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This is an archived USAID document retained on this web site as a matter of public record.
Remarks to Board for International
Food and Agricultural Development (BIFAD)
October 17, 2002
USAID, Ronald Reagan Building
October 17, 2002
Well, it's a pleasure to be here for a variety of reasons. One is that this is a venue now for me to make further comments about how important agriculture is to AID's mission and to our work. I want to say, it's not in every single country. If we had a mission in Kuwait -- we're not about to set up one, just so no one gets alarmed here… (Laughter.) But if we had a mission in Kuwait, I would not expect the mission director to write in agriculture as a major factor in their development program there. I recognize there are countries where it is not at the center of what development should be for a variety of geographic reasons or environmental reasons.
However, we do know that in the poorest areas of the world -- Central America, Central Asia, the South Asia subcontinent, and in sub-Sahara Africa - agriculture remains the principal source of income. And I broadly define the word "agriculture." It's not just sedentary agriculture. It's herding and it is processing of agricultural products. It is running the markets that sell them, the transport that moves the surpluses around. It's the whole infrastructure, agricultural infrastructure.
We do know that in these countries a sizable portion of the work force, the poorest people in the work force, live off the agricultural system. And if its productivity is paralyzed, which is to say it is not making progress, the people who are in it aren't making progress either economically.
Now, there had been a tendency in the 1990's, for reasons I don't entirely understand, in AID not to talk about economic growth as the principal engine of development. You have to define what you mean by development, because some people actually take the Nordic view -- which I respect, I just don't agree with - that you could, sort of, transfer the welfare state from the North to the South and somehow make it sustainable without economic growth. I don't see quite how you could do that unless you have perpetual foreign aid, in which case countries will never become middle income or prosperous.
The only way in which countries move from being very poor to being very prosperous is through rapid, long- term high rates of economic growth that is sustainable. The growth rate for the United States in the last 200 years is about 1.7 percent a year. But it's been steady over 200 years and so we're now the richest nation in the world. That was, of course, not always the case.
I'm always intrigued how Americans, for some reason, don't make, and development professionals, don't make any connection between development in this country and development in the developing world. We were unstable, quite poor, and disorganized politically 200 years ago, and yet we're none of those things. Most people would argue that we're none of those things right now.
So we were a developing country in 1800. If you look through what happened in the nineteenth century in the United States, you can track what's happening in a much more compressed way in the developing world. I would argue that there was no ODA (official development assistance) in the last century, but there was massive European investment after the Civil War in the American economy, which is not commonly known. We were a huge debtor nation, basically owned by German, French and British banks until World War One. The only thing that reversed that was the debt that they -- the money they borrowed from us to conduct World War One.
Up until that point, the ODA was European money coming in, entirely private sector. No one noticed it, but we didn't build our infrastructure and our agricultural system and our industrial system by pulling up our bootstraps. That is an illusion and it's simply not the case. It was done with capital and it was done with European capital, primarily.
The point here is that if we go through what we did in the nineteenth century in the United States, there are some real parallels to what we are looking at now. Except for a few of the city-states of Asia, like Singapore and Hong Kong, all countries -- and this includes Japan, it includes Taiwan, it includes South Korea -- began their rapid industrialization after an earlier phase of rapid increases in agricultural productivity that created a base upon which their industrialization could be based.
Even Russia did that. Of course they did it in an absolutely barbaric way, by killing 13 million people through the genocide against the Ukrainians by Stalin during the forced collectivization in the early 1930's. But it was based on the same theory, that the agricultural system would produce the surpluses and the state would confiscate those surpluses and use it for industrialization. I'm not ever proposing that model. I'm suggesting our model is a lot more appropriate. But the fact is there is a connection between growth and agriculture.
There is also a connection between poverty and agriculture because of the statistics that I mentioned earlier. I've often wondered why AID and the banks - all the banks did the same thing -- and most of the aid agencies that followed the United States beginning in the mid-1980's. It's a little scary. It started when Peter (McPherson) was Administrator, which disturbs me slightly, because what happens when I leave?
We need to get this into the system so that whenever I leave this continues because everybody sort of accepts that this needs to be part of the system based on the merits, based on empirical evidence, not on one person's opinion.
Now, the question of course is how to do this. We made some mistakes earlier on in the last phase of major expansion of agricultural development within the aid agencies. We did try to do too much. We had the rural-based development -- and I would not suggest we start this process of expanding our portfolio without looking back at what did work and what did not work in the 1980's and 70's in agriculture. Some things worked extraordinarily well, like the Green Revolution in Asia, and other things did not.
What are the comparative advantages of AID? The first is we have the potential to mobilize institutionally science and technology because of the infrastructure within the Agency and the connections we have to other research institutions and universities and NGOs in the United States. And we have of course financial resources. We've been asking for large increases in our funding. I keep being told by friends of mine in Congress: Andrew, there is no support here for agriculture; we're giving you a little bit more because you keep insisting. Basically to keep me quiet they just give us more money.
That is really not the case. I do know that there is an increasing amount of advocacy going on within the university community, NGO community, to boost up these budgets, because I think there is a recognition that we made a mistake by precipitously, over a decade, cutting back on agricultural funding from this Agency. We went from $1.3 billion at the high point when Peter was Administrator to $245 million when I arrived early last year. We've been getting increases, but not quite what I would like.
So the first is our ability to mobilize science and technology. The second is our multilateral and bilateral partners. It is, once again, the CGIAR (Consultative Group of International Agricultural Research centers) network. It's the other research being done around the world through different venues on the science side and the work that the NGO's are doing, what I would call applied science.
Some of the NGOs are doing a very good job in taking the research and bringing it to the villages. That has been done in an erratic fashion, in my view and maybe one of AID's contributions is to take -- what we know works is taking the science to the villages, but making it much more comprehensive in terms of whole countries and regions.
We have a field presence. I am one who believes in the decentralization of implementation, that these decisions should not be made here. I asked the Latin America Bureau to do a strategy and their strategy's a little different because there it's a more urbanized continent than Africa, let's say, or South Asia is or Central Asia. They came up with a rural-based strategy that's very interesting, because the poorest people in Latin America still live in the rural areas. It's almost as though there were a separate society that's completely different from urban Latin America.
But in Central America there is an attempt to deal with the coffee depression, which is having profound effects on people's income levels. It's causing population movements into the cities. Layered on top of that, there was a terrible drought last year. So we were actually facing quite a serious crisis in the rural areas, and the Latin America Bureau came up with I think a really fine strategy for dealing with that.
We also have the capacity within AID to engage the entrepreneurial and corporate systems in the United States, to bring in the private sector, because I am a believer in the private sector as a partner, not just through the nonprofits, not just through the university system, but through companies that have wide reach and extensive science.
Contrary to some of the attacks going on against globalization, if the partnerships are designed properly - - and we're doing that, I think -- the private sector, the for-profit sector in the United States and other countries can be a very powerful force in accelerating rates of growth. Ultimately, it is only private sector development that can cause this growth, and so having the business community involved in this makes a great deal of sense.
Our agricultural strategy is based on five propositions. The first is that new science and new technology can have a profound effect on productivity levels, and productivity is what this is all about. That of course gets to the issue of biotechnology and bioinformatics. Emmy, is that correct? Somebody has to tell me at some point what that means. So I know what biotech is at this point since I've been beaten up one side of the continent to the other.
I've been a devotee to begin with, but I read my friend Pier Pinstrip-Anderson's book on "Seeds of Contention" -- which is a layman's, not a scientist's, description of the controversy surrounding biotech, but also its enormous potential for the developing world. We do need to deal with the problem we have in Europe. It is a European problem, with the perception that this is damaging the biodiversity of the planet. I'm sure you've read some of this stuff.
It is not a problem in the United States or Canada. And I have to tell you, for the most part it's not a problem in most developing countries. In fact, they are our allies in this because they recognize, most scientists in the developing world, that this has huge potential for stimulating economic growth and dealing with the hunger problem at the same time.
The second is we know from our economic research and a lot of research that's been done what I said earlier is the case, that there is a direct connection by rapid rates of economic growth and its connection to agricultural productivity.
Third, we have now NGO-developed approaches to technology transfer, to finance, and to market access. I often say that it's very dangerous to have agricultural scientists doing agricultural programs without agricultural economists and it's very dangerous to have agricultural economists doing agricultural programs without the scientists. They need to marry each other and be connected, because there is a connection between markets and incentives and the way people grow food and the surpluses they create and the messages that are sent by the pricing system.
The third is that there is a direct connection between the legal and regulatory systems, between local, regional, and global markets, between productivity growth and governance. Governance is a part of this in a major way.
I just gave a speech last night at the Kennedy School (at Harvard) and I was astonished that some people at the Kennedy School, some of the students, still didn't get the connection between good governance, broadly defined, and rapid rates of economic growth and well-managed social services. If you can't deal with the governance problem, then a lot of the stuff we're dealing with can't be done.
We did have Michael Porter in recently from the Harvard Business School, a friend of mine from Massachusetts, who gave a two-hour lecture to the senior staff, and we taped the two-hour session. We've been told we can only show it to AID staff. He said we could. We didn't pay him to come. He came gratis. We've sent the tape out or we're about to send it out to the field missions and I am requiring everybody to see the whole tape. They will be tested and if they fail they will be fired from AID.
Fred Schieck (deputy USAID administrator) made this comment to me when he came back from seeing it. He said: "We've made a mistake; we've focused on governance and democracy-building and macroeconomic reform, and countries like Bolivia that have done both those things pretty well for 15 years now are now developing rapidly. Why is that?" That's the question Fred asked.
I kept asking that question. The only person who has an answer for that that is at least comprehensive, visionary, and nuanced is Michael Porter. He says the mistake has been we haven't focused on microeconomic reform, on the legal frameworks, on the regulatory frameworks, on the competence of government, on competitiveness strategies, on clustering among different business sectors, and the effect these things have on production.
Michael connects it to the environment. He talks about the fact that the clean energy technologies are much more efficient and better for the economy. He goes through a series of things that connects a lot of what we do into a new, much more powerful theory, I think, for the next couple of decades as to how we should be approaching this.
Agriculture fits heavily into it because one of the principles that he suggested in his two-hour lecture is that countries need to build on what they already have proven to do well. The notion that countries that have no high tech infrastructure should all of a sudden be building software factories he said just doesn't make any sense, because in all the instances that has really failed.
The countries that are doing something well should take what they do well and build on it and expand it by removing the impediments, creating better regulatory frameworks, and creating the infrastructure necessary to expand those sectors.
So this is all connected to what I would call in a broad sense microeconomic reform.
We do have new legislation supporting the new agriculture and recommitting to preventing famine and reducing hunger. We have announced, Colin Powell announced, a plan we put together here with Allan Larson's (assistant secretary of state) office and Paula Dobriansky's (under secretary of state) office on expanding agriculture to end hunger and to end famine. I have been through most of the major famines of the last 14 years and I am sort of obsessive about avoiding a repetition of the things I've seen before, although Zimbabwe's sliding fairly quickly and we are trying all we can to do to stop it, but it's difficult sometimes.
So anyway, that's where we're coming from. We have a very distinguished group of people on this committee and I'm really pleased that Peter has taken the time to take this position because leadership counts in any institution, and particularly with this institution.
We look to this committee to help us drive this agenda so it's seen as the new agenda for the development community and development agencies, whether they be multilateral or bilateral, and with a renewed understanding of how much, how very important this is to the overall development of some very poor countries in the world.
Thank you very much.
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Last Updated on: January 02, 2009 |
