Economic Analysis

The Office of Investment Policy (OIP) is responsible for evaluating the potential economic impact in the U.S. and development impact in the host country for all OPIC-supported projects. OIP ensures compliance with all Congressionally-mandated statutory and policy requirements regarding U.S. economic effects and host country development impacts. This latter analysis, called the Development Impact Profile (DIP), is required by the Foreign Assistance Act of 1961.

OIP relies heavily on information about the proposed project provided by the investor via the OPIC application form. The provision of supplemental materials, including business plans, financial statements, and expected cash flows, assists OIP in generating a comprehensive analysis. Depending on project-specific details, OIP may have follow-up questions for the investor.

Economic Impact in the U.S.
OIP conducts an analysis of the project’s expected impact on U.S. employment and U.S. balance of payments flows. Depending on the project, OIP’s evaluation may include an in-depth industry review and forecast of the project’s potential impact on the U.S. economy. In addition, OIP calculates any positive effect of project-specific procurement on U.S. employment.

Some projects are considered sensitive from a U.S. economic perspective. This means that the project sector’s U.S. industry has experienced a decline – usually measured by production, exports, imports, and employment – during the past decade. A project in a sensitive sector would require an in-depth industry analysis and OPIC’s policy has been to deny support for a project that would result in the loss of U.S. jobs.

OPIC has few categorical prohibitions for U.S. effects purposes. The main prohibition covers any project that intends to reduce or eliminate U.S. operations by moving production overseas. In addition, OPIC has policy restrictions that prohibit projects in certain sectors. Examples of such sectors include gambling, tobacco, alcohol, and munitions production.

Development Impact in the Host Country
One of OPIC’s top agency priorities is to strengthen its developmental efforts. To assure that each project receiving OPIC support has a beneficial net impact on the economic and social development of the project’s host country, OIP conducts a development impact analysis. The analysis uses objective measurements to demonstrate the developmental impact of OPIC-supported projects; the results of these analyses are documented in OPIC’s Annual Development Report to Congress.

Factors that are considered when conducting the host country development analysis include:

• Human capacity building and job creation
• Social policies and corporate social responsibility initiatives
• Infrastructure improvements
• Technology and knowledge transfer