to create business environments that are attractive to investment, that don't scare it away…”

 

Every country, multilateral organization, and NGO has its own way of working towards what President Obama calls the “force” of broad-based economic growth.

 

In particular, MIGA does this by supplying political risk insurance to private sector investors and lenders. This often allows them to go forward when they want to invest in a developing country, but are concerned about certain types of risks such as expropriation, currency inconvertibility, or war and civil disturbance, for example.

 

Since President Obama cited Sierra Leone as an example, allow me to mention MIGA’s work there—which I think illustrates his point well.

 

MIGA currently insures five projects in Sierra Leone under its Small Investment Program and recently signed two contracts with private equity funds planning several small-scale investments in the country. One MIGA-supported project provides the local market with crushed and cubed ice—an essential resource for the country’s booming fishing industry. Most of the ice is sold to local fishmongers and artisanal fishermen who are at sea for days at a time and need ice to preserve their catch.

 

Another project we insure supports the modernization and expansion of the Sierra Fishing Company. Before the country’s brutal conflict that destroyed its assets, this company was the largest private sector employer in Sierra Leone. So, just in terms of the provision of jobs, the development impact of rebuilding the company is clear. In addition, the fishing industry is the country’s largest supplier of protein and a vital contributor to economic stability. The industry is now focused on meeting European Union export standards and MIGA is working with other parts of the World Bank to help the Sierra Fishing Company achieve the required environmental, health, and safety standards.

 

These projects touch on at least two of the MDGs that were the focus of last week’s General Assembly. Certainly in matters of international development, measuring results is a challenge. Arguably this is even truer for a multilateral provider of political risk insurance, like MIGA.

 

To that point, President Obama’s term, the force of broad-based economic growth—helps explain what MIGA supports (through the encouragement of foreign direct investment) in developing countries, especially those like Sierra Leone that are among the world’s poorest and are emerging from crisis.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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