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Enterprise funds are an innovative U.S. foreign policy tool created in the early 1990s that use U.S. government funding to stimulate economic development by investing in the private sectors of developing countries. Unlike grants or loans directed to foreign governments, enterprise funds use U.S. government funding to invest in private equity and credit in emerging markets. This paper makes a case for launching a third wave of enterprise funds. It provides an overview of the enterprise fund model and its achievements, offers suggestions for improvements, and recommends six countries and one region in which current economic and political conditions are ripe for the launch of new enterprise funds. Using a set of criteria, we identify two categories of countries as candidates for a new round of enterprise funds. Ultimately, the choice for the next round of enterprise funds will follow a political decisionmaking process. The objective of this paper is to inform policymakers on the merits of enterprise funds as a strategy for sustainable economic development and to offer a select list of countries of geostrategic importance to the United States where enterprise funds could be established in the immediate future.
Daniel F. Runde is senior vice president, director of the project on Prosperity and Development. Romina Bandura is a senior fellow with the Project on Prosperity and development at CSIS.
This report is made possible by the generous support of Bowman Cutter, Kim G. Davis, James A. Harmon, and general program support provided to the Project on Prosperity and Development at CSIS.
