With rigorous economic research and practical policy solutions, we focus on the issues and institutions that are critical to global development. Explore our core themes and topics to learn more about our work.
In timely and incisive analysis, our experts parse the latest development news and devise practical solutions to new and emerging challenges. Our events convene the top thinkers and doers in global development.
Before his tenure at CGD, Steve was deputy assistant secretary of the U.S. Treasury for Africa, the Middle East, and Asia from 2000 to 2002. He left CGD to become chief economist for the U.S. Agency for International Development.
Join us for an intimate conversation with Director of U.S. Foreign
Assistance and USAID Administrator Henrietta Fore as she prepares to
pass her torch of elevating development and modernizing foreign
assistance to a new Administration. In a dialogue moderated by CGD
Senior Fellow Steve Radelet, she will reflect upon her role and
experiences as part of the Bush Administration, from her most
significant initiatives and accomplishments to the unfinished agenda for the new team to carry forward. She will share her views on both the challenges and opportunities of implementing a reform agenda for U.S. foreign assistance in the coming years, from managing the impact of the
financial crisis to navigating future reform efforts. As we all prepare
for the upcoming transition to a new Administration, there is much to
learn from the experiences of Director and Administrator Fore.
This is a joint posting with Sheila Herrling
This week the Modernizing Foreign Assistance Network, a fast-growing bipartisan coalition of international development and foreign policy leaders that I am privileged to co-chair, will be sending to the Presidential Transition Team its recommendations for jump-starting the process of strengthening our development programs. A growing number of voices agree that now more than ever, we must substantially bolster our capabilities to fight poverty and create economic opportunities around the world, both through increasing our investments over time and by making these investments much more efficient and effective. Strengthening these programs may well be one of the best investments we can make over the long term to restore global stability, security and prosperity.
Each day brings fresh evidence that Americans’ well-being is linked to the lives of others around the world as never before. Accelerating advances in technology and the creation of new knowledge offer undreamed-of opportunities. Yet global poverty, inequality, disease and the threat of rapid climate change threaten our hopes. How will the administration tackle these global challenges? A new collection of essays by the Center for Global Development, The White House and the World, shows how modest changes in U.S. policies could greatly improve the lives of poor people in developing countries, thus fostering greater stability, security and prosperity globally and at home.
Please join us to discuss and highlight the global development agenda for the next U.S. president. CGD experts will offer fresh perspectives and practical advice on trade, global health, foreign aid, and more, and CGD President Nancy Birdsall will explain why and how the next U.S. president must lead in the creation of a better, safer world.
Watch Rodrigo de Rato's keynote address, Renewing the IMF's Commitment to Low-Income Countries.
The head of the International Monetary Fund said he will propose giving developing countries a greater say in how the IMF is run. IMF Managing Director Rodrigo de Rato said that he would put forward the proposals to increase developing country representation on the Fund’s board ahead of the Annual Meetings of the IMF and the World Bank in Singapore in September.
De Rato spoke at a CGD event Monday in which he reaffirmed the IMF's commitment to assisting low-income countries. He said that the IMF would focus on its core macroeconomic expertise: helping poor countries to avoid falling back into excessive debt and to manage increases in aid.
He also repeated a pledge to address calls by low-income countries and emerging markets for greater representation in the Fund. "Low-income countries as well as clearly under-represented emerging market economies have reason to be concerned about their voice and representation in the Fund," he said.
"I will be making specific proposals on how to take these governance issues forward in the run-up to our Annual Meetings in September in Singapore, and I hope to secure the support of the membership for these," he said.
Kemal Dervis, the administrator of the United Nations Development Programme (UNDP), welcomed de Rato's reaffirmation of the IMF's involvement in low-income countries and the pledge to address governance issues. "I strongly welcome the managing director's words…on governance, voice and greater weight for poor countries in the IMF board," he said.
Dervis, a former CGD non-resident fellow, is the author of A Better Globalization: Legitimacy, Governance, and Reform. De Rato first announced plans to increase developing country representation on the Fund’s board at the 2006 Spring Meetings.
De Rato's reaffirmation of the Fund's interest in helping low-income countries comes at a time when improved macroeconomic policies in many poor countries mean less demand for IMF bailouts and supervision, and as a shift from loans to grants has led some people to question whether the IMF still needs to be actively engaged in poor countries.
"The Fund has already made an important contribution to lowering debt," de Rato said in his speech, Renewing the IMF’s Commitment to Low-Income Countries. "However, the Fund still has another important task before it: to ensure that there is not another debt crisis."
To avoid another debt crisis, the international community must offer poor countries alternative financing, he said. "It is important that the international community address the urgent needs of the low-income countries by offering sufficient grants and highly-concessional loans to enable them to finance development without relying on expensive loans," he said.
For developing countries to be able to plan effectively, such aid should be more predictable and should be delivered more efficiently, he said. He added that the Fund could help by advising poor countries on how to deal with potential risks from higher aid, including undue currency appreciation and higher inflation.
Like Dervis, the other two panelists--Ricardo Hausmann, director of the Center for International Development at Harvard University, and CGD vice president Dennis de Tray--also welcomed the IMF reaffirmation of support for low-income countries.
Hausmann, who previously served as chair of the IMF-World Bank Development Committee, the main intergovernmental coordinating body for the two global financial institutions, argued that the Fund's strategy for poor countries focuses too much on poverty reduction and the Millennium Development Goals and not enough on economic growth.
De Tray, who served as IMF resident representative in Viet Nam in the 1990s, and recently as World Bank country director for the Central Asian Republics, questioned whether the Fund could become open to learning and flexible enough at the country level to become a valued partner. Such changes in the culture of the IMF would take many years, he said.
Following questions from the floor, CGD senior fellow Liliana Rojas-Suarez, who moderated the discussion, summed up the views of the panel and the audience in just two words. "Welcome and caution," she said. "Welcome to your efforts… and caution because people still question the extent to which the current institutional environment can change as quickly as you would like."
*Watch Rodrigo de Rato' keynote address, Renewing the IMF's Commitment to Low-Income Countries. (If you are having problems streaming the video it is also available for download. [98 MB] )
Access the full text transcript
*(If you do not have Quicktime player on your computer download it for free)
On Tuesday, June 12, 2007, Steve Radelet testified before the Senate Foreign Relations Subcommittee on International Development, Foreign Assistance, Economic Affairs, and International Environmental Protection on "Foreign Aid Reform: Successes, Failures, and Next Steps."
CGD senior fellow Steve Radelet, co-chair of the Modernizing Foreign Assistance Network, shares a surprising new analysis of U.S. aid spending (it has fallen sharply in the past two years!) and explains how the next administration can bolster America’s security and reputation through better investments in reducing global poverty, fighting disease, and creating economic opportunity around the globe.
Q: What should President-elect Obama and his transition team be thinking about as they look for smart ways to strengthen U.S. global development as a pillar of U.S. foreign policy?
A: First, I think it’s important to acknowledge that President-elect Obama said more about global development in his campaign than any other incoming president. His “Common Security, Common Humanity” strategy sets out a bold agenda to bolster America’s security and reputation and show our nation’s values through investments in alleviating global poverty, fighting disease, and creating economic opportunity around the globe. At the same time, Obama has recognized that Americans want smart and effective government programs that work.
U.S. foreign assistance has had some great successes, including supporting the Green Revolution in agriculture, helping to eradicate small pox, supporting HIV/AIDS prevention and treatment programs, getting more girls into school, and building infrastructure to attract foreign private investment and spur local business. But our overall efforts are not as effective as they should be. They suffer from lack of coordination across more than 20 different agencies that provide assistance, from burdensome restrictions in outdated legislation that severely restrict our ability to respond effectively on the ground, and from a lack of an overall guiding strategy. And while funding for foreign assistance has grown over the last decade, it declined sharply during the last two years, as some of my colleagues and I describe in a new CGD Note “What’s Behind the Recent Declines in U.S. Foreign Assistance?”
President-elect Obama, his team, and key leaders in Congress have the opportunity to make every dollar we spend on development programs much more effective, especially since there is bipartisan consensus on the need to move forward. The Democratic Party platform recognizes this imperative: “We will modernize our foreign assistance policies, tools, and operations in an elevated, empowered, consolidated, and streamlined U.S. development agency. Development and diplomacy will be reinforced as key pillars of U.S. foreign policy, and our civilian agencies will be staffed, resourced, and equipped to address effectively new global challenges.” The Republican Party platform makes a strong call for “a review and improvement of the Foreign Assistance Act of 1961 oriented toward: alignment of foreign assistance policies, operations, budgets and statutory authorities; development of a consensus on what needs to be done to strengthen the non-military tools to further out national security goals; greater attention to core development programs…and great accountability by recipient countries.” So there is enormous agreement in both political parties about what needs to be done.
The Modernizing Foreign Assistance Network, which I co-chair, has recommended a four-part approach to address these challenges and strengthen our assistance programs:
Develop a National Strategy for Global Development;
Reach a “Grand Bargain” between the Executive branch and Congress on management authorities; and plan, design, and enact a new Foreign Assistance Act;
Streamline organizational structures and improve capacity, preferably by creating over the long run a Cabinet-level Department for Global Development, or possibly a strong non-Cabinet professional development agency; and
Increase funding for and accountability of foreign assistance.
These steps will go a long way towards creating the development capacity necessary for the United States to effectively face 21st-century challenges.
Q: What initial actions can be taken during the transition period and in the early days of the new administration to begin this process? Are you calling for the Millennium Challenge Corporation (MCC) and the President’s Emergency Plan for AIDS Relief (PEPFAR) to be folded into USAID?
A: MFAN recommends that the president-elect and his team take two key early steps. First, they should announce soon a strong, experienced, high profile nominee for USAID Administrator, simultaneously name that person as interim head of the MCC and PEPFAR, and make him or her a key part of the National Security team. This step would begin to provide much-needed coordination and coherence across our assistance programs, and would elevate development to a new level in our foreign policy dialogue. It would also create a package of responsibilities that would attract a strong, very high-profile leader that has the vision and leadership skills needed to drive the modernization effort forward over the next few years. At the same time, with one very senior leader named to provide vision and head the overall effort, three strong professionals should be named to run USAID, the MCC, and PEPFAR on a day-to-day basis, much as we have now. We do not recommend eliminating either the Office of the Global AIDS Coordinator (OGAC) or MCC structure, eliminating the OGAC coordinator or MCC CEO positions, or folding these activities into USAID as it is now constituted. OGAC and the MCC should be maintained as strong and separate programs with special characteristics, just as they ultimately would be under the aegis of a strong development agency in the future.
Second, we recommend that the incoming administration name a “Deputy National Security Advisor for Development” with joint NEC/NSC responsibility for interagency and White House coordination and coherence of development policy. This person’s responsibilities would include coordination across programs and policies regarding democracy, humanitarian assistance, and crisis and conflict response, and ensuring consistency with U.S. trade policy. This position would be supported by several senior director positions at the NSC/NEC. Two key actions would be coordinated by the directorate with the new development nominee: developing a National Strategy for Global Development (in tandem with the new National Security Strategy), and initiating a review of all foreign assistance and international crisis management authorities, including those in DoD, to determine which authorities are most appropriately civilian and which are most appropriately military.
There is no silver bullet here; no one recommendation will be enough to bring our foreign assistance up to date and make it as effective as it can be. And we know it is not possible to have a new development strategy, new legislation, and consolidation (hopefully into a new cabinet agency) on the first day, so these recommendations represent the first key actions along the road toward meaningful reform. Without the initial step to put one person in charge of our three largest development programs, we risk continuing the diffuse leadership and uncoordinated efforts that will undermine the prospects for serious modernization of U.S. development programs to effectively combat poverty, fight disease and hunger, and widen the circle of development and prosperity.
Q: Why should the United States care about foreign assistance and global development in the midst of the financial crisis?
A: The financial crisis makes it imperative that we focus on rebuilding the U.S. economy, and it clearly will put significant strains on an already overburdened budget. But at the same time, it shows us yet again that U.S. and global prosperity rise and fall together; the same is true for domestic and global security. The very issues that we want our global development programs to address—including poverty, hunger, and economic stagnation—are being exacerbated by the current turmoil.
Unfortunately, America’s image in the world has deteriorated sharply in recent years, undermining both our standing as a global leader and our ability to create a better, safer world. The financial crisis has exacerbated this situation. Understandably, many Americans will be tempted to turn inward to try to protect their own interests. Yet the reality is that, now more than ever, the prosperity and security of Americans is integrally linked with the prosperity and security of the rest of world.
While we work to fix the economy at home, people around the world will be looking for the United States to restore its international leadership to help limit the economic and political consequences of the crisis. Our success or failure in restoring U.S. and global economic stability to create jobs, increase trade and private investment, and prevent the emergence of rogue nations and groups that foster insecurity and fear will depend in large part on our ability to strengthen all of our tools of global engagement, including building a more robust diplomatic corps and much more effective development programs to complement our defense and security programs.
For our long-term security and prosperity, one of the worst things we could do is to draw back from our efforts to engage with the world and support people in developing countries. President-elect Obama and his team clearly understand that, and have the strong support of leading members of Congress such as Howard Berman, Nita Lowey, Betty McCollum, Christopher Dodd, Richard Lugar, and Robert Menendez. The economic crisis is both a mandate and an opportunity to fundamentally reform our national security and foreign policy so that every investment we make abroad is strategic and cost-effective. So why should we care about strengthening our engagement with developing countries right now? In short, we can’t afford not to.
Q: Isn’t all this talk about modernizing foreign assistance an inside-the-beltway conversation? Does anyone outside Washington care?
A: Survey after survey shows that Americans are supportive of development assistance, but they want to be sure that our money is being spent effectively to help those who need it. Particularly with the deep concerns over the direction of our foreign policy in recent years, people across the country want the United States to engage in smart new ways with the rest of the world. The ONE campaign was ubiquitous during the presidential primaries and debates. Organizations like Bread for the World, Oxfam, and Save the Children have networks of millions of Americans that are actively engaged in the issues and talking to their members of Congress. Recent polling suggests that a strong majority—76 percent—of those questioned support modernizing foreign assistance. They want to see results and believe that reforming foreign assistance will help ensure that our programs are helping promote prosperity and security globally and at home.
Q: Some argue that while we need to modernize our foreign assistance programs, we can do a lot without new legislation. Do we really need to rewrite the Foreign Assistance Act?
A: If we are serious about real reform, the answer is yes—as much for the process of executive branch and congressional collaboration as for the substance that emerges. It is true that we can, and should, take several steps to strengthen our programs that do not require new legislation. These include rebuilding the professional capacity of our development organizations, streamlining procurement procedures, building a more effective monitoring and evaluation capacity, and reversing presidential directives that in their totality undermine program effectiveness, among others.
But at the core of many of the problems we face are the burdensome requirements that have been built up over the years as part of the Foreign Assistance Act of 1961. The dialogue with Congress on these issues is so broken that the act has not been re-authorized for more than 20 years. We need to rebuild the trust between the executive and legislative branches and reach a “Grand Bargain” on management authorities, responsibilities, and operational modalities. This step is crucial for supporting our personnel in the field so that they can be responsive to the highest needs in particular countries and make sure every dollar we spend is done so effectively.
It is important to recognize that legislation alone is not the answer—rewriting the Foreign Assistance Act must be seen as part of a complete package that includes developing a new strategy for global development, consolidating programs into a new, strong development agency, and increasing funding and improving the allocation of funding over time.
Q: What else needs to be done to finally bring U.S. foreign assistance into the 21st century?
A: One of the most important steps towards realizing this goal will be for President-elect Obama, his foreign policy team, supportive members of Congress, and our community of development professionals to keep making the public case that U.S. global development efforts are critical for our national security and long-term prosperity. We have to emphasize that foreign assistance modernization is inextricably tied to the creation of a new foreign policy approach for the United States and will bring more strategic depth, efficiency, and accountability to our global development efforts. This is particularly important because the financial crisis, geopolitical instability, and emerging demographic pressures will cross paths in more unpredictable ways over time. We can’t afford not to prepare to address these challenges now.
It will take leadership and cooperation to complete foreign assistance modernization, which I believe the Obama Administration will see as a way to realize its own political and foreign policy goals. In the short term, changing the way the system works will make government work better and be more cost-effective. More importantly, it will create a structure that will be up to the task of handling President-elect Obama’s proposed increases in foreign assistance strategically and efficiently, and ultimately ensure that U.S. development programs meet our foreign policy goals for creating better, safer world.
Liberian President Ellen Johnson Sirleaf described the achievements of her year-old government in recovering from a prolonged civil war and called upon the U.S. and other Liberian partners to drop the debt inherited from past governments, continue security assistance, and step up development assistance, especially road building.
"Slowly but steadily we are making our way back. We know we can create a new peaceful, open and prosperous Liberia," said Sirleaf, Africa’s first elected female head of state, at an event (video clips of Pres. Johnson Sirleaf and Rep. Jesse Jackson, Jr. are available on the event page) organized by CGD that marked the start of an official visit to Washington.
"We believe that Liberia can be an example…that war-torn dictatorships can turn around and become responsible members of the international community," she said. "We are willing and ready to make the hard decisions, to adopt the right policies, to put in the right systems, if you are willing to be with us and support us, politically, analytically, and financially."
While in Washington, Sirleaf will meet with representatives of Liberia’s international partners to describe its progress, outline its strategy, and discuss how the partners can support Liberia.
Sirleaf announced that CGD founder Edward Scott, Jr. would provide $1 million to assist Liberia in managing its reconstruction, by sponsoring five or six highly trained specialists each year for three years to work in key Liberian ministries to support senior officials and their staff (see press release). She also thanked CGD senior fellow Steve Radelet, who has been advising the Liberian government on its relations with the international donor community.
U.S. Congressman Jesse Jackson Jr. told the gathering that additional U.S. help is needed to ensure that plans for rebuilding the Liberian national army are fulfilled. All the outside assistance "will go for naught unless there is peace and stability," Jackson said.
CGD president Nancy Birdsall, who recently visited Liberia, praised Sirleaf's government for rapid progress in restoring order and rebuilding systems destroyed during the prolonged civil war. The Liberian government reports quarterly on revenues and expenditures, she said, but donor organizations working in Liberia have yet to provide similar information about their activities to the Liberian government, despite repeated requests, she said.
After describing Liberia's rapid progress, Sirleaf listed six areas of concern involving support from the U.S. and other partners. First, she said, there is a risk that as Liberia improves, the attention of the international community will turn elsewhere. “Although we have made progress our recovery is still fragile,” she said. “If we do not redouble our efforts our ultimate success is not assured. Now is not the time to level off assistance.”
Second, she said, two critical elements of Liberia's program are not yet fully funded: security and roads. The U.S., which has strong historical ties to Liberia (which was founded by former American slaves), has played a leading role in restoring security. But U.S. funding for training the new Liberian army of 2,000 has not been provided beyond March, she said.
Similarly, although roads are central to providing health and education services, and to revitalizing the economy, “our partners still do not put as high a priority on building roads as we would like to see,” she said.
Other concerns included delays in disbursement; an unmet need for budget support; and possible gaps in the transition from humanitarian relief to development aid. In health, for example, NGOs that have provided badly needed medical services are preparing to withdraw, although other programs are not yet ready to replace them.
Finally, Sirleaf appealed for an urgent resolution of Liberia’s debt problem. Liberia’s debt of $3.7 billion is equal to 3,000 percent of the country’s annual export earnings. The debt, she said, is mostly from bad loans to past governments. She appealed to the shareholders of the IMF, the World Bank and the African Development Bank to agree on a plan for debt relief that would not draw away donor resources needed for Liberia’s recovery.
On Thursday, Liberian Finance Minister Antoinette M. Sayeh, and Minister of Planning Toga G. McIntosh will report on the results of the Liberia Partners Forum at public event organized with CGD support. Register for the event.
This ninth MCA Monitor Report from the Field is a snapshot-in-time of El Salvador’s program in the early phases of its implementation, during a year in which the Millennium Challenge Corporation (MCC) is under pressure to increase and accelerate disbursements, demonstrate tangible impacts, and substantiate the country-driven model as a viable alternative to traditional U.S. government foreign assistance. El Salvador’s experience highlights the challenges of balancing country ownership and oversight as well as managing procurement and expectations. The report suggests solutions to pressing questions related to country ownership, the consultative process, donor coordination, aid effectiveness, and transparency.
The MCA Monitor team presents its predictions for the MCC's selection of countries eligible to apply for funding in 2009. Steve Radelet and Amy Crone take a hard look at the tough choice the MCC has to make, and they offer suggestions to help the MCC to weather a tight budget and political transition, to increase transparency, and clarify criteria for Threshold Program elegibility.
The MCC Board of Directors will meet on Nov. 8 to select countries eligible to apply for FY 2006 funding. The Board will face a seemingly impossible task -- how to support more qualifying countries with larger, transformational compacts, from a limited MCC budget. Round Three of the MCA: Which Countries are most likely to Qualify in FY 2006 by Steve Radelet, Kaysie Brown and Bilal Siddiqi names the front runners. The MCC Between a Rock and a Hard Place: More Countries, Less Money and the Transformational Challenge, by Radelet and Sheila Herling, explores the key challenges facing President Bush's flagship foreign aid initiative.
On Tuesday, Nov. 1, from 3:00-5:00 p.m. Radelet discussed both issues in Round Three of the MCA: Assessing the Prospects for FY 2006 Country Selection and Funding.
Access the MCA Monitor website