Trans-Pacific View

The Economics of US Foreign Policy

Insights from Ziad Haider.

The Economics of US Foreign Policy
Credit: Instragram/ GES2016

The Rebalance author Mercy Kuo regularly engages subject-matter experts, policy practitioners and strategic thinkers across the globe for their diverse insights into the U.S. rebalance to Asia.  This conversation with Ziad Haider – Special Representative for Commercial and Business Affairs at the U.S. Department of State, who leads the Office of Commercial and Business Affairs in the Bureau of Economic and Business Affairs in assisting and promoting U.S. business interests overseas, global entrepreneurship, and the protection of intellectual property rights – is the 65th in “The Rebalance Insight Series.”

Explain the importance of economics and trade in U.S. foreign policy toward Asia.

Since his first day in office, Secretary [of State John] Kerry has been saying that foreign policy is economic policy and economic policy is foreign policy. There’s nowhere this is more true than in the Asia-Pacific region – the engine of global economic growth. One of the key elements of President Obama’s rebalance policy is our economic engagement in the region. It’s an agenda that begins with trade because economies cannot grow by simply buying and selling to their own people. Trade creates jobs, promotes prosperity and binds nations together. It’s good for business and it’s good for bilateral relations. But trade alone is not enough. Our foreign policy also facilitates U.S. companies investing in Asia. When they do, we know from experience that they don’t just do well, but they also do good. The quantity and quality speaks volumes about our economic engagement with the region. Besides trade and investment, we’re also focused on promoting development. Through the Lower Mekong Initiative, for example, we’ve opened a women’s entrepreneurship center in Cambodia and will soon open another in Vietnam. In short, economics and trade is at the core of the U.S. rebalance to Asia.

What is the role of public diplomacy?

Public diplomacy helps foster the people-to-people connections that are such an important part of U.S. foreign policy. Those connections not only promote better bilateral relations, but they also increase shared prosperity. The Young Southeast Asian Leaders Initiative is a great example whereby we provide training, study, and grant opportunities to emerging leaders, many of whom are themselves budding entrepreneurs.

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How is Asia incubating, investing in, and growing local entrepreneurship and what are the implications for U.S. competition and cooperation?

Promoting entrepreneurship in the Asia-Pacific is a top priority for U.S. foreign policy in the region because we understand that the growth of startups is vital to solving some of the most intractable social challenges such as corruption, climate change, and violent extremism. Under President Obama’s new U.S.-ASEAN Connect Initiative – the signature framework of our economic engagement with ASEAN – senior State Department officials led a series of American Innovation Roadshows, in conjunction with the American private sector, to Burma, Indonesia, the Philippines, and Vietnam. The purpose of these roadshows is to encourage governments to adopt regulatory environments conducive to entrepreneurs and to engage young entrepreneurs and connect their ideas with capital. At the most recent Global Entrepreneurship Summit (GES), held in Silicon Valley in June, we dedicated a specific panel to ASEAN-based entrepreneurs.

Southeast Asia is not the only part of Asia ripe with entrepreneurship and innovation. In March Assistant Secretary Rivkin led a four-city roadshow to India where we had the chance to hear about the work of clean technology entrepreneurs and the support they’ve received from the Government of India through initiatives like Digital India and Startup India. India has also agreed to co-host the next GES in 2017, a tremendous platform to showcase entrepreneurs in and across the Asia-Pacific region. It’s also worth noting that, in some cases, U.S. companies are playing a direct role in the process of incubating local entrepreneurs. MetLife, for example, has partnered with the Government of Singapore to start an incubator and accelerator that will allow some of Asia’s brightest innovators to solve really tough social challenges.

What three emerging trends in global entrepreneurship should policymakers watch?

The first trend that policymakers need to understand is that entrepreneurship is a truly global phenomenon now. There’s no better evidence for this than the nearly 5,000 applications we received from entrepreneurs that had an interest in attending the most recent GES. They sent in their applications from 174 countries, a clear indication of the fact that good ideas know no boundaries.

The second trend that policymakers and the general public should watch is the growing movement toward social entrepreneurship.  Social entrepreneurs are eager to not only make money, but also to make the world a better place. Eighty-five percent of the 700 entrepreneurs at GES this year self-identified as social entrepreneurs. They represent the avant-garde of public-private partnerships insomuch as they can use the scale and reach of governments to expand the impact of their innovation and, ultimately, help governments solve some of the world’s toughest problems.

And finally, the third trend we’ve seen is young entrepreneurs harnessing new decentralizing technologies such as the Blockchain. The U.S. startup Factom, for instance, has used open source technology to design transparency solutions that can reduce corruption.

Global entrepreneurship is critical to global economic growth. What challenges and opportunities face the next U.S. president in promoting global entrepreneurship as a critical dimension of U.S. foreign policy?

Looking ahead, one clear opportunity that we see is, as I mentioned above, the continuation of the Global Entrepreneurship Summit. The seven previous Summits have showcased more than 15,000 entrepreneurs from all over the world and the fact that India has agreed to host the 2017 GES is an unequivocally positive development.

To be sure, there are also challenges. Too often governments look for quick fixes without being willing to make the necessary reforms to strengthen intellectual property protections and reduce financial, regulatory, and other impediments to entrepreneurship and growth. In terms of the U.S. government, in June 2016 President Obama signed an executive order that institutionalizes the promotion of global entrepreneurship. Given the power of what’s possible when we scale up good ideas, and the fact that the American spirit of entrepreneurship is one of our most admired values around the world, we expect the next president will be eager to build on this foundation and continue to promote entrepreneurship globally.