This is an archived USAID document retained on this web site as a matter of public record.
Administrator J. Brian Atwood
United Jewish Federation of Metro West
New Jersey, June 16, 1997
U.S. Agency for International Development
Good afternoon. I'd like to thank Congressman Frelinghuysen
for inviting me to New Jersey. I'd also like to thank Lee Adlerstein
and the United Jewish Federation of Metro West for the opportunity
to join you today.
As head of USAID, I have talked to many groups about why
foreign assistance is in our national interest. This part of my job is
a little easier when I speak to audiences like this that understand
what Secretary of State Madeleine Albright refers to as "the
imperative of continued U.S. world leadership."
The importance of U.S. leadership is perhaps most apparent in
the Middle East. A cornerstone of U.S. policy in the Middle East
since Israel's creation in 1948 has been a commitment to Israel's
security and well-being. We are bound together closely by historic
and cultural ties as well as by mutual interests, and the U.S.'s
continued economic and security assistance to Israel underscores
our commitment.
Fortunately, the importance of Israel is very well understood
in the U.S. Conversely, foreign aid may be the most single most
misunderstood element of our foreign policy. Polls have for years
indicated that Americans think foreign aid is the largest item of the
federal budget -- the reality is that we spend less than one-half of
one percent of the federal budget on economic and humanitarian
relief. We consistently rank last among industrialized countries in
terms of the percentage of wealth we devote to foreign assistance.
Foreign assistance is a sound investment in many ways --
USAID's work preventing crises and helping advance democracy
and prosperity is far less expensive than military operations,
peacekeeping efforts and emergency humanitarian relief. Global
issues like climate change, pollution, biodiversity loss, natural
resource depletion, refugees and diseases do not respect national
borders.
I could spend hours talking about USAID's work and why it is
in our self-interest to help others help themselves. Since I'm just
across the river from Wall Street, I'd like to focus my remarks on
why development is good for our economy. As President Calvin
Coolidge once noted, "The chief business of the American people is
business." If that maxim was true 60 years ago when Coolidge was
president, it is even more so today.
This room has more than its share of well-informed foreign
policy buffs. You may be unaware, however, that this
congressional district has an important connection to the
international campaign to eradicate polio worldwide, an effort that
will save this country 235 million dollars annually in inoculations.
I'm referring to Lifelines Technology, a company based in
Morris Plains. Lifelines has worked with USAID to develop
monitors on oral polio vaccines that determine if the vaccines have
been overexposed to heat. UNICEF, among others, now requires
these monitors on all its oral polio vaccines. In the past, vaccines
had to be disposed after one day in the field. Now vaccine wastage
has been reduced by around 30 percent, saving 10 million dollars a
year, and more importantly, allowing more children to be
inoculated.
Congressman Frelinghuysen and I just toured the Lifelines
facility this morning. The 10-year effort to develop the vaccine vial
monitors is an excellent example of the public-private partnerships
USAID pursues to make government work better while helping
U.S. companies compete in the global marketplace.
We live in a brutally competitive economic world. New
Jersey -- like every other state in the nation -- understands that
there is no choice but to engage in the global marketplace. The
business people of this state are too savvy to turn their backs on
some of the world's fastest-growing and most dynamic markets.
America's real strength, in business as in many fields, has always
been our ability to make change work for us rather than against us.
The Clinton Administration is committed to promoting U.S.
economic security and prosperity in an increasingly global
marketplace. We have effectively used trade policy and foreign
policy to advance our strategic and economic interests around the
globe.
Continued Clinton Administration efforts to promote U.S. job
creation through trade and investment abroad must focus on
emerging markets in Asia, Latin America, Eastern Europe, the
New Independent States and Africa. Private capital will play the
largest role in bringing the markets of developing nations into the
mainstream of trade and investment, but some of the most
promising developing markets are still hampered by trade barriers
and other policy distortions that discourage trade and private capital
flows.
The markets of the developing world -- in which USAID has
long experience -- possess particularly rich potential for the United
States. The most recent Economic Report of the President notes
that during the last seven years U.S. exports of goods and services
accounted for more than one-third of U.S. economic growth, and
export-related jobs grew five times faster than total employment.
Developing markets increasingly drive export-led growth.
The World Bank forecasts that developing economies will grow by
60 percent during the next decade, double the growth forecast for
industrialized countries. By the year 2000, four out of five
consumers in the world will live in developing countries. In short,
the future growth of America's economy lies more and more in
developing nations and less in those more developed nations that
have been our traditional trading partners.
The increased focus on trade in the developing world has also
provided a new debate among pundits and public policy makers:
aid or trade? Of course, everyone, myself included, prefers a
trade relationship to an aid relationship. Who would not prefer
selling goods to giving assistance? But in fact, it is this nation's
abiding commitment to free trade and open markets that has always
led us to view foreign assistance not as charity, but as a sound
investment strategy. What we are talking about then is aid for
trade.
Opponents of foreign assistance frequently point out that
private capital flows to the developing world now triple official aid
flows. But these private flows are highly concentrated in less than
a dozen countries -- leaving out most of the world's undeveloped
markets.
USAID's modest investments expand the range of countries
open to U.S. exports and private investment. USAID works with
developing and transition countries willing to take the necessary
tough steps to liberalize their economies and build their
democracies.
History has taught us that a market-based economy is the only
means of achieving sustainable economic prosperity. This is a hard
lesson that has been learned and accepted on every continent. There
is an equally important lesson, however, that is perhaps less accepted
-- bad politics is bad business.
Healthy, stable societies cannot persist without participatory
democracy. Entrepreneurs must operate in a free environment. They
must know that growing businesses will not be undermined by social
or political unraveling. Mutually reinforcing economic and political
reform is the best guarantee of equity, growth, good governance and
democratic pluralism.
The small sums we invest in "aid for trade" to build
democracies and liberalize economies produce significant benefits
to Americans. Emerging markets which would otherwise not be
profitable for American trade and investment are developed and
opened.
These developments not only provide a market for American
exports and foreign direct investment, but also opportunities for
American investors as capital and securities markets grow in
developing countries. With rates of return that are projected to
continue exceeding those in the U.S., individual and institutional
investors, including pension funds, increasingly depend on equities
from developing markets to ensure healthy portfolio growth.
We have an abundance of history to prove our point of aid for
trade. In the 1950s, Western Europe and Japan were re-integrated
into the international community as democracies and free markets
with the assistance of the Marshall Plan.
In the 1960s and 1970s, other parts of East Asia became
strong members of the global economy, and countries like South
Korea used U.S. assistance to invest in education and economic
reform that set the stage for explosive economic growth.
In the 1980s, Latin America abandoned import substitution
policies and undertook reforms that have placed that region in the
forefront of democratic and economic progress. In the 1990s,
Eastern Europe and the nations of the former Soviet Union are
making the difficult transition to a market economy and are
liberalizing their political systems -- with the help of U.S. expertise
and technical assistance.
The development dividend has been substantial. For example,
we export more in a single year to South Korea than we ever gave
that nation in foreign assistance -- even though U.S. assistance was
considerable. In 1994 alone, we exported over 17 billion dollars to
Taiwan, more than 15 times what we ever gave that nation in
economic assistance. In countries like Thailand, Uganda, and
Argentina, the annual growth of U.S. exports is more than 20
percent.
In each of these cases, the pursuit of free-market policies --
when combined with open and transparent governments and
investment in human capital -- spurred the capital flows and
investment necessary to drive lasting economic growth. In each of
these cases, USAID was a catalyst moving the process forward. In
each case, America's economy benefited tremendously from
expanding its trade relationships.
Building tomorrow's markets is clearly in our national
interest. If you look at how USAID does its business, you will see
an added benefit -- about 80 percent of USAID's grants and
contracts go directly to American firms and non-governmental
organizations.
In New Jersey, USAID does tens of millions of dollars of
business directly with firms and organizations like Ortho
Pharmaceutical Corporation, Rutgers University and Burns and Roe
Company. USAID also buys upwards of one million dollars a year
of New Jersey soybeans and other agricultural products for
emergency humanitarian relief efforts. USAID also gives a boost
to New Jersey's ports and ocean transport -- transporting and
handling USAID's food and other aid generated over 24 million
dollars in fees in 1993 and 1994 for port services and ocean
transport charges billed by New Jersey companies.
USAID also helps strengthen New Jersey's higher education
community. Between 1994 and 1996, USAID sponsored 176
foreign participants' training at New Jersey universities and
educational facilities.
In conclusion, let me just say that every time you hear a critic
of the foreign aid program, go back and remember that it was some
of the same voices who said that South Korea was a basket case,
that there was no hope for lasting economic growth in Thailand,
and that Taiwan would be perpetually doomed to slumping growth
and shoddy production. Remember the voices that said that the
Marshall Plan would never work and that Latin America would
never be a promising market for American goods. And lest anyone
accuse us of giving away taxpayer dollars, you might want to point
out that U.S. exports to countries receiving U.S. aid have grown by
76 percent from 1990 to 1995.
In 10 years, it is entirely possible that business people in New
Jersey will be wishing they had gotten in on the ground floor of the
economic boom of a South Africa, Botswana, or Zimbabwe. Some
will have done just that, and they will be all the more prosperous
for their entrepreneurialism.
The future of America demands that we pursue our self-
interest with diligence and vision. Opening new markets and
promoting democracy and American ideals abroad remain vital not
only to our foreign policy, but to our long-term economic health.
Thank you.
This is an archived USAID document retained on this web site as a matter of public record.
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Last Updated on: July 18, 2001
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