FROM THE OFFICE OF PUBLIC AFFAIRS

Since our last meeting, I have had the opportunity to travel to Africa, Central Asia and Latin America – three pivotal regions, each with enormous economic potential and each confronting a unique set of development challenges. I appreciate the many opportunities these visits afforded to listen and to learn. And I value the insights I received from the people in these regions, from small- scale farmers and market vendors to development officials and government ministers.

These trips confirmed for me that people in all developing countries, even the poorest, have the potential to succeed greatly. Yet in far too many countries, the universal desire to succeed has led to frustration at the slow pace of progress and disappointing development results. I share this frustration in that I find it hard to understand why, in this twenty-first century, this era of momentous scientific and technological advances, so many people still lack access to safe water or why so many children die from disease before they reach their fifth birthday. Or why poverty is increasing in countries richly endowed with both human talent and natural resources.

Clearly, there is no simple universal blueprint for overcoming all the country-specific economic and social obstacles that impede sustainable development progress. Yet, I am convinced with the consensus of Doha, Monterrey and Johannesburg setting the agenda, we can do a better job in combating poverty if we place greater attention on two aspects of the development agenda that underlie most success stories: (1) the factors that enable people and countries to become more productive; and (2) better measuring and monitoring and managing for development results.

The Goal of Productivity Growth

We can be more effective in achieving improved living standards if we prioritize our efforts to address the basic causes of low productivity – such as poor policies, low business investment, and inadequate education and health care – that are now holding countries and people back
PO-3476
The need for sound policies is fundamental. This includes outward-oriented engagement with global markets and investment. In every country there is no substitute for honest leadership committed to good and publicly accountable economic management. Progress in meeting the goals of the Millennium Declaration is heavily contingent on improving the quality and productivity of resource use. We therefore welcome the stepped up efforts of the Bank and Fund to strengthen public expenditure tracking and fiduciary management and we urge that these efforts be intensified. All countries need to establish appropriate frameworks that build confidence and curb the ability of those who would subvert the financial system, including terrorists, in order that the strongest sustainable real economic gains are realized.

It is also crucial to create an environment that promotes vibrant private enterprise and investment. If developing countries are to realize their economic potential, it is essential that they and their donor partners move more forcefully to reduce the impediments that are constraining the creation of high productivity jobs by the private sector.

Priority must be accorded to human resource development and the investments needed to improve delivery systems for health, education, water and sanitation. These social sector investments increase individual productivity and have major spillover benefits economy-wide.

Conversely, the absence of basic services, such as clean water and sanitation – which most of us take for granted – make the prospects for economic progress more remote.

The United States supports efforts underway to identify best practice approaches that can be replicated elsewhere to help close the gaps – in data, policies, institutional capacity, and financing – that now constrain the expansion of quality education. Our goal should be to substantially increase the number of children with full functional ability to read, write and compute by age ten. Although delivery of health services and access to clean water pose different challenges, the importance of coordinated approaches that focus on program quality and the delivery of results cut across these three issues. It is difficult to envision substantial progress in any of these areas without major improvements in on-the ground coordination by official and private donors.

Better Measuring and Monitoring and Managing for Development Results.

Delivering and measuring development results at all levels should be a development priority. The IDA-13 agreement launches a fundamental shift of focus within the MDBs to measurable results. It is, however, only a beginning. A more comprehensive approach across all the MDBs is needed to measure progress towards targeted development results and to assess the reasons for success and failure. Such a system is crucial for donors to ensure the effectiveness of their assistance. It is even more important for the citizens and governments of borrowing countries who need real results, in real time, for real people. We urge a sustained and prioritized effort by all of the MDBs to create and integrate a results based operational plan that focuses on key measurable outcomes in every grant and loan, and every country strategy.

Quality baseline data are necessary to effectively operationalize a results-based system. Yet accountability for standardizing, collecting and building capacity to measure poverty and social indicators does not now reside with designated institutions. We recommend that the World Bank take the lead in working with other appropriate institutions in preparing a report for our consideration at the spring meetings on how best to establish an accountability structure within the international system for standardizing and measuring a set of priority development results. We suggest focus on indicators related to the goals of the Millennium Declaration and for such key areas as productivity growth, private sector development and public expenditure management.

HIPC

For the HIPC countries in particular, we must be careful to avoid business-as-usual lending that could put these countries back into untenable positions. The United States will work with other donors in order to finish the HIPC program. But that is not enough.

Delivering the improved economic performance and poverty reduction that we all seek will require concentrating our attention on helping these countries implement long-term growth strategies that promote strong productivity gains, human resource development, and individual enterprise.