Exporting Capitalism

Private Enterprise and US Foreign Policy

ISBN 9780674251632

Publication date: 06/14/2022

The first comprehensive history of America’s attempts to promote international development by exporting private enterprise, a story marked by frequent failure and occasional success.

Foreign aid is a primary tool of US foreign policy, but direct financial support and ventures like the Peace Corps constitute just a sliver of the American global development pie. Since the 1940s, the United States has relied on the private sector to carry out its ambitions in the developing world. This is the first full account of what has worked and, more often, what has failed in efforts to export American-style capitalism.

Ethan Kapstein draws on archival sources and his wide-ranging experience in international development to provide penetrating case studies from Latin America and East Asia to the former Soviet Union, Afghanistan, and Iraq. After WWII the Truman and Eisenhower administrations urged US companies to expand across the developing world. But corporations preferred advanced countries, and many developing nations, including Taiwan and South Korea, were cool to foreign investment. The Cold War made exporting capitalism more important than ever, even if that meant overthrowing foreign governments. The fall of the Soviet Union brought new opportunities as the United States promoted privatization and the bankrolling of local oligarchs. Following the invasions of Afghanistan and Iraq, the United States believed it had blank slates for building these economies, but ongoing conflict eroded such hopes.

Kapstein’s sobering history shows that private enterprise is no substitute for foreign aid. Investors are often unwilling to put capital at risk in unstable countries. Only in settings with stable governments and diverse economic elites can private enterprise take root. These lessons are crucial as the United States challenges China for global influence.

Praise

Ethan Kapstein provides us an historical panorama of how, in the postwar period, the US sought to establish not only a rule-based system but one built on private enterprise. As it turns out, the motivation was not just the narrowly self-interested reason of advancing the interests of American multinationals, but had deeper ideological roots. Kapstein provides fresh insights into a neglected topic: the liberal order narrative.

—Stephan Haggard, University of California, San Diego
Ethan Kapstein has drawn on his rare combination of academic expertise and professional experience to craft a wide-ranging and provocative analysis of the sources, implementation, and impact of US government efforts to promote capitalism abroad. The lessons he draws about the effectiveness of US foreign aid policies will help scholars and policymakers think more historically and creatively about the means and ends of efforts to advance the national interest by reshaping the world.

—David S. Painter, Georgetown University
Foreign direct investment by the United States to promote private enterprise has often been overlooked by scholars exploring the variety of competing approaches to promote economic growth and change around the world. Kapstein draws out the longer history of such efforts, highlighting one underappreciated segment of the complex global story of international development.

—David Ekbladh, Tufts University
Kapstein highlights an important but neglected component to US strategy during the Cold War: encouraging private enterprise around the world to spread capitalism and economic development. Combining personal knowledge and research that ranges from East Asia to Latin America, he brings the story up to date and with lessons for the globalization challenges of today.

—Douglas Irwin, Dartmouth College
A very interesting and enjoyable read, gaining much from the author’s personal practical experience.

—Diane Coyle, Enlightened Economist

Author

Ethan B. Kapstein is Codirector of the Empirical Studies of Conflict Project at Princeton University and Arizona Centennial Professor of International Affairs at Arizona State University. He has also served as a Principal Administrator at the Organization for Economic Cooperation and Development and as a US government economist. A former banker and retired naval officer, Kapstein has published widely on the international political economy and advised multinational corporations and development agencies.