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This is an archived USAID document retained on this web site as a matter of public record.
Remarks by Assistant Administrator Don Pressley
to the Equity International: Global Reconstruction & Development Conference
The Omni Shoreham Hotel, Washington, D.C.
September 20, 1999
Thank you, Mr. Chairman, for the opportunity to be here tonight.
As you have noted, my responsibilities at USAID focus on the countries of Europe and Eurasia, so I will focus my remarks, too, on that part of the world. However, having been in international business myself, I’m convinced that what I say is applicable to all the countries and regions of interest to this group.
It really is such a pleasure to talk to so many business professionals about development. Too often we tend to think of international development as being the jurisdiction of economists and political analysts and the occasional former Peace Corps volunteer.
Well, I’m none of those, but believe me when I say I know well the challenges many of you face in trying to do business in places like the Balkans. I have been there.
My point though, is that everyone and every sector has a contribution to make to sustainable international development - especially business.
The tremendous opportunities developing countries present to business are, I know, obvious to you, or you wouldn’t be here tonight. From the Chevrolet truck plant in Poland to the Chevron operation in Kazakhstan, one of the best ways for American businesses to expand their clientele and resource base is through investing in international markets.
But what I’d like to talk about this evening is the flip side of the coin - the importance of international investment and private sector growth to sustainable development.
At USAID, we have been working - I think it’s not an exaggeration to say constantly - these past ten years to promote foreign investment and small and medium enterprise development in the countries of Europe and Eurasia.
Why? Why do we consider this one aspect of reform so important?
Well for one thing it is an aspect that affects people’s everyday lives. Investment creates stable employment, which provides a solid tax base, which in turn provides the state with the resources to fund important domestic programs - education and health care reform, for example, or environmental clean-up.
Just as important, jobs give citizens a sense of pride - in themselves as well as what they do - and lessen the importance of ethnic divisions, making political strife less likely.
So therefore we can say that job creation makes a country not only healthier, better educated, and more prosperous, but also more stable - one of the major goals of sustainable development.
But the real goal of any development program is to give the host country the tools with which to one day function independent of foreign aid. The pockets of donor nations - like the United States - are, after all, only so deep. We cannot - indeed, we will not - always be the major source of capital to these countries - that must come from the private sector.
Today, we consider the countries of the former Soviet bloc to be in transition - and we at USAID see our job as helping them complete the transition to full-fledged partners in the global economy. We want them to become sustainable market-oriented democracies - to be our trading partners as well as our political allies.
But this vision can only be realized with the active participation of international business.
As I have said, economic development is only possible if people have reasonable opportunities to earn a living. Government can function only if a stable tax base exists. And a stable tax base will exist only if businesses thrive and prosper.
But of course, businesses can thrive and prosper only if the government creates conditions that stimulate and promote business development.
So this is one important way to look at what we at USAID are doing - helping to create the conditions that make successful businesses possible.
For instance, we know that businesses need a sound legal framework within which to operate. We know that transparency and accountability is essential to a healthy business climate. And we know that corruption can undermine every effort at reform. So we are working hard to institute the first two and eradicate the latter.
And we have had some notable successes. In Bosnia and Herzegovina, for example, USAID was instrumental in establishing two independent bank supervision agencies - one in the Federation, one in the Republika Srbska. These regulatory authorities have now adopted Western legal frameworks and prudential regulations - two reforms critical for the development of sound commercially-oriented banks. This an enormous step forward for the Bosnian banking sector.
And Macedonia, a small but ethnically diverse country, maintains a commitment to political pluralism. Following the 1998 elections, for instance, the winning coalition, even though it had a parliamentary majority, chose to reach out to the Albanian minority party and govern through a coalition that included them - quite a statement when you consider that Macedonia’s neighbors have fought four ethnic wars over the past ten years. We have always known that there is strength in diversity - Macedonia is only further proof.
But still, as we are fond of saying, our work is far from over.
As some of you know, one of the most common complaints heard from businesses attempting to invest in parts of Europe and Eurasia is that corruption is so widespread and evident on so many levels that it makes normal, day-to-day business operations almost impossible.
For one thing, corruption raises the hidden costs of doing business so much that firms are unable to forecast start-up costs and cash flows. These hidden costs translate into lower profit margins - so much so that eventually the cost of doing business becomes too high, and firms close up shop.
This has happened over and over again - in Bosnia, in Nigeria, Indonesia, and Russia - just to name a few.
The question I put to you is this - what can we - that is, the international community working together with international businesses - do about it?
Let me tell you a little bit about what USAID is doing.
In addition to helping improve the overall health of national banks and banking systems, USAID is also focusing on the development of International Accounting Standards. As I am sure you know, accounting is the language of business, and it is critical that countries all speak the same language if business men and women are to make sound international business and investment decisions.
Because businesses require a means of legal recourse, USAID has instituted judicial reform programs to help to improve court procedures, making the intimidation and manipulation of witnesses less likely and making the recording of testimony more accurate.
And, because raising public awareness is such an important part of the battle against corruption, USAID is working to promote media freedom throughout Europe and Eurasia, while training journalists in the art of investigative reporting.
And these are all good things. They are working - slowly in some areas, faster in others - but they are working.
So coming back to our original question - how can we all work together, against corruption? I’ve told you a little bit about USAID is doing - now let’s talk about what you can do.
Simply, you - and other businesses worldwide - can refuse to play the game.
Corruption can be eliminated by reform, yes, but also by people like you refusing to pay bribes, or fees, or any other sort of payment to conduct normal operations. Only then will corruption become less profitable, and hopefully, less prevalent. But this can only happen if international firms present a united front - unfortunately, the problem is just too big for one or two businesses, working alone, to have any lasting effect.
I believe deeply in the good American business can accomplish in developing countries. Our high standards - material as well as ethical - are the envy of the world.
You know, I constantly hear that it is American business and American investment that the peoples of Albania, Macedonia, and Turkey want. Why? Well, one the main reasons is our reputation for honesty and fairness. Ultimately, the business men and women of Europe and Eurasia are like business men and women everywhere - they will do business with whoever offers the best deal. But still, they know that by and large American firms will treat them right - and that’s good business for everyone.
There are other things business can do:
Businesses can help train local workers, men and women, so that people who have been denied the opportunity to choose their destiny finally get that chance. Whether it be in the manufacturing or service industries, the people of a country are always their greatest resource; often, they just need a chance. You have the power to give it to them.
By treating the work environment - by this I mean natural resources as well as the environment inside the office - the same way you do in America, businesses can teach developing countries that respect for the land around you and the people you work with can, do, and must go hand in hand with managing a successful business.
And American businesses can teach developing countries that while, as Calvin Coolidge once said, "the business of America is business," the spirit of America lies with helping others. Americans prove that altruism and smart business sense can go hand in hand.
As we look across the landscape of Europe and Eurasia today, we see that we have a long road ahead of us. With a few exceptions, the countries of this region have not quite become the fully functioning, market-oriented democracies we had hoped they would.
But that does not mean that they never will. In fact, I would argue the opposite - that reform, while admittedly slow in places, has progressed so far as to make a return to Communism almost impossible. It is now up to the countries themselves to complete the transition to market-oriented democracies. And we can help them - business deal by business deal, job by job - so that the promise of the future shines brighter that the false stability of the past.
I hope that all of you will join me on this journey - it promises to be an exciting one.
Thank you. I will now be happy to answer any questions.
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 12, 2001 |
