My Reflections on and Hopes for the New U.S. Global Development Policy

September 30, 2010
Here is what I liked about President Obama’s UN speech on development last week, what I liked less, and what to watch for next. I conclude with an epilogue on this week’s historic gathering of secretaries Clinton, Gates, and Geithner, USAID Administrator Shah, and Chief Executive Officer of the Millennium Challenge Corporation, Daniel Yohannes for the U.S. Global Leadership Coalition’s discussion of the new U.S. development policy. What I liked:
  1. That it happened at all. A U.S. president announced to the world a clear and compelling U.S. global development policy – what my colleague Connie Veillette called The Good – and in a multilateral forum, no less. It’s the first time a president has articulated such a policy since President John F. Kennedy proposed to Congress the creation of USAID in what became the Foreign Assistance Act of 1961 – the most recent (!) authorizing legislation. Since then, there have been special programs (President Bush’s MCC, PEPFAR), and special initiatives (on food security and global health in this administration), but nothing both grand and specific – a vision and the outlines of a strategy.
  2. “. . . aid alone is not development.” Bravo! Trade (“we’ll work to urge nations to open their markets to developing countries”); investment (“companies that raise capital in the United States” must now “disclose all payments they make to foreign governments”) and diplomacy (diplomacy? more on that below) matter for development too.
  3. That the long-term objective is sustainable growth– in the interest of “development not dependence”. As Lant Pritchett observes, this was brave at a UN conference on the MDGs. The MDGs have become too much the foci of short-run investment, instead of the outcomes that without economic growth would not stick past the 2015 target, even if they were all achieved via an aid surge in the next five years.
  4. That the White House is in charge of development policy writ large, with the USAID Administrator on the National Security Council (“as appropriate”). It’s in the fact sheet: A new interagency Policy Committee on Global Development led by the National Security Council staff is now responsible for “coordinating development policy across the executive branch.” Let’s hope that means the development implications of energy, security, trade (the Farm Bill, the global imbalance), investment (OPIC, the SEC, the Justice Department) and the trade-offs among them and domestic policy imperatives are on the table when decisions are made.
  5. Innovation, particularly in agriculture and clean energy to allow a low-carbon growth path. “We’re investing in game-changing science and technologies to help spark historic leaps in development.” Can we hope this means some sensible spending at home to harness the U.S.’s world class science and R&D capacity for development? That would make eminent sense. (David Rieff’s Microsoft Theory of Foreign Aid riff on this unrealized comparative advantage of the United States to contribute was too cynical for me.)
  6. On aid itself: that it be results-based and focused “on improving people’s lives” instead of on “how much money we’re spending.” Good idea! Let’s hope the president means focusing on their development results not our aid program results (since aid money is fungible and it’s about time that is conceded). This can be about systems – after all, developing country systems are more likely to deliver when incentives are in place to measure and learn from what works to get results. (On systems and outcome based aid go here. A mechanism that helps recipient countries measure and achieve their own results implies more long-term sustainability than donor assistance buying short-term results.
  7. On aid itself: selecting countries where aid can really get development results (a la Millennium Challenge Account), rigorous evaluation as the basis for evidence-based decision-making.
  8. On a welcome return to multilateralism: the United States is no longer the only game in town! “No one nation can do everything and do it well.”
What I liked less:
  1. Not enough clarity on what the non-aid tools for development policy really amount to. The U.S. ranks a poor 17th out of 21 on the Center’s Commitment to Development Index. It does reasonably well on trade and investment, less well on migration and badly on environment (climate). (Kim Elliott questions the administration’s commitment to trade here.)
  2. Not enough humility about America’s poor standing on foreign assistance up to now. Yes the United States is the biggest single donor in absolute terms. But it is small given our economic weight in the world, and ranks among the worst in its quality and efficiency – and there are serious barriers to President Obama’s and Secretary Clinton’s promise to make USAID the world’s premier development agency.
  3. A bit muddled on how an emphasis on results of aid programs in the short-term will contribute to the “transformational” change – when development becomes about so much more than U.S. aid programs –especially in countries with security problems and weak governance (think Afghanistan, Pakistan).
  4. Muddled on diplomacy too–cited by the president with trade and investment as a tool for development. Diplomacy a tool for development? Or an excuse to continue obscuring often serious tradeoffs between legitimate but short-term security and diplomatic imperatives on the one hand and long-term sustainable development investments on the other? In Pakistan, will short-run diplomacy (and security) imperatives guide U.S. development programs – or the long-term transformation to sustained and stable growth and democracy that is the fundamental U.S. objective? What exactly has been and will be a tool of what?
    What to watch—and hope—for next (comments and additions are welcome):
    1. Not just aid? The United States supports a commitment to work toward duty-free, quota-free access of the least developed countries without restrictions on products and with the reasonable rules of origin already reflected in the African Growth and Opportunity Act (for details go here) on the part of all G20 members in Seoul in November.
    2. Not just aid? The NSC Policy Committee on Global Development pushes the Securities and Exchange Commission to write a meaningful enforceable rule on public disclosure by companies raising capital in the United States of their payments to foreign governments. The U.S. begins to use its diplomatic tools to push the Chinese to honor this too – if not, U.S.- based firms will balk. And the U.S. Treasury puts a priority on technical support for the Stolen Asset Recovery (StAR) Initiative.
    3. Better aid? U.S. aid programs become transparent – with quarterly disbursements available to recipient countries and periodic reports on progress toward development outcomes agreed with recipient governments on the web. Most people are shocked to learn that we don’t have a clear picture of government-wide funding until nearly two years after it is disbursed. In a new (soon to be released!) report assessing aid quality (by me and Homi Kharas of the Brookings Institution), the U.S. ranks 24th out of 31 multilateral agencies and bilateral donors on the issue of transparency.
    4. Better aid? That someone and some agency (I nominate Raj Shah and USAID) is put in charge of and made accountable for the success of the Feed the Future initiative.
    5. Better aid? There is an identifiable budget for evaluation and learning, and a ring-fenced fund for innovation in the way aid is delivered.
    6. USAID becoming a premier development agency? That within that NSC committee, the USAID Administrator can disagree with the representative of his boss, the Secretary of State. That the USAID Administrator has a direct line to OMB on the USAID budget proposal for FY 2012. (On what does the PPD really mean for USAID go here.)
    7. On development and diplomacy? That Secretary Clinton advocate not for integration of development and diplomacy, but alignment. That in Tanzania and Papua New Guinea, ambassadors engage in diplomacy using advice and input from development staff, and that development staff do development with input and advice from ambassadors.
    8. That the United States increase the proportion of its foreign assistance budget that goes through multilateral channels—something on which Secretary Geithner (who invoked the 25 to 1 leverage of U.S. tax dollars at the World Bank) and Jeff Sachs agree.
    Epilogue: Tuesday’s gathering (well done to Liz Schrayer and the staff of the U.S. Global Leadership Coalition) was a WOW. History-making. All five senior officials were eloquent and fully aligned. Secretary Clinton was right to note that she set out many key principles of the new policy (ownership, focus, accountability, evaluation) in her speech at the Center for Global Development last January (and I thank her for graciously referring to us). Secretary Geithner was right to invoke the leverage the United States enjoys at the World Bank. Secretary Gates was right on development as smart, low-cost prevention of conflict. Raj Shah was right on technology and Ghana. Daniel Yohannes was right on why Honduras is an exemplar of the MCC approach. Of course, words are easier than action (and that goes for my long list, as well as for the administration!). Still, for the president to have articulated a clear and compelling strategy, and for his top cabinet officials to appear in public fully aligned with this approach is no small matter. The development community will be watching with interest and lending support whenever possible as our political leaders move from words to actions.

    12:15pm October 1 - The section "What to watch—and hope—for next" was updated for clarity.


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