The Overseas Private Investment Corporation is a government agency that provides loans and investment insurance to U.S. companies doing business around the world. Its four-year, renewable charter will expire in September 2003. Proponents of OPIC claim that the agency helps the U.S. economy and promotes economic development abroad.

A close look at OPIC activity in the past four years undercuts those rationales. OPIC lowers U.S. economic output by transferring resources from productive uses to politically favored ones. OPIC beneficiaries are highly concentrated in terms of companies and industries. The majority of OPIC’s largesse goes to a small group of large multinational corporations and overwhelmingly supports a few highly profitable industries such as oil and gas, financial services, and power.

OPIC activity is also highly concentrated geographically. A handful of troubled emerging market economies has received 60 percent of OPIC support in the past four years. The agency’s finance and insurance for those countries represented only 3 percent of their total foreign direct investment. In other countries that are unable to attract foreign investment because they do not have the proper policy environment, OPIC support undermines development by rewarding the lack of policy reform.

OPIC’s record does not live up to its advocates’ rhetoric. Congress should abolish this font of international corporate welfare.