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- 10/21/08: Remarks by Henrietta Fore, Administrator, USAID and Director of U.S. Foreign Assistance at the White House Development Summit
- 10/08/08: Remarks by Henrietta Fore, USAID Administrator and Director of U.S. Foreign Assistance at The President's Freedom Agenda
- 10/01/08: Remarks by Henrietta H. Fore, Administrator, USAID and Director of U.S. Foreign Assistance, at the Ceremony Marking the Full Operational Capacity of Africa Command (AFRICOM)
- 09/25/08: Remarks by Henrietta H. Fore, Administrator, USAID and Director of U.S. Foreign Assistance, at 2008 Millennium Development Goal Malaria Summit, New York - "U.S. Leadership in the Fight Against Malaria"
- 09/22/08: Remarks by Henrietta H. Fore, Administrator, USAID and Director of U.S. Foreign Assistance, at the White House Symposium on Advancing Global Literacy - "U.S. Commitment to Advancing Global Literacy"
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Remarks by Andrew S. Natsios
Administrator, USAID
Effective Economic Growth for People
December 1, 2004
Society for International Development
Washington Chapter
President Bush's National Security Strategy document is remarkable in a number of ways. It came out in September 2002, almost a year to the day of the terrorist attacks in New York and Washington the year previous. I believe it will rank with George Marshall's Harvard Speech or Harry Truman's Point Four Address in setting the course of this nation's policy for years to come. In the clearest of terms, it defines the new security threats that face this nation and the post-9/11 world while putting forth a coherent strategy to meet them.
The document is particularly noteworthy for what it implies for "development" and therefore my Agency, USAID. This President has retrieved "development" from the periphery of this nation's foreign policy establishment and asked it, henceforth, to play a central role, along with "defense" and "diplomacy". This is not as revolutionary as it sounds. In fact, it is a restoration. "Development" is being asked once again to assume the place of prominence it occupied in the "plans" of men like George Marshall, at the outset of the Cold War.
I mention this to underscore the changed circumstances in which my Agency now operates. In the war on terrorism, the development mission of my Agency and the mission of the people in the audience here have become at once more central and more urgent to the country and to the security of the world.
The National Security Strategy document goes on to mention how critical it is to spur "a new era of global economic growth" by a recommitment on the part of the developed world to free markets and free trade.
Today, I would like to expand on this message and argue its relevancy for the developing world. It is only through free markets and seizing the opportunities of trade in the global marketplace that the developing world can lift itself out of poverty and achieve sustainable levels of growth. This is the clear lesson that the experience of the United States teaches. And it is a lesson that has been repeated time and again in countries in Europe, the Far East, and Latin America over the last 50 years or so, and more recently in Africa and the Asian subcontinent.
I have been asked to talk about "Effective Economic Growth for People" and will emphasize 3 key elements of my Agency's strategy to help bring this about: trade capacity building, microeconomic reform, and infrastructure.
During the 1990s, developing countries that successfully integrated into the global economy enjoyed per capita income increases of 5 percent annually on an average. On the other hand, those countries that protected their domestic markets with tariff barriers and other measures that limited their participation in the global economy saw their economies decline.
The magnitude of trade and investment far outweighs foreign assistance in the broader context of international capital flows. At the 2002 Monterrey Development Conference, it was pointed out that developing countries receive $50 billion a year in aid, while foreign investment inflows total almost $200 billion and annual earnings from exports exceed $2.4 trillion.
It goes without saying that investment and trade flows, tapped into, can be a critical source of development finance. Harnessing global market forces-competition, human resource development, and technology transfer-can help generate the growth that has eluded large parts of the developing world. As evidence, trade opportunities created by the African Growth and Opportunity Act (AGOA) alone boosted African exports to the United States by more than 1,000 percent, generating nearly $1 billion in investment and creating thousands of jobs.
The United States is the largest single-country donor of Trade Capacity Building (TCB) assistance. And that commitment has grown significantly since the Monterrey Conference. Total U.S. funding for TCB activities was $902.8 million in fiscal year 2004, up significantly from the $760.1 in 2003, which, in turn, was more than double the efforts in 1999. USAID provides the lion's share of this effort in a broad array of programs around the world designed to prepare countries for participation in trade negotiations, help them implement trade agreements, and respond to trade opportunities.
We've come to realize, however, that an effective response to trade opportunities entails more than an isolated project that exploits a country's comparative trade advantage. It requires a assembling a cluster of firms and support activities that allow producers to effectively compete in the global marketplace. And this ultimately requires a significant deepening of reform, affecting the business and investment environment within which firms operate and entrepreneurial risk-taking occurs. In other words, to take full advantage of external trade, significant changes must take place internally, within the borders of a developing country.
Sound macroeconomics is a part of this. But as the Latin American experience of the 1990's illustrates, without reform at the so-called "micro" level, poverty will stay entrenched and growth will remain elusive. Microeconomic reform refers to regulations and policies that affect the ability of firms to access credit, hire and fire employees, enforce contracts, process goods through customs, and meet environmental and health standards. It includes addressing the tax burden under which firms operate and a leveling of the playing field among competitors. And it refers to individuals and their right to own property, register businesses, and the myriad other everyday activities that, cumulatively, create the environment for human enterprise.
Last June, I asked the 90 missions around the world where USAID operates to inventory all the commitments they were making to microeconomic reform. I did this for a number of reasons. First, to signal my own commitment to such endeavors; second, to focus minds in the field; and third, to stimulate cross-fertilization of successful programs and projects around the world. We found more than 600 activities have been supported by USAID field missions and I am committed to expanding and accelerating their work.
I would like to illustrate what I am talking about by referring to one such reform effort, ongoing in Jordon. In 1998, USAID, in collaboration with the Foreign Investment Advisory Service of the World Bank, made a diagnostic of administrative barriers to foreign direct investment in Jordan, entitled The Investor Roadmap.
The study examined thirty-two specific procedures, including business registration and licensing, property registration, site inspections, customs procedures, work permit approvals, import and export procedures, and income tax registration and payment. It indicated the steps involved to complete the selected procedures, what submissions are required, what the associated costs are, and how long each procedure takes. The study made 83 recommendations, which constituted a comprehensive and detailed microeconomic reform agenda. USAID subsequently addressed 36 (43%) of those recommendations through a variety of activities, including workshops, legal drafting, capacity building, and issue papers.
Additional efforts are designed to dovetail with the Free Trade Agreement (FTA) with the United States that went into effect in December 2001. This will phase out duties on nearly all goods and services by 2010. The agreement also provides for more open markets in communications, construction, finance, health, transportation, and services, as well as strict application of international standards for the protection of intellectual property.
I single out Jordan's promise for other reasons, more strategic in nature. In clearing the ground for sustainable growth there, we can give the lie to those who depreciate this region of the world and dismiss our efforts to bring modernization there as misspent and quixotic. We must demonstrate the value of friendship to the United States and show peoples that a more prosperous future awaits those, like Jordan, that eschew terror and war. Though poor in natural resources, Jordan can show the way to its more richly endowed neighbors that it is investments in the health and education of its citizenry that unlocks the real wealth of a people.
I mentioned that economic reform has to deepen. It also has to broaden. And this is as much a matter of equity as it is a way to generate wealth. As my friend Hernando de Soto so powerfully argues, the best way to rid a country of the festering sore of a "bidonville" or "barrio" is to bring the economically marginalized who inhabit these places into the economic mainstream. It means ending the informal economy in which these people are forced to operate in scratching out their existences.
An essential first step in such a project is granting these people recognizable and legally enforceable property rights to the meager plot and possessions they now tenuously hold. Again, reform at the "micro" level, if you will. This will give them a fungible stake that they can begin to use in a wider world of economic opportunity. Society as a whole can only benefit from tapping into the drive, ingenuity, and energy of such people when channeled into more productive enterprise.
There is, of course, a political and even a strategic consideration to all this, once again. The marginalized places these people now occupy are the nurseries of grievances that the demagogues and enemies of this country now assiduously exploit.
Lastly, I would like to talk briefly about infrastructure. You might assume that I will talk about the water, transportation, and electrical power systems that undergird a modern industrial economy. And you may be interested to know of the Agency's "Last Mile" initiative which is designed to wire the remoter, poorer regions of the world to the information age in order to take advantage of the knowledge-sharing and opportunities it affords. You might call this the "infrastructure" of the post-industrial age, if you're so inclined.
But I don't want to talk about these things today. I want to talk about something very mundane - road-building - something which this Agency has got away from in the course of the last twenty or so years; something which is quintessentially important to the mainly poor and agrarian societies where we have missions. I talked previously about firms and entrepreneurial risk-taking. I would like to conclude with some reflections on development at the most basic level of society.
Earlier this year, I invited Dr. Norman Borlaugh to give the Agency's First Annual George C. Marshall Address. Norman Borlaugh, now inn his 90's, is a hero in this Agency and, I might add, around the world. As the architect of the "Green Revolution," he has been credited with saving more lives than any other individual in history. In his address, he called upon his listeners to seize upon the opportunities that contemporary science presents for inaugurating a second "Green Revolution" to feed the world.
And he also called for a recommitment to road building, which he saw as integral to the success of the first "Green Revolution." It was over these rural roads that Borlaugh's grain could go to market and thence to feed hungry and undernourished peoples. It was also over these same roads that the fertilizer necessary to increase crop yields would also travel.
And it is these same roads that provide producers with access to local markets and cross border trade.
He had one concluding observation. Time and time again, he said, he would see a clinic appear at one end of that rural road and a school at the other. And the health and education of peoples, it goes without saying, remain at the core of USAID's development mission.
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