VII. Expand the Circle of Development by Opening Societies and Building the Infrastructure of Democracy
"In World War II we fought to make the world safer, then worked to rebuild it.
As we wage war today to keep the world safe from terror,
we must also work to make the world a better place for all its citizens."
President Bush
Washington, D.C. (Inter-American Development Bank)
March 14, 2002
A world where some live in comfort and
plenty, while half of the human race lives on less
than $2 a day, is neither just nor stable. Including
all of the world’s poor in an expanding circle of
development—and opportunity—is a moral
imperative and one of the top priorities of U.S.
international policy.
Decades of massive development assistance
have failed to spur economic growth in the
poorest countries.Worse, development aid has
often served to prop up failed policies, relieving
the pressure for reform and perpetuating misery.
Results of aid are typically measured in dollars
spent by donors, not in the rates of growth and
poverty reduction achieved by recipients. These
are the indicators of a failed strategy.
Working with other nations, the United States
is confronting this failure.We forged a new
consensus at the U.N. Conference on Financing
for Development in Monterrey that the objectives
of assistance—and the strategies to achieve those
objectives—must change.
This Administration’s goal is to help unleash
the productive potential of individuals in all
nations. Sustained growth and poverty reduction
is impossible without the right national policies.
Where governments have implemented real policy
changes, we will provide significant new levels of
assistance. The United States and other developed
countries should set an ambitious and specific
target: to double the size of the world’s poorest
economies within a decade.
The United States Government will pursue
these major strategies to achieve this goal:
Provide resources to aid countries that have
met the challenge of national reform. We
propose a 50 percent increase in the core
development assistance given by the United
States.While continuing our present
programs, including humanitarian assistance
based on need alone, these billions of new
dollars will form a new Millennium
Challenge Account for projects in countries
whose governments rule justly, invest in
their people, and encourage economic
freedom. Governments must fight corruption,
respect basic human rights, embrace
the rule of law, invest in health care and
education, follow responsible economic
policies, and enable entrepreneurship. The
Millennium Challenge Account will reward
countries that have demonstrated real policy
change and challenge those that have not to
implement reforms.
Improve the effectiveness of the World Bank
and other development banks in raising living
standards. The United States is committed to
a comprehensive reform agenda for making
the World Bank and the other multilateral
development banks more effective in
improving the lives of the world’s poor.We
have reversed the downward trend in U.S.
contributions and proposed an 18 percent
increase in the U.S. contributions to the
International Development Association
(IDA)—the World Bank’s fund for the
poorest countries—and the African
Development Fund. The key to raising living
standards and reducing poverty around the
world is increasing productivity growth,
especially in the poorest countries.We will
continue to press the multilateral development
banks to focus on activities that
increase economic productivity, such as
improvements in education, health, rule of
law, and private sector development. Every
project, every loan, every grant must be
judged by how much it will increase
productivity growth in developing countries.
Insist upon measurable results to ensure that
development assistance is actually making a
difference in the lives of the world’s poor.
When it comes to economic development,
what really matters is that more children are
getting a better education, more people have
access to health care and clean water, or
more workers can find jobs to make a better
future for their families.We have a moral
obligation to measure the success of our
development assistance by whether it is
delivering results. For this reason, we will
continue to demand that our own development
assistance as well as assistance from the
multilateral development banks has measurable
goals and concrete benchmarks for
achieving those goals. Thanks to U.S.
leadership, the recent IDA replenishment
agreement will establish a monitoring and
evaluation system that measures recipient
countries’ progress. For the first time,
donors can link a portion of their contributions
to IDA to the achievement of actual
development results, and part of the U.S.
contribution is linked in this way.We will
strive to make sure that the World Bank and
other multilateral development banks build
on this progress so that a focus on results is
an integral part of everything that these
institutions do.
Increase the amount of development assistance
that is provided in the form of grants instead
of loans. Greater use of results-based grants
is the best way to help poor countries make
productive investments, particularly in the
social sectors, without saddling them with
ever-larger debt burdens. As a result of
U.S. leadership, the recent IDA agreement
provided for significant increases in grant
funding for the poorest countries for education,
HIV/AIDS, health, nutrition, water,
sanitation, and other human needs. Our goal
is to build on that progress by increasing the
use of grants at the other multilateral
development banks.We will also challenge
universities, nonprofits, and the private
sector to match government efforts by using
grants to support development projects that
show results.
Open societies to commerce and investment.
Trade and investment are the real engines of
economic growth. Even if government aid
increases, most money for development
must come from trade, domestic capital, and
foreign investment. An effective strategy
must try to expand these flows as well. Free
markets and free trade are key priorities of
our national security strategy.
Secure public health. The scale of the public
health crisis in poor countries is enormous.
In countries afflicted by epidemics and
pandemics like HIV/AIDS, malaria, and
tuberculosis, growth and development will
be threatened until these scourges can be
contained. Resources from the developed
world are necessary but will be effective only
with honest governance, which supports
prevention programs and provides effective
local infrastructure. The United States has
strongly backed the new global fund for
HIV/AIDS organized by U.N. Secretary
General Kofi Annan and its focus on
combining prevention with a broad strategy
for treatment and care. The United States
already contributes more than twice as much
money to such efforts as the next largest
donor. If the global fund demonstrates its
promise, we will be ready to give even more.
Emphasize education. Literacy and learning
are the foundation of democracy and development.
Only about 7 percent of World
Bank resources are devoted to education.
This proportion should grow. The United
States will increase its own funding for
education assistance by at least 20 percent
with an emphasis on improving basic education
and teacher training in Africa. The
United States can also bring information
technology to these societies, many of whose
education systems have been devastated by
HIV/AIDS.
Continue to aid agricultural development.
New technologies, including biotechnology,
have enormous potential to improve crop
yields in developing countries while using
fewer pesticides and less water. Using sound
science, the United States should help bring
these benefits to the 800 million people,
including 300 million children, who still
suffer from hunger and malnutrition.