USAID: Remarks by Ambassador Harriet C. Babbitt, 09/30/99

This is an archived USAID document retained on this web site as a matter of public record.

Remarks by Ambassador Harriet Babbitt, USAID Deputy Administrator
to the Harvard Institute on International Development
September 30, 1999

Thank you, Richard, and good morning to all of you. It's a great pleasure to be in Cambridge and to appear with two people I respect so much, Jeffrey Sachs and Jean-Claude Faure - not to mention Clare Short, who is making what I think is called a virtual appearance.
We at USAID are extremely pleased that the Harvard Institute for International Development is hosting this conference. We are proud of our association with HIID, impressed by the work you have done on the Consulting Assistance for Economic Reform project, and excited about the work you are about to do.
As we look to the new century, we take pride in progress the donor nations have achieved in international development in the past half-century, but we are also profoundly aware of the magnitude of the challenges that lie ahead.
To meet those challenges, we must continue to value good research and to rely on the insights of researchers and analysts like you to help us do our work better.
Learning from research is a two-step process. First, the researchers increase our understanding of how the world works. Second, we must determine what this new understanding means for the design and delivery of development assistance.
We're here to begin a dialogue on the second step. It is time to take the insights of the CAER project and make them part of the design and delivery of our foreign assistance program.
The project has been directed toward understanding the dynamics of several trends that influence the prospects for progress in the developing world. I'd like to talk for a moment about one of the trends that most affects USAID's program, globalization.
Globalization has been good to America, in part because some of the things most in demand in the post-industrial world are what we do best, such as information technology, telecommunications and transportation systems. I like to think that globalization also reflects fundamental American values, innovation, creativity, and our impulse to reach out to other people in other lands.
For all these reasons, perhaps, our powerful economy has gained even more strength as we have learned to view the entire world as our marketplace.
But globalization also presents challenges. Without safeguards, and full citizen participation, it has a very real potential to do harm.
We recognize that developing nations have a responsibility to position themselves for progress by good governance and sound economic management. But we also believe we have a responsibility - and it is in our best interest -- to help those who do help themselves.
Let me quote something that Stu Eizenstat, then of the State Department, now of the Treasury Department - and, wherever he is, one of the most thoughtful people in government -- said in a speech earlier this year.
The challenge of making globalization work for the benefit of all people in all nations, Secretary Eizenstat said,
"…will guide the work of U.S. policy makers during the first half of the 21st century in much the same way as our effort to contain communism dominated the last half of the 20th century."
That is a large statement, and it was not lightly made.
Eizenstat went on to list some of the ways that we could seek to ensure that the benefits of globalization are widely shared. These included:

Debt relief to nations that make serious efforts to reform;
Urging countries to invest more in human capital and social services;
Improved regulation of financial institutions and corporate governance;
Campaigns against corruption;
And continued support for democracy and open markets.

As you know, USAID is working in many of these areas. If nations are serious about reform, we will help.
Brian Atwood made an important and thoughtful speech to the Overseas Development Council last June, shortly before he left USAID after six years as its administrator. In that speech, Brian expressed deep concern about the growing global disparity between rich and poor.
"The industrial world is getting shamelessly rich while most of the world's people are losing ground," Brian warned.
And it was a warning, because he went on to say that the dangers caused by this poverty gap include not only war and terrorism, but losing the battle against climate change and disease.
We suspect that globalization neither condemns poor countries to poverty, nor guarantees their rising prosperity. Rather, the outcome turns on how individuals and governments in developing countries react to the constraints and opportunities that it presents.
As we look around the world, we are troubled to see not only a widening gap between the rich and poor nations, but between developing nations, and even between the rich and poor in individual developing nations.
According to a United Nations report issued this year, the income gap between the fifth of the world's people living in the richest countries and the fifth in the poorest rose to a ration of 72 to 1 in 1997. That compares with 30 to 1 in 1960. Such figures raise serious concerns that poor countries will bear the costs of globalization while rich ones reap the benefits.
With regard to developing countries, we see both progress and cause for concern. Since 1990, forty countries have sustained per capita income growth of more than three percent a year, while fifty-five countries have had declining per capita income.
Some countries are seizing the opportunities to make themselves more competitive by investing in their human capital, linking into global markets, and attracting foreign investment. Others have not, and are falling farther and farther behind.
Finally, as Brian Atwood noted, too often the changes in a country only occur within its existing ruling class - what he called reform without equity.
Clearly we need to know much more about why inequality exists and what we can do about it. If Stu Eizenstat is right about the magnitude of the challenge globalization will present to our policy-makers in the new century, then we all are going to have to work very hard to find answers.
We won't have all the answers by tomorrow's closing session - we won't even have all the questions. But in these two days we can break new ground, explore the implications of your research insights, and map out paths for exploration during the last year of the CAER project.
We must never forget that globalization, whatever its dangers, has a huge potential for improving life on this planet.
I often recall an image from Tom Friedman's bestseller, The Lexus and the Olive Tree, in which he described a group of village elders in an Amazon rainforest who were gathered in a hut that might have existed in pre-history.
The elders were watching a television set served by a satellite dish, flipping between a Brazilian soccer game and reports of prices on the world gold market. They used the price information to set fees for small miners they allowed to work on the edges of the tribe's property.
Nearby, international scientists had a biotechnology center. The Body Shop was marketing products internationally made from materials that grew on their land.
Those village elders provide us a useful model of how to make globalization and change work for the better. They had found a way to preserve their heritage by allying themselves with environmentalists, international scientists and concerned businesses - and by using cutting edge technology and global markets.
That is the potential - it is not yet a promise - of globalization.
Let me comment on the future of the agency I serve. I think we are going to be around for a while. I say that despite our budget battles of recent years, and despite the view in some quarters that support for foreign assistance went south with the end of the Cold War.
Let me give you two reasons for my optimism.
First, although we are no longer fighting a Cold War, we are increasingly being called upon to take military action in hot spots from Haiti to Kosovo to East Timor and many places in between.
President Clinton referred to these challenges when he declared, in his August 17 speech to the Veterans of Foreign Wars, that investing in foreign assistance is a means to prevent our fighting men and women from being put in harm's way.
"Of course international engagement costs money," the President said. "But the costliest peace is far cheaper than the cheapest war."
We at USAID, of course, strongly agree. And it may be that continuing outbreaks of violence around the world will encourage the American people, and Congress as well, to accept the view that foreign assistance programs are an investment in peace.
The other reason I am optimistic is that I believe in the American people.
We at USAID make a lot of pragmatic arguments for our programs - in terms of new jobs and markets - but every poll confirms that most Americans support foreign assistance for idealistic, not pragmatic, reasons. They want their government to help less fortunate people abroad because they think it is right.
But we cannot take that support, or those values, for granted. We must nurture them, from year to year and from generation to generation.
When I was a little girl, I was taught that it was extremely important that I clean my plate because of the hungry children in other lands. To be a member of the "clean plate club" was to help the starving Armenians.
Even then, it was not clear to me precisely how my eating my carrots would translate into better lives in Armenia - but no matter. My family, and every family I knew, however dubious our logic, nonetheless had generous hearts.
And we still do. When a hurricane or an earthquake devastates a foreign land, we Americans are quick to open our hearts and our checkbooks.
But it is harder to rally support for long-term development. Although we have good hearts, sometimes we have short attention spans; moreover, we have spent fifty years listening to some people denounce foreign assistance as a giveaway.
It's not a giveaway, of course, and never has been. We don't just give money to governments; most of our aid is technical assistance or devoted to strengthening local organizations. Our programs help create a safer, more stable world, and create stronger partners for us, both economically and politically.
Some of our programs, in democracy and economic growth, work to influence the course of globalization; others, like child survival, help with the social safety net that is urgently needed in most developing countries.
But we need more flexible resources to influence the direction of economic growth, to help the developing world benefit and ultimately prosper.
Certainly one of our frustrations at USAID is that we lack operational flexibility, particularly in the economic growth area. This year the House has proposed inadequate funding in Development Assistance, and the Senate bill contains an unprecedented number of earmarks. These cuts and directives keep us from having the flexibility to implement our programs in ways that we - and you - might think best.
Let me, in closing, urge you to add an extra dimension to your work. You are leaders, thinkers, people whose voices have great resonance. Don't stop with your research, however valuable it may be. Reach out - in speeches, in op-ed articles, in the classroom, in private conversations -- and tell others why our helping developing countries to make progress is so urgently important.
Opinion, Woodrow Wilson said, rules the world. Help us communicate better with the American people - for that, ultimately, is what we must do if we are to translate your work into the better world that is your goal as well as ours.
Thank you very much.

This is an archived USAID document retained on this web site as a matter of public record.

Last Updated on: July 12, 2001