This is an archived USAID document retained on this web site as a matter of public record.
Administrator J. Brian Atwood
Overseas Development Council
"A New Consensus on Development?"
Washington, D.C., December 16, 1997
U.S. Agency for International Development
I want to thank John Sewell and the Overseas Development Council for once
again making us all stop and think. That is what we will do today as we consider
ODC's latest publication, "Perspectives on Aid and Development."
The authors of these policy essays have accomplished their purpose: they have
presented solid new data and they have provoked circumspection in the development
community. The editors, Catherine Gwin and Joan Nelson, deserve special praise
for their analysis of three very distinct pieces and for asking the right questions.
These relate to the criteria for selecting development partners; the effectiveness of the
partnership; the relationship of the volume of aid to the dependency phenomenon; and
the transition from aid dependence to new, more healthy partnerships.
Believe it or not, those of us on the operational side of development struggle
with these issues constantly. We at USAID are promoting internal reforms to assure
that our missions are listening to their host country counterparts. We are trying to do
more in the field and less in Washington. We are also creating systems that will
allow us to measure results. We even have a legal framework for this. It is called
the Government Performance and Results Act. It forces USAID to do what it should
do: plan strategically, relate our budget to a performance plan and aggregate our
accomplishments, evaluate them and report them to the public. We are more
concerned than ever before with the effectiveness of our development assistance.
Can these requirements produce a perverse effect, as Elliot Berg's essay
suggests other donor requirements have done? Emphatically yes. That is why we are
constantly stepping back to examine the impact of unintended bureaucratic behavior.
And that is why this discussion today is so important.
The timing of this meeting could not be better and not only because the end of
the year is good for stocktaking. This week USAID is undergoing a peer review of its
operations by our colleagues in the donor community. A team representing the
Development Assistance Committee, the DAC, is in town interviewing people and
examining the changes we have made in the American development program. This is
never an easy exercise because our system is somewhat unique and we hold ourselves to a very high standard. Despite our drop in ODA volume, we still believe we are
international leaders in development.
This is also the year the United States hosts the annual meeting of the
development ministers and representatives of the major multilateral development
agencies. This is the 30th year of the so-called "Tidewater" meetings, named after the
inn in Easton, Maryland where the first gathering was held.
This gives us a good opportunity to review the achievements of donor
cooperation over this period. In doing so, we will find that despite the trials and the
errors, despite significant setbacks in some countries, despite all the problems, we
have established an intellectual and experiential foundation over the past 30 years that
has helped us create the substantial consensus that exists today.
Most importantly, we can look our detractors straight in the eye and assert that
development cooperation has worked. With the right blend of host government
commitment, human capacity, the freedom of citizens to participate and the catalyzing
impact of external donors, there is absolutely no question that development progress is
feasible.
USAID staff recently reviewed the development record of ninety countries that
were seen in the early 1960's as the most difficult development challenges.
Development cooperation efforts were concentrated on these 90 nations over the past
three decades. These countries account for over 3 billion people. How do they stand
today? They fall into four broad groupings.
The first group, 25 countries accounting for almost 700 million people, includes
nations that can readily be considered advanced developing countries. Some have
even joined the ranks of the industrial countries and some are fledgling aid donors.
The second group, 15 countries accounting for roughly 400 million people,
have reached "middle-income status." They still have some claim on concessional aid,
but most of them should be expected to reach advanced status over the next decade.
A third group, numbering ten countries, but with very large populations, is still
poor but has made clear, steady progress over the past decade. This group accounts
for approximately 1.3 billion people. Each has achieved growth in per capita income
of at least 1.5 percent.
That leaves some 40 countries, accounting for 600 million people, mainly in
Sub-Saharan Africa, that continue to preoccupy the development community. Yet, even here the story is not entirely negative. Development progress has been
intermittent and uneven, but we can assert with confidence that we have made these
difficult situations better even if we are far from being able to claim that our efforts
are sustainable.
The litany of sectoral achievements attributable to development -- child survival
rates, literacy rates, access to clean water, agricultural production and family size -- is
well known to you so I will not repeat the data here. Suffice it to say that, while we
cannot claim to have created sustainable institutions in the 40 poorest countries, we
have made a real impact in each of these areas.
What is significant about these achievements is that they have occurred over a
thirty year period that was characterized by experimentation, less-than-acceptable
degrees of coordination among donors, often excessive paternalism in our relations
with recipient countries, a highly stovepiped sectoral approach yielding little direct
synergy among the sectors, and a constant ideological struggle within our community
probably exacerbated by the Cold War.
Catherine Gwin and Joan Nelson capture this struggle well. They portray it,
correctly I believe, as a debate over whether we should emphasize the reduction of
poverty or economic growth. The development community spent an inordinate
amount of time debating whether economic growth actually reduced poverty or
whether it exacerbated distribution patterns and inequality.
When I was nominated to be AID Administrator over four years ago, I was
subjected to the intensity of that debate. The election of an Administration that
believed in putting people first was seen by some as a rejection of structural
adjustment schemes that forced governments to abandon social sector programs. I had
no trouble accepting the ill effects of poorly conceived structural adjustment. But then
I heard the defenders of adjustment programs espouse the benefits of sound fiscal
policies, of trade liberalization and the potential for job creation when governments
created private markets and incentives. I had no trouble accepting the logic of those
arguments either.
The reality was that in 1993 this debate was already over despite the continuing
intensity of the advocates. Just as is true in the military field, people in development
often find themselves refighting old battles. In this case, the IMF and the World Bank
had already absorbed their critics' message and had begun to modify their adjustment
packages to insist that social sector spending be protected.
The ODC publication we consider today presents evidence by World Bank
experts, supported by other scholars, that in effect tells us that "economic growth is
distribution-neutral, benefitting all layers of society roughly in proportion to their
initial levels of living." They present evidence that tells us that "sustained rapid
growth virtually always reduces poverty."
Now, to some of us this is a little like hearing scientists finally proclaim that
tobacco smoking is injurious to your health, or that the burning of fossil fuels
contributes to global warming. We feel we have known these things for some time.
But nothing more limits the intensity of a debate or the certainty of an
ideologue than the presentation of hard, empirical evidence. From now on, whatever
our bias -- we can no longer assert that growth by itself produces inequality.
Just as we can now trust that growth itself need not fuel inequities, we should
also have confidence that poverty alleviation strategies can both stimulate and sustain
economic growth. Programs that save children, and educate them, give economic
opportunity and dignity to the poor and strengthen civil society are not merely
humanitarian, they contribute to the productive capacity of society. They contribute to
sustainable growth with equity. As Hubert Humphrey once said, "compassion is not
weakness, and concern for the unfortunate is not socialism."
When the Cold War ended, we heard one author express his nostalgia by
referring to "the end of history." People who have been engaged in the development
debate would never be so presumptuous. But we can see clearly, to paraphrase
Churchill, the end of the beginning. We can, I believe, have confidence that we are
entering something other than just another new phase.
I believe we are entering an era of convergence. It is an era when we can feel
proud of the rough consensus we have forged, even as we continue to ask ourselves
whether that consensus will translate into sufficient political support.
This is an era that is shaped by a common development framework. The
DAC's 21st Century Report establishes our goals for the next two decades and, with
the DAC, we are actively setting up monitoring systems to measure results against
those important goals.
This is an era shaped by unprecedented private capital flows to the developing
world, albeit to emerging markets rather than to the LDC's. We agree that the
removal of obstacles to the flow of that capital -- obstacles to trade and investment --
is a challenge for development. That means the creation of capital markets, sound legal and regulatory systems, the elimination of arbitrary government intervention in
the economy and the adherence to certain international standards of practice relating to
workers' rights, the environment, the protection of intellectual property and the like.
This is an era shaped by common global problems, the solution to which
requires sound development approaches. The climate change agenda is, therefore,
both a domestic challenge for the industrial countries as well as a development
challenge in the developing world. We cannot succeed in meeting this challenge in
the absence of a development partnership based on the principle that economic growth
must be facilitated and can best be sustained with sound environmental policies.
This is an era shaped by the major challenge of untapped human resources,
most of whom are poor and many of whom are women. Our challenge is to provide
basic education and basic health care services. Without human capacity economic
growth cannot be sustained.
This is an era shaped by a common understanding that democratic governance
is an essential aspect of development. We now accept that without the participation of
people in the development process, economic growth cannot be sustained. We also
know that governments that select a democratic path are vulnerable until they develop
strong civil societies, a rule of law and strong governmental institutions at the federal
and local levels.
This is an era shaped by huge infrastructure needs in the developing world. If
these needs for power plants, water systems, transport and telecommunications are not
met, economic growth cannot be sustained. These needs cannot and should not be
met by concessional assistance, but rather by private capital. But development
assistance can stimulate needed private investment.
This is an era shaped a bit less by conditionality and a bit more by selectivity,
to capture a central theme of the ODC publication. Donors know that conditionality
does not produce the kind of partnership we seek. We fear that focussing on
conditions imposed by external forces distorts the dialogue that should occur between
governments and their people. And we increasingly grow concerned that societies
with large informal economies will shift focus from the need to transform, integrate
and formalize these structures to macro-economic reforms that, while important,
capture only a portion of the solution.
As for selectivity, we have thus far answered the moral dilemma with a triage
system based on budgetary realities. Still, recipient nations are becoming increasingly
self-selecting. Those that mistreat their own people are less likely to be good
development partners and more likely to create the pressures that lead to crisis.
Part of this new era is understanding that throwing good development resources
at bad partners will not produce development results. We cannot be sentimental about
that. If we are, we will lose the support of our own people. We must acknowledge
that humanitarian relief is only a partial answer to the moral dilemma posed by those
who suffer under bad governments.
Another characteristic of this new era is the phenomenon of developing nations
joining together in agreement on the essential ingredients for development, on the need
to reject dependency and on the need to cooperate regionally. This has created
stronger regional groupings in Southern and Eastern Africa, Central America, the
Southern cone of Latin America and East and South Asia. It has brought the ACP
countries together in support of positive development criteria as they prepare for
negotiations with the European Union to rewrite the Lome Convention. It has brought
the African nations together at the World Bank to seek more authority to manage their
own development agendas.
This is an era shaped by a proliferation of non-governmental organizations who
are part of the development process. We know that government-to-government
cooperation is an essential but not fully adequate condition if development progress is
to be made. Top-down development doesn't work which is why conditionality has
often failed to produce results. People, acting through NGO's, can produce a demand
for more effective national policies and more responsive, less corrupt government.
All of this leads me to conclude that we are in an era of convergence. We are
not at the end of history, but our political leaders should feel confident that
development dollars today can achieve more than at any time in the post-World War II
period. The resources we spend are more likely to be coordinated among donors and
more likely to stimulate private sector involvement. These dollars are more likely to
be supporting solid partnerships between committed reformers and donors. They are
more likely to be serving national interests and international development goals
simultaneously. They are more likely to strengthen both the global economy and our
position in it. In other words, it's a good bargain.
Will this produce a new political consensus? To some extent it already has
begun to do so. This Fall the House of Representatives passed the foreign assistance
bill by the widest margin ever: 375 to 49. We are rebuilding a bipartisan consensus
in the United States Congress. Congress has begun to recognize that whether our goal
is to contain global warming, or to protect ourselves against infectious diseases, or to open new export markets or to manage post-conflict transitions, we cannot achieve
national goals without an effective and well-financed aid program.
We have begun to recognize once again that we cannot pursue our values as a
nation without an effective aid program. Our current program embodies both our
interests and our values and it must. Unlike many other nations we have a much
harder time maintaining a viable foreign policy when we attempt to separate interests
from values. That is a reflection of our national character.
Let me conclude by wishing you well in your important discussions. I believe
this is a time for consolidating our gains and for celebrating the era of convergence
we have worked so hard to achieve. The creative energies and enthusiasm that won
our victory will undoubtedly continue to encourage a debate over the fate of
development. It may even attempt to define new eras, new phases. We should
welcome that because this creative tension helps us serve the world's downtrodden.
The creative tension within our community constantly reminds us to ask whether we
are delivering the goods.
I am known as an optimist in our business. I confess that in the darkest days I
knew our country would not abandon development. I even believed that we wouldn't
abandon USAID!
Well, I would suggest that optimism be a qualification for the job of
Administrator of USAID. It would be too easy to see the plight of the world's needy
and to give up hope. Yet hope is all many of these people have left. Remember that
as you debate the finer points of our business. During this holiday season, please
remember the people development assistance must serve. 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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