Support for the idea that private capital and the business sector are key ingredients to reducing poverty, promoting global growth, and also good for U.S. companies, has been growing since the early 2000s. Yet, the U.S., with its unparalleled private sector capacity and ingenuity, is far behind in bringing those assets to the development arena. The tools to enhance this capability exist and can be deployed with only modest additional resources. The capabilities of the main U.S. instruments of development finance – the Overseas Private Investment Corporation (OPIC), the US Trade and Development Agency (USTDA), US Agency for International Development’s Development Credit Authority (DCA) – are ripe for expansion at a reasonable cost. In addition, the private sector has demonstrated its willingness and ability to engage in the development space, if only the U.S. government will make itself a better, more open partner through a one-stop-shop and a more strategic use of public-private partnerships (PPP)s.

The more ambitious and universal SDGs are grounded more on domestic and international finance, with a big role envisioned for the private sector as a force for building inclusive economic growth.

Over the past two decades, private resource flows and investment in developing countries have dramatically expanded. Official development assistance (ODA), which is extended by donor governments, has lost its preeminent position to private flows (inclusive of private capital, philanthropy, and remittances), which now account for some 90 percent of financial flows, leaving ODA accounting for just 10 percent.

Development finance—which joins public support with facilitate private capital flows—was not a big issue in the second half of the 20^th century. International corporations were viewed with suspicion in development arenas and donor assistance was the ‘go-to’ development solution. That has significantly changed, as highlighted by the 2015 Third International Conference on Financing for Development in Addis Ababa, focused on how to fund the Sustainable Development Goals (SDGs). Efforts to finance the Millennium Development Goals (the predecessors to the SDGs) were targeted on increasing ODA to advance specific development outcomes in developing countries.  The more ambitious and universal SDGs are grounded more on domestic and international finance, with a big role envisioned for the private sector as a force for building inclusive economic growth.  With achievement of the SDGs estimated to require an additional annual investment of $2.5-$4.5 trillion between now and 2030 and with a further $13.5 trillion required to implement the Paris climate accord, all mechanisms available to raise financing for development must be deployed.