|
|
|
|
|
|
|
|
|
|
  |
 |
  |
This is an archived USAID document retained on this web site as a matter of public record.
Remarks by Andrew S. Natsios
Administrator, U.S. Agency for International Development
John F. Kennedy School, Harvard University
October 16, 2002
Thank you very much, Dean Nye, and my good friends, Peter Bell, and Charlie McCormack.
What I'm going to talk about tonight is a subject that I given have too few speeches on and too few lectures since I took over. And I regret that, but the forums that I've spoken at were directed towards other issues that seemed more glamorous.
In my view and the view of an increasing number of people in the development community, the central reason why some countries remain poor and other countries develop, and develop in terms of rapid rates of economic growth, center around the issue of governance, of democratic governance. And the failure of democratic governance is a central reason why some countries are stuck without growth, deeply mired in poverty and in chronic instability, corruption, and mismanagement.
And without dealing with this issue in some depth, it seems to me that we are going to continue to fail in our effort to reduce the number of poor people in the developing world. There is a direct relationship between the number of poor people in the world and the climate you require for investment in private sector growth that leads to the creation of jobs and the reduction of poverty.
There are different debates about what poverty is or what is not. But one thing, one sort of statistic that is used commonly in the discourse on the subject of what poverty is, is how many people live on less than one dollar a day. Now it is interesting that some of the people who use that statistic take the view that is a statistic about social services, the inadequacy of social services in a developing world. I would argue that if you use that statistic, you are essentially taking an economic index of what poverty is. You're talking about how much income families have available to them to live their lives. Unless there are high rates of sustained economic growth over an extended period of time, poor countries do not become prosperous. And unless the development that takes place, as with the case with the Asian giants--South Korea and Taiwan being the most sterling examples of that--that is widely distributed across the society, you do not have development that enriches everyone in the country. Latin America has the worst distribution of the wealth in the developing world. The best is in the giants of Asia. Taiwan has one of the best distributions of wealth in the world. And I would argue that the reason Taiwan does and South Korea does, is because of the governance system that eventually developed into middle-class democracies and the decisions they made about their own development.
Tonight, though, I want to focus on this aspect of development that I regard of central importance. So I decided to do that tonight because we're at the Kennedy School of Government.
While you study economics here and social services and other things -- it does say "government" in the name of the school - "governance" is a central focus of what we need to be about in the field of development.
Now governance is government, that is to say, elections, political party development, and policy formulations by public officials, but it is also "governing," which is how the principles and practices of honest, transparent, and accountable government are put in place.
The definition (of governance) should also include management, how institutions and organizations that influence public life function: businesses, schools, NGOs, foundations, clubs, societies, religious institutions, and all manner of other associations.
The word "associations," is used by Alexis de Tocqueville, a great hero of mine, whose wonderful essays on American life in the 1830s in the book "Democracy in America" actually contain some very good development theory, which I'm going to refer to this evening.
A friend of mine, who is a prime minister in a Southern African country --he is a medical doctor, but he had been Minister of Health, and then he became the Minister of Foreign Affairs, and then he was asked to become Prime Minister. Dr. Mocumbi is the Prime Minister of Mozambique, which is one of the countries doing the best in Africa right now, in terms of governance reforms, in terms of improved transparency, in terms of economic reform, as well, after being through a devastating civil war that killed 2 million people. Dr. Mocumbi and I were talking one day, and he said, "You know, when I became prime minister, I went to South Africa to a school of public administration because I really didn't know what management was." Running a foreign ministry is not the same as being Prime Minister. And being a medical doctor is not the same as running the government of a country. What he said that was very interesting. I didn't ask him about this, he brought this up to me and what he said was this: "there are simple things, techniques that I learned in terms of setting priorities, establishing lists of actions to carry the priorities out, assigning them to people, and then checking every week to see whether they're doing what we assigned them to do." He said frequently in the villages, where there's a government administrator, he will assign the task and assume that it's done. And I, of course, smiled to him, and said, "Human nature is the same everywhere in the world." We all know that making the assignment almost assures it will not be done, unless you check back repeatedly.
But he went through the series of management lessons he learned in these courses, and he said: "I was so impressed that I required all the county and provincial officials in Mozambique to go through the same course." And he said: "We've noticed a dramatic improvement in management of our social service programs, our agriculture programs, our health programs, since I put people through these basic public administration courses, on just basic supervision and management and planning."
He did this on his own, by the way. There was no AID program, as I understand it, that did this for him, because I was hoping he would end by saying: "AID financed this, this was AID's..." It wasn't; it was his own idea. But the point is management is part of this as well.
It has become clear to everyone in the past decade that good governance is critical to sustained development. Poor governance is one of the primary reasons that we have so many failing states, like Afghanistan, Somalia, the Democratic Republic of the Congo, and I could go through a list of other states.
I wrote a book on this about five or six years ago, on the number of complex humanitarian emergencies, which is a different way of saying "failed and failing states," countries that are basically institutionally, economically, and politically collapsing, that don't function any more, and that fall into civil war.
Good governance depends on accountability. The corruption problem in many countries is one of the most serious challenges facing the society. We used to think it was sort of peripheral, but the World Bank has done a number of studies of countries that seem to be stuck economically, and tried to analyze the level of corruption as a function of the national income of the country, and they've discovered a massive effect, not only on future investment in the private sector, but on the proper management of public sector resources that then get diverted and abused.
It seems to me we need to have a more thoughtful conversation than we've had so far on why Northern countries have developed governance institutions that seem to function, even though there is a wide variation in what those systems are. The British system, of course, and the German system are different than the American system and the Japanese system.
But it seems to me there are certain common characteristics to the Northern countries that do make our societies more accountable. And I'm not sure they're quite what we think they are. We have put too much emphasis for too long on assuming that elections, even when there are two people on the ballot for a different office, is all you need for a democratic system of governance. You may, in fact, have a democracy, as Larry Diamond -- a good friend of mine, who is one of the two great democracy scholars of developing world governments and teaches out on the West Coast -- would argue that there are countries that have regular elections, even when there are competed elections, that are not democracies at all. There is no civil society. There are none of the institutions that allow for democratic governance to be sustainable and transparent.
There are two mechanisms that Western countries and Northern countries have developed, and I must say there are a number of Southern countries. Chile and Costa Rica have come a long way. They are now middle-income countries and institutionally, along with Botswana in Africa, they are middle-class democracies even though they haven't quite reached the stage of per capita wealth that would make them comparable to the United States or, let's say, to Japan or South Korea or Taiwan. But they're getting there and they have high rates of sustained growth, and they have a system of governance that works.
The first is that they protect individual rights, human rights, and that there is a control over the power of the State in terms of the autonomy of the individual. If the government fails to do its job, the press, voluntary associations, political parties hold them accountable, through elections or public exposure. A free press, Jefferson once said, is more important than anything else in a democracy, because it will discipline the political system.
Secondly, within government they create intricate balances of power within different levels in institutions. The branches of government were designed to check one another. In European democracies we know that they're not the same system of divided government we have in the United States. But nevertheless, in all European democracies, there are these intricate sets of balances of institutions of accountability that constrain corruption and the misuse of authority. Not just corruption, it's the misuse of authority.
I happen to be a neo-conservative, and I take a more Calvinist view of human nature. Some people think that civilization is the problem that corrupts people. I do not. I believe there's an inherent flaw in human nature, regardless of where you are. There is no more virtue among the American people than among people in the poorest country of the world. The only difference is the institutional decisions that were made around how governance took place over a very long period of time, because we had very high levels of corruption in our own country in the urban areas in the late 19th Century, as I'm sure many of you know, who are students of American history.
So we had our own problems, and we dealt with them over a long period of time. But the reality is that without institutions constraining behavior of people once they enter office, development does not work very well. Trusting not to the goodness of leaders, but rather assuming their vulnerabilities, our early founders enveloped power in webs of competing institutional interest to maximize accountability.
I would argue that we need to look exactly at how those complex relationships exist to see why some countries in the developing world like Chile and Costa Rica are doing so well, and other countries like Nicaragua are not -- although Nicaragua is beginning to take the steps now on its own. There is a very powerful judge, and she has basically indicted the former head of state for corruption, and a number of public officials, and there is a huge convulsion, and I would say a purging going on of Nicaraguan society. And she didn't get any help from anybody else, except a very strong backbone.
Failed states, in my view, are a failure of governance, more than anything else. They're a failure of the society to have the kinds of institutions, in formal and public sector, that mediate the tensions that exist in all societies. All societies have tensions. The question is how you deal with them.
It is interesting to reflect on the President's National Security Strategy, which has become, for reasons I don't well understand, are quite controversial. I would urge you to read it. It's actually an extraordinarily powerful document. And there's a section in it on development. But one of the things that I liked -- I was accused of having written this, but I have to tell you, no one from AID wrote this sentence: "America is now threatened less by conquering states than we are by failing ones." That is in the National Security Strategy of the United States Government.
And there is a clear perception within the senior leadership and the career service that what happened in Afghanistan was not a little accident, that when you have 24 failed and failing states in the world, it is an invitation to all of the criminal syndicates that exist in the world. And it's not just terrorists; it's human trafficking, which goes on on a massive scale in countries that have weak national governance systems. It is the drug traffickers. It is counterfeiting rings that devalue legitimate currencies. You can go through a whole series of illegal international cartels that exist, and they tend to focus on countries with very weak national institutions.
Now, what is it about countries that are either already developed or are like the ones I mentioned earlier in the South that are doing so well, that distinguishes them from other countries? The first is education. There is a minimum level of education for job purposes, that you need to have a thriving economy in, but you also need education for civil pursuits. We owe a debt to Massachusetts -- obviously I have a little bias, being from Massachusetts. The Puritans believed an ignorant mind is the devil's workshop, and it was dangerous to have, from a theological point of view, uneducated people. And we know that they founded Boston Latin School in 1635 and Harvard College the next year. And then in 1646, very early on in the development history of the United States, a decision was made in the state, requiring every town with 50 families to open an elementary school.
Now, the other thing is, I actually was educated in American History as an undergraduate at Georgetown University, and I always draw in my speeches on the developing world connections between our development and development in the Third World. America was a weak, poor, and unstable country in 1800, two hundred years ago. We had many of the characteristics of being, not a failed state, but a failing state. We had insurrections in the country; we had a massive public debt that we were not dealing with until Alexander Hamilton's reforms. You go through the list.
We were a poor country. Our greatest development president, I would argue, was Abraham Lincoln, not just because of the Civil War, but because of some central things he did to create a middle class through the state college system that he created, infrastructure, creating the Continental Railroad, and the Homestead Act, that distributed land in equitable fashion for a very large number of farmers, with I think its 100 acres -- if you lived on in a certain number of years, you got it for free, if you farmed it.
But there are direct parallels between the decisions that were made in those years and the decisions being made in the developing world.
Second, a very important category of institution is local government. I have come from a New England town government in my early career before I was in the legislature, and this is what Alexis de Tocqueville says about local government in "Democracy in America." He says, "Local assemblies of citizens constitute the strength of free nations. Town meetings are to liberty what primary schools are to science. They bring it within a people's reach. They teach men how to use it and how to enjoy it. A nation may establish a free system of government, but without the spirit of municipal institutions, it cannot have the spirit of liberty."
We have a heavy emphasis in AID now, in our democracy and governance programs, on decentralization. There is a growing awareness in the developing world that stronger local institutions with citizen participation and election of local officials may be one of the central governance reforms that will strengthen the institutions of democracy in the country. The most powerful thing the U.S. government has done in China -- in fact, I would argue one of the most powerful things done in China by anybody in the last 20 years -- was an IRI (International Republican Institute) program in China to train local people at the village level in how to conduct competitive elections -- not for the national level. And for some reason, the Chinese National government did not interfere with this effort. And they do have competitive elections in the rural villages. The message to the Chinese is: if people do not do what they promise in their campaigns, or they abuse their office or they're corrupt, you can remove them peacefully, through an election. It's a fairly radical idea in China. It is not a radical idea here, but I would say it's almost revolutionary there. The notion that that value system is spreading among the Chinese peasantry is a heartwarming notion, in my view, that may actually allow a peaceful transition to a democratic system at some point in Chinese history.
De Tocqueville was also impressed with a third very important institution, and that is voluntary associations. We would call them NGOs now. We call them civil society in AID. And American NGOs like Care and Save the Children -- I see Oxfam here, I see Plan US, I see World Vision, I see International Medical Corps. I apologize for the rest I'm forgetting here. They tend to do civil society development in the course of the provision of public service.
International Medical Corps works in the medical area, for example, but they also try to develop capacity, as the other NGOs do, in the villages, and they tend to create local organizations that become self-sustaining on their own. All of our NGOs that are really doing their job well do that, and that is a central focus of developing a rich civil society that can help accommodate the stresses in the society.
And I'll just give you one example of this. And that is in Kenya. Kenya should have had civil conflict by now. The stresses in Kenyan society are overwhelming - overwhelming -- and the levels of abuse in the national government in terms of corruption are a serious problem. There has been fighting, but it's not a failing state or a failed state. Why is that? There are three reasons, my Kenyan friends tell me.
The first is the largest tribe or ethnic group are the Kikuyus, and they have an abhorrence of political instability. And they are a stabilizing force in the society.
The second is that the churches are extraordinarily well-organized and very powerful. The political leaders are afraid of the leaders of the church -- Catholic and Protestant.
And the third reason is that there is a rich tradition of civil society in Kenya that has organized in a way that it's actually found ways of mediating the tensions in the society and kept the country together when the government has not been able to do that.
James Madison argues in the Federalist Paper No. 10 that the checks and balances that we have in a stable society are central to controlling the spirit of party and faction. He says the regulation of these various and interfering interests forms the principal task of modern legislation and involves the spirit of party and faction in the necessary and ordinary operations of government. What he says is an inference to which we are brought is that the causes of faction, which I would say is human nature, cannot be removed, and that relief is only to be sought in means of controlling its effect. This is the most famous of the Federalist Papers. It's a development paper. It's a paper on development.
Because what he's arguing is that by the contending factions in society being very numerous, they will in fact, gridlock each other enough that it will stabilize the society, and allow mediation between groups that will allow nonviolent ways of dealing with stress.
T. S. Elliott wrote an essay, which I've always admired, called "Notes Toward the Definition of Culture," which he published in the 1940's, but he was also an amateur sociologist. And he says something very interesting. He said, "Indeed, the more conflicts of culture"--he doesn't mean violent conflicts - "the better, so that everyone should be an ally of everyone else in some respects and an opponent in several others, and no one conflict, envy, or fear will dominate." The argument being, once again, that a rich group of what we call civil society now, in fact has the effect of creating stability in the political and governance systems in the country.
The situation in countries that are governed by tyrannical and predatory governments is they first try to destroy civil society, because civil society is a threat to the absolute power of the State. We've seen that sort of thing happen in Sudan since the coup that led to the NIF taking over in June of 1989. We see it in Iraq. We see it, unfortunately, increasingly, in Zimbabwe, which was a functional country. It actually was developing very well. It had a 92 percent literacy rate, but things are deteriorating because the national government has made some terrible governance decisions. In my view, they stole the last election. I think it was not just my view, but it is a widespread view, including people in Zimbabwe that the election was stolen.
Amartya Sen has argued in his books on famine -- I think John Drews wrote one of them with him -- in which they have argued that there is no known famine that has ever taken place in a democracy, first, because of free press preventing people from ignoring the suffering that's going on. But, two, because the democratic systems of governance force legislators and public officials to be accountable for what is going on. You can see in the countries that have democracies, you don't even get close to famine conditions, because the government reacts and reacts well.
And so, I would conclude by saying -- then I will answer questions -- that there are, I think, several characteristics that we need to focus on: the creation of a free media, creation of strong local governments. We also need good, strong citizen participation in the way in which governments function.
The community-driven development model, such as the local empowerment and governance activity which we ran in Mozambique through our AID program, is one approach that I understand a new book is out on now, or a study by Lant Pritchett and Michael Woolcock at the Center for Global Development. This has focused on the importance of bottom-up approaches to development, the centralized approaches as opposed to top-down responses to development.
Finally, I want to talk about the Millennium Challenge Account, which is a major initiative of the President's, the third major development initiative--and I'll conclude with this remark--the President proposed in his speech before the Inter-american Bank. If you have not read it, it's on our web site, I would commend it. We're literally using phrases in that speech to drive policy; it was carefully written over a period of five months beginning in November of last year.
There are three characteristics that countries must have in order to qualify for assistance under this account. It's a $5 billion increase in foreign assistance, a 50 percent increase. We give about $10 billion in all accounts of foreign assistance. Now it will go up to $15 billion under the President's proposal, phased in over three years.
Countries will first be looked at in terms of their income levels, and there are some international indices we're using to make the first cut of the poorest countries. Then, we will look at these three characteristics.
The first is good governance. That's why I spoke about it today in some depth in terms of the protection of human rights, in terms of democratic elections with multiple parties, and in terms of accountability and transparency.
The second characteristics are macro and micro economic policies that encourage investment and encourage the creation of firms that in turn create jobs.
And the third is: do these countries use their own resources to invest in their own people, in health and education programs? For example, if a country has a 90 percent literacy rate among boys and a 10 percent literacy rate among girls, we would conclude that they are not taking seriously what we would view as equitable education levels for all children, and they would be actually seriously hurt if they are directing all their resources to one group, instead of both. Or if 98 percent of their health budget is through foreign assistance, and they use none of their own private tax revenues for that purpose, we would conclude that they do not have a commitment, necessarily, at least in some way to public health as part of their own budget. That's the third requirement.
Once those three requirements are met, the $5 billion will be allocated and the national offices of these countries will work with the U.S. government on the ground to program the money and to spend the money.
So this is a substantial change in the way we've approached it all. In the past, we've used conditionality to sort of encourage countries to do what we think they should do. And the effect of that has been that we've failed. In the last 20 years only one country has graduated from LDC (less developed country) status. That is Botswana. And Botswana did it with a little bit of foreign aid. They did it primarily by finding a way through governance of avoiding their diamond mine wealth being looted by government officials, or elites, and being carried out of the country and being used instead for public services.
Botswana is a well-governed society and their wealth is being well used. That's why their growth rate is high and their per-capita income is high. That's the only country that's graduated. Why is it the only country? And we go back once again to this question of reform of governance, and of commitment without being forced to do it. We want to see the countries that have made the decisions on their own, without any force from the outside. They've made the decisions to make the changes necessary in their society to encourage rapid rates of economic growth.
Thank you very much.
 |
|||
Last Updated on: January 02, 2009 |
