How can U.S. policymakers better support a thriving middle class? While this has long been a question for economists at home, less attention has been given to a similar issue abroad. Just as a majority of citizens in the U.S. have traditionally fallen into the economic bracket of middle class, the majority of countries today fall into the category of “middle income.” What is middle income? These countries aren’t ultra-rich — nor are they ultra-poor. They are the international middle class — representing a new majority of the world’s states, whose impact will disproportionately shape our 21st century world.
Unfortunately, the U.S.’ current approach to middle income countries isn’t getting the job done. The U.S.’ main competitors on the global stage — China, the European Union, Japan and Russia — have outpaced the United States in both understanding and engaging these rising powers. To regain America’s competitive advantage, the U.S. must take a smarter tack.
As part of a newly released study, senior U.S. diplomats told us that America’s toolbox for engaging the new majority of the world’s countries is severely lacking — particularly on issues of helping U.S. firms to foster critical infrastructure in the transport and energy sectors. Yet instead of helping American companies seize new trade and investment opportunities in promising emerging markets, the Trump administration’s proposed budget for fiscal year 2018 eliminates trade promotion offices. Coupled with the decision to pull out of the Trans-Pacific Partnership, this has only put the U.S. further behind competitors.
This shortcoming in policy also represents an outlier in American history. Since the end of World War II, with the founding of the United Nations, World Bank and International Monetary Fund and advent of the Marshall Plan, the United States has sought to lift up impoverished countries. By the 1960s and 1970s, the U.S. encouraged the Organization for Economic Cooperation and Development and G-7 forum to share common concerns and coordinate joint activities among the wealthiest countries.
During these same two decades, two-thirds of the world’s countries were classified as “least developed.” Today, more than half of the world’s countries have risen to middle income status, defined by the World Bank as having a per capita gross national income of $1,026 to $12,475. This includes nearly all of Latin America, South and Southeast Asia, at least a third of the countries in Africa, and several countries in East and Southeast Europe, as well as a number of countries in the Middle East.
For many middle income country governments, their primary interaction with the United States has been as recipients of American foreign aid. That emphasis informed not only America’s economic relationship, but colored its political and security relations as well. Many of these middle income countries have now “graduated” from such programs, but instead of giving these graduates added attention to develop mutual interests, we have a dangerous U.S. policy vacuum.
The countries in the middle have reason to believe that their accomplishments have not yet been recognized. Moreover, they perceive that they and the U.S. have not yet developed the more mature relationships that would permit them to share challenges and opportunities in ways that each could make their own valued contributions.
Working better with this new majority as critical partners for development and peace benefits American interests and values in at least two fundamental ways:
— First, by allowing the U.S. government, businesses, civil society organizations and individuals to access and leverage the immense economic, social, technological and other capabilities of middle income countries for mutual progress on shared development goals.
— Second, by increasing the likelihood that long-standing and new middle income countries will provide political support to United States’ foreign policy goals in global multilateral fora on matters ranging from safeguarding human rights and promoting green technologies to nonproliferation and defusing and resolving armed conflicts.
To upgrade America’s toolbox for better engaging middle income countries, policymakers would do well to convene annually at the highest political levels with key emerging economies. This engagement should include a new generation of binational commissions and strategic dialogues that could focus on initiatives that bring mutual interests to reality. American ambassadors should also facilitate greater numbers of city-to-city, university-to-university, hospital-to-hospital and business-to-business partnerships with middle income country counterparts.
A final smart step would establish a new governmentwide office, co-located in the U.S. National Security and Economic Councils, to study and nurture comprehensive approaches between America and major emerging economies. It would help advance priority U.S.-middle income country relationships by strengthening cross-government coordination on a range of policy priorities that harness the capabilities and innovative ideas of U.S. cabinet departments and agencies, including the Export-Import Bank of the United States and Overseas Private Investment Cooperation.
Though these measures should never come at the expense of robust and targeted aid and other programs for least developed countries, especially fragile states recovering from years of protracted violence, they are necessary more than ever if America is to regain its competitive advantage vis-à-vis the lion’s share of — and in several cases the most dynamic — countries. In short, both America and the new majority of the world’s middle income countries can benefit from a radically modernized set of relations based on a new level of appreciation and respect for what each has to offer the other.
Neglecting these opportunities forgoes the prospect of millions of new jobs and billions of added growth to the U.S. economy.
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The U.S. Has a Flawed Approach to Middle Income Countries originally appeared on usnews.com
