Woodrow Wilson School 75th Anniversary
Regional Event – World Bank, Washington, DC
March 13-14, 2006
Conference on Strategic Agendas for Development
"Development in the Globalizing World: A Transformed Agenda?"
Monday, March 13
PANEL 1: 9:00-10:30am
The Sweep of Development History
Moderator: Jim Adams MPA *74, Vice President, Operational Policy, World Bank
Panelists: Robert Picciotto MPA *62, King's College, London
Andrew Natsios, Georgetown University, former Administrator, USAID
Jessica Einhorn *74, Dean, School of Advanced International Studies, Johns Hopkins University
1. Dr. Picciotto briefly traced the evolution of modern development history from Sir Arthur Lewis to the present day’s Millennium Development Goals (MDGs). He then made the case that the current MDG-centered paradigm needs to develop a clearer focus on human security and global public goods because the worldwide transition to the market system has led to disproportionately greater economic and social insecurity for the poor and raised the prospect of conflict. He supported this assertion with reference to a range of topical global problems:
· Natural disasters, pollution and the spread of disease have grown in frequency and severity, global warming will create dramatic threats to ecosystems and livelihoods.
· Financial crises over the last 30 years have taken a devastating toll in Africa and emerging developing countries.
· Criminal networks, weapons proliferation, have all expanded with the number of terrorist attacks has grown more than eightfold over the last two decades.
· Competition for natural resources has led to conflict both among and within nations.
2. Mr Picciotto then reasoned that state weakness exacerbates these problems and can lead to conflict. Since such fragile states also account for a third of the world’s absolute poor, he argued that security and development policies need to be integrated with a focus on state fragility, social safety nets, youth employment, food security, access to social services, natural resource management and disaster preparedness. In this “human security” view, quality growth is preferred to rapid, inequitable, unsustainable growth. In conclusion, Mr Picciotto contended that the development community must urgently reconsider the basic tenets, protocols and operational practices of its enterprise as otherwise it is likely to suffer a sharp and sustained decline in relevance, effectiveness and legitimacy.
3. Andrew Natsios began by claiming that the sectoral approach to development taken historically by some agencies including USAID is dysfunctional since countries don’t develop in sectors and that development is more about institutional reform, change and capacity building. In order to promote these processes however, development professionals need to change approach and focus on understanding the local political dynamics and supporting the agents of change in each country. By contrast, Mr Natsios suggested that the current aid system tends to support the government in place, which in most cases is the cause of state failure and the source of resistance to reform. A central challenge for the development community therefore according to Mr Natsios is to find new ways of strengthening domestic institutions which do NOT however support the current paradigm that caused the problem.
4. A linked but even more important question for Mr Natsios is how to achieve strong governance, in particular the transfer of power from one government to the next without a civil war or riots. This is critical he argued because intra-country conflict is the main reason countries are not growing in Africa. Moreover, failed states create magnets for the darker forces of globalization with Bin Laden’s presence in Afghanistan being the starkest example. The problem however is that there is still no “Washington Consensus” for governance and aid assistance will continue to have limited impact according to Mr Natsios until there is a clearer idea of how to promote it more effectively.
5. Dr. Jessica Einhorn sketched the central role World Bank has played in the evolution of history of modern intellectual development theory and practice from the end of WWII. As the institution expanded its activities from lending to providing policy advice, the progress of Latin America and East Asian miracle in the 1990’s seemed to validate the World Bank’s approach. Yet the subsequent decline of Latin America, the lack of aid effectiveness in Africa and the 1997 Asian financial crisis in fact displayed the limitations of the Bank’s focus on macroeconomic reforms and the creation of human capital, and led to a call for a new approach to poverty reduction. Since then the overarching focus of the World Bank has been on the development of sound domestic institutions and policies that would promote good corporate governance as well as private sector development, and establishing sufficient social safety nets.
6. Dr. Einhorn pointed to China’s rise in the global economy as a case of how the Bank can be successful when it finds a good country partner but made the point that the Bank faces daunting challenges in helping to reduce global poverty. She noted that in countries with a thriving middle class and growing liberal economy, the Bank remains outside the national debates on globalization strategies (although it does act as a partner on pro-poor programs). As a result, and in response to its donors, the Bank has focused its efforts on alleviating poverty in poor, IDA-eligible countries and intimated that the institution is cannot emerge from the current difficult period until we see results in these countries. Dr. Einhorn concluded that despite current pessimism about our state of knowledge, there is hope in this regard based on past experience - in 1980, few thought China and South Korea would be the low hanging fruit of the development harvest.
Question and Answer Session:
Regarding the tension between post-conflict and development work because of the different sets of actors and the difference in their backgrounds, Andrew Natsios recognized that the military operates under a different business model from the development community. For example, in Afghanistan, since the government couldn’t provide services and rule of law, there were incentives for the military to make deals with the warlords. This type of practice weakened the government and thus the military have abstained from it and are using principles of good development work more consistently. James Adams added however that there still doesn’t seem to be a consensus on how to integrate military into the development work in this situation.
On the question of shifting the focus of aid from transformational countries to fragile states, James Adams mentioned that they have become an increasingly more important part of the Bank’s portfolio and that they should be the most important item in the agenda. There is a need to think more long-term in terms of policy cycles and investments because it is likely that in three years an investment in a fragile state is not going to bear fruits. The Bank has been careful about how the resources have been allocated and he believes that there should be a separate system to evaluate fragile states as the security issue is very important and needs to be incorporated into the decision making process.
PANEL 2 10:45am-12:15pm
Globalization Challenges
Moderator: Frederick Wherry MPA *00, University of Pennsylvania
Panelists: Moises Naim, Editor in Chief, Foreign Policy magazine
Takatoshi Kato MPA *68, IMF Deputy Managing Director
Robert Rotberg MPA *57, John F. Kennedy School of Government, Harvard University
1. Dr Wherry opened the panel by quoting Mauro F. Guillen in defining globalization as “a process fueled by, and resulting in, increasing cross-border flows of goods, services, money, people, information, and culture”. This multidimensional nature of globalization not only leads to different definitions according to academic discipline but also requires two different levels of analysis: i) the “above”level, namely supranational organizations and nation states and ii) the “below” level, ie sub-national regions, NGOs, and person to person networks. Dr. Wherry emphasized the growing macro-level importance of such “below” level institutions, in particular informal networks and individual remittances.
2. Dr Naim outlined a less explicitly expressed but increasingly common definition of globalization as a project designed and implemented by the powerful, in particular, America. The enthusiasm for globalization in many countries in the early 1990s has turned to disillusionment and frustration and is partly due to certain global imbalances and inequalities. Beyond trade and exchange rate imbalances, Dr. Naim drew attention to a more striking and more frustrating global imbalance – the widening gap between demand and supply of global public goods.
3. Dr Naim then presented empirical evidence to support this assertion, for example noting that partly as a result of rapid globalization and urbanization in the past two decades, the incidence and impact of global environmental disasters have increased more than fivefold. During the same period however, the budget of international institutions in charge of dealing with those crises has either stagnated or declined. For instance, the budget of the UN High Commissioner for Refugees has only increased 62% since 1990 while the total budget of the UN has risen by just 26%. In short, the need for global collective action has been increasing over the last two years yet the capacity and availability of international organizations has been declining.
3. Finally, Dr Naim drew a parallel between globalization and democratization in that there might be growing global disillusionment with democracy. For example, following the invasion of Iraq, at least some parts of the world have begun to view democratization as another part of a larger self-serving American agenda. Although he did not share this view, Dr. Naim warned of the danger of “assuming that the value of democracy is a no-brainer and there is no need of discussion.”
4. Mr Kato began with a brief overview of the global economy, citing the sustained strength of global economic growth and the vibrancy of the international financial markets, especially in emerging countries. He stressed however that despite this healthy picture, there are still important global economic challenges and outlined how IMF is trying to help developing countries overcome them. First, he mentioned the historic 100% debt cancellation of 19 low-income countries in 2005. Secondly, in view of the surging global current account imbalance, Mr Kato emphasized the importance of remedial policy on the side of the US but also of Asian countries in regards to their exchange rates and described IMF operations with emerging markets in this direction. Thirdly, he described the Fund’s broader work in promoting development via reform of the multilateral trade regime and facilitating balance-of-payment adjustments for low-income countries. He highlighted the newly introduced Trade Integration Mechanism (TIM) as an illustration of the Fund’s commitment to low-income countries and multilateral trade liberalization.
5. Mr Kato then focused on three key challenges in international development lending.
i. Ensuring greater debt sustainability and avoiding huge debt liabilities and aid dependency in developing countries;
ii. Sound financial management and fiscal sustainability that involves prudent international borrowing, strong budget management, and good governance.
iii. “Dutch disease”in lending- eradicating the phenomenon whereby high foreign aid inflows actually end up harming countries’ long-term growth prospects;
In view of these risks, the Fund and the Bank have jointly instituted a Debt Sustainability Analysis Mechanism to regularly assess individual countries’ debt situations and the Fund is committed to finding new lending facilities and instruments that are tailored to specific country needs.
6. Dr. Rotberg focused on the challenge of good governance and how it must be nurtured and cultivated by public leadership. He suggested that the development community first had to establish more robust empirical methods for establishing good governance practices. In his view, good governance should not be defined in terms of intentions, inputs, and/or intrinsic capacities but rather as a bundle of deliverables that citizens expect from governments (a definition which he believes goes beyond those of the World Bank and the USAID). Among those deliverables, the following four political goods are most important:
i. Security both at the national and the individual (human) level;
ii. Rule of Law as a mechanism to resolve conflicts
iii. An economic framework to facilitate releasing entrepreneurship
iv. Political freedom – political participation with free elections one part of it
7. Dr. Rotberg also emphasized the importance of the provision of education, health services, infrastructure and the empowerment of civil society. He proposed to use his simplified framework as a diagnostic instrument to measure governance, rank individual country accordingly, and establish good governance practices. Questioned in the Q&A session about the difference between democracy and good governance, Dr. Rotberg replied that democracy is only a small part of his governance index and his goal is to be as objective as possible because governance itself is “as neutral as you can get.”
PANEL 3 2:00-3:15pm
"Global Governance: Managing Interdependence and Tackling Global Issues"
Moderator: Anthony Lake MPA *69, PhD *74, former National Security Advisor Panelists: Anne-Marie Slaughter '80, Dean, Woodrow Wilson School, Princeton
University
Helen Milner, Professor, Woodrow Wilson School, Princeton University Keith Hansen MPA/JD *87, Health Sector Manager, Latin America & the Caribbean, World Bank
1. Anthony Lake began by explaining that global governance is needed more than ever for two reasons. First, because of the democratic revolution, never before have so many people been able to exert such high influence over their governments. Yet the irony is that because of the forces of globalization, never before have governments had so little power to affect their domestic policies. There is thus a global democratic deficit that can be filled to a certain extent by international institutions. The second reason is the existence of many important international issues like terrorism, global warming or international health crisis. It is becoming more evident that the United States cannot defend its citizens without the support of global institutions and international regimes.
2. Mr Lake subsequently linked development to this gap in global governance and national security, suggesting that as one billion new people enter the global work force, whether or not they have stable jobs will fundamentally affect the way the world looks. In his view, the current debates on UN reform will lead to only insufficient, marginal changes and the world is missing a huge opportunity because the current global governance framework, with the international institutions under so much strain from the rapid changes due to globalization, needs new blueprints and much bolder reform.