Exporting Capitalism: Private Enterprise and US Foreign Policy

Abstract

In the post-World War II era, the United States took a key role in promoting economic development in the global South. When formulating policies and mapping out development strategies, the United States has consistently emphasized the key role of the private sector. In US policymakers’ view, development through private sector investment offered the best path to economic reform. Ethan B. Kapstein provides a magisterial overview of US efforts to promote development in Taiwan, South Korea, Latin America, Eastern Europe, Iraq, and Afghanistan in ‘Exporting Capitalism’. Throughout, Kapstein emphasizes the role of ideological beliefs that drove US policymakers to emphasize private sector development. Kapstein argues that ideological beliefs among US policymakers pointed to the role of private enterprise as key to economic development. These beliefs emphasized the notion that entrepreneurial spirit and the development of domestic enterprises, combined with large-scale private investment from abroad would transform economies of developing countries around the world and thus represent best-practice standards to be exported to other states. These beliefs played a fundamental role in shaping the views of US officials concerning effective development strategies. In five chapters, Kapstein provides evidence for this argument through a series of case studies. These case studies show that US officials consistently pushed for private sector involvement and were reluctant to use direct transfers of funds, as through foreign aid. Efforts to rely on private sector investment to stimulate development often resulted in failure. These failures stemmed both from a reluctance of the US industry to spearhead development programs, and unwillingness on the part of developing states to implement the necessary reforms that would stimulate private sector development. The track record for private sector development thus remains mixed: while Taiwan, Japan, and South Korea are success stories, this strategy failed to produce results in Latin America, Russia, Iraq, and Afghanistan.