BUILDing a Better Economic Future Requires People, not just Infrastructure

By Alicia Phillips Mandaville and Kristin Lord

 

Last month, heads of state from around the world gathered in New York City for the UN General Assembly to discuss, among other topics, global development goals. This year, there was no shortage of whiplash for both policy makers and American citizens who prioritize the United States’ engagement in the world: just after President Trump’s General Assembly address caused hand-wringing in New York, a momentous global development event unfolded in Washington DC with the bi-partisan passage and White House support of the BUILD act, which establishes a new U.S. International Development Finance Corporation (USIDFC).

 

Designed to enable infrastructure investments in emerging and developing economies, this new DFI can create new market opportunities for Americans and economic growth for our partners. But to fully reap the potential, we must ensure fresh, actionable thinking about the fundamental relationship between human capital and infrastructure in long-term economic growth. Based on prior experience with the Millennium Challenge Corporation (MCC) and the discussions around the USIDFC so far, this may not happen without an explicit and intentional focus early on.

 

Investing in infrastructure is important. It directly impacts economic growth and signifies progress to all who observe it. As anyone who has traveled to major urban centers or economic hubs knows, infrastructure is the nerve system through which an economy operates. Whether highways, sanitation, or telecoms, infrastructure enables transactions and information to move at the speed needed for a modern economy.  And, despite the noise and the dynamism, if you have ever stood in the middle of a busy industrial port anywhere in the world, there is something quietly reassuring about the resonant buzz of that operation. It is as if you can feel the growth happening around you.

 

But if there is one lesson that economists and humanity have learned over and over, it is that the economic growth equation fails in the absence of human contribution; no matter how well it is equipped, an economy without dynamic human resources is a recipe for stagnation. Development organizations know this: the historic, multilateral, “if you build it they will come” model of public goods provision led to roads-to-nowhere and was roundly critiqued by academics and development technocrats alike early in the 21st century. This was in part what led the US to stand up the MCC as an effort to put resources in those countries already investing in human capital and sound governance, and therefore was able to provide an environment in which investments in public infrastructure could have maximum impact. It is also why World Bank President Jim Kim’s efforts to focus on human capital so revolutionary.

 

The BUILD Act, and the USIDFC it creates, is built on this and other hard-learned lessons of development. But it emerges at a point in time when nearly everything we know about the nature of dynamic human contributions to an economy are in question. The global labor market is changing, and with the rise of automated systems, artificial intelligence, and employment platforms, so are our expectations about the very role of humans in a labor market. Common wisdom is that the jobs of the future in all economies will center around complex, creative, and interpersonal skills – but no one quite knows what it will take to get there. 

 

Looking at this uncertainty, it could be easy for a newly minted USIDFC (and other US levers of economic development) to cause the US to focus exclusively on the physical capital side of investment. That would be a mistake. To succeed, the USIDFC will need to apply one of the most complicated and least glamorous lessons of the MCC: investing in both the human and physical side of economic growth. Without that, it will fail to leverage this obvious moment for American economic leadership in a dynamic sector, and neglect opportunities both at home and abroad. To put it more pithily, US foreign assistance needs to invest in people as well as in stuff. 

 

What does this mean? The USIDFC needs to make a tangible commitment to rigorously designing and evaluating the human capital side of its investments. It may require new research and creativity to assess the evolving effect of secondary and higher education transitions, or the role of informal education, apprenticeships, or other employment focused interventions at the young adult and adult level. But to be successful over time, the DFC’s economic assessments must articulate their assumptions about the role of people in making economies work, and impact evaluations of that work should create the same type of robust experiments that MCC depended on to explore investment returns in agriculture, transport, and power sectors. That may also mean pulling other foreign assistance agencies as well as private sector and philanthropic partners in to make complementary investments in human capacity that align with their own mandates.

 

We know there are a tremendous number of ways for individuals to actively participate in an economy, and that this participation is necessary for growth as well as for political and social stability. Genuinely evaluating the ways US investments and foreign assistance support this crucial participation will invariably lead us to some positive conclusions and some painful realizations – that is the nature of robust impact assessment. But we all see the future of work changing. It would be inexcusable for the development community to believe that has no implication for the way we work too.  

 

Alicia Phillips Mandaville is Vice President of IREX, and a non-resident Senior Associate for the CSIS Project on Prosperity and Development. Kristin Lord is President and CEO of IREX, a global development and education nonprofit celebrating its 50th year.

Secretary Carlucci valued American Soft Power and Allies

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Secretary of Defense Frank C. Carlucci transfers the rein of command of US Central Command from General George B. Crist (USMC) to General H. Norman Schwarzkopf (USA) on January 11, 1988

By Daniel F. Runde and Christopher Metzger

Legacy of Service

Former Secretary of Defense Frank Carlucci passed away last month. There is a generation who do not know his exemplary legacy of public service. For all those who remember him, Secretary Carlucci is best known for his later career as National Security Adviser and Secretary of Defense under President Reagan.  He is less known for his very important contributions to using American soft power to increase freedom and create deeper ties with allies while serving in Portugal; it is this part of his legacy that deserves more attention.

Before serving as a political appointee, Secretary Carlucci was a career ambassador and foreign service officer service in Africa and Latin America starting in the 1950s. But he really made a major contribution when he was ambassador to Portugal from 1975-1978. Secretary Carlucci was sent to Portugal during a period of utter chaos. From 1932 to 1968, António de Oliveira Salazar had ruled Portugal as a dictator, suppressing political freedom and establishing the Estado Novo (“New State”). Shortly after Salazar suffered a stroke and was replaced, 300 officers called the Armed Forces Movement and led by Francisco da Costa Gomes successfully completed a coup in what would be later be called the Revolution of the Carnations. By 1975, the Portuguese Communist party and other Marxist-Leninist groups had won virtual control of the government, and it seemed that all of the Lusophone and Ibero American countries in South America and Africa would fall to communism as well.

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Official Portrait of Secretary of Defense Frank Carlucci on November 1, 1987

To this day, Secretary Carlucci is very highly regarded in Portugal for his leadership during the “Portuguese Revolution” of 1975-1976. Ambassador Secretary Carlucci famously remained in the country even after Otelo Sariva de Carvalho, a leading leftist member of the military, said they could “not assure his safety.” Leveraging USAID and other forms of American soft power, Secretary Carlucci was a key figure in Portugal’s democratization and ultimate election of its first Prime Minister, Mario Soares. According to an interview with Amb Carlucci by the Gerald Ford Foundation, “if Portugal hadn’t gone democratic, it’s really questionable whether Spain would’ve. And Spain set the pace for Latin America.”

Secretary Carlucci was also instrumental in the negotiations over the Azores islands in the Atlantic Ocean. The United States had stationed a fleet of planes at the Lajes field in the Azores islands since World War II. After the war was over, Portugal and the U.S. reached an agreement that granted the U.S. the right to use the Azores, while the Portuguese government retained ownership of the land and infrastructure. Our basing rights on these islands, near Northern Africa, have only grown in importance over the years.

Another part of Mr. Carlucci’s legacy in Portugal was his involvement with the Luso-American Foundation that continues to build ties between the U.S. and Portugal and the growing Lusophone (i.e. Portuguese speaking) world. At a time when the U.S. is considering how to maintain ties with countries that used to receive foreign assistance, the Luso-American Foundation is an example that deserves study and replication.

President Reagan named Mr. Carlucci national security advisor in 1986 and, just a year later, appointed him Secretary of Defense.  Though he is remembered primarily for these last two positions, it is the far-reaching impact of his time in Portugal that cements his legacy as a pivotal figure in the history of American foreign policy.

Daniel F. Runde is a Senior Vice President, holds the William A. Schreyer Chair in Global Analysis, and directs the Project on Prosperity and Development at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Christopher Metzger is the program coordinator for the CSIS Project on Prosperity and Development. 

 

Photo 1: National Archives/CCO
Photo 2: Ron Hall/CC0

Power Sharing for Post-Conflict Development: The Case of Rwanda and Burundi

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Photo of Kigali, Rwanda by Flickr user oledoe under an Attribution-ShareAlike 2.0 Generic license.

By Francis Jung

Introduction

According to the World Bank, the IMF and the US Agency for International Development (USAID), Rwanda is doing exceptionally well at attaining the development goals outlined in its Vision 2020, despite the Rwandan Genocide of 1994.  Burundi, on the other hand, is not doing so well; especially since President Pierre Nkurunziza’s announcement to run for a third term in April of 2015.  Why is Rwanda doing so well, while Burundi is doing so poorly when it comes to achieving human development goals?

At face value, the question seems broad and mundane to which any number of people in the development community could provide a separate answer, half of which would start out with, “that depends;” but a deeper analysis of their similarities suggest that it would be reasonable to draw from the two something specific that explains why one country has driven down poverty and infant mortality while maintaining stable growth rates and the other is all but re-immersed back into conflict.

This article establishes that the reason Rwanda is doing so well is mainly due to two factors:  first, the consolidation of power, the exclusion of opposing parties and the establishment of a single-party state early on its post-conflict development and second, Rwanda’s focus on implementing the Sustainable Development Goals; and Burundi is doing so poorly because the government is vulnerable to power seeking, would-be political entrepreneurs.

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International Documentaries in Global Development: Outreach, Measuring Impact and Engagement

By Julie Tumasz

Public and private organizations can use documentaries to widen the public’s awareness of development issues, motivate public involvement, and have a beneficial impact on non-profits’ social change goals. Non-government organizations (NGO), federal governments, and the private sector use a variety of different strategies to reach, impact, and engage documentary audiences – both while watching the film and afterwards, through activism and advocacy. Measurable outcomes of documentary films can be seen in several steps of the documentary process: the story, outreach, impact and finally, engagement.  The best strategies for organizations to effectively complete these steps are to engage the viewer before, during, and after the viewing.

This article will examine two widely distributed feature-length documentaries from two different American filmmakers that focus on promoting the same social goal of education. World Vision Documentaries describes the importance to tell a development story from the perspective of an outsider because that is the same perspective as the audience the filmmakers are targeting; these films were primarily aimed at American audiences. These feature films, making use of long-form storytelling, appropriately match the complexity of development work unlike short-form advertising, spots or social media.

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A filmmaker captures a rural school in Kabwe, Zambia. Documentaries inform and motivate the global public to participate in international development issues. Photo courtesy of Flickr User Francesco Volpi, under a Creative Commons Attribution-Share Alike 2.0 Generic License.

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Remittances: A Complement to International Aid

By Rohit Sudarshan

The future of traditional foreign assistance is in a precarious situation. Over the past five years, Organization for Economic Co-operation and Development (OECD) countries that contribute the largest share of international aid—namely Australia, France, and the U.S.—have seen a downward trend in official development assistance (ODA) as a percentage of gross national income (GNI). Additionally, the United Kingdom’s development agency, DFID, is currently handling a surge of fraud investigations regarding their foreign aid. Countries that are global leaders must promote other financial means for international development. Few options are as important and efficient as remittances.

Remittances are payments made by immigrants to families and friends in their country of origin and represent an effective method for those in developing countries to continue to improve their standard of living. While ODA requires the coordination of government agencies as well as policymakers from many countries, remittances do not face that same constraint. The difficulty in ensuring accountability has meant that governments have misused and absorbed aid money. For these reasons, remittances can be an appealing alternative; they can move expediently and directly to a recipient that needs it.

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