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A New Model for Development

Cameron Cushman on June 21, 2010 Source: Policy Dialogue on Entrepreneurship

During the last week of May, the Kauffman Foundation and the Command and General Staff College Foundation at Fort Leavenworth hosted a conference that sought to help build functioning economies in countries recovering from conflict or disaster. This new form of economic development, called expeditionary economics, provides a new way of thinking about building an economy in a post-conflict country, such as Iraq or Afghanistan, or in a post-disaster scenario, like Haiti. This new model focuses on two key ideas, as laid out in Carl Schramm’s recent article, Expeditionary Economics: Spurring Growth After Conflicts and Disasters.

1) Economic growth is essential to stabilizing countries that have been struck by war or disaster and the best way to achieve growth is through indigenous entrepreneurship. This idea stands in contrast to the traditional, top down approach utilized by large, bureaucratic government agencies such as USAID.

2) One of the best equipped groups to help encourage domestic entrepreneurship is the U.S. military. They are typically the first ones on the ground following a conflict, are the best trained, are prepared to take action and whether they like it or not, they will be held responsible for what happens in the afflicted country.

I’ll tackle the latter and probably more controversial point in my next post, but for now let’s focus on how the formation of new businesses will build economies where little economic growth has existed before. One of the main reasons that the U.S. economy is the envy of the world is largely due to the entrepreneurial nature of our economy. Entrepreneurs innovate and create new products, inventions and services that we never knew we needed before. So can the United States use this “secret sauce” as an economic development tool that can help rebuild economies in the wake of invasion or disaster?

The current approach to economic development assumes that foreign aid can use outside sources of funding and assistance to build infrastructure, create jobs and increase economic growth. This approach distorts markets and removes the ability for domestic businesses to compete. Typically, corruption follows these assistance programs, keeping the aid from those who need it the most. It is becoming clear in Washington that the current model is producing less than ideal results.

But what if you flipped this model on its head and created economic growth from the bottom up? What if you could encourage local people to start their own ventures, hire local workers and innovate in their local regions? What can successful entrepreneurs around the world do to help spur entrepreneurship in failing or failed states?

This is a new field of inquiry and it is clear that the conference raised many questions and issues that must be thought through before any of these ideas can become U.S. policy or military doctrine that can be implemented in theater. The first step has been taken, but now the real work begins.

The Foundation recently released the initial conference proceedings on expeditionary economics. It will continue to be updated as new research becomes available.

Category:  Digesting DC 

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