In the last decade, the concept of government partnerships with the private sector has frequently appeared in international development literature and U.S. development policy discussions. Goal 8 of the United Nations' Millennium Development Goals is to "develop a global partnership," with an emphasis on working with the private sector to increase global access to information technology and pharmaceuticals. The "transformational diplomacy" initiative in the George W. Bush Administration included "engaging the private sector" among its six areas of focus. The Obama Administration's U.S. Global Development Policy, announced in September 2010, aims to "leverage the private sector, philanthropic and non-governmental organizations, and diaspora communities." U.S. development activities in the last decade reflect this emphasis. The U.S. Agency for International Development (USAID) alone reports participating in 1,600 public-private partnerships (PPPs) with more than 3,000 different partners between 2001 and 2012. Some observers view such partnerships as part of a broad ongoing transformation of how foreign aid is implemented, bringing nontraditional actors and ideas into development practice. Others view PPPs as an experiment that has not proven itself preferable to traditional approaches to development assistance. This report discusses the evolution of private sector involvement in U.S. foreign assistance programs over recent decades, how globalization has driven the modern approach to development partnerships, potential benefits and drawbacks of PPPs, and how partnerships are being used by other bilateral donors and multilateral development agencies. The report then discusses partnership-related issues that may be of interest to Congress as part of the foreign assistance authorization and reform process. USAID and other U.S. agencies have worked with the private sector for decades, but they have expanded their means of engaging the private sector over time. Starting in the mid-1970s, USAID began using nonprofit nongovernmental organizations (NGOs) as development program implementers more frequently, primarily as an alternative to full government staffing. The shift allowed for greater flexibility, and arguably cost savings, while maintaining full government control of development policy and programs. In the 1980s, the Reagan Administration's foreign aid policies focused on supporting indigenous for-profit private enterprises as a means of improving economic development processes and outcomes. The Private Enterprise Initiative, begun in 1981, focused largely on improving the policy environment for indigenous private enterprise in developing countries, but it also explored ways to use the private sector to implement traditional aid programs. This approach was also reflected in the establishment of several enterprise funds, beginning in 1989, which primarily used USAID funds to invest in small and medium-sized private businesses, initially in Central and Eastern Europe, as a means of spurring private sector development in countries transitioning toward market-based economies. Microenterprise programs, through which USAID supports local financial institutions or organizations providing small loans and support services to small entrepreneurs, first became popular in this period as well. These models of private sector engagement continue to this day. Government aid agencies work with private entities both as implementing partners and drivers of economic growth in which to invest. In the last decade, however, a new model of public-private engagement in development has emerged. Rather than funding private entities to implement USAID-designed programs, or investing in the growth of private enterprise within a developing country (both approaches are ongoing), the new model is designed to take advantage of the growing presence of international corporations, foundations, and other private entities in developing countries through formal relationships marked by common objectives, mutual resource contributions, and shared risk. This is the type of activity, now commonly referred to as a public-private partnership (PPP), addressed in this report. Nevertheless, there is no official definition of PPP in the international development context, and an understanding of the wide range of activities that are referred to as PPPs is important for understanding the debate around PPP efficacy. The rise of PPPs in development assistance is closely related to significant changes in the flow of funds to developing countries in recent decades. Liberalized trade policies and information technology innovations have led to a surge in global actors. Private financial flows to developing countries—including commercial lending, charitable giving, and money transfers between family members—are now significantly and consistently higher than official development assistance, a dramatic change from just 10 years ago. Foreign aid from government donors accounted for only 18% of the estimated $703 billion in total financial flows between the Organization for Economic Cooperation and Development (OECD) member countries and developing countries in 2010 ( Figure 1 ). Looking at U.S. financial flows to the developing world in 2010, official flows (development aid from the government) accounted for only about 9%. Private capital flows, remittances, and philanthropy made up the bulk. The quality of private flow data is questionable, and some analysts assert that much of the private flow is not going to the least-developed countries, where official aid is still paramount. Still, the trend is unmistakable. Donor governments are no longer the key foreign players in many developing countries. Aid policies and priorities are affected by evolving trade, investment, and migration trends and policies. In this changing context, PPPs are viewed by many policymakers as an opportunity to leverage private resources toward solving problems that hinder development and business interests alike. Among U.S. agencies involved in international development, USAID took the early lead in developing and implementing a PPP model. Under the Obama Administration, the State Department has become more active in development-related PPPs as well, and, more recently, the Millennium Challenge Corporation has applied the new partnership model in the development of its country compacts. While agencies may vary in their partnership priorities and processes, there is significant overlap. In fact, many large PPPs include multiple U.S. agencies as partners. USAID is the primary U.S. agency promoting international development. The agency has been the U.S. government leader on PPPs for development since establishment of the Global Development Alliance (GDA) Secretariat within USAID in 2001. The Secretariat was tasked with developing partnership models that could become a new standard for USAID programs. It was intended to link growing private financial flows in developing countries to U.S. development assistance programs, enabling both private and public gains by promoting common interests. USAID reports participating in more than 1,600 PPPs since 2001, with more than 3,000 distinct partners. Private partners include corporations, universities, and foundations and other nonprofit organizations. USAID uses PPPs in every development sector. For example, in the Jordan Education Initiative, USAID brought a dozen private sector technology companies, including Cisco and Dell, together with the Jordanian Ministry of Education's program to modernize curriculum content and broadband information technology as a key step to education reform. USAID contributed $11.25 million to the partnership between 2005 and 2007, while the private partner contributions were valued at $25.6 million. In the Sustainable Tree Crops Alliance, USAID brought together public and private stakeholders in the cocoa industry, including Mars, Hershey, Nestlé, and other international chocolate processors. The project was designed to improve the income of small tree crop farmers and the environmental sustainability of cocoa production systems in West and Central Africa through technology transfer, marketing, and institutional innovations. USAID contributed $2.18 million to the effort in 2002, while other partners contributed $7.55 million. Table 1 and Table 2 , below, show the objective and partner roles for two fairly typical USAID PPPs. The text box below ("Innovation in Partnership: African Diaspora Marketplace [ADM]"), in contrast, highlights a more innovative partnership model focused on leveraging the knowledge and resources of developing country nationals who reside in the United States. The GDA Secretariat was intended to be a temporary entity that would be phased out when the GDA business model was mainstreamed throughout USAID. However, mainstreaming did not occur as quickly as planned, and in 2005, rather than disappear, the Secretariat evolved into the Office of Global Development Alliances, later into the Private Sector Alliance Division of USAID's Office of Development Partners, and most recently the Global Partnerships Division (GP) of the Office of Innovation and Development Alliances (IDEA). PPPs have arguably become an integral part of program planning and development strategy at many U.S. missions abroad. Efforts to institutionalize the alliance concept have been bolstered in recent years by new foreign service officers, hired through the Development Leadership Initiative, who have been trained and designated as alliance builders before beginning their first overseas assignments. Efforts in the international community to broaden the donor-centric aid model to engage a broader range of development stakeholders have strengthened the mainstreaming effort as well. The GP Division in Washington continues to assist mission staff in developing strategic alliances, serves as a point of contact for private sector entities wishing to engage in partnerships, and focuses on advancing knowledge of best practices in alliance building and evaluation. In recent years, the GP Division (once PSA) has also focused on identifying opportunities to improve alliance efficiency through establishing Global Framework agreements with companies that collaborate with USAID in a specific sector or type of activity in multiple countries. For example, USAID works with Cisco and Hewlett-Packard in more than 60 countries to provide information technology training that creates job opportunities and lays the foundation for a global information technology infrastructure. As of September 2013, USAID had Global Frameworks with Starbucks, Coca-Cola, Intel, Evensen Dodge, Bayer Pharma, the Packard Foundation, Green Mountain Coffee, General Mills, Kraft, the MacArthur Foundation, PepsiCo, the Alliance for Green Revolution in Africa, Project C.U.R.E., Swiss Re, Unilever, DSM, the World Cocoa Foundation, and Microsoft Corporation as well.