At a time that the U.S. economy is tied more closely than ever to the world economy and some of the strongest economic growth is occurring in developing countries, American businesses are underrepresented in many of these high-growth regions, OPIC President and CEO Elizabeth Littlefield said.
Littlefield, who spoke on Tuesday, July 17 at the Women in Finance symposium at the White House, said that just 1% of U.S. companies invest abroad. While OPIC’s work supporting private investment in many of these developing markets often helps to advance U.S. foreign policy, it also helps U.S. businesses expand into promising high-growth regions, she said.
Many of Littlefield’s remarks focused on Africa, where the number of households with disposable income is expected to grow by 50% over the next ten years. “An annual income of $10,000 seems to be the tipping point at which households are able to purchase beyond their basic needs,” Littlefield said. Other changes that have transformed much of sub-Saharan Africa into a more welcoming business climate include what she called a “reversal of the brain drain,” in which many people are returning to their country of birth after studying or working abroad; as well as government reforms that have removed some of the hurdles to investing and doing business.
Littlefield, who spoke on a panel on The Global Economic Outlook, was joined by Lael Brainard, Under Secretary for International Affairs at the U.S. Department of the Treasury – as well as an OPIC board member; and Abby Joseph Cohen, Managing
Director, Senior Investment Strategist and President of the Global Markets Institute at Goldman Sachs, who also spoke about the effects of a global economy where more and more of the growth was occurring outside of the United States. Their remarks, which, focused on impact of the financial crisis in Europe and on competition from China, underscored Littlefield’s message about the growing importance of emerging, frontier markets to U.S. businesses. “Clearly, U.S. companies are dramatically affected by the rest of the world,” said Cohen.
Asked about some of the most promising sectors for businesses investing in developing markets, Littlefield said that the rapid migration into the middle class had created a massive need for clean technology supporting renewable energy. In 2010, 50% of newly-installed electric capacity around the world was renewable energy, she said.
“It is a huge investment opportunity, and an imperative for the planet.”