Ideas to Action:

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Last week President Obama’s Global Development Council at long last held its first official, public meeting at the National Press Club in Washington. For those of you who don’t remember (and you’ll be excused for forgetting), President Obama signed an executive order that formally established the Council in February 2012, although the Council’s origin story dates back to the 2010 Presidential Policy Directive on Global Development. After the public meeting, the Council’s ten non-governmental members were joined by Secretary of State John Kerry, Secretary of Defense Chuck Hagel, USAID Administrator Rajiv Shah, the heads of OPIC and the MCC, and other top officials in a private meeting with President Obama that was duly disclosed in a White House press release.

The meeting has been a long time coming. Here at CGD, we met news of the creation of a Global Development Council with cautious optimism. We waited for members to be appointed and then watched with disappointment last year as two public meetings were scheduled only to be canceled.

So we are pleased that the US Global Development Council has indeed held a public meeting. Even better, the group released a concise seven-page document with the encouraging title Beyond Business as Usual that sets clear priorities—many informed by CGD’s own work.

Led by Mohamed El-Erian, former CEO of the Pacific Investment Management Company (PIMCO), a global investment management firm, the Council has put forward specific proposals for how the Administration can be smarter, faster and more effective in advancing sustainable growth and development around the world—mostly by making better use of existing budgets and executive instruments. The recommendations build on the 2010 Presidential Policy Directive, with a healthy emphasis on how to go more quickly from vision to implementation. It’s an excellent blueprint that we hope gains wide attention and serious follow-through from the administration.

Council members said that they welcome public comments. We are happy to oblige.

What We Like and Hope to See Implemented:

  • Leveraging much more private capital for development-friendly investment

The Council’s considerable emphasis on harnessing the private sector reflects the reality that many US development goals—including expanded energy access, improved food security, and reduced emissions of heat trapping gases driving climate change—will only be met with active private sector engagement. Topping the Council’s list of recommendations is the creation of a US Development Finance Bank that would combine the US Overseas Private Investment Corporation (OPIC), America’s strong and effective development finance institution, with several smaller entities at USAID (like the Development Credit Authority), the US Trade and Development Agency and others, all of which have similar goals of encouraging US and domestic private investment in developing countries. A US Development Bank, as envisioned by Todd Moss and Ben Leo in a 2011 proposal, would reduce existing inter-agency inefficiencies, help the US benefit from commercial opportunities in emerging markets, yield development benefits, and operate on a self-sustaining budget neutral basis. The Council also made calls to further unleash OPIC individually, by allowing it to make equity investments, retain a portion of its profits to increase staffing, and mix direct investments with loan guarantees.

  • Outcome-focused incentives for development

Across multiple recommendations, the Council emphasizes paying for results – the application of cash-on-delivery, implementation of development impact bonds, and payment for performance in the context of protecting valuable ecosystems. Innovation isn’t just about technology: these innovative funding models offer the promise of increased impact at reduced costs. Amid Congressional budget battles, approaches to foreign assistance that pay for results have clear political advantages over the old model of paying for inputs. More importantly, however, focusing on outcomes aligns incentives for success, while offering the flexibility to experiment and innovate.

  • More emphasis on win-win programs that minimize climate change and maximize growth and development

The latest IPCC reports have confirmed what many of us had feared. Climate change poses serious threat to the rich, but will prove catastrophic for the poor. The Council pushes for specific programs that would support climate-smart increases in agricultural production and productivity that are sustainable and intensive – and not associated with exploiting more land. It calls on USAID to exploit increasingly available satellite-based, geospatial information (such as Global Forest Watch) in its Feed the Future programs, and to establish “pay for performance” or cash-on-delivery like projects to provide incentives for agricultural expansion into degraded lands, rather than into forested areas.

  • A quiet plea for publishing subcontractor data

The Council welcomed the US government having signed the International Aid Transparency Initiative (IATI) in 2011. Beyond the US delivering on its existing commitments in user friendly formats, it called for the government and its “implementing partners such as NGOs and for-profit contractors” to work jointly to publish subcontracting data – the lack of which has made it impossible to assess the effectiveness of US programs in countries like Haiti

For the next round:

Foreign assistance has for too long been the sole lens through which the foreign policy community and successive administrations have viewed development. We’re pleased that investment finance (and not just traditional US grants) topped the Council’s recommendations this time, and that the issue of climate–where the US could support faster transfer of technology for example—found a place on the agenda. We hope this will not be the last such exercise, and that in subsequent rounds the Council will include consideration of trade, intellectual property rights, and the potential for US leadership on global initiatives – such as combating drug resistance, dealing with sex and drug trafficking, and addressing small arms proliferation.

What do you think? Post your own views on Beyond Business as Usual and any reactions to ours in the comments section below. Or send them to directly to President Obama’s Global Development Council at gdc@usaid.gov.

Many thanks to Casey Dunning and Erin Collinson for their contributions to this post.