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USAID's
Natsios Offers New Vision for Foreign Assistance
Foreign Assistance Builds a Foundation for Sustainability
By
Andrew S. Natsios, April 10, 2002
The
end of the Cold War and the rise of globalization have brought
tremendous change to the political and economic dynamics that
shape the world. As
the U.S. government's principal institution working to fight
poverty and end hunger in developing countries, USAID has
recognized how these changing global forces also necessitate
a new vision for development assistance.
In
the Bush administration, we are reconstructing the concepts
of foreign assistance, and keeping pace with the momentum
of the private sector. We are also informed with the vast experience we've gained
from the successes and failures of aid programs over the last
40 years.
We
are changing the concept of what foreign assistance should
achieve. Foreign assistance is not merely a transferal of
money from the North to the South.
We are rethinking what foreign assistance is all about,
rethinking the purpose of foreign assistance, recognizing
that it's not how much you spend in foreign aid -- it's how
you spend it.
We
have learned that transferring large amounts of cash into
the treasuries of developing country budgets is not a fail-safe
way to achieve long-term economic, social, and democratic
sustainability. Rather
we have learned that to sustain growth over a long period
of time, aid programs must work to attract private sector
capital in order to develop economies.
All
of the countries that were once poor and have become prosperous
in recent decades have done it through private sector growth
and official development assistance.
Foreign assistance has helped these countries achieve
sustained growth to eliminate poverty.
They've done it through technology transfer, through
institution building, through improved health services, and
through policy reform.
Successes in these investments have shown us that foreign
assistance spending in these areas will create the environment
for private sector-led growth.
For
this reason, President Bush announced in March 2002 that the
United States would create the Millennium Challenge Account
to provide additional development assistance to a select number
of developing countries that demonstrate a strong commitment
toward good governance, the health and education of their
people, and sound economic policies that foster enterprise
and entrepreneurship.
The Millennium Challenge Account will increase the
baseline level of official development assistance by $5,000
million over the next three years, amounting to an unprecedented
50 percent increase in official development assistance from
the United States.
Technology
Transfer
The
"green revolution" in Asia is the best example of
the stunning progress that can result from technology transfer.
Genetically modified wheat, developed in Mexico by
an American-led team, increased yields and was widely distributed
for planting through India and Pakistan. The success of these crops helped to avert famine in the 1960s,
but not through a transfer of official development assistance
(ODA). The "green
revolution" fundamentally was a technology transfer of
improved seed varieties and of new kinds of equipment that
allowed smaller farmers to grow more food.
It's a movement of fertilizers and different kinds
of inputs that helped small farmers increase food production.
The "green revolution" was a spectacular
success brought about by an alliance between American scientists,
U.S.-based foundations, the World Bank, and USAID.
In
Africa, technology transfer has helped to create dramatic
increases in yields.
In Mali's inner delta region, for instance, rice production
doubled between 1993 and 2000 as a result of USAID-supported
programs that created incentives to invest in better rice
varieties and processing technology, improving the management
of both agricultural and natural resources.
In this administration, we are working to encourage
African farmers to make use of the latest agricultural research,
which we know can increase productivity.
Institution
Building
Since
the end of the Cold War, developing countries have made a
dramatic movement toward democratic capitalism as the operative
model of governance.
In making that transition, however, many countries
discovered that they did not have the institutional experience
to operate all the mechanisms of a democratic system.
They had never held free and fair elections with a
full ballot of candidates from multiple parties. They were not prepared to run a parliament, not prepared to
have journalists and broadcasters looking at the problems
of government in a very public way.
USAID
and other donor governments have facilitated institution building
to help these countries set in place all the mechanisms operating
in an open democratic society. We are supporting programs
to train people in the management of their new democratic
institutions. We
are training journalists to understand solid fact-based reporting,
and the concepts of fairness and balance.
We are training government officials in how to govern
in an open way. We
are sponsoring democracy programs introducing new approaches
to crisis management and conflict analysis to assist opposing
parties in resolving their issues peacefully and within the
framework that a democratic system provides.
Policy
Reform
USAID
has also been instrumental in assisting countries to reform
their policy environment as they move from the socialist economic
model toward a free market model. If a country isn't adhering
to macroeconomic policies that will sustain a free market,
no amount of foreign assistance is going to lift that nation
from poverty to prosperity. Policy reform is an absolute prerequisite
for long-term sustainable development.
USAID
has been helping countries make the policy adjustments necessary
to adopt macroeconomic policies that will attract investment.
So we've been providing guidance to nations in how
to control inflation, stabilize currencies, and prevent counterfeiting.
Through these reforms, countries can create an economic
environment where farmers and businesses have incentives to
grow and produce because they are assured their profits will
be safe. Creation
of this economic stability lays the foundation for prosperity
and an end to poverty.
Over and over again, policy reform has proven itself
to be an absolute prerequisite for long-term sustainable development.
Public
Services
Policy
reforms carry over into the arena of public services as well. Many governments in the developing world have been unable to
provide quality public services at a reasonable cost to a
large portion of the population. USAID
has helped build institutional capacity of the ministries
in these countries to carry out public services.
The last 40 years have witnessed dramatic improvements
in child mortality, in maternal mortality, and in literacy
levels in many countries.
As a result of the programs we've supported, institutional
capacity has increased, allowing improvement in the delivery
of these critical public services.
We've
made significant progress through the decades in our recognition
of the interrelationship between the successful delivery of
these public services and a nation's capacity to overcome
poverty and achieve long-term sustainability.
Mothers must be healthy if babies are to be healthy.
Children must be healthy in order to learn and become educated.
Education creates a capable, productive workforce that
will lead a nation to prosperity.
President
Bush has established an increase in spending for education
in the developing world as a top priority.
USAID funds devoted to this purpose will increase from
$100 million to $170 million in two years.
Leadership
As
USAID pursues foreign development assistance on these four
tracks, we also remain keenly mindful that strong, capable
local leadership is profoundly important in achieving success.
Only where national commitment exists can these initiatives
take hold and bring results.
Mozambique
provides an outstanding example.
This East African nation had one of the most brutal
civil wars in the last quarter of the 20th century after independence
from Portugal. Two
to 3 million people died of starvation. Terrible atrocities
were committed. A
decade of Marxist economic policies had failed to build upon
the country's rich agricultural land and mineral resources,
leaving Mozambique as one of the poorest countries in the
world. Fighting
ended in the 1990s, a constitution and a multi-party democracy
were adopted, and an international aid effort began. By
2001, Mozambique experienced a 14 percent growth rate in its
economy during a one-quarter period.
Leadership
is a fundamental element in that progress.
Prime Minister Pascoal Manuel Mocumbi is very proud
of having created a policy environment where there is widespread
investment across the country. Areas that experienced famine
during the civil war are now exporting foods as a result of
USAID agricultural programs.
Dr. Mocumbi is deeply interested in agriculture, and
his cabinet members are among the most able ministers I've
seen in many developing countries.
They created the policy environments and they attracted
capital to build on the base they created.
Private
Sector
The
model for foreign development assistance has evolved at the
same time another relevant trend has developed in recent decades.
In 1969, 70 percent of all capital flows from the United
States to the developing world were in the form of foreign
assistance. Now
only 20 percent of all capital flows from the United States
to the developing world come from official development assistance.
Eighty percent of the money now flows from private
entities -- foundations, nongovernmental organizations (NGOs),
universities, and most significantly, private companies.
The statistic is the inverse of what it was 30 years
ago.
U.S.
foreign aid policies must evolve in keeping with that trend. Under an initiative called the Global Development Alliance,
these organizations are joining the U.S. government as partners
in helping developing nations chart a course toward sustainability.
One-third of USAID's budget flows through international
and American-based NGOs to the developing world. Another third
is distributed through universities, private associations,
and locally based NGOs.
The final third is spent through the private sector.
With
these partners, USAID will build alliances to target specific
development objectives, matching our resources with theirs
to accomplish those objectives.
We've joined with a software company to bring Internet
access and computer training to the developing world.
In other arrangements, companies are working with USAID
to assist governments in creating regulatory policies that
will address illegal lumbering and deforestation in ways that
will preserve environmental resources while still allowing
some opportunity for harvesting resources.
Accountability
The
achievements made by foreign aid from the United States and
other industrialized nations over the last few decades are
impressive. Infant and child death rates in the developing world have been
reduced by 50 percent.
Health conditions around the world have improved more
in the last 50 years than in all of previous human history.
Smallpox has been eradicated; polio nearly so.
To
insure a continued domestic commitment to these worthwhile
programs, USAID must assure accountability and results from
the programs it funds. Our programs oriented toward policy
reform must meet specified benchmarks for balancing budgets,
achieving macroeconomic norms, and controlling inflation.
We work with local governments to reach those goals
each year. All
of USAID's 71 country programs are assessed by performance
indicators, which set targets for signs of achievement such
as increasing literacy, reducing child mortality, and increasing
immunization rates.
The
people of the United States have a profound humanitarian commitment
to improve the quality of life in less privileged nations.
They also know that aid is most successful when it
is no longer needed.
The greatest assistance the United States can give
to developing nations is the achievement of self-sufficiency
and sustainability.
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Andrew
S. Natsios is Administrator, U.S. Agency for International
Development.
Originally
published in the Global Issues Electronic Journal "Achieving
Sustainable Development"
The
Washington File is a
product of the Office of International Information Programs,
U.S. Department of State.
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