carter center gdi - dcf 2005 report

DevelopmentCooperation Forum

Waging Peace. Fighting Disease. Building Hope.

ACHIEVING MORE EQUITABLE GLOBALIZATION

DECEMBER 2005

CONFERENCE REPORT SERIES

THE CARTER CENTER STRIVES TO RELIEVE SUFFERING

BY ADVANCING PEACE AND HEALTH WORLDWIDE;IT SEEKS TO PREVENT AND RESOLVE CONFLICTS, ENHANCE FREEDOM AND DEMOCRACY,

AND PROTECT AND PROMOTE HUMAN RIGHTS WORLDWIDE.

DEVELOPMENT

COOPERATION FORUM

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ACHIEVING MORE EQUITABLE GLOBALIZATION

DECEMBER 7–9, 2005

THE CARTER CENTER

DEVELOPMENT COOPERATION FORUM

Terms and Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

Chairman’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

Prologue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

Forum Speeches

Keynote Address . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20Joseph Stiglitz, Executive Director, Initiative for Policy Dialogue

Welcome Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31Jimmy Carter, Former President of the United States

Opening Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34Amadou Toumani Touré, President of the Republic of Mali

Opening Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38Armando Guebuza, President of the Republic of Mozambique

Keynote Address . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42Nancy Birdsall, President, Center for Global Development

Forum Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47

Appendices

Appendix A: Forum Agenda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59

Appendix B: List of Forum Participants and Biographies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61

Appendix C: The Carter Center’s Approach to Effective Development Cooperation . . . . . . . . .70

CONTENTS

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CDF Comprehensive Development Framework

DAC Development Assistance Committee

EU European Union

G8 Group of eight main industrialized countries

GDI Global Development Initiative

GDP Gross domestic product

HIPC Debt relief initiative for Highly Indebted Poor Countries

HIV/AIDS Human Immunodeficiency Virus/Acquired Immune Deficiency Syndrome

IADB Inter-American Development Bank

IFI International financial institution

IMF International Monetary Fund

MDG Millennium Development Goal

NDS National development strategy

NESC National Economic and Social Council of Mauritius

NGO Nongovernmental organization

NHDR National Human Development Report

OECD Organisation for Economic Co-operation and Development

PRGF Poverty Reduction and Growth Facility

PRS Poverty Reduction Strategy

PRSP Poverty Reduction Strategy Paper

RENAMO National Resistance of Mozambique (Portuguese acronym)

SBA Small Business Administration

TRIPS Agreement on Trade-Related Aspects of Intellectual Property Rights

UN United Nations

UNDP United Nations Development Programme

USAID United States Agency for International Development

WTO World Trade Organization

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TERMS AND ABBREVIATIONS

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CHAIRMAN’S REPORT

Since its inception more than 10 years ago, theCarter Center’s Global Development Initiative(GDI) has worked with a small but diverse set of

countries — Albania, Guyana, Mali, and Mozambique —to identify ways to make development cooperationmore effective. GDI also has served as an independentconduit for feedback and information to key institu-tions in the international development system —including the World Bank, the International MonetaryFund (IMF), the U.N. system, bilateral donors, andnongovernmental organizations (NGOs)— on how theirpolicies and actions in developing countries couldmore effectively and more quickly reduce human suf-fering and narrow the gap between rich and poor.

Through the Development Cooperation Forumseries, we have convened leaders from developing coun-tries and development organizations for frank discussions on the global actions needed to improveinternational aid policies and practices. This fourthDevelopment Cooperation Forum is the last in the seriesand, as such, provides an opportunity for me to com-ment on the progress achieved and the many obstaclesthat still remain in helping the poor permanently moveout of poverty. I thank the Rockefeller Foundation, theKellogg Foundation, and the U.S. Agency forInternational Development for their support.

As chairman of the meeting, I was joined by twogood friends: President Amadou Toumani Touré of Maliand President Armando Guebuza of Mozambique.President Bharrat Jagdeo of Guyana and Prime MinisterSali Berisha of Albania also sent senior representatives tothe conference. Private sector, civil society, and opposi-tion political party representatives of these countries alsowere present. Senior officials from the IMF and theWorld Bank, the Organization for EconomicCooperation and Development, the CanadianInternational Development Agency, and the MillenniumChallenge Corporation participated. In addition, wewere joined by Joseph Stiglitz, Nancy Birdsall, Ha-Joon

Chang, Jeffrey Sachs, and other prominent individualswho shared their insights. I am grateful to them all.

I have witnessed important improvements over thelast decade in the way donors and developing coun-tries cooperate. Governments are producing NationalPoverty Reduction Strategy Papers drawing on theinput of businesses, NGOs, farmers, health experts,human rights activists, legislators, teachers, communityleaders, and others. The papers are an improvementover the old way of business where the IMF, WorldBank, and developing country finance ministers deter-mined the basic set of policies for an entire country.The World Bank articulated this approach in itsComprehensive Development Framework, which JimWolfensohn has noted was influenced by GDI’s workon long-term national development strategies. Weshould not discount what a significant change this rep-resents in the donor–recipient country relationship.

Despite this progress, however, forum participantspointed out that the Poverty Reduction Strategy Paperapproach has fallen short of achieving its full potentialon a number of fronts, from the adequacy of civil soci-ety participation to the boldness of resulting programs.For instance, according to our country partners, anunintended impact of the Poverty Reduction StrategyPapers has been to heavily skew aid allocations tosocial sectors to the neglect of the productive sectorsfrom which transformative growth must come.

This problem was indicative of an overriding con-cern expressed at the forum: the continued inability ofcountries to exercise their right to pursue nationallyappropriate policies due to constraints made by donorpolicies and conditions. GDI partner countries madeclear arguments for relaxing some of the rigid positionsof the international lending community that restrict cru-cial public spending, eliminate support for infantindustries, and require blanket privatization of publicenterprises or utilities. Moreover, our academic andnongovernmental colleagues highlighted numerous

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examples where neoliberal policies have failed to pro-duce expected results. Many of the economic policiesshunned by the Washington Consensus played impor-tant roles in the successful experiences of my owncountry in the past and of countries such as China andIndia more recently. GDI partner countries identifiedspecific issues they want to put on the table. For exam-ple, Mozambique wants to re-evaluate the role that adevelopment bank could play in fostering private-sectordevelopment, and Mali wants to find sustainable privati-zation paths for key sectors in its economy.

Another topic of concern to many of the partici-pants was the limitations IMF programs place onoptions for countries to manage their budgets, interestrates, and inflation, thereby making it difficult forthem to create the conditions for achieving growthrates that can take them out of the poverty cycle. Fromthe evidence presented at the forum and the prepara-tory workshop, these issues do not seem to be openfor debate in the national Poverty Reduction StrategyPaper processes, yet are decisive in determining every-thing from spending on health programs to civilservice salaries to growth and employment rates. TheIMF did not debate these assertions, and I am hopefulthat it will take steps to help countries explore feasiblebut bold macroeconomic alternatives that successfullycan address the grinding poverty that afflicts poorcountries. I believe the IMF, the World Bank, and theU.S. Treasury need to re-evaluate their preference forstrict macroeconomic efficiency and weigh this againstthe real need for poor countries to invest in growthand also hire more teachers, health care workers, andagricultural extension agents.

Another hotly debated issue was the lack of ade-quate resources to finance the achievement of theMillennium Development Goals, which aim to reduceby half the number of people living in extreme povertyacross the globe by 2015. All of the countries withwhich we work are making enormous efforts to mobi-lize resources for their own development, but it simplyis not enough. More aid is needed for practical pro-grams to immunize children, prevent the spread of

diseases, increase agricul-tural production, andeducate youth.Regrettably, there hasbeen insufficient progresson increasing aid flowsand improving their pre-dictability and stability.

There appeared to bedisagreement betweenthose who believed the aidcommunity should delivertechnical solutions to thepoor versus those who feltthe most fundamentalneed is building the insti-tutional capacity ofdeveloping country gov-ernments and otherindigenous institutions todeliver services to their cit-izens. I do not feel thatthese are mutually exclusive aims. On this point, ourdeveloping-country partners made it clear that theyhad an urgent responsibility to effectively deliver serv-ices. Donors must focus on building governmentcapacities and resist allowing aid to become an indus-try that arguably benefits the provider more than therecipient. In situations where governments are corruptor too weak to meet basic needs such as health servicesand potable water, greater reliance on donors, NGOs,and private operators will be necessary in the shortterm. But this is not an excuse to avoid buildingnational capacity, without which there will be no sus-tainable results.

Forum participants regularly pointed to the dys-function of the donor aid system and recognized that,although some progress has been made, meaningfulchange of the system still escapes us. This dysfunctionwas seen on two fronts. First, a large proportion of aidmoney reverts to the donor countries. The thrivingindustry of foreign consultants facilitated by tied aid

Former U.S. President JimmyCarter, chairman of the fourthDevelopment Cooperation Forum.

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was the issue participants mentioned most frequently.Several decades ago, the United States began channel-ing its aid to American consulting firms,nongovernmental organizations, and charities out ofconcern over government corruption in recipient coun-tries. While this practice is by no means limited to theUnited States, it has gone on far too long and hasreduced local ownership of aid programs and under-mined self-sufficiency. The leadership of the UnitedKingdom, which has fundamentally overhauled its aidlegislation and eliminated many of the ineffective prac-tices, should be examined and emulated. Second, themoney that is made available for transformative growthis blocked from making its way to the poor by multiple,burdensome, and sometimes incoherent donor proce-dures and practices that recipient countries mustaccommodate. Decisive action is needed by donorcountries to make sure that the commitments theymake at the global political level are translated intodemonstrable changes on the ground.

We also discussed the role that our GlobalDevelopment Initiative has played as a third-party facil-itator of development cooperation. This role emergedfor us because donors and developing-country partnersagreed that an honest, outside broker could enhancemany facets of the aid relationship. In this role, wehave helped the ruling and opposition groups in bothGuyana and Mozambique to find consensus on theirlong-term development strategies. We have helpedAlbanian citizens achieve a greater voice in their gov-ernment’s anti-poverty programs. We are also assistingthe Malian government to strengthen its managementof external aid and to build government capacity toanalyze and develop government policy to spur greaterpoverty reduction. As with our conflict-mediation andelection-monitoring work, we can play this rolebecause of my high-level access to political leaders. Inaddition, GDI does not have an aid program to dis-burse, nor do we advocate a particular developmentideology. This allows us a privileged role as an impar-tial adviser and facilitator. I believe the positivereactions we received at the forum to the GDI

Approach Paper validated our work to date, as did theagreement by participants that third-party facilitation,if judiciously implemented, can play an important rolein improving development cooperation both on theground and at the global level.

The following is my own interpretation of the con-sensus points for action that emerged at the meeting,as well as a few of my own suggestions for next steps.

1. The important gains that have been made to ensure that national development strategies arelocally owned and participatory are in jeopardy ifgovernments and citizens come to believe that distantorganizations and forces maintain a stranglehold ontheir freedom of choice. All of our country partnersaccept the challenges of globalization and the need tobe transparent and accountable. But too often they arediscouraged from implementing development initia-tives they feel appropriate for their circumstancesbecause donors are not predisposed to support them.

My suggestion is that each of the countries wework with identify critical areas of their developmentstrategies that they feel have not been given adequateconsideration by the donor community: for example,for a less-restrictive macroeconomic program, creationof a development bank, options for restructuring pub-lic enterprises and utilities, or the higher spending onpractical investments needed to achieve theMillennium Development Goals. Each country couldpresent credible options for advancing such issues and,in those cases where options do not already exist, sug-gest a mechanism or process for identifying them.

2. Countries need greater capacity to developtheir own policies and programs that will gain theconfidence of donors. This is where the validity ofjoint policy work between governments and donorswas affirmed. Each country could suggest a set of prac-tical proposals for improving their policy-developmentcapacity in the government and nongovernmental sec-tors. These could then be presented to theinternational donor community for long-term support.Assistance in strengthening capacities in the non-governmental sectors—what Nancy Birdsall calls

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independent institutions that are endowed, externallylinked, and conduct evidence-based analysis—couldbuild on models such as the Center for GlobalDevelopment in Washington, D.C., or the NationalEconomic and Social Council of Mauritius.

3. There is good work taking place at theOrganization for Economic Cooperation andDevelopment to move donors to reform their aid prac-tices so that they impose less administrative burden ondeveloping countries. A typical African country submitsabout 10,000 quarterly donor reports each year andreceives about 1,000 donor missions to comply withdonor-funded programs and projects. This is a waste ofscarce time and resources for recipient countries.Donors can alleviate this burden by increasing the pro-portion of their aid that is channeled through thenational budgets of well-run and accountable govern-ments and by reducing conditions and improving thepredictability of aid flows to allow recipient govern-ments to better plan expenditures and match them tolocal needs. Recipient governments have a mandate toprovide services to their citizens. Donors must thereforerecognize that earmarking development projects accord-ing to their own sectors of interest, along with thevolatility of aid flows, can weaken the democratic linkbetween user needs and government accountability formeeting them.

Mozambique presents an example of how aid effec-tiveness can be improved. The government has acontract with 17 donors that provide some of their aidas budget support. Under this agreement, the govern-ment is strengthening its financial systems so thatdonors can have confidence that their funds will notbe stolen and will meet objectives spelled out in specif-ic performance indicators. While donors regularlymonitor the performance of the government, they alsohave allowed an independent third party to evaluatethe donors’ performance against their promises.Budget support represents just 30 percent of donor aidin Mozambique and could increase with more ambitiousefforts and reforms on both sides. Nevertheless, I

believe this model, including the role of independentthird-party monitoring, should be applied more widely.

4. Everyone at our forum acknowledged thatmany of the obstacles to more and higher quality aidcan be resolved only in the legislatures of the richcountries. Every country could do more, but theUnited States, as the richest nation in the world, mustshow more leadership. Too much of U.S. aid goes tomiddle-income countries for political or security pur-poses, and the meager remaining amount oftenbenefits the development industry at the expense ofthe poor African farmer. I will continue to do what Ican through my public statements to encourage theU.S. government to live up to the pledge of more andbetter aid for the poorest countries — particularly aidthat is channeled to untied budgetary support — so thatgovernments can properly use and account for it. I willcall on others to become part of a political movementthat will elect leaders who support more developmentassistance to these countries and who are prepared tomodernize our grossly antiquated enabling legislationfor foreign assistance, the Foreign Assistance Act of1961, which should be brought in line with today’sinternational standards.

5. The need for impartial third-party actors tohelp facilitate mutual accountability between aiddonors and recipient governments will exist as longas major decisions about global development areskewed in favor of rich countries. Based on our expe-rience with the GDI, I believe it is time to enjoinother organizations to pick up the role we have playedand scale up its application. Many expressed interest inthis concept at the forum.

Jimmy Carter, Former U.S. President and Chairmanof the Development Cooperation Forum

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GDI’s fourth forum would not have been possi-ble without the support of the KelloggFoundation, the Rockefeller Foundation, and

the U.S. Agency for International Development. Thesuccess of our meeting depended on the informationand feedback provided by our developing-country part-ners. GDI is especially grateful to President AmadouToumani Touré of Mali and President ArmandoGuebuza of Mozambique, who saw the value of takingtwo days from their busy schedules to share theirthoughts and concerns about the development process-es in their countries. We are also grateful to our otherMalian and Mozambican partners who joined theirpresidents along with GDI’s partners from Guyanaand Albania. It was the interventions of our countrypartners that kept the discussions rooted in the every-day reality of their situations.

Very special thanks are also extended to our twokeynote speakers: Dr. Joseph Stiglitz and Dr. NancyBirdsall. Their provocative and informed remarks set

the tone for a meeting that recognized that we can nolonger tolerate a business-as-usual approach to develop-ment cooperation if we are serious about narrowingthe gap between rich and poor, creating greater globalequity, and launching a meaningful assault on poverty.

Finally, I want to acknowledge the dedicatedefforts of the GDI team and other Carter Center staff.Assistant Director Jason Calder, Assistant Director VuDang, and Program Assistant Hannah Feinberg, alongwith our dedicated interns, made up the Atlanta team.The valuable support provided by GDI Mali field col-leagues Modibo Makalou and Elaine Geyer-Allély wascritical to making this event a success, as was the sup-port we received from the Carter Center’s Events,Public Information, Security, and Volunteer offices.

Edmund J. CainDirector

Global Development InitiativeThe Carter Center

ACKNOWLEDGMENTS

President Carter; Armando Guebuza, president of Mozambique; Abou Bakar Traoré, minister of economy and finance in Mali; andEdmund Cain, director of the Global Development Initiative at The Carter Center; discuss major forum themes at a press conference.

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The Global Development Initiative was estab-lished in 1993 out of a concern thatdevelopment cooperation was too externally

driven, making newly democratic governments moreaccountable to donors than to their own people anddistorting national priorities as a result. For more thana decade since, GDI has sought to improve the effec-tiveness of development assistance in the fight againstpoverty and inequality by developing and applying anew model of international development cooperationemphasizing:

■ host country ownership of national developmentstrategies,

■ broad-based participation in governance, and■ greater coherence in the development policies

and practices of donor countries and multilater-al institutions.

GDI has pursued its mission through a two-trackapproach: country-level initiatives and a global-action andlearning series chaired by President Carter and known asthe Development Cooperation Forum. At the countrylevel, GDI has facilitated the efforts of its partner coun-tries—Albania, Guyana, Mali, and Mozambique—toformulate and implement their own long-term nationaldevelopment strategies. Recognizing that poor countries’development is constrained by problematic global poli-cies and practices, the Development Cooperation Forumhas sought to improve global development cooperationby identifying best practices from GDI country work andmobilizing political will behind effective solutions toglobal problems.

An important feature of the GDI has been its rolein development cooperation as an impartial, non-donor, third-party actor. Concern about the highlyunequal relationship between developing countriesand international donors was behind the idea of anhonest broker playing facilitation, mediation, andcapacity-building roles. GDI has taken this approachboth among stakeholders within its partner countries,

where it can work evenhandedly with government andsocial forces, and between its partner countries and theinternational community.1

Over more than a decade since GDI’s establish-ment, what is known today as the partnership model ofdevelopment cooperation—embodied by the core GDIprinciples and applied through mechanisms such asthe national Poverty Reduction Strategy Papers—hasbecome widely applied. GDI’s early pioneering role indefining and testing it has been acknowledged bymany, ranging from former World Bank President JimWolfensohn2 to the Overseas Development Institute.3

As the international community adopted the partner-ship model, GDI focused its efforts on promoting itssuccessful application.

PARTNER COUNTRY EXPERIENCESGDI’s work has revolved around its country partners’desire to advance their own national developmentstrategies. GDI’s approach is flexible enough toaddress country needs at any point in the strategic poli-cy cycle, from formulating and implementing nationalstrategies to aligning donor assistance with country pri-orities to strengthening national capacity formonitoring and evaluating public policy.

In Guyana, GDI helped catalyze and facilitate theprocess of producing that country’s national develop-ment strategy. This effort was the first majorparticipatory policy-making initiative since the coun-try’s return to democracy in 1992, which generatedwidespread support across social and political divisionsand laid the basis for Guyana’s Poverty ReductionStrategy Paper. Unanimously endorsed by the parlia-ment, the Guyana National Development Strategy also

PROLOGUE

1. See GDI Approach Paper (Appendix C).2. The Carter Center. “Development Cooperation Forum: HumanSecurity and the Future of Development Cooperation.” Atlanta,GA, 2002.3. Hewitt, Adrian. “Assessment of The Carter Center Global Develop-ment Initiative.” London: Overseas Development Institute, 1999.

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reinforced the country’s constitutional reform processand remains today a widely accepted reference pointfor the country’s ongoing dialogue about inclusivedevelopment and governance.

In Mozambique, GDI supported the formulation ofa long-term vision and strategic policy orientations.Mozambique’s Agenda 2025 was unprecedented in itseffective inclusion of both ruling and opposition politi-cal forces, its approval by parliament, and its acceptanceby government and civil society as the basis forMozambique’s second Poverty Reduction Strategy Paper.

In both countries, the efforts of citizens to formu-late their national development strategies havefundamentally altered national policy dialogue, shift-ing the terrain on which policy discussions take place.4

It has widened the scope of the debate, introducingessential development policy questions that previouslywere not discussed within the country. For example,Agenda 2025 highlighted the need to reorient macro-economic policy to enable broad-based growth andemployment creation, while the Guyana NationalDevelopment Strategy tackled the country’s deep eth-nic divisions.

In Albania, GDI facilitated civil-society participa-tion in the development of the Poverty ReductionStrategy Paper, which over time has grown into a morecomprehensive strategy called the National Strategy forSocial and Economic Development. As this processevolved, the Albanian government, along with thepolitical opposition and with the support of theWorld Bank, asked GDI to support a national vision-ing process that would harmonize objectives such asthe Millennium Development Goals and those associ-ated with European integration, all within a long-termvision of their national aspirations.5

Where national strategies were already in place,GDI has tailored efforts to ensure the alignment ofdonor assistance with country priorities. In Mali, GDIhas focused on strengthening the government’s eco-nomic planning capabilities around the PovertyReduction Strategy Paper to target donor assistancemore effectively. GDI has helped Mozambique define

the linkages between its Poverty Reduction StrategyPaper and its long-term national vision and strategy.Country counterparts from government and civil soci-ety were trained to utilize the Threshold 21 IntegratedDevelopment Model, a tool for strategic multisectorscenario analysis.6

Where countries have been in the process of imple-menting national strategies, GDI has supported effortsto promote the harmonization of donor practices withcountry systems to reduce the burden of external aid.In Mali, for example, GDI supports the government asit formulates a clear and decisive action plan to directdonor harmonization efforts in the country. GDI alsois prepared to reinforce government efforts to imple-ment the plan in cooperation with donors andsupports institutional strengthening in other areas,such as the reorganization and streamlining of govern-ment development management functions.

In addition, GDI emphasizes strengthening thecapacity of civil society to monitor and evaluate theimplementation of national strategies. In Mozambique,for example, GDI helped enhance the capacity of civil-society organizations to monitor and critique the

4, 5. The World Bank. “Enabling Country Capacity to AchieveResults: 2005 CDF Progress Report, Volume II (Country Profiles).”Washington, DC, 2005.6. See www.millennium-institute.org.

President and Mrs. Carter meet with Mali PresidentAmadou Toumani Touré to discuss the Global DevelopmentInitiative’s work in Touré’s country.

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government’s Poverty Reduction Strategy Paper and toeducate and engage local-level stakeholders in thatprocess. Similar efforts have been supported in Albaniato build a network of regional focal points for civil-society participation in the national strategy process,resulting, in one instance, in citizen mobilization thatreversed an unpopular government policy that flaunt-ed local priorities.

THE DEVELOPMENT COOPERATION FORUMSDuring its history, GDI held four DevelopmentCooperation Forums that contributed to and trackedthe larger changes taking place in the internationaldevelopment system. The first DevelopmentCooperation Forum in 1992, chaired by PresidentCarter and U.N. Secretary-General Boutros Boutros-Ghali, took place in a hopeful atmosphere fordevelopment following the end of the Cold War. Theconference examined specific and practical ways toimprove development cooperation on an internationalscale and proposed a new model based on true part-nership between rich and poor countries.7 Followingthe conference, The Carter Center convened anaction-planning meeting of experts, donor officials,and developing-country representatives that led to theestablishment of the Global Development Initiativeand the launch of pilot initiatives.7

Its second Development Cooperation Forum in1996 focused on GDI’s first pilot initiative in newlydemocratic Guyana. Chaired by President Carter andattended by the president, finance minister, and oppo-sition leader of Guyana, as well as developmentministers, aid agency representatives, and leaders fromthe private sector and civil society, the second forumreviewed the results of efforts to facilitate the partici-

patory preparation of a national development strategyas the basis for international cooperation. Participantsat the meetings called the Guyana effort a potentialnew model of development cooperation emphasizingthe principles of ownership, participation, and inter-national partnership. The Center was encouraged atthe meeting to expand its country-based initiatives toAfrica.8

At its 2002 Development Cooperation Forum,GDI and its partners—now including Albania, Mali,and Mozambique in addition to Guyana—took stock ofa decade of post-Cold War efforts to reform and trans-form development cooperation. By this time, the coreprinciples of GDI had become organizing principlesfor a new partnership between rich and poor coun-tries, as articulated by global agreements such as theMillennium Development Goals and the MonterreyConsensus and through operational practices such asthe Poverty Reduction Strategy Papers. The questionswere whether these new approaches amounted to morethan hopeful rhetoric and aspirations and whetherthey would prove adaptable and resilient in the face ofthe complex challenges facing poor countries.

While much attention had traditionally been placedon reform in developing countries, it had become appar-ent that the policies and practices of donor nations andinternational development organizations—such as U.S.and European Union agricultural subsidy policy, globaltrade agreements, and the terms of international debtrelief—increasingly constrained low-income countries’development prospects. The 2002 forum concluded thatthe global development architecture of aid, debt, trade,and finance policies required major changes in order forglobalization to become a force for greater inclusionrather than growing disparities. Forum participants alsoconcluded that the Poverty Reduction Strategy Paperprocess had yet to prove that it could deliver country-owned development models embracing sound marketprinciples that were creatively applied, as opposed to aone-size-fits-all version of the neoliberal model that crit-ics claim poor countries have been forced to pursue overthe last 20 years.9

7. The Carter Center. “Conference for Global DevelopmentCooperation.” Atlanta, 1992.8. The Carter Center. “Toward a New Model of DevelopmentCooperation: The National Development Strategy Process inGuyana.” Atlanta, GA, 1997.9. The Carter Center. “Development Cooperation Forum: HumanSecurity and the Future of Development Cooperation.” Atlanta,GA, 2002.

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The issues addressed at the 2002 forum remainprominent on the international agenda today.In 2005, the G8 Summit, review of progress

on the Millennium Development Goals by the U.N.General Assembly, and the Ministerial Conference ofthe World Trade Organization all focused on the chal-lenges facing developing countries, making 2005 apotentially defining year for meaningful advance of thedevelopment agenda.

In a recent Foreign Affairs article, three prominenteconomists focused the debate squarely on what poorcountries could do for themselves if rich countrieswould provide them with the space to do it.10 Moreaid could help poor countries, but only if donors pro-vide it in a way that builds national capacity ratherthan undermines it. Greater market access would alsobe a boost, but only if developing countries figure outhow to build the institutions and capacities of thepoor to take advantage of them.

Over the last 50 years, countries as diverse asSouth Korea, Taiwan, Chile, China, Vietnam, India,Botswana, and Mauritius have succeeded by taking afew general economic policy standards—macroeconom-ic stability, outward orientation, accountablegovernment, market-based incentives—and applyingthem creatively in a manner appropriate to theirnational contexts. Those that have attempted “garden-variety” structural-adjustment programs consisting ofdeep and complex reforms across a wide spectrum ofinstitutions have fared less well. In other words, histo-ry and social and political institutions trump outsidemodels. Unfortunately, today’s highly indebted andaid-dependent poor countries face a developmentcooperation environment that is less tolerant of experi-mentation and more conditionality-driven, restrictingtheir room for maneuver.

The Foreign Affairs article authors argue forempowering poor countries with enough space to craftand implement their own national strategies:

…the secret of poverty-reducing growth lies in creatingbusiness opportunities for domestic investors, includingthe poor, through institutional innovations that are tai-lored to local political and institutional realities.Ignoring these realities carries the risk that pro-poorpolicies, even when they are part of apparently soundand well-intentioned IMF and World Bank programs,will be captured by local elites…Wealthy nations andinternational development organizations should notoperate as if the right policies and institutionalarrangements are the same across time and space.

The relevance of these observations resonates withGDI’s partner countries, which to varying extents haveformulated and implemented their own long-termnational development strategies. Two of these coun-tries, Mali and Mozambique, are revising or preparingto revise their Poverty Reduction Strategy Papers.Guyana is entering into and Albania is emerging fromnational elections, and both will soon have to reformu-late their Poverty Reduction Strategy Papers in thecontext of their long-term national visions and strate-gies. How will these countries fare? Has theinternational community embraced the need for policyautonomy and institutional innovation in these coun-tries? What context-specific approaches to developmentis each country trying to pursue? How much progresshave donors made in aligning their assistance to coun-try strategies and harmonizing aid delivery systems tosupport, rather than undermine, national capacity?

With such questions in mind, featuring the experi-ence of its partner countries and building on theagenda laid out at the 2002 forum, President Carterconvened the 2005 Development Cooperation Forumin Atlanta on Dec. 9, 2005, under the theme“Achieving More Equitable Globalization.”

INTRODUCTION

10. Birdsall, Nancy; Rodrik, Dani; & Subramanian, Arvind. “Howto Help Poor Countries.” Foreign Affairs 84 (Jul./Aug. 2005).

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GDI’s fourth Development Cooperation Forumon “Achieving More Equitable Globalization”was held on Dec. 9, 2005, at The Carter

Center. Malian and Mozambican counterparts met inMaputo, Mozambique, in October for a preliminary plan-ning session to identify, discuss, and plan theircontributions to the forum’s broad themes of policyautonomy and aid effectiveness. They were joined by theircolleagues from GDI’s two other partner countries,Albania and Guyana, on Dec. 7 for a pre-forum work-shop, during which they all shared their relevantexperiences and further prioritized the issues to beaddressed over the following two days. On Dec. 8, GDI’spartner countries presented these issues for initial discus-sion with a small group of representatives from theinternational donor and NGO community. The discus-sion was expanded on Dec. 9 to include high-levelrepresentatives from many partner countries. Dr. JosephStiglitz, Nobel laureate in economics, delivered thekeynote address. President Carter presided over theforum on Dec. 9, where he made welcome remarks.President Touré of Mali and President Guebuza ofMozambique made opening remarks, and Nancy Birdsall,president of the Center for Global Development, deliv-ered the forum’s second keynote address.

HIGHLIGHTS OF SPEECHESJoseph Stiglitz, Executive Director, Initiative for Policy Dialogue,2001 Nobel Laureate in Economics, Keynote Address Joseph Stiglitz drew upon contemporary events and hisexperience at the World Bank to illustrate that low-income countries need to shape their own economicdestinies. He highlighted the importance of open pub-lic dialogue, arguing that it brings out information onpolicy choices and expands policy alternatives. Sinceinternational financial institutions often represent onlya single perspective, public dialogue can allow compet-ing ideas to emerge.

Stiglitz contrasted the cases of the United Statesand Argentina in terms of social security privatization.In the United States, public dialogue revealed informa-tion about privatization’s potential negativeconsequences, which included increasing the nationaldebt. In the end, privatization was defeated. InArgentina, on the other hand, public dialogue was neg-ligible. Argentina was presented one perspective, whichheld that privatization equals “good economics.” Nopolicy alternatives emerged and, once privatization wasimplemented, the country found itself with a drasticincrease in public debt. Also, citing the mixed success-es of market board privatization in some Africancounties, Stiglitz argued that lack of dialogue makesadverse effects more likely because local conditions areoften overlooked.

Furthermore, because international financial insti-tutions are often unwilling to back down from certainpolicy positions, such as the pace and desirability ofcapital market liberalization, Stiglitz argued that theycannot be relied upon for the formulation of develop-ment strategies. Instead, third parties should facilitatepolicy debate so that alternative views can be consid-ered when governments and international financialinstitutions construct development strategies. He calledattention to the inappropriate accounting and budget-ary framework that hindered Brazil’s land reform andpresented evidence that moderate inflation has no sig-nificant effect on economic growth. Stiglitz concludedby stressing that there is no uniform way to achievedevelopment and arguing that third parties can expandthe scope of policy dialogue to bring greater accounta-bility to governments and international financialinstitutions.

Jimmy Carter, Former President of the United States,Welcome Remarks President Carter remarked that the most crucial prob-lem facing the world today is the growing chasm

EXECUTIVE SUMMARY

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between the rich and poor. He described the CarterCenter’s health programs, which focus on eradicatingdisease and increasing food production, and how theseprograms have often led The Carter Center into resolv-ing conflicts and monitoring elections in variouscountries. He said that his experiences in these coun-tries prompted the creation of the Global DevelopmentInitiative, as the need for more efficient developmentassistance to these countries became obvious.

President Carter emphasized that, even when acountry has a sound development vision and program,there are many obstacles to implementation. He statedthat African countries generally absorb only 20 percentof available resources due to lack of aid coordinationand burdensome restrictions associated with funding.President Carter called on donor countries to harmo-nize their efforts so that aid intended to promotehealth, development, or education does not result in a

cacophony of separately run projects that overwhelmthe limited administrative capacity of the government.While he acknowledged that in some countries, corrup-tion prevents donors from investing in the government,he emphasized that in many countries, governance isnot a problem.

President Carter also argued that donors are sim-ply not generous enough. During the InternationalConference on Financing for Development inMonterrey, Mexico, in 2002, donors made significantcommitments of new resources that have not material-ized. He noted that the U.S. government is at thebottom of the list in terms of generosity, giving only 16cents of every $100 of income, while European nationsgive, on average, 40 cents. The fact that the grossdomestic product of 50 of the poorest countries islower than it was 10 years ago is a testament to theneed for this conference and to continued efforts to

Mozambique President Armando Guebuza and President Carter address members of the media at a press conference.

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iron out the problems that prevent more aid frombeing delivered effectively to poor countries and to thepoor within those countries.

Amadou Toumani Touré, President of the Republic of Mali,Opening RemarksPresident Touré called for reform of the internationalaid system so that it might reflect a “true partnership”between donors and recipients. Outlining steps thathis country has taken to develop strategies for econom-ic growth and poverty reduction, he asserted that Malihas been willing to cooperate with donors, even whenthat has meant implementing drastic economicreforms that have “placed us ill at ease.”

“When there are efforts to be made,” he said,“Mali is ready.” Now, it is up to donors to assist Maliin mobilizing necessary resources and to place confi-dence in the government, thereby allowing a truepartnership to emerge.

While Touré expressed gratitude for the generosityof donors, he asserted that more needs to be done toensure that efficient and effective development takesplace. He argued that true partnership “requires a per-manent dialogue to identify needs, fix objectives, andmobilize necessary resources.” Ultimately, through dia-logue, the president expressed hope that his countrywill see more aid and better aid management. Heargued that better aid management requires four basicchanges. First, external aid must be integrated into thegovernment budget. Second, the planning and account-ing of aid must be improved. Third, donor proceduresmust be simplified. He held that inefficiency has result-ed “not because [Malians] are not intelligent, butrather…because the procedures are so complicated.”Fourth, the government’s capacity must be strength-ened so that it can engage in better management andassume a more direct role in shaping the developmentof the country. All of these priorities require the confi-dence associated with a true partnership.

Finally, President Touré drew attention to what heperceives to be a lingering hypocrisy on the part of thedeveloped world. He argued that trade is absolutely

essential for Africa’s development, yet agricultural sub-sidies in the developed world render it virtuallyimpossible for Africa to compete for a profit. Holdingthat it is “unjust” for developing countries to be forcedto accept market-driven economic programs whiledeveloped countries refuse to follow the same guide-lines, he calls for agricultural subsidies to beeliminated so that African countries can enjoy the ben-efits of international trade.

Armando Guebuza, President of the Republic ofMozambique, Opening Remarks The dominant message of President Guebuza’s remarkswas that Mozambique’s development strategy must andwill be Mozambican. While acknowledging his coun-try’s current dependence on aid, he made clear hisexpectation that donors align their resources around“domestically generated strategies and programs,”emphasizing in particular the hope that donors wouldsupport, or at least not block, the creation of a devel-opment bank. He reiterated that the people of hiscountry are smarter than they are often given credit forand that, since they are the ones who are first to feeltheir problems, the people need to be heard andrespected as the ones who are first to solve their prob-lems. “Africans,” he said, “also are able to learn.”

He reduced the question of development down tothree critical factors: capacity, resources, and coopera-tion. Although he acknowledged that Mozambiquecould do more to improve the capacity of its govern-ment to absorb aid, he asked that donors refrain fromviewing this as an excuse not to scale up resource flowsbut as a challenge that both donors and Mozambicanscan overcome as partners. With 70 percent of its popu-lation living in rural areas, Mozambique, he argued,urgently requires increased investments in its ruralinfrastructure: “Additional resources should be signifi-cant, stable, predictable, and available for identifiedneeds of recipient countries.” Addressing cooperation,he stressed the need for donors to make more progresson harmonization and alignment.

President Guebuza returned to a recurring theme

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as he concluded his speech, calling for a re-evaluationof the relationship between donors and countries. Thecurrent assumption that the “provision of aid is a mat-ter of charity toward poor countries” spawns apaternalistic attitude that must change. Mozambiqueneeds to be equal in its relationship with donors, whomust share the same goals as Mozambique: “social andeconomic development that contributes to a moreequitable globalization.”

Nancy Birdsall, President, Center for Global Development,Keynote Address Nancy Birdsall argued that today’s globalization perpet-uates inequality; she elaborated upon the implicationsfor development and transformative growth and forthe development community. Birdsall said that moreintegrated, deeper, and richer markets tend to rewardcertain assets that are unequally distributed—from auniversity education at the individual level to soundand stable political and economic institutions at thecountry level. The rich world, possessing the majorityof these assets, is able to set the rules of the game atthe global level to reflect its interests, reinforcing thetendency of globalization to spread inequality.

Rising inequality creates insecurity and dissatisfac-tion among the poor in developing countries, making itharder for leaders to enact what Birdsall called the“right” policies. Her contention was that local politicsmatter. Development practitioners need to understandthat, while economic policies embraced by internationalfinancial institutions may be sound in principle, the“right” policies often do not fit with local politics. Infact, they may be impossible to implement. This is thereason, according to Birdsall, for the failure of manystructural adjustment programs. The rich world mustconsider policy autonomy for developing countries inthis context, as it is the local leaders and local commu-nity that have the most information ex-ante about whatpolicies can be effectively implemented at any givenmoment to generate pro-poor growth.

Birdsall called for a new “global social contract” toaddress inequalities across countries, much like a social

contract that forms the foundation of a country’s obli-gations to its own citizens. She proposed the richworld should first “do no harm” to poor countries andreverse harmful policies and practices such as theAgreement on Trade-Related Aspects of IntellectualProperty Rights (TRIPS). Further, she encouragedinvesting in new technologies that yield direct benefitsto people in the developing world, making internation-al financial institutions more democratic andrepresentative, and ensuring that development assis-tance improves critical social and political institutionsin the developing world. Birdsall suggested independ-ent, external scrutiny of the donor community, creativenew ways to deliver aid, pushing for donor communi-ties to take more risks in areas such as budget support,and endowing “independent institutions,” such asindependent policy think tanks, in poor countries.

HIGHLIGHTS OF DISCUSSIONThe major themes explored in the fourth DevelopmentCooperation Forum were whether recent efforts haveresulted in greater policy autonomy for poor countries,whether on-the-ground progress was occuring in thearea of aid effectiveness as a result of the global harmo-nization movement,11 and what role impartial thirdparties could play in facilitating more effective develop-ment cooperation. In general, participantsacknowledged that the principles of partnership andmutual accountability that now guide developmentcooperation are the right ones and that mechanismssuch as the Poverty Reduction Strategy Paper, medium-term expenditure frameworks, budgetary support, andthe new focus on relieving burdensome donor practicesrepresent improvements over the situation that pre-vailed even 10 years ago. However, developingcountries’ experiences suggest that country ownershipremains severely constrained in certain areas of eco-nomic policy and by the reluctance of donors torelinquish control of aid resources even when good gov-ernance is not the driving concern.

11. See www.aidharmonization.org.

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On the topic of policy autonomy, forum partici-pants subscribed to the basic tenet that differentcontexts demand different approaches beyond simplyensuring basic free-market-enabling fundamentals.However, country partners and several other partici-pants stated that the Bretton Woods institutions andother donors do not follow this advice in practice. Asseveral participants noted, the growth strategies donorsimpose are often completely contrary to successfulexperiences in other parts of the world, particularlywhen it comes to rethinking industrial policy and therole of the state in the context of growth strategies andprivate sector development. Mozambique’s difficultiesgenerating a transparent and honest dialogue withdonors about the creation of a development bank werea case in point.

Another area of widespread concern was the inflex-ibility of the macroeconomic framework supported bythe International Monetary Fund’s Poverty Reductionand Growth Facility, which is basically the same acrossmost developing countries irrespective of their uniquecircumstances.12 There can be many alternative macro-economic frameworks with trade-offs among growth,employment, poverty reduction, trade balances, andinflation, particularly over the medium to long term,but these are often not openly debated. Several partici-pants pointed out that the Poverty Reduction andGrowth Facility has prevented countries from makingthe vital social investments and generating the kind ofeconomic growth necessary to lift their people out ofpoverty. Moreover, participants noted that not only doPoverty Reduction and Growth Facilities obscure coun-tries’ clear need for additional aid, some internationalfinancial institution officials actually discourage coun-tries from raising the matter. This point was contestedby other participants, who pointed out that balancedframeworks must be agreed upon based on availableresources and that governments lacked the capacity toformulate several budget scenarios.

GDI country partners expressed concern that thecombined impact of the Poverty Reduction StrategyPapers, Millennium Development Goals, and Heavily

Indebted Poor Countries Initiative had resulted in asocial-sector bias in aid and public investment reflect-ing donor priorities at the expense of productivesectors like agriculture and private-sector develop-ment, both of which are needed to generatebroad-based and rapid economic growth.13 While par-ticipants recognized the important contribution thatsocial investment makes to long-term growth andpoverty reduction, they argued that a better balancemust be established to ensure the long-term sustain-ability of today’s efforts with less reliance on externalassistance. In some countries, the broader agenda iselaborated in national development strategies ornational visions but not adequately realized throughthe Poverty Reduction Strategy Papers, which have amedium-term focus. It was also noted, however, thateven among the four developing countries present,there would be diverse experiences. For example, Maliand Mozambique in particular had large, impover-ished rural populations in desperate need of basicsocial services.

To resolve these issues, participants agreed, morecan be done to promote the exploration of sound poli-cy alternatives. Participants agreed that resourcescurrently spent on external technical assistance couldbe invested in the creation of indigenous capacitiesfor evidence-based research and policy formulation asit pertains to growth promotion strategies. Thisincludes independent institutions such as think tanksas well as government units that could carry out jointanalysis with donors. Third-party actors can play a rolein building this capacity and promoting the explo-ration of alternative or heterodox approaches.However, donors must make more open-minded andhonest commitments to country ownership and recog-nize their own biases. Ultimately, greater developing -

12. This issue was raised at the 2002 Development CooperationForum, and its continued existence as a source of contentionrequires that it be addressed as a priority.13. This trend has also been borne out by other evaluations ofglobal experience. See, for example, World Bank OperationsEvaluation Department, “2004 Annual Review of DevelopmentEffectiveness.”

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country participation in the governance of the interna-tional financial institutions would be needed to ensure responsiveness and greater accountability.

On the issue of aid effectiveness, partner-countryrepresentatives agreed on the need for a substantial,stable, and predictable increase in aid resources toeradicate extreme poverty. As one participant fromMozambique explained, it is not a matter of shiftingresources within budgets because the efforts of the lastfew years have probably addressed intersector issues,but a larger quantum of resource flows is needed.

Forum participants also stressed the dysfunctionof the donor aid system and recognized that, althoughsome progress has been made, really significant changeof the system still escapes us. The dysfunction mani-fests on two fronts. First, the large proportion of aidmoney is spent not on transformative development—such as reducing disease, investing in teachers, andbuilding roads—but rather goes back to those who pro-vided the aid. The thriving industry of foreigndevelopment consultants was mentioned most fre-quently by participants as an example of this. Second,the money that is available for transformative growth isblocked from making its way to the poor by multiple,burdensome, and incoherent donor procedures andpractices that recipient countries must accommodate.Forum participants affirmed that continued actionmust be taken at the global political level, as well asthe developing-country level, to address these problemsand help the poor.

Participants called for donors to harmonize andalign their procedures and practices according torecipient country systems and to increase the propor-tion of aid money that goes to budget support ratherthan to a cacophonous array of individual donor petprojects. Partner-country representatives acknowledgedthat they must strengthen their own public financialmanagement systems and asked for support in increas-ing capacity in this area. Participants strongly agreedthat government and donors must have mutuallyagreed-upon and concrete indicators of performance,emphasizing quality of aid and achievement of specific

and measurable results in saving lives. They also agreedthat an independent third party such as The CarterCenter can play a valuable role in monitoring and eval-uating performance of government and donors toensure accountability.

There was general consensus that, despite the com-mitment to partnership and mutual accountabilityexpressed in numerous international agreements,development cooperation is still compromised by fun-damental power differences between donors andrecipient countries. Participants supported the rolethat impartial third-party actors could play in realizingthese principles more fully through facilitation, media-tion, monitoring, and capacity building. Participantsdefined third parties as actors not associated with thehost government and not members of the donor com-munity. There was general agreement that third-partyactors must be respected by all sides and be impartialto the substantive content of policy and aid debates inthe country. Their emphasis must be on strengtheningdeliberative and democratic processes and host-countryownership.

Third-party actors could play a number of roles.They could act as facilitators to ensure the inclusionand participation of diverse groups in dialogue andplanning processes, such producing homegrownnational development strategies or Poverty ReductionStrategy Papers, as GDI has done. They could mediateagreements on development assistance frameworksbetween governments and the donor community. Theycould also monitor the implementation of agreements.Participants felt there was a considerable need for thelatter, at both national and international levels, whenit came to donors’ aid harmonization commitments.Country-level experiments from Mozambique andTanzania, in which independent experts monitoredand evaluated donor behavior on budget support andharmonization, were mentioned.14

14. See the Mozambique Program Aid Partners Web site atwww.pap.org.mz; Also see: Killick, Tony. “Monitoring thePartnership-based Aid Relationships: A Note.” Development PolicyReview 22 (2004) 229-234.

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Participants agreed that either internal or externalorganizations could play third-party roles. Amongdomestic actors, think tanks or independent nationalcouncils such as the one in Mauritius were cited asexamples. There was general endorsement for thethree “Es” for successful domestic third-party actors:an endowment of five to seven years to get these insti-tutions started, evidence-based methods to drive theirresearch and analysis, and external partnership oppor-tunities to plug into global knowledge and capacitybuilding. GDI and Joseph Stiglitz’s Initiative for PolicyDialogue were cited as examples of international

third-party actors addressing development policy dia-logue at the recipient-country level, although thecontributions of other organizations at the forumwere also noted. All agreed that international actorsmust always be invited by the host country, ensurethat their efforts build the capacity of domestic actors,and themselves be monitored. There was generalagreement that the concept of employing third-partyactors should be developed and applied more exten-sively, as it is critical to the conference goal ofachieving equitable globalization.

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JOSEPH STIGLITZ, EXECUTIVE DIRECTOR,INITIATIVE FOR POLICY DIALOGUE,KEYNOTE ADDRESS

Dialogue and DevelopmentThe spread of democracy around the world is one ofthe major positive changes in the global landscape ofthe past two decades. Democracy is, of course, morethan periodic elections. It entails meaningful participa-tion in decision making, and no aspect of decisionmaking is of more concern to those living in the devel-oping world than are those that affect economiclivelihoods. And an important aspect of democraticparticipation is dialogue. I’m going to be talking aboutthe role of dialogue in general as well as the role ofthird parties in dialogue. The Carter Center has beeninvolved in these matters in international develop-ment, as has my organization at Columbia University,the Institute for Policy Dialogue.

I was motivated to initiate Initiative for PolicyDialogue by my experiences at the World Bank,described in my book, Globalization and Its Discontents.In many ways, the experience I had at the World Bankwas wonderful. It was exciting, and I see many of myfriends here like Jim Adams, whom I worked with andvisited Tanzania with—he was country director at thetime. But as I left the World Bank, there were manyquestions in my mind. During his tenure from1995–2005, Jim Wolfensohn made enormous effortsto open up dialogue with developing countries. Hetalked about the Comprehensive DevelopmentFramework, or CDF, an approach to development thatemphasizes the interdependence of all elements ofdevelopment, including social and financial. He recog-nized that a single magic bullet did not exist. In thepast, the magic bullet has been more capital, moremarkets, and more this and more that. Wolfensohnrecognized that part of the problem was this search fora magic bullet and that one needed to take a more

holistic approach. The concept is clearly right, yet Idon’t think one can rely on international institutionsfor the formulation of development strategies. There isa role for outside parties (that is, outside the country),but the extent to which international financial institu-tions can play that role is limited, and there is a needfor other outside parties to be involved in the discus-sions. I will explain why.

Limitations on the International FinancialInstitutionsFirst, the World Bank and IMF are enjoined by theircharters from engaging in politics. Their mission iseconomics. Some of you may gasp when you hear mesay that. You ask, “Well, aren’t they involved in politicsall the time?” The answer is “Yes.” But they definewhat they do as economics. This approach itself is verypolitical; that is, all too often the international finan-

FORUM SPEECHES

Joseph Stigliz, 2001 Nobel laureate in economics, delivers hiskeynote address.

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cial institutions define what is political not in ways toenable them to do what they want but as an excuse fornot doing what they do not want to do. Let me giveyou an example. Before I arrived at the World Bank,Jim Wolfensohn had raised the question of corruptionas an impediment to development. At the time, manypeople at the World Bank said that he had gonebeyond his mandate; cor-ruption is a political issue,not an economic issue.And it was only when ourresearch department wasable to show that corrup-tion had an effect ongrowth that it then becameacceptable to talk aboutcorruption. Obviously,everyone knew it was an important topic, but the arti-ficiality of the constraints stopped it, and across thestreet at the IMF, many people remained reluctant totalk about corruption.

I offer another example that illustrates problems ofdialogue at the World Bank. There was a change ingovernment in South Korea on the first anniversary ofthe election of Kim Dae-jung as president. He decidedto have a conference on democracy and development,and I was slated to give the keynote speech. The speechhad to be vetted, as occurs in these kinds of bureaucra-cies. I was told that I could not give that speechbecause we were not allowed to talk about democracyat the World Bank. That policy is beginning now tochange, but at the time we couldn’t talk about it. I hadto do a search-and-replace in my word processor andinsert the word “participation” every time I used theword “democracy.” We got around the restriction. Theaudience understood what I meant, but the rules ofthe game, which were that I could not give a speech ondemocracy, were satisfied.

Their charter says they’re not supposed to be polit-ical, but of course nearly every issue they deal with ishighly political. Thus, what proscribes the internation-al financial institutions from playing the constructive

role in dialogue that one might have hoped is not justtheir charter. It is politics —the economic and politicalagenda that these institutions are advancing, whichoften lies beneath the surface and which they have aninterest in keeping that way.

The United States has just gone through a highlypolitical debate on the privatization of social security.

It appears the right side hasprevailed, and social securitywill not be privatized. Butaround the world, develop-ing countries are told byone or the other of theinternational financial insti-tutions that good economicsrequires the privatization ofsocial security. The conse-

quences in many countries have been disastrous. Manyof you may know about the Argentine economic crisisin 2001. Everybody attributed a large part of the blamefor the crisis on the country’s huge deficit. Had it notprivatized social security, its deficit would have beenclose to zero. Almost the entire deficit was caused byprivatization of social security. In the U.S., a dialogueoccurred that indicated that even partial privatizationof social security would lead, over the next 20 years, toa $6 trillion debt. That’s a lot of money, even for arich country. This dialogue was one of the factors thatled people to say, “Maybe this is not such a good idea.”Unfortunately, Argentina didn’t have that dialogue. Itsleaders were told that good economics says you have toprivatize social security. Argentina’s citizens paid anenormous price for that mistake.

Even within economic areas, certain policies thathave an enormous effect on development are taboo.For instance, in 1997–98, one of the topics that arosewas the question of the exchange rate in China, a ques-tion that has arisen again recently. At that time, theofficial position was that China should not have a flex-ible exchange rate. As you know, today the officialposition is that China must have a flexible exchangerate. I think the lesson is that China must have a flexi-

It is absolutely imperative in my mind thatthere be a dialogue on these topics and thatleaders hear differing views of possible conse-quences of policy decisions—including viewsthat may not be liked by some of the powers-that-be in the advanced industrial countries.

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ble mindset about what they are told and what theyaccept. The economics of exchange rates was as contro-versial then as it is now. There are enormousconsequences of making exchange rates flexible or not.I thought it was important to have a discussion of theconsequences. What would it do to inflation, to therural sector, to various sectors, to other countries inthe region? The view, however, of the IMF, and to alesser extent the World Bank, was different. If theywere discussed at all, they had to be discussed behindclosed doors; if there were disagreements among thestaff of the World Bank or the IMF, those in the devel-oping world should never know it.

There was one occasion where I asked hypotheti-cally, “What might happen if an exchange rate wereadjusted?” I did not say if it should or should not beadjusted. Instead, I simply went through the analytics.Nonetheless, phone calls flew across the Pacific at anenormous rate in the middle of the night in responseto my question. You would’ve thought that I had com-mitted treason.

A final example highlights how a topic that todayseems almost banal—the importance of transparency—can give rise to problems. The issue of transparencyhas a special resonance for me because I received theNobel Prize for my work on the economics of informa-tion. Transparency is just another name for“information”—making information available to thosewho should have it. My own work has evolved in thelast few years to focus on the role of information inpolitical processes, which is another way of saying: onthe role of transparency. At one point during my serv-ice as chief economist of the World Bank, I prepared aspeech on the corrosive effects of secrecy in govern-ment. Admittedly, I may have been a little out ofschool, as I illustrated the speech with examples drawnfrom actions undertaken by the U.S. Treasury. (GivenTreasury’s official position that East Asia adopt greatertransparency, it was understandable why the Treasurymight not have been happy with my speech.) Thespeech was vetted by the bank’s vice president forexternal relations, who asked me whether this was my

resignation speech. His view was that if I gave thespeech in the form I had written it, the U.S. Treasurywould go ballistic. They would not like me being trans-parent about their lack of transparency, and theywould demand that I be asked to leave. I decided therewere more important battles to be fought and present-ed a toned-down version. The speech articulated theeconomic logic behind the importance of transparen-cy, without some of the concrete examples that wouldhave driven the point home. I mention this storybecause it shows the limits of what one can say at theinternational financial institutions, even at a periodwhere there was an attempt to be more receptive.

The point I want to make is that there are areas ofenormous importance to developing countries that theIMF and the World Bank cannot talk about or won’ttalk about. And the unfortunate thing is that the otherinstitutions like the United Nations DevelopmentProgramme have also become less likely to speak open-ly. They are dependent on governments for their fundsand are sensitive to political pressures. It is absolutelyimperative, in my mind, that there be a dialogue onthese topics and that leaders hear differing views ofpossible consequences of policy decisions—includingviews that may not be liked by some of the powers-that-be in the advanced industrial countries. Withoutindependent third parties participating in these dia-logues, there can’t be that kind of discussion.

The Value of Dialogue I was in Venice for a meeting with a group of NobelPrize winners on the value of dialogue. One of thepeople there was Gary Becker, an economist withwhom I often disagree. We’ve always had very gooddialogue, very good discussions, where the dialogueshave helped bring out the areas and reasons aboutwhich we agree or disagree. He made a remark, “Idon’t understand why we’re having this discussion.Who could argue against having a dialogue?” Well,unfortunately, there are subjects that are taboo to dis-cuss at the international development organizations.The result is that important decisions are made, some-

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weight of opinion would be on the side of stimulatingthe economy, cautiously raising interest rates and taxes,and cutting expenditures. I thought even if an opendialogue did not come down on my side, at least wewould have had a democratic and open process. Butthat was not to be. A dialogue on these issues neverhappened. And the policies failed miserably. The fail-ures, in part, happened because the policies weren’tthought out as completely as they would’ve been hadthere been an open dialogue.

The preceding examples helped motivate me,when I left the World Bank, to say that there ought tobe more discussion about economic policies, morealternative policies on the table, and more people atthe table. It’s important to expand both the substanceof what is talked about—alternatives of economic poli-cy—and the number of voices included.

More Voices at the TableI want to spend a moment talking about the impor-tance of including different voices in policyrecommendations. Before I came to the World Bank, Ispent four years in the first Clinton administration.One of the wonderful things about the Clinton admin-istration is that we talked a lot—people sometimes saywe talked too much—and one thing that was evidentfrom our conversations was that there are very differentperspectives on the world. The secretary of the treasurylooked at the world very differently from the secretaryof education and of health and welfare and from thehead of the Environmental Protection Agency. Theirinterests, their constituencies, and the way they hadlived their whole lives contributed to these differencesin perspectives. If you worked your whole life on WallStreet, you would see the world differently from the wayyou would if you lived your whole life in academia. Myexperience in academia shaped me: It forged strong feel-ings about open dialogue and research. People fromfinancial markets, meanwhile, feel a lot more stronglyabout secrecy. Knowledge is money and is thereforeshared only for a price, if shared at all. It is not surpris-ing that very different perspectives can coexist in

times in secret, often without the benefit of dialogue.These decisions often have negative results.

When I was at the World Bank, it was both analarming and exciting time because the financial crisesof ’97, ’98, ’99, and 2000 occurred during my tenure.Crises kept coming, and the rescue policies that theIMF designed to deal with them kept failing. A coupleof questions were very much at the core: What is thecorrect response? Should interest rates be raised to thevery high levels that the IMF was recommending? Willthat step stabilize the exchange rate? Should expendi-tures be cut? Every undergraduate and graduateeconomics course teaches that in a recession, govern-ments undertake three steps: cut taxes, raiseexpenditures, and lower interest rates to stimulate theeconomy. During these crises, the IMF was doingexactly the opposite.

I wanted to have a dialogue, a discussion about theconsequences of these policies. Will the suggested poli-cies help or hurt? But to adequately answer thatquestion, I wanted to discuss a prior question: Whatwas causing the crises? One of the factors that I andmany people at the World Bank thought formed thebasis of the crises was excessively rapid liberalization ofcapital markets. This frequently occurred before thecountries’ institutions were prepared for it. Again, Ithought there should be a dialogue about the pace anddesirability of capital-market liberalization. Would itlead to growth or instability?

Research at the World Bank had shown that rapidcapital-market liberalization would probably increaseinstability but not growth. Therefore, I and my col-leagues suggested there be a dialogue. IMF officialssaid no, they did not want to have any dialogue. If adialogue were to take place, they added, it had to meettwo conditions: The conversations must occur in pri-vate, and attendees couldn’t talk about the contents ofthe dialogue, ever. As somebody who had been incul-cated in democratic traditions, I found this verydifficult to accept.

I thought that if there was an open discussion, the

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international development circles. It is important ascountries debate development strategies among them-selves that they have a sound understanding of thesedifferent perspectives.

Even in areas of finance, policy decisions wouldnever be left solely to the secretary of the treasury.Even if policy-makers had enormous confidence in hisabilities, other views should be introduced. Forinstance, in Clinton’s second term, Treasury did notthink that global warmingwas an important problemand opposed the Kyotoprotocol. They worriedabout the impact on theeconomy. (The truth mayhave been that they weremore worried about theeconomic impact on theautomobile and oil indus-tries.) This opinion hadmany critics, including me.The Kyoto protocol is anissue of global environmen-tal importance as well aseconomic importance. The president recognized theenvironmental importance of the Kyoto protocol andultimately decided against the Treasury. Another issuediscussed in Clinton’s second term was whether toinvest a limited amount of the Social Security trustfund in stocks. Treasury opposed the idea. The admin-istration thought there would be higher returns andthat, rather than going to the extremes of privatiza-tion, this would be a way of dealing with some of theseeming financial shortfall that the Social Securitytrust fund faced. The president thought this a reason-able thing and sided against Treasury. I can think ofmany more examples—regarding taxes or intellectualproperty —where the Treasury’s view differed fromother agencies. But all the examples boil down to oneidea: Economic decisions affect numerous aspects ofsociety. Therefore, a president should hear a range ofpolicy voices and not delegate to the secretary of the

treasury. I sometimes say that the IMF’s governancerepresents a wide range of views—all the way from theperspectives of a central bank governor to that of aminister of finance. There may be some diversity ofviews within the world of finance, but that is relativelysmall compared to that within the wider world. Theculture and mission of the World Bank encourageviews from finance ministers and aid agencies. Theaid agencies tend to be more liberal, and the finance

ministers tend to be moreconservative. This is truewhether you have aRepublican or a Democraticadministration. I think theWorld Bank has benefitedenormously from the factthat a wider diversity ofviews exists in the gover-nance of the World Bankthan exists, say, at the IMF.

This issue of diverseviews arises not only in areasthat touch upon finance,monetary, and fiscal poli-

cies. It comes up in every policy area and arises all thetime in trade.

One of the big issues discussed at the World TradeOrganization development round in Hong Kong hasbeen intellectual property. The intellectual property pro-visions of the Uruguay Rounds, also known as theAgreement on Trade-Related Aspects of IntellectualProperty Rights, or TRIPS, were not a balanced intellec-tual property regime. Because of this imbalance,lifesaving medicines for diseases such as AIDS have beenmade less available, and thousands of people will die asa result. To put it overly graphically but probably accu-rately, when that agreement was signed in Marrakesh inApril of 1995, they were signing the death warrants forthousands of people in sub-Saharan Africa.

Interestingly, both the Council of EconomicAdvisers, of which I was a member, and the Office ofScience and Technology Policy opposed TRIPS. We

There’s more to democracy than just going to the polls every four years. Deliberativeprocesses are a critical component of partici-patory democracy. At the very least, citizensof countries need to be involved in the deci-sions that affect their lives, to talk about theimpact of economic decisions that affectthem and future generations, perhaps morethan any other decisions that are made.

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thought the intellectual property provision was unbal-anced, that it was bad for American and world science.We thought it was bad for developing countriesbecause of this problem of access to medicines. But weweren’t in Geneva in the secret negotiations that decid-ed the trade agreement. We were in Washington.While we expressed our views to the U.S. trade repre-sentative, I think he heard them, but he certainlydidn’t listen. So the final agreement reflected the inter-ests of the U.S. pharmaceutical and entertainmentindustries.

The negative impact of TRIPS —the problems thatonly became clear years later—emphasizes why it isimportant to get different voices at the table.Unfortunately, we did not feel at the time that wecould openly criticize the U.S. government’s positionbecause we were in the government. This was a harddecision, I recall, but we had hoped NGOs wouldvocalize their dissent on the issue. Unfortunately, theydidn’t or didn’t speak loudly enough. If they had spo-ken, if there had been other parties out there pointingout these consequences, perhaps something would’vebeen done about it.

Democracy and DialogueSo far I’ve tried to argue three points. First, dialogue isimportant: It enhances the likelihood that good deci-sions get made; second, countries cannot rely oninternational institutions alone for policy dialogue andframework; and third, it makes a great deal of differ-ence who is at the table and what issues are on thetable. I want to spend a few minutes talking about whythese matters are important, not just for economicsbut also for democracy. I think that developmentstrategies that are decided without the benefit of opendialogue are less likely to be successful.

Democracy ought, however, to be viewed as an endin itself and not just as the means to a stronger econo-my. Open dialogue is essential for successfuldemocracy, and that’s one of the reasons why I thinkit’s so important for The Carter Center to be engagedin these kinds of issues. We all understand that

democracy is not defined simply by periodic elections.It is obviously an important part, but there’s more todemocracy than just going to the polls every four years.Deliberative processes are a critical component of par-ticipatory democracy. At the very least, citizens ofcountries need to be involved in the decisions thataffect their lives, to talk about the impact of economicdecisions that affect them and future generations, per-haps more than any other decisions that are made.

One example of the current debate about democrat-ic institutions is the institution of the independentcentral bank. It’s a contentious issue, and it ought to bedebated more precisely because of that. We tell coun-tries they ought to be democracies and to be responsiblefor their own destinies, but as soon as we tell them that,the next thing we say is, “By the way, the thing that ismost important, your macroeconomic performance, istoo important to leave to democracy. We’re going totake that and put it in a central bank that is going to berun by some technocrats.” That’s not a persuasive orconsistent message. It may be that, in the end, a democ-racy can’t be trusted to make decisions—that is aquestion for debate. I don’t think so. If you don’t trustdemocracies with making decisions about interest rates,maybe you shouldn’t trust them with making decisionsabout taxes. Should we have an independent set ofbureaucrats making decisions about tax structure? Wecertainly have had some peculiar political decisionsmade in the United States about tax structures recently.I don’t like those recent decisions. But those are part ofthe political process. But I also think interest rates oughtto be part of the political process.

There are institutional frameworks that partiallyinclude interest rates in the political process. TheUnited Kingdom has a framework in which the gov-ernment sets the inflation target, looks at the situationof the economy — what the employment rate is, if theemployment rate is too high — and decides to increaseor decrease inflation in a given year. So the inflationrate is a political decision, and the implementation is atechnical decision. The U.K. has distinguishedbetween a technocratic decision of how to operate

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monetary policy and a political decision of the macro-economic direction of the economy, how to balancetrade-offs between inflation and unemployment. Thatseems to me a reasonable framework. But even if acountry had an independent central bank, the bankwould ideally be accountable and representative. Thedecision makers would hopefully consider not just howinterest rates affect Wall Street but also how they affectworkers, not just how inter-est rates affect bond pricesbut also how they affectunemployment and realwages. And yet, in the waywe constitute our centralbanks in many countries,we don’t try to get represen-tation. Central banks aredominated by financialmarkets. A few countrieshave said that Wall Streetand financial markets are special interests, and we can-not allow them to dictate monetary policy. Thosecountries have looked for impartial people to runmonetary policy. I hesitate to recommend that planbecause the only people who tend to be knowledgeableabout this are academics—that would be recommend-ing my own special interests.

Nonetheless, the question of impartiality illustratesthe point I want to make. There are alternatives outthere, they ought to be discussed, and they have a pro-found effect on the nature of our democracies.

Dialogue and National CohesionThere is another reason that I think the role of dia-logue is important to participatory democracy. Anumber of people have become increasingly concernedabout the polarization of political thought in U.S. soci-ety. There have been some interesting social psychologyexperiments in which people who tend to be on theleft or right of the political spectrum are separated intogroups to discuss an issue. The experiments found thatthose on the left or the right tend to polarize their

views when surrounded by like-minded people.Consequently, the two poles move further apart. Onthe other hand, the experiments found, if people areplaced in a mixed discussion group, their views arepropelled toward the center. So in a participatorydemocracy, dialogue has the social dynamic of bringingpeople together, and, if not reaching consensus, thenat least reaching broader understanding and making

society less divisive. One ofthe concerns about whathas happened in the UnitedStates is that the left andright are not talking to eachother and, hence, our socie-ty becomes more and morepolarized.

Dialogue andAsymmetries of InformationThis kind of dialogue and

discussion is more likely to lead to better economicperformance. There are several reasons for this. One isa simple observation about information. People inZimbabwe, for instance, know more about the countrythan people outside. This is true, no matter how longoutside observers are there, and certainly true if theyare there for only a brief period. If you live in a village,you know more about people’s daily patterns andtherefore know where to locate the water well.Someone who does not live there is unlikely to knowwhere to locate the well. Outsiders may not even knowhow important the well is to the people in the village.So dialogue has the important function to reduce theasymmetries of information, allowing people to under-stand the consequences of the very complex policychoices developing countries face.

I want to emphasize that some international devel-opment processes in the past have not involved thiskind of open dialogue. Instead, the IMF or the WorldBank grants financial aid based on a developing coun-try’s ability to meet conditions. These organizations

I think conditionality as it has often beenimplemented in the past undermines democracy.It can have the effect of politically undermin-ing elected officials who appear as if they arecarrying out the wishes of international insti-tutions rather than responding to the wishesof their own people.

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would come into a country and demand leaders meetconditions within 30, 60, or 90 days. For instance, theIMF or World Bank may insist that a developing coun-try pass a bill through parliament. The internationalfinancial institutions basically say, if the bill does notpass parliament, then the country won’t get aid. Wecan say countries like this have a choice. They caneither put their economy at risk or they can do whatthe international financial institutions want. They feelthe gun at their head. Technically, they have a choice,but if you’re desperately poor, the demands may feellike an ultimatum, not a choice. I think conditionalityas it has often been implemented in the past under-mines democracy. It can have the effect of politicallyundermining elected officials who appear as if they arecarrying out the wishes of international institutionsrather than responding to the wishes of their own peo-ple. Even if they are the right conditions—althoughoften the problem is that they’re not the right condi-tions—the fact that they come from outsiders has anenervating effect on democracy.

Dialogue and OwnershipThe importance of ownership cannot be overempha-sized. It is not just the acquisition of betterinformation that is at stake but also how peoplerespond to development projects. Behavior is altered.Recently, economics has shifted to investigating behav-ioral models that take into account psychologicalphenomena, such as “ownership.” It has a value in itsown right, but it also means that it’s more likely theproject will be successful.

In short, participation and dialogue are importantboth for successful development and for strengtheningdemocracy.

These are some of the reasons why I think dia-logue, participation, and discussion are so importantfor sustaining democracy in developing countries.

Sharing KnowledgeWhat we know from the last 50 years of developmentis that development is possible. There’ve been some

enormously successful cases — countries whose incomeshave grown eightfold in 30 years. But we also knowdevelopment is not inevitable. There has been a lot offailure. The question is to interpret the evidence of thesuccesses and failures. If the interpretation of that evi-dence were simple, we could look at the cases of EastAsia, distill, say, five recipes of success from them, andapply them to African countries. But extracting univer-sal lessons from success cases and adapting them tocountries that have not yet been successful are extreme-ly difficult. There are so many factors, and they varygreatly from country to country.

Successful policies are very contingent on circum-stances, and it is only through the exchange ofinformation that we are able to extract the contingen-cies that are the relevant ones for a particular country.

Having dialogue is important both to provide bet-ter information and knowledge but also as animportant check against the role of ideology in devel-opment, which has been a real source of problems.

Example: Marketing BoardsLet me give you an example that is relevant to manyAfrican countries. Many of them had marketingboards—government boards that bought agriculturalcommodities—and the boards tended to be both ineffi-cient and corrupt. As a result, the prices that farmerswere getting for their crops were much lower than theyshould have been. The natural response from the inter-national financial institutions was, “Let’s get rid ofthose and privatize marketing.” But if the financialinstitutions had talked to the people in the countries,they would have said, “But there are some problemshere. If we get rid of them, maybe the private marketwon’t be able to operate; maybe a local mafia will takeover the market.” We have found that different coun-tries had very different responses to the elimination ofthe marketing boards. In some countries, thingsworked as hoped, but in others, there was a shift froman inefficient, corrupt government to an even worsesituation, in some cases a mafia-controlled distributionchannel for farmers’ goods. People were even worse

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off, and the government wasn’t receiving any of themoney. In other cases, competitive markets did notdevelop, and so the distribution channel was dominat-ed by a local monopoly—and again the farmers werenot better off. The bottom line was that if the interna-tional financial institutions had initiated a dialogue,risks such as the ones I mentioned would have beenrecognized, and strategies would have been able toadapt appropriately.

The Role of OutsidersI want to conclude by spend-ing a few minutes on the roleof outsiders. Having talked somuch about the importanceof local knowledge and own-ership, it obviously raises thequestion, “What can some-body from the outsidecontribute?” This questionmakes those of us who are inthe development businessvery uneasy. I believe we havea role. I wouldn’t be here if Ididn’t believe that. The role is very limited but still veryimportant.

The most important function of outsiders is toshare knowledge. People in a particular country knowthe local knowledge. An institution like the WorldBank has amassed a wealth of knowledge by operatingin many countries around the world. They have inter-pretations of what has succeeded and what has failed,based partly on an enormous number of experiments.They are not controlled experiments, they are not per-fect experiments—so it’s often difficult to extractlessons—but they still hold valuable information. It isimportant that that information be shared.

It’s also important that this information be sharedby a party that is not viewed to have an interest, thatdoes not have a particular agenda. The internationalpublic institutions, because they reflect the interests ofthe G7 and financial markets, are inevitably viewed as

reflecting a particular world view and representing, atleast to some extent, those interests. So it is importantto have not only that view represented but also to haveother views represented.

The second important function of outsiders is tohelp open up the space for policy debate and lend legit-imacy to alternative views. I hope I have already donethat in giving you some illustrations during this talk.

Inflation andIndependent Central BanksIf you’ve listened to theparty line of some of theinternational institutions,you would have thoughtthat everybody believes thatan independent centralbank run by financial mar-kets is the only way to run acentral bank, with a soleresponsibility of keepinginflation in check. Actually,in the United States, the

Fed doesn’t just look at inflation. We look at unem-ployment and growth as well as inflation. There is arole for an outsider, raising the question, “Is it the casethat countries with independent central banks havegrown substantially faster? Have they grown fastenough to give up the sense of democracy that yougive up when you turn over your control?” The answer,I think, is “No.”

There are other issues that have come up in thediscussion in the last two days that illustrate whereoutsiders can lend legitimacy to other views. Forinstance, we just talked about inflation. Obviously,high inflation is an economic problem, and it can be avery difficult political problem. But the evidence isthat inflation, when it’s moderate or low, has no sig-nificant effect on economic growth. Hundreds ofeconomists have data-mined for more than 15 yearsand have been unable to show that inflation has a sig-

If you’ve listened to the party line of some ofthe international institutions, you wouldhave thought that everybody believes that anindependent central bank run by financialmarkets is the only way to run a centralbank, with a sole responsibility of keepinginflation in check. Actually, in the UnitedStates, the Fed doesn’t just look at inflation.We look at unemployment and growth aswell as inflation.

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their budget was that one can’t rely on foreign aidbecause it’s too unstable. When we went back toWashington, we did an econometrics study. It showedthat tax revenue is also very unstable, so if you use thatlogic, the Ethiopian government shouldn’t rely on taxrevenue either. Subtract foreign aid and tax revenue,and every government has trouble. The logic of it justwasn’t there. Of course, countries have to worry about

inflation. The real questionis: What is the right way oflooking at the budget? Whatis the right accountingframework? The problem inEthiopia was that theaccounting framework thatwas being imposed was notthe right accounting frame-work.

These distinctions areimportant. Right now, thisproblem of accountingframeworks is hindering animportant land reform inBrazil. Land reform, theway it is often today,involves the government

buying land and then selling it. It borrows money tobuy the land, and then it sells the land and gets amortgage. But in the international financial institu-tions’ accounting frameworks, they count theborrowing when they buy the land as a liability, butthey don’t count the mortgage they get when they sellthe land as an asset. So the transaction, in which thegovernment is nothing more than the middle man,shows up as an increase in the deficit of the govern-ment. The Brazilian government has a commitment tohave a primary surplus of a specified percentage ofGDP. This means the government can’t engage in landreform—simply because of a faulty accounting frame-work. (There are legitimate issues to be debated: Theremay be more risk on one side of this transaction thanthe other. If so, then the appropriate response is to

nificant effect on economic growth at the levels ofinflation that we have been experiencing. So, if infla-tion goes from 2 percent to 4 percent, does it makeany difference? Almost surely not. If it even went up to6 percent, it would not have any difference. In fact,George Akerlof, who shared the Nobel Prize with me,has argued very strongly and persuasively that the realrisk is getting inflation too low. If inflation gets belowsome number like 2 per-cent, it starts having anegative effect. We knowthat deflation has very nega-tive effects, worse thanmoderate inflation. And ina world of high volatility, ifyou get near 1 percent infla-tion, you have a risk ofgoing down to deflation.So, clearly there is arespectable view that wheninflation gets at a moderatelevel, you don’t need toworry about it. You do needto worry about it if it getstoo low.

Accounting FrameworksAnother issue that has come up a number of times isaccounting or budgetary frameworks. Should foreignaid be included in a budget that assesses the budgetarystance of a country? In my book Globalization and itsDiscontents, I tell a story about Ethiopia. During myfirst trip as chief economist of the World Bank,Ethiopia was facing a tremendously difficult situation.Ethiopia’s leaders had been given foreign aid. Theywere told, though, that they could not spend it, becauseit would cause a deficit. I said, “I don’t understand.People are giving you foreign aid so that you can spendit. If you don’t spend it, it will just add in reserves, andI don’t think any of the donors believe that they wanttheir money just to go to build up reserves.” At thetime, the response of the IMF as to why they weredemanding that Ethiopia not include foreign aid in

Governments have used credit to stimulateimportant sectors with enormous success. To be sure, there have been some failures, but what’s remarkable among the successes is that most have had either a developmentbank or heavy government involvement inthe provision of credit in one way or another.There are risks, but there are risks in any-thing—but these risks can be managed andhave been managed. The risk is not under-taking these kinds of policies. Countries thathave not done so have not grown.

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adjust the way one deals with these assets; one dis-counts them at perhaps different rates.)

These are not just technical details; these aredetails that have enormous consequences for the livesof citizens and for development policies. It is impor-tant for there to be a discussion of this. We went downto Brazil, and we had a discussion about this. I thinkthe discussion clarified the issues. Everybody exceptone person agreed that the IMF accounting frameworkwas inappropriate.

The Importance of Credit AvailabilityI want now to turn to an issue where traditional devel-opment discussions, by the IMF for instance, have puttoo little attention. As they worry about inflation toomuch, they worry about credit availability too little.Any dialogue within a country, and especially a dia-logue involving the business community, would havebrought this out.

Availability of credit is essential for developingcountries. It is absolutely essential for the success of theprivate sector. Poor people in a poor economy can’t starta business without credit. Or if they can, it takes themyears and years longer than they otherwise could. So it’simportant to figure out how to get credit to all kinds ofpeople in society: microcredit to very small farmers,small- and medium-sized credit to small and medium-sized businesses, larger credit to larger enterprises. Andproviding credit needs a comprehensive framework.

Credit is really a problem of information: figuringout who is going to repay you and monitoring the loansto make sure you get repaid. A lot of my research hasbeen on that topic.

The private sector in developing countries needs tobe encouraged to give more loans in a whole variety ofareas that are underserved. We do that in the UnitedStates. We have a very important bill, called theCommunity Reinvestment Act, that requires banks tolend a certain fraction of their portfolio to under-served communities. Developing countries should dothe same. In India, they have a very important and suc-cessful regulation requiring banks that open branches

in Delhi or Mumbai to also open branches in under-served parts of the country. The regulation strives tomake credit available throughout the country. So gov-ernment regulation can be used as leverage to get theprivate sector involved. In the United States, the pri-vate sector has not provided adequate small- andmedium-sized loans to small businesses. That’s why theSmall Business Administration exists. The SBA pro-vides credit and credit guarantees. Some of the UnitedStates’ leading businesses started as small businesseswith an SBA loan. Federal Express started with anSBA loan. In several countries around the world, therehave been very successful development banks: theAndean Bank, Cathay, BNDS in Brazil. In these cases,governments have used credit to stimulate importantsectors with enormous success. To be sure, there havebeen some failures, but what’s remarkable among thesuccesses is that most have had either a developmentbank or heavy government involvement in the provi-sion of credit in one way or another. There are risks,but there are risks in anything — and these risks can bemanaged and have been managed. The risk is notundertaking these kinds of policies. Countries thathave not done so have not grown.

Not only would more open dialogue involving peo-ple within the developing countries have brought outthe importance of credit availability, more dialoguewith outsiders on the experience of the successful coun-tries would have provided a sharing of the successfulexperiences of how credit can be made available. Thesediscussions themselves would have provided a check onthe ideological presumption that government shouldnot be involved in the provision of credit.

I hope these examples illustrate my argument: thevalue of these dialogues, and of third parties, in high-lighting new issues, in opening up the scope for a widerrange of ideas in a policy discussion. There is not oneway; there is a not a single solution. One-size-fits-allpolicies do not work. The world is more complicatedthan that. We cannot allow technocrats by themselvesto set economic policy. To put it into economic jargon,there’s not a single Pareto dominant policy; there are

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trade-offs, and there are limitations in our knowledge.And that is why it is absolutely imperative not only thatthere be dialogue but that it’s important to bring inoutsiders so that the space of the dialogue is increased,so that alternatives can be discussed.

Dialogues Have Made a DifferenceIn conclusion, sometimes I’m asked, “Has this processof dialogue worked? Has it made a difference?” Ofcourse, if you believe in democracy, the process is avalue in itself. But I actually think the process of dia-logue has not only opened up the debate and beensuccessful in the process, but it’s also been successfulin the results. Some of the dialogues we have had havesuccessfully opened up the discourse in a much broaderand sustained way. The dialogue we held in Colombia,for instance, helped change the economic debate inthat country. The dialogue was catalytic; after we left,the discussions continued, and in a way that the dia-logue had helped shape.

We also had a very interesting dialogue in Nigeria.A number of concrete actions were taken as a result ofthese discussions. Policies were changed in some cases;in others, new options were put on the table. The fulleffects may not be felt right away but will be realizedeventually. Let me just give you a couple of examples.One of the things that we emphasized was that even ifthere is successful development, the agricultural sectorwill be a dominant part of the economy for a very longtime. Therefore, any development strategy—especiallyany development strategy that was to make significantinroads in reducing poverty—had to have an importantagricultural component. The result of that is that thegovernment decided to allocate more resources to agri-culture. The dialogue also had effects in promotingtransparency, including giving currency to the idea of afreedom of information act, in altering some of the dis-course on privatization, and on the setting of monetarypolicy.

The Role of The Carter CenterI conclude by thanking The Carter Center for thisopportunity to dialogue with you. I congratulate you

on your work. I think the Global DevelopmentInitiative, as a third party to stimulate dialogue indeveloping countries, bringing new stakeholders intothe discussion, and expanding the scope of discus-sions, has played a crucial catalytic role. The countriesthat have been fortunate enough to have its involve-ment have benefited enormously, and it has provided aset of examples for others to follow. I hope you willcontinue this very important work. Thank you.

PRESIDENT JIMMY CARTER, WELCOME REMARKSMy comments will be fairly brief, but I want to let all ofyou know the background of what these sessions com-prise and the purpose for them. The Carter Centernow has programs in 65 nations in the world, 35 ofwhich, not surprisingly, are in Africa, and we have awide range of programs. Two-thirds of our budget isdevoted to health issues. We are trying to eradicateGuinea worm in many countries, and we’ve reducedthe incidence of Guinea worm from 3.5 million—morethan 99.5 percent— to where we now have about 10,000cases left. We also deal with river blindness, with tra-choma, diseases with which most of you are familiar,along with schistosomiasis and lymphatic filariasis,which is otherwise known as elephantiasis. We’ve alsohad agricultural programs in 15 countries in Africa. Ineach country, we generally deal with 40,000-60,000small-farm families that each have an average of onlytwo acres of land, and we are able, with the help ofexperts, to increase the production of basic food grains.We don’t deal with cash crops like cotton or tobacco,but we just deal with basic food grains, primarily maize,rice, sorghum, millet, and wheat.

While we are in the countries in which we are pro-viding these services, we have made our Carter Centerfacilities available. We are an NGO— as you know, fair-ly small compared to most others— but as we workwith ministers of health and agriculture and finance,with the prime ministers and presidents, and with thevillagers in the desert areas and in the jungles, webecome quite familiar with the country, and they

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become familiar with us. So quite often when a nationhas a serious problem, with an ongoing civil war orwith a threatened conflict, we make our services avail-able to mediate the dispute, to try to have cease-fires ofan extended nature, or even to prevent or end a civilwar. Sometimes we have been quite successful.

More prevalent, however, has been the call on TheCarter Center to help with election procedures. Quiteoften there have been authoritarian governments thatfor the first time decide to try to have a democratic elec-tion. In those cases, we have gone in and helped themeven write a new constitution and laws and set up elec-tion procedures. And more often, we go into a countryto help monitor an election in an existing democracy tomake sure it’s honest and fair and hopeful and safe. Youmight be interested in knowing that we just finishedwith our monitoring services in Liberia. The electionresults were finally made known this past month[November 2005]. This was the 61st election in whichThe Carter Center has been involved, and we nowbelieve that, with the election of a new and first womanpresident in Africa, we will see great strides forward inthis devastated country. Our next assignment on elec-tion monitoring will be in the Palestinian community,where we will go to help the Palestinians for the thirdtime with elections. The first time was in 1996 with theelection of President Arafat and the parliamentary mem-bers. Last January we were there when Abu Mazen waselected president of the Palestinians, and next monththe members of the Palestinian Authority will be electedfor their parliament.

As we have been deeply involved in the internalaffairs of countries —that is, out in the villages andworking with individual families, primarily on agricul-ture and health programs—we have seen thedevastating need for increased assistance of a develop-ment nature to these countries, the poorest and mostdestitute and forgotten and ignored and needy peopleon earth. And this has been a matter of great excite-ment to us, as we have seen successes but also greatconcern and challenge, as the successes, have not beenrealized despite the good intentions of many donors—

some of whom are represented around this table—andalso the eagerness with which the recipient countrieshave sought and received either direct grants or loansor debt forgiveness.

Back in 1992, however, I became personally con-cerned about the incompatibility between donors onthe one hand and recipient countries on the other. I’moversimplifying a complex issue, as you can quickly see.So the secretary-general of the United Nations,Boutros Boutros-Ghali, and I sponsored here at TheCarter Center the first forum of its kind. We had the32 most important donor groups represented alongwith leaders of three or four of the most destitutecountries. And we evolved a procedure, which we havenow used and which others have now expanded,including the World Bank with their PovertyReduction Strategy Papers, to make sure there was animprovement at least in the compatibility betweendonors on the one hand and recipient countries andpeople on the other.

There are still some serious problems involved.Most recently, for instance, I was in Mali. We hadbeen on a tour around the northern part of Mali, toTimbuktu and other places, and we came back toBamako and met with the donor leaders there. TheWorld Bank was present, along with individual coun-tries. USAID was present. I was taken aback to beinformed by them that, at the beginning of the year,when theoretical assistance was available, say at a $100level during an average preceding year, Mali had onlybeen able to utilize effectively $15—only 15 percent.Some of that money was defaulted at the end of theyear, and Mali never had the opportunity again, andsome of it, of course, was carried over to the next year.When I questioned the statistics, the World Bank rep-resentative told me the entire continent of Africa, onthe average, only utilized 20 percent of the availabledevelopment assistance funds at the beginning of theyear by the end of that same year.

The causes of this tragedy, in my opinion, are mul-tiple. One of the major causes that ought to beaddressed most easily by the powerful, influential, and

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rich countries is to coordinate the donor communitiesin their offers of assistance to countries that are inneed. But there is very little, if any, real progress in get-ting the World Bank, the IMF, USAID, Canada,Japan, Norway, Sweden, Great Britain, Germany, andthe Netherlands to make sure that when they make anoffer of development assistance for education or healthor transportation to a recipient country that it is not acacophony of offers. And quite often the restraintsplaced on individual coun-tries’ contributions areextremely difficult and burdensome.

My country is certainlyone of those at faultbecause of the effort of allpresidents—there hasn’tbeen much opposition fromthis particular president—toattach restraints on the useof money for family plan-ning because of an intenseaversion to any kind of useof condoms, for instance, or the possibility of abortion.It’s almost impossible for funds offered for AIDS to beutilized, and there’s great pressure placed on countries’leaders—Uganda is a perfect example—to not use con-doms. Everybody knows that if you don’t use condomsto control AIDS, the AIDS epidemic will increase. Andin Uganda, since they quit distributing condoms, theAIDS incidence among women has gone from 6 per-cent to 9 percent in just three years. So these restraintsthat are placed on aid by individual countries—whichmay seem innocent at home—when they finally reachcapital cities in Africa, for instance, make the impedi-ments almost insuperable.

Another obvious problem is the embryonic charac-ter of some of the African governments. I’ve been tothe Central African Republic, for instance, on a triparound Africa with Bill Gates Sr., who operates theGates Foundation. They didn’t have any capability ofeven filling out an application to get money from the

Global Fund for AIDS, Malaria, and Tuberculosis.They didn’t know it was available. That’s an extremeexample. But quite often in a poverty-stricken country,the infrastructure of the government is not adequate tofill out all the necessary forms and to be accommodat-ing to the multiple challenges. And in a system ofgovernment where corruption exists—I won’t name thecountries, as you can go on the Internet and look atthe report from Transparency International—much of

the funds that go fromdonor countries are notreaching the recipients whoare in need, and some of thefunds are channeled off intoSwiss bank accounts of cor-rupt officials. There’s nodoubt about that.

But the problem is thatdonor countries quite oftenare not adequately generous.I was one of the key peoplewho went to Monterrey in2002 for the Millennium

Conference that was sponsored by the U.N. TheUnited States was there, and I think it was one of thelargest conferences in history. More leaders from differ-ent countries came, and very generous pledges weremade. Most of those pledges have not yet been hon-ored, and there’s an attempt made by manypeople—Jeff Sachs can speak to this when he getshere—to increase the contributions of the rich coun-tries to development assistance. My own country is atthe bottom of the list. If you take $100 of nationalincome, my country, through its government, givesonly 16 cents. The average for Europe would be about40 cents for $100. The goal to be reached in the futureis 70 cents per $100. You see, this is still less than 1percent of the wealth that comes into the developedcountries to go for development assistance. That’s justone indication of the need that still exists. And theneeds are much greater than that.

The other problem is that promises made are not

My country is certainly at fault because ofthe effort of all presidents to attach restraintson the use of money for family planningbecause of an intense aversion to any kind ofuse of condoms. It’s almost impossible forfunds offered for AIDS to be utilized.Everybody knows that if you don’t use con-doms to control AIDS, the AIDS epidemicwill increase.

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realized. The money doesn’t get to the people who areactually in need. So the purpose of this conference isto try to iron out some of these problems. I was look-ing at statistics yesterday. Fifty of the less-developedcountries have GDPs that are lower than they were 10years ago, despite the good statements of the richcountries and the eagerness of the recipient countriesto use the funds. This illustrates the dramatic need forthis particular conference.

The Carter Center has dealt with—I’m not exag-gerating —literally millions of people in Africa who aresuffering from Guinea worm or river blindness. Lastyear, we treated 11.5 million people for river blindnesswith free medicine given to us by Merck, and I’vealready described the progress on Guinea worm. Inagriculture, I’ve been in the fields with small farmerswho I’ve said have an average of only one hectare ofland, and I’ve seen them double or triple their produc-tions. And my experience personally is that the peopleof Africa in the poorest villages imaginable are just asintelligent, hard-working, and ambitious as me, andtheir family commitments and moral values are just asgood as mine.

I’ve seen extraordinary changes taking place, butthere need to be some coordination of donors andsome improvement in the structure within the recipi-ent governments themselves to guarantee that themoney promised is contributed and the money con-tributed actually gets to the people in need and not besubsumed by American contractors who take USAIDmoney. An overwhelming portion of this goes foradministrative purposes, and a very tiny percentageactually gets to the people who need better education,health care, housing, job opportunities, and trans-portation and more hope in life, more self-respect, andmore expectation that their afflictions will be alleviat-ed. That is the purpose of this conference. Thank youvery much.

AMADOU TOUMANI TOURÉ, PRESIDENT OF THE REPUBLIC OF MALI,OPENING REMARKSMr. President, ladies and gentlemen, distinguishedguests, let me say how happy I am to take part in thisimportant meeting at The Carter Center, which is aboutone of my most important concerns: achieving moreequitable globalization. The Carter Center’s name is rec-ognized throughout the globe and represents formillions of people a glimmer of hope. The CarterCenter for me is my home, and every time a Maliancomes to Atlanta, I tell them to go to The Carter Centerand that will make me happy. I thank President Carterfor having made Mali a part of this forum and for hissteadfast interest in Africa and in Mali in particular.President Carter, for many years, has devoted his experi-ence, time, and leadership to the service of Africa. Ihave worked with him, and I have learned a great deal. Iaccompanied him in the fight against Guinea worm. Iaccompanied him on elections because we were aware ofTogo at the time — and history has proven us right — andto the Great Lakes region in Africa. For 10 years, I wasbusy away from the politics of my country.

In his opening remarks, Mali President Amadou ToumaniTouré said, “When there are efforts to be made, Mali is ready.”

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The Carter Center is definitely taking care ofeverything—the preservation of peace, the consolida-tion of democracy, the promotion of human rights,and support to economic development efforts. I wasparticularly happy to see my friend observing electionsin Liberia, which went very well. It has been a few dayssince we greeted in Bamako the first female presidentin Africa, who was elected by a wide margin. You par-ticipated in this greatadventure, and Africa willalways be grateful. I wouldlike, in the name of theMalian people, to say to youagain, “Thank you, Mr.President.” I would like tocommunicate also to yourkind wife my appreciationand tributes.

The theme of thisfourth forum, to realize amore equitable globalization, is particularly importantto me, because the 23rd Africa-France Conference thatwas just held in Bamako and devoted to the concernsof African youth addressed what is necessary for us to better manage globalization. The themes of this confer-ence were vitality, creativity, and aspiration. Africanyouth is our greatest asset, but in order for this hopeto be realized, we have to win the battle of develop-ment. In Africa today, more than 60 percent of thepopulation is under 25 years old. This is an asset butalso a potential threat—a threat if we do not succeedand if we lose sight that these millions of youth couldrepresent a threat to the stability of our societies in theabsence of real opportunities for their future.

A few weeks ago, you saw groups of youngAfricans going through Spain to reach Europe wherethey believe their opportunities are much greater. If wedo not give them opportunity, it is in your countriesthat the problem could explode. The conference inBamako showed that African youth are willing anddedicated to take decisive part in the solution to theseproblems. What are these problems? They are employ-

ment and professional training, education, quality andinfrastructure of schooling, health, AIDS, which main-ly affects youth, and malaria, which kills many morethan AIDS. The concern of youth today is mainlyemployment. Mali doesn’t have factories like in theUnited States, but we can provide opportunities, wecan provide work, if development takes into accountthis concern. The responsibility is upon us, then, to

commit to this through theadoption and implementa-tion of vigorous andcoherent development poli-cies and programs stronglysupported by our develop-ment partners, who havedone a great deal, but notenough.

In Mali, the state, incollaboration with NGOsand civil society, adopted a

Poverty Reduction Strategy Paper (PRSP). It expressesour willingness to commit to development work that isbetter organized, more consensual, and thus moreeffective and able to rapidly reduce poverty in a sus-tainable manner. I am certain that the Mali delegationhas shared with you, through describing the PRSPprocess, the state of development cooperation in Mali.The second-generation PRSP, which is in the processof being elaborated, will take into account the firstPRSP, the Millennium Development Goals, and thenecessity of accelerated economic growth.

In doing so, this second-generation PRSP will permitus to increase our momentum in fighting povertythrough three areas. First, support for creating basicroad, transport, energy, and communication infrastruc-ture, which are all indispensable if we want to achieveviable development. Second, aid in modernization ofproductive sectors, notably agriculture. The potential ofagriculture is enormous in Africa. In Mali, we have morethan 2 million hectares of land ready to be exploited foragricultural use, and the great Senegal and Niger riverspass through Mali, practically half of which are on

The impact of aid is not always easy to eval-uate, because the multiplicity of sources offinancing has been, in certain cases, anobstacle to aid effectiveness. Moreover, it isdifficult to perceive the impact of aidbecause it is so removed from the needs ofrecipient countries.

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Malian territory. Finally, support in the social sectors. Inhealth, for example, the incidence of AIDS in Mali isaround 1.7 percent. This is not acceptable. It is necessaryto be vigilant, and efforts have to be strengthened. Also,support to education, and especially the reinforcement ofcapacities. Since I have been president, the biggest prob-lem I have seen is capacity. This is one of our greatweaknesses. The Carter Center understands this andsupports us in the strength-ening of our capacities.

Pertaining to aid man-agement, we must recognizethat the experience of thelast 40 years has not beenconclusive—I would say sim-ply, it has been bad—forsub-Saharan African coun-tries in particular. The impact of aid is not always easyto evaluate, because the multiplicity of sources offinancing has been, in certain cases, an obstacle to aideffectiveness. Moreover, it is difficult to perceive theimpact of aid because it is so removed from the needsof recipient countries. This is a situation we candeplore.

An increase in development aid, its coordination,and the simplification of procedures for its mobiliza-tion are as indispensable as the definition ofparticipatory and appropriate development policies andstrategies. The Monterrey Consensus recognizes devel-opment is a shared responsibility that starts from theefforts of the developing countries themselves, support-ed by the commitment of its partners. When there areefforts to be made, Mali is ready. But responsibilitiesare poorly shared. Donors don’t always respect theircommitments and put us in a very difficult position.

Mali, like other countries, has taken enormousefforts to undergo economic reforms that are some-times drastic, so that it often puts us ill at ease withour partners. Participatory sector programs and strate-gies were adopted in priority areas in the fight againstpoverty, such as education, health, rural development,and justice. But it remains that donor countries and

international financial institutions must honor theircommitments to aid poor countries in mobilizing nec-essary resources to obtain their objectives. In thissense, donors must make the disbursement of aidmore efficient and effective—that is to say, ensure thataid levels are adequate, stable, and predictable overtime. We do not need any kind of aid. We have aproverb in my country that says the hand that gives is

always above the hand thatreceives. We need aid thatwill enable us to rid our-selves of the need for anyaid. This is the aid thatAfrica needs.

Thus, emanating fromthe Heavily Indebted PoorCountries Initiative and the

recent decision taken by the G8 to cancel the multilat-eral debt of certain countries including Mali, ourpartners must increasingly move toward a substantialincrease in development assistance to obtain the goalof 0.7 percent of GDP. You can count the number ofcountries that have obtained this goal on the fingers ofyour hand. I have to salute and especially recognize thegenerosity of these countries and their respect to theircommitments.

But it is necessary for both sides to go further inreaffirming and especially implementing certain princi-ples. True partnership supposes autonomy ofbeneficiary countries in requesting aid and in deter-mining its objectives; it implies equally an aid deliverysystem where donors neither substitute for the benefi-ciary nor marginalize the beneficiary in the setting ofobjectives and the implementation of projects and pro-grams. Often programs are imposed on us, and we aretold it is our program. This is not just, and when weimplement the programs, they are consequently notimplemented well. People who have never seen cottoncome to give us lessons on cotton. Sometimes there aredysfunctions that we have to have courage to pointout. True partnership requires further that donorsrespect national policies and strategies and that they

We do not need any kind of aid. We have aproverb in my country that says the handthat gives is always above the hand thatreceives. We need aid that will enable us torid ourselves of the need for any aid.

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harmonize and align their procedures. No one canrespect the conditionalities of certain donors. They areso complicated that they themselves have difficulty get-ting us to understand them. This is not a partnership.This is a master relating to his student. This puts us ina very difficult place as it regards our pride.

The experience of the National Agency forInvestment in Territorial Collectives shows very wellthat it is necessary to place confidence in national gov-ernment agencies and to assist them in building theirown capacity. The first phase of the program to pro-vide financial support to the territorial collectivesmanaged by this agency permitted the implementationin five years of more than 4 million projects that bene-fited the most vulnerable populations in Mali,especially in the rural environment. This proves to ushow much flexibility could guarantee the effective andefficient use of aid.

It is evident that trade is an essential tool for devel-opment. Africa, which has enormous resources at itsdisposal to profit from world markets, cannot, unfortu-nately, do so because of subsidies that bend the rulesof international trade. These practices strongly handi-cap the development of our countries. It is thereforeimperative to eliminate these subsidies and ensureinternational trade functions in a just and equitablemanner, as those who control international trade say.It is sad for us to talk about this injustice. One talks tous about fair trade. One talks to us about programs wemust accept. But is it reasonable that we must cultivatecotton for a deficit while on the other side of theocean they do so for a subsidy? This is unjust.

The true partnership that I have been referring torequires a permanent dialogue between partners toidentify needs, fix objectives, and mobilize necessaryresources. In this regard, I am happy with the assis-tance that The Carter Center brings to Mali by way ofthe Global Development Initiative. This assistance isfounded on a new approach to relations betweendonor and aid beneficiaries. The usual relationshipbetween two parties becomes a relationship betweenthree parties. First is the state, which elaborates devel-

opment strategies and programs, without always havingall the financial means for their realization. Second arethe donors, who are the technical and financial part-ners. Third is the facilitator, which is The CarterCenter. It is to the credit of The Carter Center, whichis represented in Mali through its Development andCooperation Initiative, that this work is focused onensuring better aid management.

Thanks to the support of partners, Mali hasachieved significant results in the sectors of education,health, justice, territorial collectives, and labor-inten-sive work. However, to consolidate these achievementsand to accelerate sustainable development, Malirequires more resources and investment.

Within this framework of dialogue with partners,we are working to promote the following priorityactions. First is budgetary support, that is to say theintegration of external aid in the state budget. Donorsmust have confidence in us. Second is improvement inthe planning and accounting of external aid. Third issimplification of procedures. President Carter, youmentioned that Africa on average can only use 20 per-cent of aid available to us. This is not because we arenot intelligent, but rather it is because the proceduresare extremely complicated. Fourth is the strengtheningof capacities of structures responsible for coordinationand management of aid. In Mali, we have made allarrangements so that the government can fill thiscapacity gap.

The strategic choices of Mali consist in investingmassively in human capital and in basic infrastructurethat creates an environment where roads free us fromthe constraint of being landlocked, where agriculturalproduction ceases to be dependent on climatic haz-ards, and that facilitates access to water andcommodities, such as energy and means of communi-cation. Agriculture in Africa today is a mine of growthand employment. But in Africa only 9 percent of itsland is developed, compared to 40 percent in Asia; 1.6percent of water is exploited in Africa, compared to 14percent in Asia; 9 kilograms of fertilizer is utilized perhectare in Africa, compared to 120 kilograms in Asia.

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In essence, we want to ensure conditions for economicdevelopment, but equally conditions for harmoniousand sustainable development.

I would like to thank you and say also that lastyear we had a difficult situation that allowed us not todevelop but merely to survive. We had the migratorylocusts that eat everything in their path, the rainsstopped early, all our crops dried up, and then the cri-sis in the Ivory Coast, through which 70 percent ofour imports and exports flow. Then there is cotton.Ours is of a better quality, and we are the largest pro-ducer of cotton in Africa. But not a single T-shirt ismade in Bamako. We only transform 1.8 percent ofour cotton in Mali. And then there is oil. We don’tproduce oil. From 2002 to now, the price of oil hasgone up three times. The port closest to us is 980 kilo-meters away in Conakry, but its port has limited

capacity. We are situated between Dakar and Abidjan,which are 1,228 kilometers and 1,225 kilometers away.It is not that we aren’t intelligent or don’t want towork, but we run into extreme constraints that thedonors need to recognize and understand.

I am sorry for the length of my speech, but it isn’ta speech—it is an expression of faith.

ARMANDO GUEBUZA, PRESIDENT OF THEREPUBLIC OF MOZAMBIQUE, OPENINGREMARKSFor me it is an honor to be here today, especially withyou, Mr. President, as a good friend of Mozambiquealso. We take that as an important issue. You’ve beenhelping us in agriculture, observing elections, andhelping us define a vision for the year 2025 thatbrought together all different sectors and interests intoa common and coherent vision for the well-being ofMozambicans. We consider you as our advocate. That’swhy when one talks about the role of third parties, theway The Carter Center has been working with usshows that it is possible, respecting the identities andinterests of each individual country, to have somebodywho will understand us and try also to make those out-side Mozambique who are interested in developmentand helping our development cooperate with us. Sothank you for this opportunity.

My brother, President Touré, we were just recentlytogether in Bamako during the conference on theyoung ones. I was impressed by the way he organizedthe young ones there, which gives us hope that Mali ispreparing itself, because the solution to problems isnot to depend on what other people think but to con-sider what other people think or see that can becomplementary to our own efforts. Our own effortsare determinant on this issue.

We would like to start by placing on record ourgreat appreciation for the kind invitation extended tous to attend this important forum. We are happy to beparty to an event that is seeking to contribute to achiev-ing more equitable globalization. The Carter Centermust be congratulated for having brought this impor-

“Debt relief is a very welcome development, but its effectivenesscan only be obtained if additional new resources are provided,”said Mozambique President Armando Guebuza in his openingremarks. “These should be significant, stable, predictable, andavailable for identified needs of recipient countries.”

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tant theme forth and for its perseverance for fostering aneeded debate among those interested in global, social,and economic development. Globalization as we knowit today has its advocates and its critics. The debates ofits merits and demerits are subject to scholarly treat-ment, conferences, and publications. We are pleased tonote that the theme of this meeting is not to be an aca-demic exercise. Rather, it is meant to deal withpractical issues, aimed at making globalization a vehiclefor socioeconomic development for all.

If our assumption iscorrect, then we will arguefor a paradigm shift, whichwill result in greater coher-ence between discourse andpractice, which will entailexpansion of provision ofconcessional resources bydeveloped countries. It willalso entail mobilization ofmore investment for developing countries, thus layingthe foundation for commercial flows, technology, cred-it, and trade. Also, it will result in greaterdetermination in support of social and economicdevelopment of poor countries.

With this attitude guiding our relationship andway forward, the attempt to artificially separate aidfrom trade issues becomes redundant for a meeting likeours today. I usually hear people say, “What do youprefer? Aid or trade?” This is not the issue. We needboth. But it will be important only if they are comple-mentary — if aid is a vehicle to create better conditionsfor trade. Otherwise our market will be completelyinsignificant, as it is today. The assumption that theprovision of aid is a matter of charity toward poorcountries also becomes immaterial. A new type of effec-tive partnership based on mutual respect andunderstanding among the partners is the goal: bilateraland multilateral experiences have shown that interestedparties derive greater benefits from such partnerships.

We in Mozambique have been working hard forsocial and economic development. We’ve been con-

ceiving and refining and implementing policies andstrategies and programs aimed at combating poverty.The new five-year plan strives to build a sound econo-my that has to be fast growing, private sector led,broad based, competitive, and integrated in the worldmarket. This approach is particularly supported byhuman resource development, institution building,and infrastructure expansion. Accordingly, specialattention is placed in the following areas: educationwith emphasis on technical and vocational. If we do

not succeed in creating edu-cation in rural areas of atechnical and vocationaltype, then we are not goingto respond to the challengesof today and the future, andwe are not going to be com-petitive. In a globalizedworld, for us to survive andplay a positive role, we must

be competitive. There are health areas covering healthcare and fighting such diseases as malaria, TB, andHIV/AIDS; there are water and sanitation projects inrural areas where drought is being addressed withmedium- and long-term measures.

On the issue of drought, we see that we need totake that calamity as an opportunity for us to be able tosee it as a challenge, to see whether those people livingin those conditions can find other ways for their liveli-hoods, using resources around them. We understandthis is possible. One way to do that is creating vocation-al training schools and infrastructure in those areas;energy, road, and communication infrastructures;applied research and extension, especially in support ofrural, small-holder producers. Good governance, equali-ty, and justice, including decentralization of publicservice provision, and reduction of excessive bureaucracyand enforcement of intellectual property rights andrespect for contracts. Economic management and finan-cial and international trade policies allowing adequatelevel of openness in the economy will facilitate the need-ed flow of knowledge, technology, other resources,

I usually hear people say, “What do you pre-fer? Aid or trade?” This is not the issue. Weneed both. But it will be important only ifthey are complementary, if aid is a vehicle tocreate conditions so that we can be in betterconditions to trade.

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are told that we cannot have a development bank inMozambique because we had problems with the devel-opment bank we had 10 years ago, problems related tomanagement and other serious questions. That meansthat Mozambique, if it had something wrong some 10years ago, cannot be given the chance to transformthese experiences into something that will be able tobenefit more of our people. I think what went wrongin the past is a lesson for ameliorating it in the future.

In Europe, people have created institutions that prevent wars on their conti-nent because they havegone through serious warsin the last century and,because of this bad experi-ence, they don’t want torepeat it. So whatever hap-pened that is incorrect inthe past should be taken asa lesson, and we Africans

also are able to learn. Availability of resources is critical for our country

to develop. The responsibility of raising and efficientlyutilizing the resources needed to promote developmentlies in our own hands. In Mozambique, for instance,we are taking efforts to expand domestic tax collection.We have also introduced reforms, both to inject moreefficiency in the tax system and to strengthen the taxadministration. Accountability and expenditure man-agement are receiving our attention as well. Thesesteps include improvement in auditing and greatertransparency in the utilization of public resources. Werecognize, however, that for the medium and longterm, what is being collected from within the countrywill not meet our needs. This will have to be comple-mented by the resources of our cooperating partners,including aid and credit.

The other sector that we would like to come backto is cooperation and look at three specific issues verybriefly. The first is alignment of foreign resources withdomestically generated strategies and programs.

investment, and trade. We take full cognizance that over70 percent of our people live in the rural areas; thus,integrated rural development features high on our devel-opment agenda. The decision to decentralize furtherand to make the district the center from which develop-ment planning takes place is to be read in this context.

Our program also places a great emphasis onbroad-based private initiative. This includes family,small, and medium enterprises operating alongsidemegaprojects in an interde-pendent fashion. We alsoinclude mobilization andencouragement of domesticand foreign investment.Usually when one talksabout the private sector, theexperience we have beengoing through up to now ismostly that privatizationmeans privatizing for theforeigner, and the domesticentrepreneurs do not have the resources, they are notgiven the chance to have the resources, and they arenot part of those that should play an important role increating wealth in the country and providing jobs.

The effectiveness of national policies, strategies,and programs is to some extent very much dependenton the following factors: capacity, resources, and coop-eration. Capacity relates to the ability of public andother domestic institutions in developing countries toeffectively exercise ownership of the programs to beconceived and implemented. We are all aware thatexpatriates can only provide a transitory and short-term solution for the capacity problem. Domesticcapacity has to be built through relevant training andretention of skilled personnel in public institutionsand with the support of these expatriates. Anotherdimension of capacity relates to what has been termedabsorptive capacity. On this issue, we are of the viewthat the lack of such capacity should be regarded as achallenge and addressed as such with the support ofthe cooperating partners. For example, sometimes we

We are the ones who suffer when we havehunger, when we have floods and cannotprotect ourselves, when we have AIDS ormalaria, when we have a corrupt justice sys-tem or police system, when we have problems.So we are the first ones interested in solvingour problems.

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Successful alignment should contribute to increasingownership of the project by the recipient country. Weare the ones who suffer when we have hunger, whenwe have floods and cannot protect ourselves, when wehave AIDS or malaria, when we have a corrupt justicesystem or police system, when we have problems. Sowe are the first ones interested in solving our prob-lems. We feel them every day, and that is why we needto own our own development program. We need it tobe understood, also, especially by our cooperatingpartners, that we know what we want to do and whatwe can do in order to overcome our problems. As anexample, if we are to solve the problems of rural areas,we need to have in all districts and all rural areas atelephone, energy, good roads, and, in higher produc-ing agricultural areas, a bank. We know that’s what’snecessary. But usually when we present these ideas,problems of viability studies come up and make itpractically impossible for us to go to those areas,which means we are not solving the problems as weintend to do. We know what we want to do, but weunderstand the donor community, which is helping alot, is concerned about how we’re going to spend theirfunds. So let us combine them, listening a little bitmore to us, since it is our project, our concern, ourmain preoccupation.

The second is the need for harmonization amongour cooperating partners alongside the recipient coun-try. This will result in simplification and adaptation ofcommonly agreed rules and procedures. However, thepoint must be made that harmonization and align-ment will have greater impact on the development ofcountries only if they result in the expansion of thenet foreign inflow of resources into developing coun-tries. It’s in this context that debt relief is a verywelcome development, but its effectiveness can only beobtained if additional new resources are provided.These should be significant, stable, predictable, andavailable for identified needs of recipient countries.

The third point is market access. We are all hopefulthat the forthcoming trade negotiations in Hong Kongwill result in favorable agreements for poor countries. It

will be problematic when our delegation going to HongKong from Mozambique finds that there is nothingthere that helps ameliorate the situation ofMozambique. We have the problem of cotton, too, butwe don’t produce that much. We have another prob-lem, which is sugar, that is with the European Union,where we have a favorable price. A decision is beingmade to respond to the problem of subsidies in Europe,meaning that farmers in Europe who get subsidies willreceive compensation, but the farmers in Mozambiqueand other sugar-producing countries will not get asmuch. In Mozambique some years ago, we had aninvestment of about 100 million U.S. dollars for a sugarfactory. If this decision is applied, it means this invest-ment will be lost, because it will not be competitive intwo or three years’ time. But more than that, in thatarea we have more than 8,000 new workers who will belosing their jobs. And if someone from Hong Kong [theWTO Ministerial] comes and says we will not find waysof solving your problems, or at least we’re not going tolisten to you in the way that you think will help to solvethese problems, then we’re in trouble. We are going toask ourselves, “Is this process to help us or is thisprocess all made just to harm us?”

Mozambique has been involved with multi- andbilateral partners who have been part of the successfulefforts of our country to reform and recover our econ-omy. There is an improvement of the relationship withpartners over time, leading to greater openness in thedialogue in the context of harmonization and align-ment efforts. This doesn’t mean all the issues I’veaddressed, nor does it mean that all the solutions havebeen found. However, the fact that we are all open todialogue and ready to address those outstanding issuesis an important gain, and we must all cherish and pre-serve. Together, in the true sprit of partnership, we willbroaden our resource base for the fight against povertythrough social and economic development that con-tributes to a more equitable globalization.

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NANCY BIRDSALL, PRESIDENT, CENTERFOR GLOBAL DEVELOPMENT, KEYNOTEADDRESSIt’s a great honor to be here. I’m a bit intimidated hav-ing so many distinguished colleagues from thedevelopment community here and, of course, by thepresence of our presidents: President Carter (I am verypleased to be here, President Carter), President Touré,and President Guebuza.

I am going to talk about three subjects and try tolink them together. First, that globalization as we knowit today is inherently disequalizing. Equitable globaliza-tion is the theme of The Carter Center, and I think itis the right one. Since today’s globalization is disequal-izing, equitable globalization is a daunting challenge.Second, why the disequalizing tendency of today’sglobalization matters for development and for transfor-mative growth. And third, the implications of thatreality for the development community—in particular,for the question of how enlightened outsiders can helpenlightened insiders most effectively.

Let me start with globalization being disequalizing. Iam going to suggest two reasons why it is so. The first isstraightforward: More integrated, deeper, richer mar-kets— a good thing since they generally bring highereconomic growth—by their nature reward certain assets,assets that are usually unequally distributed. At the indi-vidual level, markets in today’s economy reward mostlyindividuals with university education. That’s true inevery country in the world. Despite what textbook eco-nomics predicts, it is true even in the poorest developingcountries. At the country level, it is also true that deep-er, richer markets reward a particular asset that is alsounequally distributed across countries: sound and stablepolitical and economic institutions. By institutions, Imean not only organizations like the central bank andthe ministry of finance but the norms and customs andrules—property rights, a free press, judicial independ-ence, and so on—that constitute the social as well as thepolitical capital of a country. So the right endowmentor the right asset that countries need to exploit the ben-

efits of this richer global market is “institutions”—some-thing that economists finally are coming to see ascritical to development.

We know that inequality across countries has beengrowing, and I just want to drive home this point incase there are doubters in the room. Inequality may befalling across all people in the world, but a lot of goodeconomic work suggests that this is essentially becauseof the success in China and India in bringing millionsand millions of people out of poverty. They were verypoor, and now they are less poor, so on the whole,their rise in income is reducing global inequalityacross the world population. But across countries,inequality is growing. The ratio of the average incomeof the world’s 10 richest countries and the 10 poorestwas about 9-to-1 at the beginning of the 20th century,and now it is closer to 100-to-1 and growing.Inequality is also increasing within countries. Thisgeneral trend comes, in part, from globalization’s ten-dency to reward some people more than others in the

“It is time to stop fiddling around at the edges with TRIPS[Agreement on Trade-Related Aspects of InternationalProperty Rights] and to end it altogether,” said NancyBirdsall during her keynote address. Birdsall is the foundingpresident of the Center for Global Development.

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absence of effective compensatory programs thatemphasize, for instance, equal opportunity throughprogress toward universal education.

It is also true that countries can have the wrongasset. Though I won’t go into too many details, I willsay that it is not a good thing in today’s global econo-my to be specialized in oil or in diamonds, or mineralwealth in general, or in certain primary agriculturalcommodities, such as cotton and sugar. Natural-resource wealth is not the “right” asset fordevelopment, as we see inthe case not only of thepoorest countries of theworld—Nigeria and Angolaand Sierra Leone—but formiddle-income countries aswell, such as Venezuela.Natural-resource wealthwithout the right politicaland democratic institutionscan be a curse rather than ablessing.

The second reason thatglobalization is disequalizing, as Ed Cain mentionedin his introduction, is that the rules of the game atthe global level, inherently and always, will tend toreflect the interests of the rich world. So, those of usin the development community have to think of thedevelopment challenge as a constant struggle againstthe tendency, across countries as well as within coun-tries, for those who have more economic power tocapture more political and social power. We see thisproblem in the case of the global trade regime.President Carter mentioned this morning the influ-ence of cotton subsidies, and we know from the Malicase how damaging they can be. And last night JosephStiglitz described how TRIPS, the arrangement forpatent rights and intellectual property rights acrosscountries, is unbalanced. I have said, in the articlewith my co-author Arvind Subramanian, that it istime to stop fiddling around at the edges with TRIPSand to end it altogether.

Besides trade, we see the global rules of the gamebeing unreasonable and unfair in the migration regimeas well. Rich countries welcome talented people andeven develop policies aimed at attracting them. But forthe most part, rich countries minimize immigration ofunskilled workers and their families who, from thesimple act of moving from a poor country to a richcountry, could enjoy as much as a sixfold increase intheir income as an immediate consequence.

The international community also has failed, sincethe Asian financial crisis, todeal effectively with theinternational financial archi-tecture. The new round ofemphasis on surveillanceputs additional burdens ondeveloping countries,although they accept thesechanges and they are goodfor them. But the fact is thatwe really haven’t addressedanything about the interna-tional financial architecture

that would require tough political decisions in the richcountries— such as the IMF having a meaningful func-tion in handling sovereign bankruptcies.

For 150 or more years after Marx published theCommunist Manifesto, economists didn’t want to talkabout inequality. We could only talk about the prob-lems and the inefficiency of transfers andredistribution. I think we have to end that taboo inthe economics community and recognize that withglobalization comes a critical need to find ways to com-pensate for the initial unequal endowments of assets,both across people and across countries, and find waysto resist the natural tendency for the more rich andpowerful to reinforce, rather than compensate for,those initial unequal endowments.

Let me now go to my second major subject: whythis issue of inequality matters so much for the chal-lenge of development, that is, to build betterinstitutions and encourage more pro-poor and pro-

The rules of the game at the global level,inherently and always, will tend to reflectthe interests of the rich world. So, those of usin the development community have to thinkof the development challenge as a constantstruggle against the tendency for those whohave more economic power to capture morepolitical and social power.

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growth policies in the developing countries. The ten-dency for globalization to create new inequalities cancause major problems for enlightened leaders withincountries. The first comes from the reality that, withthe return to a market system in countries likeMozambique and Albania, some people are gettingahead faster, and others are being left behind. This real-ity creates frustrations. Even in the United States, theview that globalization is behind job losses and newinequalities has led to a new wave of protectionism.The resulting insecurity and dissatisfaction in both richand poor countries in turn lead to perverse policy out-comes. For example, workers fiercely resist job losses,even though what countries need to exploit an ever-changing dynamic global market is a labor market and asocial safety net that encourage workers to changejobs—since it is the ability and willingness to changejobs that protects families’ incomes while allowing somefirms and industries to fail and others to succeed inSchumpeter’s classic process of “creative destruction.”

When people are insecure and feel powerless, it isdifficult for any political leader to implement textbookmarket policies —no matter how sensible they are.Workers resist job losses; high-income householdsresist introduction of public university fees. Local poli-tics then matter. Policies brought in from outside thatlook good on paper and follow the textbook (such asimplementing labor “flexibility” and introducing uni-versity tuition), for all their merits, may well beimpossible to implement—at least in the textbook man-ner proposed in the short run. Or worse, what looklike pro-poor policies on paper, if implemented, areeasily hijacked by political and other forces over whichthe enlightened government that tried to implementthem has little control—with the opposite result fromthat intended. In democracies especially, no govern-ment can perfectly predict the outcome once it starts aprocess of reform and change.

This is the context in which outsiders in the richworld have to consider policy autonomy for insiders intheir own countries more carefully. It is the local lead-ers and local community that have the most

information ex-ante about what policies can be effec-tively implemented at any given moment to generategrowth and help the poor. In fully functioning, richsettings like the advanced Western economies, it isoften the middle class that plays that role through thebusiness sector, through independent think tanks,through the press, and through the back-and-forth thatoccurs as bureaucrats become business people and viceversa. It is a very Jeffersonian viewpoint, the idea thatin a democracy where institutions are strong, voterseventually—perhaps with errors—discover policies andpractices that work for them. In the Western advancedeconomies, I believe, the demands of these middle-income groups for policies that benefit them haveallowed the free-riding of the politically voiceless poor.That’s why we have at least a modicum of equal accessto education in Western advanced economies. Themiddle class wants and demands it, and that makes itmore accessible to the poor, too.

The point is that outsiders are not particularlygood at understanding the politics and the social set-ting in which ideas have to be implemented, whetheror not they look good on paper. To me, that is the rea-son for the failure of many structural adjustmentprograms in developing countries. It’s not only, oreven mostly, that those policies were completely mis-guided and wrong, or were likely, if reasonably wellimplemented, to increase inequality. In many casesthey were, in principle, right— good for growth andgood for the poor, too. It is that in many cases thepolicies were never actually implemented—they weretoo politically radioactive you might say. In other cases,they were hijacked or distorted, becoming victims ofthe larger tendency for the economically powerful tobe politically powerful as well.

Let me go into my third subject: the implications ofthis kind of analysis—of the pressures, including risinginequality, that globalization brings to developing coun-tries—for the development community, the enlightenedoutsiders. I want to refer to some of the issues raised inthe Foreign Affairs article that you have on what therich-world outsiders can do without adding to the

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right kind of meaningful dialogue. These two Africanexecutive directors have so many responsibilities and sofew resources compared to the German, British, andU.S. executive directors who occupy their own chairsthat there is no practical basis for dialogue. This isonly one example of the need for more balanced repre-sentation.

So the development community should focus ongetting the rich countries to fix the rules of the gameat the global level.

Let me end with the question of how, throughdevelopment assistance, the rich world can helpimprove those critical social and political institutionsin the developing world. Let me say something in par-ticular about the role of development assistance in thekind of developing countries represented here today—those for which aid makes up a hefty portion of GDP(as much as 5 or 6 percent in some cases) and whereup to half of government spending is financed fromoutside. It is very difficult to imagine these countrieshaving policy autonomy when their political and eco-nomic leaders have to spend so much time beingaccountable to the outside aid community that theycan’t find ways to be accountable to their own citizens.What can be done about this? I have four ideas, and Iknow you have more.

The first is more independent, external scrutiny ofthe donor community. Let’s make the official donorcommunity more accountable. At the Center forGlobal Development. we are thinking of developing amore specific measure of the quality of aid that wouldrank the rich donors by how good their aid is: whetherit is tied, how much of it goes through multilateralinstitutions, how coordinated it is, and so on.

The second idea is developing creative new ways ofdelivering aid. One idea that is afloat, with someexperiments going on, is paying for results. Don’t payfor policies. Forget the discussion about privatizationor not, trade liberalization or not. Pay for results; payfor Millennium Development Goal results. The idea ofthe Millennium Development Goal in education is toget to universal primary education by 2015. Why not

“cacophony” (President Carter’s term) of donors andother outsiders operating inside the developing coun-tries. Basically, I believe we in the rich world should paymuch more attention to the rules of the game at theglobal level in three specific ways.

First, we need to lobby for the rich world to “dono harm.” We currently do harm in the way we haveorganized the trade regime. We do harm with TRIPS.We are doing harm, particularly in the United States,by imposing current and future costs on poor peoplewith our greenhouse gas emissions. So the first task onthe development agenda of the rich countries shouldbe: Work on your own problems and try to fix them,which is the idea behind the Center for GlobalDevelopment’s Commitment to Development Index.

Second, we should invest in new technologies thatwill have direct benefits for people in the developingworld. There has been some progress in this areaalready. There’s been investment over many years invery high-return research and development for tropicalagriculture, for instance, and there have been advancesin health technology that have led to dramatic reduc-tions in mortality. There’s more we can do in thisarea—we have a proposal from my center on how wecould structure a program that would, I think, greatlyaccelerate the development of a malaria vaccine and anAIDS vaccine. These are global public goods for whichwe can do more. Another example is what The CarterCenter does on election commissions from outsidewhen requested; election monitoring is an example ofa nice interaction between a rich-world asset and theneeds of developing countries.

Third, after doing no harm and investing in globalpublic goods, the rich countries have the responsibilityto find ways to make international institutions morefundamentally democratic and representative. JosephStiglitz talked about the idea of dialogue. Ultimately Ithink the right distribution of power is a prerequisitefor the right kind of dialogue. And until, for example,we have more than two African members on theWorld Bank’s board, each representing more than 20countries, that particular institution can’t support the

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say, every year, we will give your government $50 forevery child that finishes primary school over and abovethe number that had finished in 1990? We could struc-ture it so that the parents can hold their schools andtheir governments accountable; perhaps the parentswould have to turn in a voucher to the government,which the government could redeem for $50. Theresulting flows would be more automatic and pre-dictable in a way foreign aid now is not. There wouldneed to be independent monitoring, which could workmuch the same way we already have independent mon-itoring of elections.

The third idea is pushing the official donor com-munity, including the Millennium ChallengeCorporation and the World Bank, to take more risksin countries with able and honest leadership. Thatmeans, for example, more emphasis on budget sup-port. It is outrageous that my government is notallowed to join other donors in providing budget sup-port to, for instance, Mozambique. Even theMillennium Challenge Corporation, the new idea ofthe Bush administration based on putting moneywhere governments are well run, feels the need to fig-ure out exactly what the recipient governments aredoing and follow all the disbursements and follow allthe rules of procurement and so on. It’s an embarrass-ment and just adds to the burden of officials in thedeveloping world.

Fourth, and finally, I have a pet idea to mentionhere. It’s come up in different ways already this morn-ing. It is for the donors, the outside community, toinvest in a double “i.” The double “i” stands for “inde-pendent institutions” within developing countries. Ilike that language better than “capacity building”because I think many countries already have the capac-ity and that is not the problem. They have the peoplewith the talent and the skills, but those people havefound they are not in a setting where they can channeltheir efforts and their commitment productively. Soimprovement is a matter, among other things, of find-ing ways to focus on independent institutions. Insteadof just training people in government for five days here

and four days there, put the money together to endow,at least in 10 or 15 poor countries, independent think-tank policy researchers. And, I say endow so they arenot reliant on constant renewals, at least give themmoney for five or 10 years. They could then hire thebest people and generate real dialogue and discussionwith independence and credibility. They could focusinitially on monitoring governments’ use of resources,both the budget expenditure side and the tax side, andcould thus help make governments that want to beaccountable more accountable. And they could pro-vide a productive setting for government officials whenthey leave government and aren’t ready yet to go intoopposition or leave the country—as is the case in theUnited States now, where government officials go toacademia and think tanks to continue contributing topublic policy dialogue.

Let me end by returning to the Carter Centertheme, and actually to the theme of my center as well:equitable globalization. In the development communi-ty, if we want the benefits of globalization in theaggregate, then we have to think more in terms of asort of global social compact. Just as we have domesticsocial contracts that address unequal endowments ofcitizens, we need something closer to a global socialcontract to address unequal endowments across coun-tries and peoples. That compact has to do not only ormostly with transferring more aid, as necessary as thatis, but with attacking the inequality that results fromunequal initial endowments and opportunities amongcountries and peoples. We need to find ways to workwith countries so their people can eventually enjoy theopportunities we have in this country and in WesternEurope and Japan: namely, our sound institutionsbacked by the bulwark of a middle class in a democrat-ic setting.

Thank you very much.

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The major themes explored in the fourthDevelopment Cooperation Forum included thefollowing: whether recent efforts have resulted

in greater policy autonomy for poor countries,whether much progress is being made on the groundin the area of aid effectiveness as a result of the globalharmonization movement,15 and what role impartialthird parties could play in facilitating more effectivedevelopment cooperation. In general, participantsacknowledged that the principles of partnership andmutual accountability that now guide developmentcooperation are the right ones. Furthermore, theyagreed that mechanisms such as Poverty ReductionStrategy Papers, medium-term expenditure frameworks,budgetary support, and the new focus on changingdonor practices represent improvements compared tothe situation that prevailed even 10 years ago.However, developing countries’ experiences suggestthat country ownership remains severely constrainedin certain areas of economic policy, particularly by thereluctance of donors to relinquish control of aidresources even when good governance is not the driv-ing concern.

POLICY AUTONOMYForum participants subscribed to the basic tenet thatdifferent contexts demand different approachesbeyond adherence to basic free-market-enabling princi-ples. Much of the policy autonomy discussion revolvedaround the limited choice of growth strategies permit-ted to low-income countries through the actions of theinternational financial institutions and donors. Manycountry participants noted that restrictive internation-al financial institution (IFI) policies often preventgrowth and do not allow them to take the steps need-ed to lift their people out of poverty. Whileparticipants acknowledged that the question of policy

autonomy is distinct from industrial policy or the roleof the state in development, the two are interconnect-ed, as it is this area of policy content that is mostcontested.

Some of GDI’s partner countries expressed frustra-tion over not making more progress in theirdevelopment as middle income, and industrializedcountries continue to outpace them. They argued thatthe kind of growth needed to make substantial reduc-tions in extreme poverty is just not happening in their

FORUM DISCUSSION

15. See www.aidharmonization.org.

Jennifer Westford, minister of public service in Guyana,addresses the challenges Guyana has faced in implementingits national development strategy.

countries. According to a Mozambican representative,his country has worked over the past 20 years with theIFIs. Although Mozambique has certainly seen somepositive results, as countries coming out of politicaland economic crises often do, another Mozambicanrepresentative stated, “We need to take more steadyand firm steps toward somewhere else.” Mozambique,for example, has had a growth rate of approximately 7percent the last few years but remains one of the least-developed countries in the world. He stressed that, if

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one looks into how and what has made the economygrow, then one begins to see structural problems.While 7 percent growth might seem very good, thatfigure is based on a limited number of megaprojectsand excessive dependency on external flow of funds,mainly aid and foreign direct investment. InMozambique, there is little promotion of domesticentrepreneurial activities and investment and an undi-versified export base, which contradict the growthexperiences of today’s successful countries.

Country partners and other participants agreedthat the ability to diversify the economy, especially inareas where the poor are concentrated, through domes-tic industrial (particularly agro-industrial) andproductivity growth must be integrated into theprocess of development and poverty reduction.Mozambique was particularly vocal on this issue, usingits own experience as evidence. Although 70 percent ofthe population is involved in agriculture, very fewresources have gone into building the physical, scientif-ic, and innovation infrastructure of this and otherpotentially important sectors or into actively support-ing emergent domestic companies and industry tobecome competitive, particularly for entry into theglobal economy.

Some participants, particularly those representingMozambique, also called for institutions offering higher-risk financing, another element in the success of devel-oped countries and countries such as Brazil andChina, which are quickly catching up. One representa-tive from Mozambique articulated, “We’ve been told tofollow the example of successful countries like China,India, and Brazil, but all these countries have develop-ment banks.” He expressed strong frustration thatinternational donors have denied Mozambique a devel-opment bank that would provide private-sectorfinancing and technical support to increase the qualityof loan demand, even though Brazil has expressed sup-port for providing professional managers.

The consensus among many forum participantswas that the current international development policyagenda neither prioritizes nor allocates enough

resources to spurring significant private-sector activity.In other words, government has a role to play in set-ting public policy in the productive sphere—policiesthat complement market forces and counteract marketfailures to promote development. The market alone isnot a panacea.

Mali, for example, focused on current problemswith the privatization of its key public enterprises andservices, particularly in the provision of water and elec-tricity. A Malian representative explained that thecountry has not seen the promised benefits of privati-zation, that there have been too few policy optionsfrom which they could choose, and that they needed arange of feasible options that are better adapted to theMalian context. While one participant, pointing tosuccessful country cases from around the world, statedthat “the idea that state-owned enterprises don’t workflies in the face of the historic record,” other partici-pants cautioned that one should not rush to acceptstate-owned enterprises as the answer. The consensusamong participants underscored Mali’s position thatautonomy requires real options with which to experi-ment and from which to draw lessons. In this way,country governments can make necessary correctionsand ultimately take courses of action appropriate fortheir people and their countries’ development.

Beyond the need to look at a wider range of poli-cies for growth, another area of widespread concernwas the inflexibility of the macroeconomic frame-work. Many countries are forced to act within thestrict macroeconomic framework of the IMF’s PovertyReduction and Growth Facility. Policies dictating veryhigh interest rates, low single-digit inflation rates, andtight spending have rendered countries unable toobtain the kind of economic growth and make thevital social investments necessary to lift their peopleout of poverty.

Mali was very vocal on this issue. While the countryhas made and still makes great efforts to work withinthe framework and be a good partner with the IMF, it isalso frustrated with the inflexibility of the policiesimposed. Mali experiences many predictable shocks to

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its economy, such as climatic variations and decliningterms of trade, but the macroeconomic framework is sonarrow, with such tight caps on spending, that it doesnot adequately take into account these shocks ex-antenor adjust for them ex-post. Instead, high growth ratesare projected, and Mali, not surprisingly, is often unableto meet them. One representative stated that the IMF“forecast and set a growth rate for us of 6.7 percent, butthis growth rate is too high, too ambitious. To be realis-tic for us, we need to have an extrapolation of trends,and from this we see that growth simply cannot be thishigh.” Furthermore, when the country does not meetthis growth rate, spending is further restricted, leavingthe country unable to make necessary investments intheir people. A representative from Albania, as well,expressed concern over the framework, saying it is toooriented toward the short term and too narrow, focusedonly on a few macro indicators such as fiscal deficit andinflation.

One international NGO representative comment-ed that many other economists, academics, and theeconomic literature find questionable the elements of

the Poverty Reduction and Growth Facility that makeup the macroeconomic framework (e.g., growth rates,money supply, deficit reduction targets, inflationreduction targets). In fact, participants noted, the verypolicies that helped developed countries get to wherethey are today are being denied to the developingworld. For example, many policies call for cuts in pub-lic investments, but past lessons have shown thatraising agricultural productivity and fighting diseaserequire increased public investment.

Several forum participants questioned whetherextremely low inflation rates are necessary for robustgrowth. They cited research in peer-reviewed academicjournals showing that countries can achieve consistentgrowth with moderate inflation rates; it is when infla-tion gets above 20 percent that countries run intotrouble.16 Some studies, one participant pointed out,suggest that inflation as high as 40 percent is not detri-mental to development. The point of this discussionwas not to set a new standard for inflation targets, butto suggest that there is room for debate of the trade-offs. The debate, however, is simply not happening,according to participants.

A country representative from Albania pointed outone such trade-off. He stated that investment, a vitalpart of development, does create some inflation in theshort term, but it brings dividends in the long term,and this fact must be acknowledged. All country dele-gations concurred, asserting that they are unable tomake needed investments to cut poverty substantiallyand quicken the pace of their countries’ development.A representative from Guyana expressed that, underthe IMF framework, the country is unable to invest inits people, which greatly restricts its ability to recruit,train, and retain staff, teachers, and doctors within thecountry. A representative from Mali pointed out that70 percent of its civil service workforce will retire with-in 10 years and that the government must invest inthis area to replace the aging workforce. They are find-

16. See, for example: Fischer, Stanley. “The Role ofMacroeconomic Factors in Growth,” Journal of MonetaryEconomics 32 (December, 1993) 485-512.

Mohammed Diallo (left) coordinated the development of hiscountry’s national prospective study, called Mali 2025; SalifDiallo (center) is coordinator of the Capacity-BuildingProject for National Implementation in the Ministry ofForeign Affairs in Mali; and Sékouba Diarra is coordinatorof the Poverty Reduction Strategy Paper Unit in Mali.

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ing it very difficult, however, to do so under the cur-rent macroeconomic framework, which restricts civilservice salaries to 5 percent of GDP. According toanother Malian representative, donors expect the gov-ernment to lead and make more progress on ambitious

Article IV consultations17 with the issue of transparen-cy and accountability that was supposed to beadvanced by the Poverty Reduction Strategy Papers.Although a country’s future fiscal and monetary policyoptions are discussed during Article IV consultations—with enormous implications for the welfare of thecountry’s citizens—the consultations are held behindclosed doors. One participant called for the Article IVconsultations to be incorporated into the PovertyReduction Strategy Paper process or for the consulta-tions to at least be made more transparent andparticipatory. One participant stated that many of theinternational NGOs that welcomed the PovertyReduction Strategy Paper process when it was unveiled,expecting macroeconomic issues to be put on the tableas part of the discussions, are losing faith in theprocess because this has not happened.

This discussion led to a discussion of concerns thatconditionalities are compromising democratic institu-tions and processes. A representative from Mozambique,for example, expressed great frustration that, althoughMozambique’s Agenda 2025 is a development visiondesigned from the ground up by the Mozambican peo-ple with active civil-society involvement, supported byThe Carter Center and the United Nations DevelopmentProgramme, approved unanimously by parliament andendorsed by the president, donors are actively discourag-ing one of its key recommendations—that Mozambiqueneeds a development bank—through surreptitiousmeans. He and other participants felt the proposeddevelopment bank is at least worthy of an honest andopen debate, but donors are already financing one-sidedstudies to denigrate the idea.

Participants also complained that IFIs compromisethe authority of countries’ legislatures. Country partici-pants from Albania, Mozambique, and Guyana saidthat their governments are pressed to push IFI man-dates through their own legislatures to satisfy aidconditions and keep necessary resources flowing intothe country. They argued that these policies interferewith legitimate checks and balances within their sys-tems. An NGO participant supported these claims,

Jose Sulemane, national director of research and policy analysisin the Mozambique Ministry of Planning and Development,presents a summary to forum participants of the key points fromdiscussions on policy autonomy during pre-forum workshops.

reforms while not investing in the very people who areresponsible for conceiving, planning, and implement-ing those reforms. This serious disconnect has led to acurrent state of impasse that must be overcome if Maliis to move forward with its development.

Participants linked the lack of transparency withthe Poverty Reduction and Growth Facility and the

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17. This refers to Article IV of the IMF’s charter, which spells outthe IMF’s obligation to monitor member countries’ exchange ratepolicies. Article IV consultations take place between the IMF andeach member country, usually annually, and cover the member’seconomic and financial policies.

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citing a survey in which leaders from five aid-recipientcountries reported that their governments are moreaccountable to donors than to their own people. As aresult, he stated, the people of the country do notknow where donor authority ends and where theirown government’s authority begins. IFI representativessaid, however, that they are moving away from requir-ing the passage of legislation as a condition for aid andacknowledged that they can afford to be more flexibleto allow countries to build greater consensus.

While all parties agreed that more can be done toprevent conditionality from interfering with the demo-cratic process, country partners from Mali,Mozambique, and Guyana continued to express con-cern that IFIs are unwilling to accept and evendiscourage alternative views. One expert argued thatIMF country-level representatives intensely discouragegovernments from requesting more resources becausethe IMF does not want to reveal that there is a donorfunding gap. He acknowledged that this dysfunctionmay not make its way up to IMF headquarters.

Meanwhile, IFI representatives at the conference main-tained that their organizations are receptive tocountries’ needs and concerns, but that the question isultimately one of available resources with which coun-tries must then develop realistic budgets.

Country participants complained that, whiledonors claim to be receptive to country ideas, theyoften enter discussions with country officials with firmpreconceived notions of what the results should be.One Mozambican representative said that this is frus-trating, particularly when IMF missions, predisposedto focus on macroeconomic stability, spend hours dis-cussing with them precise interest rates or whetherinflation is 10 percent or 12 percent. Although theseissues are important, the exorbitant amount of timespent focusing on a percentage point is not productive,especially when the discussion inevitably ends withwhat the IMF wanted all along. As another example, arepresentative from Guyana spoke of the arrogance ofIMF officials who come into the country for a few daysand essentially disregard local knowledge, saying thatcountry officials’ analyses are wrong. This, he claimed,is how the Guyanese were treated after their countryexperienced massive flooding. Their assessment of theimpact of the floods on GDP growth, which IMF offi-cials dismissed, is turning out to be correct. Heconcluded that these attitudes must change in orderfor the donor community to respect policy autonomyand promote aid effectiveness. A Mozambican repre-sentative went so far as to complain that IFIs wantcountries to say what the IFIs want them to say beforethey are told to say it.

Addressing the same topic of whether countriesreally can determine their own policies, participants dis-cussed other shortcomings, beyond the macroeconomicframework, of the Poverty Reduction Strategy Paperprocess. Although this process is currently the mainframework for discussion between donors and aid recip-ients, country participants felt that it does not grantthem an avenue for articulating the aspirations of theircountries. They expressed concern that the combinedimpact of Poverty Reduction Strategy Papers,

Sékouba Diarra is counselor to the minister of economy andfinance of Mali.

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Millennium Development Goals (MDGs), and HeavilyIndebted Poor Countries Initiative has resulted in asocial-sector bias in aid and public investment.Governments have very little ability to dispute the allo-cation of donor resources. In Guyana, for example, 60percent or more of aid is allocated to the social sector,based on donor priorities. While partner countriesstrongly agreed that social spending is important, ofequal importance is spending on productive sectors,such as agriculture, and on private-sector developmentnecessary to generate high and broad-based economicgrowth. These must receive equivalent consideration in the process.

Participants stressed that a country cannot movetoward achieving ambitious aims, such as MillenniumDevelopment Goals, without the growth process, butthis process is often overlooked. A representative fromGuyana remarked pointedly: “MDGs are outcomes—something would have to happen to produce thoseoutcomes—and we are pretending they are the develop-ment mechanisms themselves. They are not; they areoutcomes.” Local industry, employment, and incomegenerate the capacity and local resources necessary toachieve these goals in the long term. Therefore,

increased investment must balance social spending andspending on activities that generate growth. Guyana andMozambique elaborated their countries’ broader agen-das in overarching national development strategies ornational vision statements, but these agendas are notadequately realized through Poverty Reduction StrategyPapers, which have a medium-term focus.

Donor representatives reminded forum partici-pants that the Poverty Reduction Strategy Paperprocess is the agreed-upon framework for dialogue onaid between the international community and poorcountries, and that it remains an evolutionary process,one in which improvements are continually beingmade. They pointed out that Tanzania, Zambia, andMozambique are all involved in developing second-gen-eration papers that are more locally driven and leavegreater room for national leadership and ownership ofthe process.

In the end, country partners agreed that the pointis not to debate the merits of one mechanism versusanother. The point is that, in the final analysis, coun-tries’ views of their own needs are not reflected in thepolicies implemented. Whatever policy framework doc-ument is utilized, it must allow country partnersgreater influence over the content. “Inside that docu-ment, we have to have a macro-framework,” aMozambican representative stated. “We have to talkabout resources, we have to talk about expenditure—these are the essential components.”

However, in such a situation, the question thenarises of whether countries have or are able to buildthe capacity needed to discuss and influence the con-tent of their policies and Poverty Reduction StrategyPaper processes. One representative from Mozambiquebrought up an illustrative example, suggesting coun-tries are often unable to build the needed capacityinternally. He spoke of a poverty and social impactassessment that was done in Mozambique, which costaround 100,000 U.S. dollars and took six months withthree outside foreign experts to complete. He claimedthat, with that amount of money, nine new ministrystaff with bachelor’s degrees from within the country

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Prakash Ratilal, executive member of Mozambique’s Agenda2025 Committee, with members of the Mozambican delegation.

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could have been hired for an entire year, enabling pro-fessionals from Mozambique to learn and develop thecapacity to run and handle such processes. If donorswere more flexible, countries could build such capaci-ty. Participants agreed that resources currently investedin external technical assistance could be better investedin the creation of indigenous capacities for evidence-based research and policy formulation.

Many participants then went on to emphasize thatnot only the government but other local institutionssuch as think tanks, universities, and civil-societyorganizations must be strengthened to independentlyformulate and analyze policies to strengthen the capaci-ty of the country. The emphasis, more specifically,must be on developing capacity within these institu-tions to perform evidence-based analysis. Participantsstressed that there are an increasing number of civil-society groups and NGOs in developing countries that

perform advocacy and service work. What’s missing isindependent, evidence-based analysis, which is nonide-ological and provides constructive critiques of both thegovernments and donors in a mutually beneficial way.

Some forum participants stressed the necessity ofmoving toward joint analytical work, with governmentsand local institutions in the lead, as a way of strength-ening domestic capacity, including that of civil society,and holding both governments and donors account-able. Policy analysis is a dynamic process, whichrequires an understanding of country conditions andof the links between short- and long-term issues andthe ways in which they are integrated. Too often, IFIsperform policy analysis and make recommendationsthat become conditionalities for policy loans. Joint pol-icy analysis could better empower developing countriesand build local capacity to manage donor projects andresources.

AID EFFECTIVENESSForum participants stressed that, in order to achieveequitable globalization, international donors and thedeveloped world must make greater efforts to providethe promised and needed resources to countries bur-dened by poverty. It is no longer a question ofrecipient governments shifting resources within budgetcategories, but a question of obtaining additionalresources from outside combined with generatingmore domestic revenues. Once the resources are in thecountries, they must actually get to those who needthem, which is why aid effectiveness is so important.

Participants noted that, although some progress hasbeen made, really significant change of the aid systemstill escapes us. Although countries have committedthemselves to harmonization and alignment in interna-tional agreements, there is still a large gap betweenrhetoric and reality. In fact, participants stated thatthe very structure of the donor aid system is still proj-ect oriented, with a cacophony of different donorpriorities and agendas.

A main theme of discussions was that many donoraid projects are conducted outside of the government

Marta Cumbi, president of the board for the MozambicanDebt Group and director of cooperation and advocacy for theFoundation for Community Development, speaks about theways in which Mozambican civil society has engaged in thecountry’s policy debate.

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budget cycle—and therefore outside of national demo-cratic accountability—by international NGOs. Oneresult is that a large proportion of aid money is spentnot on transformative development—such as reducingdisease, investing in teachers, and building roads—butrather goes back to the countries that provided the aid.Participants most frequently mentioned the thrivingindustry of foreign development consultants as anexample. One Mozambican country participant provid-ed an illustrative example. Donor projects are begun inthe name of reducing poverty. But, he asked, whenonly $124,000 of a $6.4 million project is spent incountry and the rest on foreign consultants, where isthe accountability? Unsolicited donor projects, headded, are debited to the country, resulting in govern-ments being indebted for projects they did not ask forand money their people never saw.

Additionally, country partners emphasized that themoney available for transformative growth is blockedfrom making its way to the poor by multiple, burden-

some donor procedures and practices that recipientcountries must accommodate. Participants agreed thatgovernments are still inundated by a multitude of donorprojects, managed by different project implementationunits and monitored at different times using differentevaluation criteria. Donors often duplicate each other’sefforts, wasting valuable time and energy that could bedirected to areas in need of more attention and makinghuge demands on the governments themselves. Forexample, a Malian representative stated that his govern-ment must spend a total of three months out of everyyear dealing with visiting aid missions.

In addition to being uncoordinated and burden-some, donor investments are not always aligned withcountry priorities, participants said. A representativefrom Guyana complained that his country does notreceive enough resources to combat its 10 most deadlydiseases because donors want to pour their resourcesinto fighting AIDS. This is not just an example of aidbeing driven by donor priorities but also of aid beingfocused on the eradication or treatment of a single dis-ease, as opposed to focusing on building the capacityof a national health system, which is what countriesoften call for and need.

What needs to be done, therefore, is to harmonizeand align donor procedures and policies behind thoseof recipient countries. Participants called in particularfor channeling more aid toward budget support,because governments would have more freedom tochoose where and how to allocate resources as part ofthe budget and political process. This will begin to pre-vent wasteful duplication of effort and ensure thatmoney is spent on country priorities. As one multilat-eral agency official noted, the goal is not to get acountry government to manage 20 to 30 differentdonor systems but to get a government system in placethat 20 to 30 donors can reinforce and strengthen. Inaddition, this means strengthening the systems of leg-islative oversight of the executive branch.

Mozambique’s successful experience with budgetsupport was highlighted as a case study for others toexamine. The government and 17 donors have signed a

Michael Baxter, World Bank country director for Angola andMozambique, points out the need for national strategies totake account of wider regional dynamics.

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memorandum of understanding on budget support.18

Under this agreement, the government has strength-ened its financial and oversight systems, giving donorsgreater confidence that their funds will not be stolenand will be used to meet objectives measured with spe-cific performance indicators. In addition, donors havecommitted to increasing the share of their aid going tobudget support and reducing practices that tax the lim-ited administrative resources of the government.While donors regularly monitor the performance ofthe government, they also have allowed an independ-ent group to evaluate the donors’ performance againsttheir promises. Budget support represents just 30 per-cent of donor aid in Mozambique and could increasewith more ambitious efforts on both sides.

Coby Frimpong, coordinator of the Policy Coordination andProgram Management Unit of the Office of the President ofGuyana, presents conclusions of pre-forum workshops on aideffectiveness.

Shari Spiegel is managing director of the Initiative for PolicyDialogue and adjunct professor at Columbia University’s Schoolof International and Public Affairs; Inhaye Ag Mohamed istechnical counselor to the minister of planning in Mali.

18. For more information on this experiment, see the MozambiqueProgram Aid Partners Web site at www.pap.org.mz.

Some participants stressed that progress on aideffectiveness is highly dependent on individual coun-try circumstances. The mechanisms that proved asuccess in Mozambique, for example, cannot necessari-ly be replicated and made to work elsewhere, sincedifferent countries have different priorities and workin different fashions. The progress in Mozambique,one donor representative said, is due to the govern-ment making it “clear what they want” and “pushingus in this direction.” In this way, government leader-ship and credibility can be decisive in overcomingreluctance or resistance among donors to harmonizeand align project support and to move more towardbudget support.

Governments also face the challenge of overcominginternal resistance. Since changing budget supportentails shifting political power within the government,certain ministries stand to lose their current authority,including their ability to negotiate directly with donors

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over sources of sector funding. As for donors, theymust reform their own aid structures and incentive sys-tems, particularly regarding the relationship betweenheadquarters and field offices. Some participants fromthe headquarters of multilateral organizations expresseddisappointment over the disconnect between globalprinciples and agreements, or what is announced atheadquarters, and what actually happens on theground. Field representatives often have enormousinfluence, exercising their own discretion as to whetherand how progress is made toward harmonization andalignment in the countries where they are assigned.Furthermore, the rapid turnover rate of field representa-tives places an additional burden on governments todeal with constantly changing personalities and priori-ties. Both country and donor representatives expressedconcern that turnover makes continuity in donor poli-cy, and sustained coordination and partnership amongdonors and governments, difficult to achieve.

Still, there are good approaches that have met withsome success, such as Tanzania’s sector-wide aid pro-gram in which more than three-quarters of the donorspooled resources and engaged in joint dialogue andjoint missions. Participants also expressed enthusiasmfor silent partnerships, whereby donors agree to addfinancing to other donors’ projects to scale them up.Forum participants agreed that such approaches needmore support, representing an area where additionalprogress could be made. For aid money to be spentmore effectively, donors and governments must agreeto a set of measurable aid-effectiveness indicators.Some participants argued that the Paris Declarationindicators were too broad and difficult to measure.They called instead for a set of indicators that not onlymeasure the quality of donor aid but also specific out-comes—revealing, for example, which aid dollarstranslate into mouths fed, roads built, teachers andhealth professionals trained, and so forth. In otherwords, rather than monitoring a multitude of inputsinto the development process, donor investmentshould pay for results. The donor community, oneforum participant argued, has lost its way, becoming

too self-serving and detached from its ultimate pur-pose of improving lives. Governments and donorsmust refocus on this purpose by adopting a set of con-crete targets they can monitor jointly.19

THIRD-PARTY ASSISTANCEThe final session focused on the role that third-partyactors could play in enhancing development coopera-tion. The issue was framed by the GDI ApproachPaper (see Appendices), which had been circulated,discussed, and broadly endorsed during the preparato-ry sessions of the previous two days. The overviewnoted that the third-party role played by GDI was notnew for The Carter Center, as the idea of an “honestbroker” had informed the Center’s approach to con-flict mediation and election monitoring. The newtwist lay in applying this concept to national dialogueand development planning and, more specifically, to

Aleksander Mita (left) is head of the Civil Society DevelopmentCenter in Vlora, Albania; Albert Gajo serves as deputy ministerof integration in Albania.

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19. See http://www1.worldbank.org/harmonization/Paris/FINALPARISDECLARATION.pdf.

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■ power differentials between donors and develop-ing countries;

■ political, commercial, and other interests thatmotivate development assistance;

■ unhealthy competition among many donor agen-cies for influence over host governments;

■ strong incentives for host governments not to“bite the hand that feeds them”; and

■ weak capacity of host governments to engagedonors on an equal footing.

The existence of such circumstances compromisethe goals of country ownership, partnership, andmutual accountability. As one participant remarked,until more democratic decision-making mechanismsexist, at the global level and within the internationalfinancial institutions, there will be a need for third-party facilitation to help level the playing field.

There was general agreement that honest brokerscould be helpful. To be credible, the third-party actormust have certain characteristics: It must be respectedby all sides, be impartial to the outcome on substantiveissues, and not have conflicts of interests. The actor’semphasis must be on strengthening process—democrat-ic process as broadly understood—and not on imposingits own agenda.

Third-party actors could be either domestic orinternational organizations. Participants supported var-ious roles for third-party actors, including supportingdialogue processes, strengthening institutions, pro-moting the generation and discussion of policyalternatives, and monitoring the behavior of bothdonors and governments. Among domestic actors,independent think tanks or national councils such asthe National Economic and Social Council ofMauritius were put forward as examples.20 The councilis an institutional forum established by the parliamentwith broad stakeholder participation. It supportsresearch, dialogue, and consensus building to helpMauritius realize its national vision and respond to thechallenges of globalization in ways that promote social

(Left to right) Hans R.Herren, president of the MillenniumInstitute; Rick Rowden, senior policy analyst with ActionAidInternational USA; Jan Tuit, senior policy officer of theNetherlands Institute for Multiparty Democracy; andKoenraad Van Brabant, head of Reflective Practice andLearning at War-Torn Societies.

development cooperation. The third-party role wasdefined vis-à-vis host governments and internationaldonor organizations but was also relevant to the nexusbetween host governments and local stakeholders fromcivil society and the private sector, which was playedout in GDI’s facilitation of national visioning andPoverty Reduction Strategy Paper processes in Guyana,Mozambique, and Albania.

GDI’s creation, for the purpose of offering third-party assistance, was motivated by a number of basicconcerns about the nature of the relationships betweendeveloping countries and international donors, namely:

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20. For more information, see http://www.nesc-mauritius.org/.

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cohesion. Representatives from Guyana andMozambique both expressed interest in the Mauritiusmodel. There was general endorsement for what waspresented as the three “Es” for successful domesticthird-party actors: an endowment of five to seven yearsto get such institutions started, evidence-based meth-ods to drive their research and analysis, and externalpartnership opportunities to plug into global knowl-edge and capacity building.

GDI and Joseph Stiglitz’s Initiative for PolicyDialogue were examples of international third-partyactors addressing dialogue on development policy andcooperation, although other organizations at theforum were also involved in various, relevant dialogueand capacity-building efforts. All agreed that interna-tional actors must always be invited by the host

country, ensure that their effort builds the capacity ofdomestic actors, and themselves be monitored. Athird-party actor must not become a crutch or sourceof dependency but rather an agent to help a countryget to the point where it no longer needs third-partysupport. The cost of such interventions should also becarefully weighed against the potential benefit of allo-cating those resources to national actors.

Country participants from Albania frequentlymentioned a need to hear an independent voice onpolicy alternatives. Representatives from Mali andMozambique also called for assistance in local capacitybuilding for policy determination and analysis.

An area where third-party monitoring is in partic-ularly high demand is the implementation of aidharmonization agreements. Participants felt that thereis a considerable need for a third-party role at bothnational and international levels, because host govern-ments often lack the capacity to monitor or applypressure to the large field of donors. In Mozambique,where 17 donors are part of a budget support agree-ment with the government, a local and an internationalconsultant were hired to assess the quality of donorassistance against the general framework of the Parisand Rome Declarations21 and determine whether thedonors were living up to their commitments. Tanzaniaundertook a similar initiative, forming an independentmonitoring group that examined the behavior of boththe government and the donors and recommendedchanges in the aid relationship. At the request of boththe governments and donors, the group then moni-tored the implementation of the recommendedchanges.22 As one multilateral official said of aid harmo-nization efforts to date, “when it’s all said and done,much is said and little is done,” so further experimenta-tion with these models, particularly in Africa, shouldbe a high priority.

21. www.aidharmonization.org22. For more information, see: Killick, Tony. “Monitoring thePartnership-based Aid Relationships: A Note.” Development PolicyReview 22 (2004) 229-234.

Ed Cain (left), director of the Global Development Initiative,moderated the fourth Development Cooperation Forum. JasonCalder (right), assistant director of GDI, facilitated discussionof the role of third-party actors in development cooperation.

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FORUM PREPARATORY WORKSHOP

Wednesday, Dec. 7, 2005

9 a.m.–5 p.m. Proposals for Policy Autonomy and Aid Effectiveness Chapel Based on Country ExperiencesOpen to country delegations

Thursday, Dec. 8, 2005

9 a.m.–5 p.m. Advancing National Priorities and Improving Aid EffectivenessChapel Open to country delegations and invited guests

THE FOURTH DEVELOPMENT COOPERATION FORUM

Achieving More Equitable Globalization

Thursday, Dec. 8, 2005

5–6:15 p.m. Cocktails and RegistrationMuseum Lobby

6:30 p.m. ADDRESS & DINNERCyprus Room Joseph Stiglitz, Executive Director, Initiative for Policy Dialogue,

Columbia University

APPENDIX AFORUM AGENDA

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Friday, December 9, 2005

8:30–9:15 a.m Registration (for day registrants) and Continental BreakfastDelta Lobby

9:30 a.m.– 10:15 a.m. WELCOME & OPENING REMARKSChapel President Jimmy Carter

President Amadou Toumani Touré, Republic of MaliPresident Armando Guebuza, Republic of Mozambique

10:15 a.m.– 11:45 a.m. DISCUSSION SESSION IChapel “Realizing Policy Autonomy Through National Development Strategies”

noon–1:30 p.m. ADDRESS & LUNCHCyprus Room Nancy Birdsall, President, Center for Global Development

1:45– 3:30 p.m. DISCUSSION SESSION IIChapel “Making Aid Work: Experience with Alignment and Harmonization”

3:30 p.m.– 3:45 p.m. Break Delta Lobby

3:45–5 p.m. DISCUSSION SESSION IIIChapel “Meeting Conclusions and Future Actions”

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James W. Adams is vice president and network headfor operations policy and country services at the WorldBank. Since joining the bank in 1974, he has held avariety of operational positions in East Asia, LatinAmerica, and sub-Saharan Africa. Most recently,Adams served as country director for Tanzania andUganda. Before joining the bank, Adams was a loanofficer for Merchants Bank in Syracuse, N.Y.

Inhaye Ag Mohamed has been technical counselor tothe minister of planning in Mali since 2002.Immediately prior to that post, he served as head ofthe Program and Financing Division of the NationalPlanning Department. Ag Mohamed has participatedin recent evaluations of the implementation of Mali’sPoverty Reduction Strategy Paper and MillenniumDevelopment Goals. He holds degrees in economicsand banking and finance.

Tamara Agolli was a Carter Center project manager inAlbania from 2003 through 2005. Prior to her workwith The Carter Center, Agolli worked closely with thebusiness and NGO communities while employed byKPMG Albania from 1996 through 2003. She alsoworked in the UNHCR Liaison Office in Tirana as anoffice manager from 1992–1996.

Mark Allen has been director of the PolicyDevelopment and Review Department of the IMF since2003. His fund career has mainly been in policy devel-opment and review, where he has worked on a range ofissues, including trade, international capital markets,debt restructuring, financial crisis management, andIMF reform. He also has served in the fund’s Genevaoffice and the African Department and has been resi-dent representative in Poland and Hungary.

John Anderson is a natural resource policy adviser forthe Economic Growth, Agriculture and Trade Bureauof USAID. Previously, Anderson worked in the

Forestry Department of the FAO in Rome. Prior to hiswork with the FAO, Anderson spent approximately 17years in West Africa working on a World Bank forestryproject and acting as project manager for rural develop-ment and river basin management for USAID. He alsoteaches rural development at Johns Hopkins University.

Michael Baxter is the World Bank’s country directorfor Angola and Mozambique. His development workexperience is mainly in the rural and infrastructure sec-tors in the South Pacific, South Asia, Latin Americaand Africa, primarily with the World Bank. Hereceived his education in Australia; Papua, NewGuinea; and at the University of California, Berkeley.

Victor Bernardo is vice minister of planning anddevelopment, Mozambique.

Nancy Birdsall is the founding president of theCenter for Global Development. Prior to launchingthe center, Birdsall served for three years as senior asso-ciate and director of the Economic Reform Project atthe Carnegie Corporation, focusing on issues of global-ization, inequality, and IFI reform. From 1993 to 1998,Birdsall was executive vice president of the Inter-American Development Bank, where she oversaw a$30 billion public and private loan portfolio. Beforejoining the IADB, Birdsall spent 14 years in research,policy, and management positions at the World Bank.

Robert Blake is sector manager for West African coun-tries in the Poverty Reduction and EconomicManagement Unit at the World Bank. During his 16years with the World Bank, Blake has held field assign-ments in Cameroon and was a country programmanager in Uganda. For 15 years, Blake worked for theU.S. Treasury Department, both in a Paris post withthe U.S. delegation to the OECD and in the Office ofDeveloping Nations Finance.

APPENDIX BFORUM PARTICIPANT BIOGRAPHIES

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Richard C. Blum is on the Carter Center’s board oftrustees and is chairman of Blum Capital Partners. Healso currently serves as a director on a number ofboards, including CB Richard Ellis (chairman),Glenborough Realty Trust Inc., and Newbridge Capital(co-chairman). Blum is founder and chairman of theAmerican Himalayan Foundation and is honorary con-sul to the Kingdom of Nepal. In addition, Blum serveson the board of regents of the University of Californiaand is a member of the advisory board of the businessschool at the University of California at Berkeley.

Ed Cain is director of the Carter Center’s GlobalDevelopment Initiative. Prior to joining the Center,Cain had a 30-year career with the United Nations,where he held senior positions in both the U.N.Secretariat and the United Nations DevelopmentProgramme. His assignments in New York have con-tributed to shape UNDP’s human development policyand the secretary-general’s reform process of theUnited Nations. His last post overseas was as a U.N.resident coordinator in Egypt.

Jason Calder is assistant director of the CarterCenter’s Global Development Initiative. Calder hasdesigned and managed GDI’s national dialogue anddevelopment planning initiatives in Albania, Guyana,and Mozambique. He has also developed and support-ed GDI work in Mali and organized three of the fourGDI Development Cooperation Forums. In addition,he has served on Carter Center election observationmissions to Mexico, Nicaragua, Venezuela, Nigeria,Mozambique, and Guyana.

Jimmy Carter, the 39th president of the UnitedStates, co-founded The Carter Center with his wife,Rosalynn, in 1982. Actively guided by President Carter,the nonpartisan and not-for-profit Center resolves con-flict, promotes democracy, protects human rights, andfights disease.

Rosalynn Carter has worked for more than threedecades to improve quality of life for people aroundthe world. Today, the former First Lady is an advocate

for mental health, early childhood immunization,human rights, and conflict resolution through herwork at The Carter Center.

Ha-Joon Chang has taught economics at CambridgeUniversity, served as a member of the editorial boardof Cambridge Journal of Economics, and held short-term visiting teaching positions in Korea and Japan.Chang has also worked as a consultant for numerousinternational organizations, including various U.N.agencies, the World Bank, and the Asian DevelopmentBank. Chang has written nine books, including“Kicking Away the Ladder: Development Strategy inHistorical Perspective,” which was awarded the 2003Myrdal Prize by the European Association forEvolutionary Political Economy.

Pedro da Conceição Couto is vice minister of financeand director of the Studies Department in theMinistry of Finance and Planning, Mozambique.

Roy Culpeper joined The North–South Institute in1986 and was appointed president in 1995. Beforejoining the institute, his work experience includedpositions in the Manitoba government’s CabinetPlanning Secretariat, the federal Department ofFinance, and the Department of External Affairs andInternational Trade. From 1983 to 1986, Culpeper wasadviser to the Canadian executive director at theWorld Bank in Washington.

Marta Cumbi is president of the board for theMozambican Debt Group and director for cooperationand advocacy for the Foundation for CommunityDevelopment. She is also the vice president of theboard of the Forum for African WomenEducationalists, Mozambican chapter, and president ofthe board of the Mozambican Education Network. Aneconomist and development planner by training, shehas been involved in development work since 1994.

Vu Dang is assistant director of the Carter Center’sGlobal Development Initiative. Dang advises, develops,and administers GDI’s national development strategyinitiative in Mali. Before joining the Center, he con-

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sulted for the government of the Democratic Republicof the Congo, the World Bank, and the Peace Corps.He was also director of an indigenous NGO and aPeace Corps volunteer in Guinea.

Mohammed Diallo is coordinator of the NationalCapacity-Building Program for the StrategicManagement of Development in Mali. An economistand statistician by training, he earlier served as nation-al director of planning and counselor in the ministriesof Planning and of Economy and Finance and as cabi-net director in the Ministry of Planning. Diallocoordinated the development of Mali’s nationalprospective study, Mali 2025.

Salif Diallo is coordinator of the Capacity-BuildingProject for National Implementation in the Ministry ofForeign Affairs and International Cooperation in Mali.A macroeconomist and planner by training, he earlierserved as division head in the Department ofPlanning, research director at the Bureau of StateEnterprises, deputy director for methods and proce-dures at the Department for Public Tendering, and asan expert on business economics at the Center for theAnalysis and the Formulation of Development Policies.

Sékouba Diarra has been counselor to the minister ofeconomy and finance of Mali and coordinator of thePRSP Unit since March 2000. A demographic statisti-cian by training, he previously served as counselor tothe minister of economy, planning, and integration,where he directed the preparation and implementationof the national Poverty Reduction Strategy, and as assis-tant director of the national Department of Statisticsand Computer Sciences. Diarra has been active inresearch and teaching in Mali and the subregion.

Abdoulaye Diop is the ambassador of Mali to theUnited States. Prior to his assignment in Washington,D.C., Diop was the diplomatic adviser to PresidentAlpha Oumar Konaré and President Amadou ToumaniTouré. Diop has served as a delegate to regional andinternational conferences focusing on regional integra-tion, economic development, and peace and security

and oversaw Mali’s participation in the SecurityCouncil of the United Nations in 2000 and 2001.

Issa Doumbia is chargé de mission in theCommunications Unit of the Office of the Presidentof the Republic of Mali since July 2002. Prior to thatposition, he was press adviser in the cabinet ofPresident Amadou Toumani Touré. Doumbia holds adegree in journalism and is the author of several stud-ies on political communication that are used intraining courses for journalists in Bamako.

Vincent J. Farley is a former U.S. State Departmentsenior foreign service officer and was director of thedepartment’s Office of Research and Analysis, retiringwith the rank of minister counselor. Farley was a diplo-matic adviser to former U.S. President Jimmy Carter atThe Carter Center from 1994 to 1997. He lectures andwrites on current developments in Africa and providespolitical commentary for CNN and other Atlanta-based media. He serves as adviser on Africa to theSouthern Center for International Studies and on theboard of MedShare International.

Homa Fotouhi has been working as operations officerin the Caribbean Unit of the World Bank since 2000.Previously, Fotouhi managed the preparation of thePoverty Reduction and Public Management Operationin Guyana. Prior to joining the World Bank, sheworked at the International Atomic Energy Agency inVienna, Austria.

Coby Frimpong is a coordinator for the PolicyCoordination and Program Management Unit of theOffice of the President of Guyana. He is also head ofthe Poverty Reduction Unit, where he oversees theimplementation of the country’s PRSP. A formerWorld Bank technician, Frimpong has also served asan adviser to the president.

Albert Gajo is the current deputy minister of integra-tion, Albania. His previous work includes serving asexecutive director of the Center for Research andDevelopment, Tirana. He spent 1999 to 2001 as a

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NATO research fellow at Maastricht University, wherehe conducted research on the role of internationalorganizations in integration processes.

Elaine Geyer-Allély is the Carter Center’s countryrepresentative in Mali. Before coming to the Center,she worked in Mali as a freelance consultant for non-governmental, international, and bilateral organizationsfrom 2001 to 2002. She also worked in Paris as a policyanalyst on environment and sustainable developmentfor the Organization for Economic Co-operation andDevelopment from 1991 to 2001.

Heather Grady is director for policy and partnershipsof the Ethical Globalization Initiative. Previously, shewas global lead on rights and institutional accountabilityfor Oxfam Great Britain. She also served as OxfamGreat Britain’s regional firector for East Asia from 2002to 2004 and as country representative in Vietnam.Previously, she worked for seven years with Save theChildren in the Gaza Strip and Sudan.

Armando Guebuza is president of the Republic ofMozambique. In 1966, he became private secretary toPresident Mondlane and was later appointed secretaryfor education and culture. In his capacity as politicalcommissar during Mozambique’s first independentgovernment, Guebuza established grassroots politicaland administrative structures. During the 1980s, heheld other ministerial positions and was Frelimo secre-tary-general in 2002. Notably, Guebuza played aformative role in the Rome Peace Agreement with theRenamo rebels in 1992.

R. Pablo Guerrero is senior adviser to the vice presi-dent, Operations Policy and Country Services at theWorld Bank. Previous to joining the World Bank in1989, Guerrero was an economist at the Inter-American Development Bank in the health,education, hydroelectric, irrigation, and agriculturalcredit sectors, among others. He has also taught eco-nomics at the University of the Andes in Colombia.

David Hamburg served as the Carnegie Corporation'spresident from 1982–1997. Under his leadership, thework of the corporation focused on education, health,and international security issues. Previously, Hamburgwas a member of the United States Defense PolicyBoard and co-chair of the Carnegie Commission onPreventing Deadly Conflict. As a medical doctor,Hamburg has been a professor of health policy, humanbiology, and social medicine at Harvard and Stanforduniversities.

John Hardman is executive director of The CarterCenter. Before joining the Center, Hardman heldprominent positions in psychiatry and pediatrics,including most recently at the Atlanta-based EmoryUniversity Medical School.

Hans R. Herren is president of the MillenniumInstitute. Previously, Herren was director-general of theInternational Center for Insect Physiology and Ecologyin Nairobi, Kenya. As an expert in pest management,Herren conceived of and implemented the highly suc-cessful biological control program that saved the Africancassava crop, averting Africa’s worst-ever food crisis. Overthe years, Herren has moved his interest toward integrat-ed sustainable development issues.

Terence Jones has served as resident representative/resident coordinator of United Nations DevelopmentProgramme (UNDP)/United Nations in Bhutan,Malawi, and Philippines. He currently directs theCapacity Development Group of the Bureau ofDevelopment Policy in UNDP headquarters in NewYork. In the context of the Outcome Statement of the2005 World Summit, the Capacity DevelopmentGroup is rolling out a series of capacity developmentdiagnostic instruments to mainstream capacity develop-ment into national development strategies.

Modibo Makalou is personal adviser to PresidentAmadou Toumani Touré of Mali and coordinator ofthe Development and Cooperation Initiative, which isa joint program between the Office of the President ofMali and the Carter Center’s Global Development

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Initiative. He previously worked in Mali as a financialmanager with a multinational mining company, com-mercial manager for a large petroleum company, andadministrative and financial coordinator in a USAIDlivestock export project. He also managed his owninternational business consulting firm in Mali.

Arben Malaj was formerly the finance minister ofAlbania. Previously, he held the position of minister ofeconomy in Albania and served as governor forAlbania at the World Bank. Earlier, he had beenengaged in the parliament of Albania as a chief of theParliamentary Commission for Economy, Finance andPrivatization. Currently, he is a senior fellow atHarvard University’s John F. Kennedy School ofGovernment, where he is working on long-term, sus-tainable economic development determinants,specifically pertaining to Albania.

Calvin McDonald is currently adviser and missionchief for Malawi at the IMF, where he previously servedas deputy division chief for the Fiscal AffairsDepartment, fiscal economist for Russia and Moldova,desk economist for Uganda, deputy mission chief forNigeria, and mission chief for Mauritius and TheGambia. Prior to joining the IMF, he was assistant pro-fessor at Iona College and State University of New York.

Aleksander Mita has been head of the Civil SocietyDevelopment Center in Vlora, Albania, since 2001.Prior to this work, Mita spent five years at the ForeignRelations Office in Vlora, first as chief of public educa-tion, and later as chief of culture, sports, and foreignrelations. Formerly a schoolteacher, Mita has focusedmuch of his career around education.

Nadir Mohammed is the country manager of theWorld Bank office in Tirana, Albania. With the WorldBank, Mohammed has been a country economist inWashington, D.C., and had two field-based assign-ments as country economist for Egypt and Yemen. Inaddition, Mohammed has written for more than adecade on issues of military spending, the economicsof war, and post-conflict issues. Previously, he worked

at the African Bank for Development and the IslamicDevelopment Bank.

John Moores is chair of the Carter Center’s board oftrustees. He founded BMC Software in 1980 andserved as chairman until 1992. Currently, he is chair-man of the San Diego Padres, which he acquired in1994. Moores founded the River BlindnessFoundation, which was absorbed into The CarterCenter in 1997.

Winston Murray is a member of Guyana’s parliamentand chair of the Central Executive Committee of thePeople’s National Congress Reform Party. He is a for-mer deputy prime minister and minister of trade,tourism, and industry.

Shoji Nishimoto is assistant administrator and direc-tor, Bureau for Development Policy. Prior to joiningthe United Nations Development Programme,Nishimoto held the position of director-general of theAsian Development Bank Strategy and PolicyDepartment. Prior to that, Nishimoto served as anassociate economic affairs officer at the U.N.Economic and Social Commission for Asia and thePacific and as an economist at the Food andAgriculture Organization.

Roger Norton has been a regular adviser for GDIsince 1995. A development economist with more than35 years of experience, Norton specializes in analysis ofeconomic policy for agricultural development and nat-ural resource management, formulation of legislativerecommendations, and development of macroeconom-ic policy. Previously, he was a professor of economicsat the University of New Mexico and director of aresearch division at the World Bank.

Michael Nowak is deputy director of the AfricanDepartment at the IMF. Since joining the IMF in 1979,Nowak has headed missions to a range of countries,including Ghana, South Africa, Uganda, and Zimbabwe.Previously, he was an economist at the Reserve Bank ofAustralia and at Forex Research Ltd., London.

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Moussa Ouattara is the millennium challengeaccount coordinator for Mali in the Ministry ofEconomy and Finance. Since 2000, he has also beenthe Malian representative of the London-based WestAfrica Business Association. He has been director ofFINWATT Brokerage Firm for International Trade andFinance. As an international consultant, he has con-ducted studies for the World Bank, MultilateralInvestment Guarantee Agency, USAID, and privateinternational companies.

Armando Alexandre Panguene is the ambassador ofMozambique to the U.S. His professional appoint-ments have included ambassadorships to South Africa,Great Britain, and Portugal. Prior to 1987, he heldnumerous political positions in the government ofMozambique.

Borany Penh is a political economist on the PovertyAnalysis and Social Safety Nets team in the Office ofPoverty Reduction at USAID. She is responsible foradvising on the role of institutions and politicalprocesses on economic growth and poverty, with par-ticular attention to conflict and fragile states. Prior tojoining the Economic Growth Agriculture and Tradeunit, Penh worked as a consultant for seven years withUSAID’s Policy and Program Coordination Bureau.

Michael Phelan serves on the Senate ForeignRelations Committee, working for Chairman RichardLugar, where his portfolio includes African affairs,Afghanistan, and post-conflict stabilization/reconstruc-tion. Prior to his current position, Phelan completedhis master’s degree at the Fletcher School of Law andDiplomacy at Tufts University in 2002 and worked as afellow at Conflict Management Group developinggrassroots peacebuilding programs. Prior to his gradu-ate work at Tufts, Phelan spent 15 years in the U.S.Navy as a carrier-based pilot.

Prakash Ratilal was an executive member ofMozambique’s Agenda 2025 committee. As governor ofthe Bank of Mozambique, he negotiated the joining ofMozambique to the international financial institutions

and the first rescheduling of Mozambique’s externaldebt. Ratilal is a member of the Panel of EminentPersons on United Nations Relations with Civil Society.

Michel Reveyrand is currently chair of the WorkingParty on Aid Effectiveness and Donor Practices,OECD-DAC. Prior to his current position, Reveyrandacted as finance adviser to Africa in the FrenchMinistry of Economy and Finance.

Claude Ricaud is a world specialist in sugar cane dis-eases, working for 50 years in the sugar industry. Hewas director of the Mauritius Sugar Industry ResearchInstitute from 1984–1995. After retirement, he becamechief executive of the National EconomicDevelopment Council and helped to create a multipar-tite forum promoting participative democracy throughgovernment policy formulation and social dialogueamong economic stakeholders. He was in charge of theScience and Technology working group of the NationalLong-Term Perspective Study for Mauritius.

Rick Rowden has worked for ActionAid InternationalUSA since 2003. Previously, he worked as a policyresearcher and advocate with several Washington,D.C.-based international economic justice advocacyNGOs, including RESULTS and Jubilee USA.Recently, his policy work has focused on the linkagesand policy coherence agreements between the IMF,World Bank, and the World Trade Organization togain a better understanding of how the overlappingpolicy agendas of these institutions impact global eco-nomic development and poverty eradication efforts.

Jeffrey D. Sachs is the director of the Earth Instituteand professor at Columbia University. He is also direc-tor of the U.N. Millennium Project and special adviserto U.N. Secretary-General Kofi Annan on theMillennium Development Goals. Prior to joiningColumbia, Sachs spent more than 20 years at HarvardUniversity, most recently as director of the Center forInternational Development.

Charles O. Sethness is vice president for theDepartment of Accountability at the Millennium

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Challenge Corporation. For 14 years prior to joiningMCC, Sethness was the chief financial officer at theInter-American Development Bank. He has also beendirector of the Capital Markets Projects Department atthe International Finance Corporation, assistant secre-tary for domestic finance at the U.S. Department ofthe Treasury, an associate dean at the HarvardBusiness School, a managing director of MorganStanley Inc., and U.S. executive director at the WorldBank Group.

John D. Shilling is retired from the World Bank,where for 27 years he held various senior positions. Hehas headed the bank’s effort in sustainable develop-ment and laid the basis for a new environment strategyand a World Development Report on sustainabledevelopment. He has worked extensively in economicanalysis and policy assessments in macroeconomics,environmental sustainability, capital flows and finan-cial markets, and risk assessment, especially in NorthAfrica and Asia.

Mark Simpson is currently working with the UnitedNations Development Programme in Harare,Zimbabwe, as senior recovery adviser. From 2001 to2004 he worked as the Carter Center’s representativein Mozambique, facilitating the Agenda 2025 project.Prior to his work with the Center, he worked inAngola for the U.N. Department of PeacekeepingOperations as special adviser to the secretary-general’sspecial representative to Angola, for the U.N. Office ofProject Services in Mozambique, and in the U.N.peacekeeping operation in East Timor.

Naresh Singh is currently the director-general of theGovernance and Social Development Directorate atCanadian International Development Agency’s PolicyBranch. He was principal adviser, poverty and sustain-able livelihoods, in the Bureau for Development Policy,United Nations Development Programme (1996–2001)and director of the Poverty and Empowerment Program(1993–1996) at the International Institute forSustainable Development. He worked in the Caribbean

Environmental Health Institute from 1986 to 1993. Heis also adjunct professor at Boston University.

Shari Spiegel is the managing director of the Initiativefor Policy Dialogue (IPD) and an adjunct professor atColumbia University’s School of International andPublic Affairs. Spiegel joined IPD from Lazard AssetManagement, where she was a director of Lazard LLCand the senior fixed-income portfolio manager incharge of emerging market debt and foreign exchange.Prior to joining Lazard in 1995, Spiegel worked inHungary as an adviser to the National Bank and aschief executive officer of Budapest InvestmentManagement Company, a subsidiary of Budapest Bank.

Joseph Stiglitz has taught at Yale, Princeton, Stanford,and Oxford universities and Massachusetts Institute ofTechnology. He was a member of the Council ofEconomic Advisers (CEA) from 1993 to 1995 duringthe Clinton administration and served as CEA chair-man from 1995 to 1997. He then became chiefeconomist and senior vice president of the WorldBank from 1997 to 2000. In 2001, he was awarded theNobel Prize in Economics. He is now professor atColumbia University in New York.

Gordon Streeb is a former associate executive directorfor peace programs at The Carter Center. An econo-mist by training, he directed the Global DevelopmentInitiative at the Center for several years. Streeb cameto the Center near the end of a 30-year career in theU.S. Foreign Service, which culminated in his appoint-ment as ambassador to Zambia.

Arvind Subramanian is a division chief in the IMF’sResearch Department and worked on the TRIPS agree-ment as a member of the GATT secretariat during theUruguay Round.

Jose Sulemane is national director of research and poli-cy analysis at the Ministry of Planning and Development,Mozambique. Before assuming his post, Sulemane wasnational director for planning and budget. He is also asenior lecturer of international economics at

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Mozambique’s University Eduardo Mondlane. He is alsochair of the steering committee under the Joint ReviewProcess (Government/Donor Memorandum ofUnderstanding for General Budget Support).

Ousmane Tandia is head of protocol at the Office ofthe President of the Republic of Mali. He previouslyserved as chargé d’affaires at the Malian Embassy inSouth Africa and as counselor in the Malian Embassyin the Federal Republic of Germany.

Amadou Toumani Touré, president of the Republicof Mali, started his career in the military, where herose to the rank of brigadier general. He led the mili-tary operation that put an end to the tyrannical rule ofthe former regime and successfully led the 14-monthtransition. During this time, a democratic forum draft-ed a new constitution, an independent judiciary wasestablished, and a free private press was permitted.Until he was elected president in 2002, Touré devotedhimself to the realization of social actions to promotepublic health and welfare of marginalized peoplethroughout Africa.

Boubacar Sidiki Touré has been director of theDepartment of International Cooperation of theMinistry of Foreign Affairs and InternationalCooperation of Mali since September 2004. In thiscapacity, he oversees the technical and administrativepreparations of negotiations of Mali’s agreements andconventions with its development partners. Prior toassuming this position, Touré was minister of stateproperty, land affairs, and housing.

Abou Bakar Traoré is minister of economy andfinance in Mali. Since 2000, he has served as commis-sioner to the Banking Commission of the WestAfrican Monetary Union. He is also director of aMalian consulting firm specializing in public finances.Traoré was director of the Cabinet of the Ministry ofEconomy and Finance from 1992 to 1994 and assistantnational director of taxes from 1990 to 1992.

Jan Tuit began his career with a number of DutchNGOs before joining the United Nations in 1986. Two

assignments of two years each took him to Jamaica andGuinea Bissau. Subsequently, he moved to Mali onassignment for the Netherlands DevelopmentOrganization. After a comprehensive evaluation assign-ment in Yemen, he joined one of the major Dutchfunding NGOs, Novib, in 1994. His current positionas senior policy officer of the Netherlands Institute forMultiparty Democracy started in September 2002.

Koenraad Van Brabant is head of reflective practiceand learning at the War-Torn Societies Project (WSP),an international Swiss peacebuilding association thatsupports national capacities for dialogue and consen-sus building in divided societies, typically after a war oreven during low-intensity conflict. Prior to WSP, hetrained and did field work as an anthropologist but forthe following 16 years worked in the humanitarian sec-tor, half of that time in conflict areas, followed byyears working as a policy analyst, trainer, evaluator, edi-tor, and consultant.

Kamoji Wachiira just ended a stint as head of aid forGuyana and Suriname, where he represented theCanadian International Development Agency (CIDA) inPoverty Reduction Strategies discussions. He serves as asenior specialist in environment at CIDA, where he isresponsible for climate change technical advice to opera-tional programs. Wachiira has extensive field experiencein development programming in Eastern Africa, SouthAsia, and the Caribbean/Americas regions.

Jennifer Westford was elected to the NationalAssembly of Guyana and appointed as the minister ofthe public service in 2000. Her responsibilities includethe management of the civil service. She performs theduties of minister of health in the minister’s absence.She also has responsibility for developmental projectsin several hinterland and depressed communities. Sheis currently heading the Public Sector ModernizationProgram and is the chairperson of the GovernanceThematic Group, which is comprised of governmentand donor organizations.

Tao Xi is director of the Research Center for Law and

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Economics at the Chinese University of Politics andLaw. He is also secretary-general of the Association ofWorld Economic Studies. Additionally, he serves asexecutive assistant to the vice chairman of the StandingCommittee of the National People’s Congress.

Agostinho Zacarias is the resident coordinator forUnited Nations Development Programme (UNDP),Zimbabwe, and U.N. resident/humanitarian coordina-tor. He previously held a position in the U.N.secretary-general’s Office of the Special Adviser onAfrica. He holds a doctorate in international relationsfrom the London School of Economics and has lec-tured in the United States, South Africa, and hishome country of Mozambique. Prior to joining the

Office of the Special Adviser on Africa, he worked inthe UNDP Department of Political Affairs as a gover-nance adviser.

Baosheng Zhang is vice president of the ChineseUniversity of Politics and Law. Zhang has worked inthe Chinese Ministry of Education since 1987 and hasbeen in charge of political economy curriculum ininstitutions of higher learning in China. He was theChinese representative on the steering committee ofthe China–E.U. European Studies Project. Zhang wasalso a visiting scholar at the Kent University LawSchool and at Northwestern University Law School,where he conducted research on international econom-ic development and relevant legal frameworks.

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1. INTRODUCTIONThe Carter Center’s Global Development Initiative(GDI), motivated by the vision of President JimmyCarter, strives to contribute to a world that is free ofpoverty, inequality, despair, and conflict. The commit-ment to advancing human rights worldwide is integralto all of the Carter Center’s work and serves as thebasis for fulfilling President Carter’s vision. The CarterCenter also recognizes the indivisibility of all aspects ofhuman rights: civil, political, economic, social, and cul-tural. As the development arm of the Carter Center’sPeace Program, GDI seeks to advance human rights bypromoting sustainable human development.

GDI was established in 1993 out of a concern thatdevelopment cooperation was too externally driven,making newly democratic governments more account-able to donors than to their own people and distortingnational priorities as a result. Since then, GDI hasbuilt on the Carter Center’s worldwide reputation forimpartiality and integrity to promote country owner-ship of development policies and programs,broad-based participation in governance, and moreeffective development cooperation. A prominent fea-ture of GDI is that of an impartial, non-donor,third-party actor playing facilitation, mediation, andcapacity-building roles within its partner countries andbetween its partner countries and the internationalcommunity.

GDI pursues its mission through country-level ini-tiatives and a global-action and learning series knownas the GDI Development Cooperation Forum. At the

country level, GDI facilitates the efforts of developingand transition countries to formulate and implementtheir own long-term national development strategies,consisting of clear long-term visions and comprehen-sive and consistent strategies and policies. Itsexperience cooperatng with national stakeholders inpartner countries has shaped a multifaceted and flexi-ble approach that GDI continues to apply and refine.Recognizing that poor countries’ development is con-strained by problematic global policies and practices,GDI also convenes its periodic high-level DevelopmentCooperation Forum to improve global developmentcooperation by identifying best practices from its coun-

APPENDIX CTHE CARTER CENTER’S APPROACH

TO EFFECTIVE DEVELOPMENT COOPERATION

…the most serious and universal problem is the growing chasm between the richest and poorest peopleon earth…not only between nations but also within them. The results of this disparity are root causesof most of the world’s unresolved problems.

— Jimmy Carter, Nobel Peace Prize Lecture

GDI AND CORE PRINCIPLES IN ACTION

COUNTRYWORK

Changing

Sharing

Doing

FORUMPOLITICALTRACTION

DevelopmentPolicies &Practices

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try work and mobilizing political will around effectivesolutions to global problems.

GDI’s fundamental objective is to promote moreeffective development policies and practices, which willlead to a reduction in poverty and human suffering. Inorder to achieve this, GDI’s broad aims are to con-tribute to greater social cohesion, stronger andsustainable institutions, and more equitable growth inwhich all citizens are able to fully exercise their politi-cal, economic, social, and cultural rights. GDIrecognizes that countries must own their nationaldevelopment strategies, that the international policyenvironment must enable those strategies, and that sus-tainable human development is not possible withoutpolitical will at the national and international levels.GDI partners with others to bring change to the cur-rent paradigm of global development policy andpractice, which continues to exacerbate the growingchasm between rich and poor.

2. THE ROLE OF THE GLOBALDEVELOPMENT INITIATIVEGDI is the component of the Carter Center’s PeaceProgram that deals with sustainable human develop-ment. GDI believes that development is fundamentallya process of transformation, of major changes not onlyin the form and function of institutions but also inhow people think, behave, and interact with oneanother. GDI strives to lay the basis for sustainablehuman development by promoting country-driven andcountry-owned policy-making and governance process-es that bridge and link social, economic, and politicalactors and institutions into more socially cohesive rela-tionships. This vision of transformation guides GDI’sapproach.

2.1 The Role of Third-Party AssistanceGDI was established to play a special role within therealm of international development cooperation.Emerging from an international conference on devel-opment cooperation in 1992, GDI was charged withworking collaboratively with developing countries and

international donors to experiment, pilot, evaluate,and disseminate practical new approaches for enhanc-ing aid effectiveness.

The initial inspiration for GDI playing this rolewas the view that a non-donor third party, acceptableto the major stakeholders, could bring a fresh perspec-tive to old problems and help overcome obstacles. Thiswas due in no small part to the perception of theCenter’s general impartiality, its track record in mediat-ing political and electoral disputes, and its access tosenior leadership in developing countries and theinternational donor institutions. GDI has since built atrack record providing third-party facilitation, media-tion, and capacity-building assistance to countriesformulating and implementating national developmentstrategies.

A number of basic concerns about the nature of therelationship between developing countries and interna-tional donors motivated the idea of third-partyassistance. While there has been wide agreement overthe past decade on broad development aims and goals,the means and processes for achieving those goals hasremained problematic. Progress toward stronger partner-ships between developing and developed countries,guided by the principle of “mutual accountability,” haveoften been compromised by the following constraints.

Power differentials: The relationship betweendeveloping countries and international donors is fun-damentally unequal, given the weakness ofdeveloping-country institutions relative to those of thedonor community and international organizations andthe countries’ severe aid dependence.

Interests: Many donor countries have political orcommercial interests that motivate their developmentassistance programs and affect their positions on theeconomic policies of developing countries. For theirpart, the multilateral financial institutions have longespoused neoliberal economic strategies and havebecome tied to their success, which effectively limitsthe space for serious consideration of alternativeapproaches.

Competition: At the country level, unhealthy com-

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petition among donor agencies for influence with thegovernment and recognition for their programs oftencompromises host country leadership. Not only is thisan inefficient use of resources, it often redirects gov-ernment attention from more productive pursuits.

Incentives: There are strong incentives for host gov-ernments not to challenge or question fundamentaltenets of economic policy held by major donors andinternational financial institutions or to question cer-tain donors over practices and procedures thatcompromise aid effectiveness.

Capacity: The lack of capacity on the part of devel-oping countries to conduct independent analysis as itconcerns the formulation of credible policy alternativesand the evaluation of quality of donor aid underminestheir ability to take leadership and ownership of theirdevelopment.

As a result of these constraints, developing coun-tries have limited leverage over their donorcounterparts to ensure accountability to the principlesespoused in recent international aid compacts emanat-ing from Monterrey, Rome, and Paris. It follows thatthere is a role for third-party actors, acceptable to themajor players, to provide various types of assistance,ranging from facilitation to capacity building to media-tion and monitoring.

2.2 GDI Capabilities and Expected Results GDI’s work is distinguished by the following:■ President Carter’s leadership■ Impartiality■ Convening capacity■ Expertise in consensus building and participatory

processes■ High-level and broad access to all actors:

–Top levels of government and political parties–Civil society–Donor agencies

■ Integrated development approach While many other international entities share some

of these strengths, GDI is able to bring all of them tobear on the country-level initiatives it supports.

GDI works in an unobtrusive, supportive manner,attuned to national concerns and respectful of nationalpriorities. GDI’s primary role is to organize and sup-port participatory dialogue and policymaking processesthat span all stages of the policy cycle, from formula-tion of national visions and strategies to institutionalreform and harmonization of donor assistance aroundnational priorities. It can help convene diverse nationaland international actors. GDI also provides long- andshort-term technical support, including capacity build-ing, policy mediation, and experts who act as soundingboards for the ideas of national counterparts, helpingthem refine their analyses, policy proposals, and imple-mentation plans.

Specifically, GDI is able to support: 1) broadly par-ticipatory formulation of long-term national visions anddevelopment strategies, 2) alignment of developmentcooperation frameworks such as the Poverty ReductionStrategy Paper with these strategies, and 3) developmentof institutions and capacities for implementation, moni-toring, and evaluation of national strategies. Thissupport includes assistance in training on the use ofpolicy modeling and in analyzing different developmentscenarios before a country decides on a strategic policyframework. Building on this work, GDI can facilitatedialogue between countries and donors to help alignexternal programs with national strategic priorities andpolicies. One of the roles it can play is helping definelinkages between a national development strategy and aPoverty Reduction Strategy Paper—requirements of thedonor community for most low-income countries—toenhance the operational effectiveness of both.

GDI helps achieve the following results:■ country ownership of development policies and

strategies;■ country leadership of development policy

dialogue with the international community;■ national management of development processes;■ deepening of national and political consensus on

strategic development objectives;■ strengthened mechanisms of good governance and

more responsive institutions;

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■ space to build mutual trust and networks among keyactors across different segments of society;

■ greater capability of individuals and capacity in civilsociety to help shape and monitor national policy;

■ better-informed national debates over fundamentaldevelopment policy issues and trade-offs;

■ greater coherence between the international develop-ment architecture and sustainable humandevelopment objectives;

■ improved alignment between donor programs and national development priorities and increasedharmonization of donor procedures;

■ better understanding of social and economic costs,benefits, and risks of strategic policy alternatives;

■ better definition of frameworks and mechanisms forpolicy implementation;

■ improved linkages between countries’ short- andmedium-term policies and their long-term strategies;and

■ consistency among macroeconomic and sector policies.The particular selection of outcomes will vary

from country to country, depending on the areas towhich national counterparts wish to direct GDI assis-tance. At the international level, GDI disseminatesillustrative experiences and lessons learned in theundertaking of national development strategy processesin its partner countries.

3. GDI’S APPROACH TO THEDEVELOPMENT AND IMPLEMENTATIONOF NATIONAL DEVELOPMENT STRATEGY

3.1. A National Development Strategy asCatalyst of DevelopmentA national vision and strategy can be expressed in dif-ferent forms and at levels such as the macroeconomyor specific social and economic sectors. It is rooted ina country’s historical experience and shaped by theinterplay of national ideologies and social and politicalinstitutions. Particularly in countries that are heavilydependent on external assistance and where democrat-ic institutions are developing, it is often useful to make

a strategy explicit in order to communicate a nationalvision and draw out its principal operational implica-tions to guide implementation and the identificationof resource requirements. A national developmentstrategy can be the platform from which strategic public-private partnerships for development emerge.

Such an exercise also can be valuable for countriesrecently emerging from violent conflict or character-ized by deep internal divisions. In some cases, it canhelp consolidate a peace process by launching a widerprocess of civic and social dialogue aimed at forging anational consensus. This can help to broaden anddeepen the areas of agreement on how the countryshould move forward.

3.2 What Is a National Development Strategy?A national development strategy (NDS) is a foundationdocument that provides a country with guidance tosociety and policy-makers in successive governmentadministrations over time. While an NDS is not arequirement for international financial institution lend-ing, the World Bank’s Comprehensive DevelopmentFramework philosophy calls for a long-term vision andstrategy to guide shorter term operational plans.Unlike Poverty Reduction Strategy Papers, an NDS is along-term strategy, is ultimately approved by parlia-ment, and it goes beyond economic developmentissues by dealing explicitly with questions of politicalgovernance, social inclusion, and environmental con-siderations.

An NDS is not a one-off effort but becomes anintegral part of ongoing policy-making processes and istranslated into short- and medium-term action plans.An NDS also places the Millennium DevelopmentGoals within the larger context of national long-termgoals and aspirations, making it more likely they willbe achieved. Finally, NDS formulation requires thatthe international community respect national govern-ments’ need for policy autonomy and that thesegovernments provide space for a process that takes afresh look at policy approaches and their underlyingassumptions. Therefore, while national governments

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provide the overall legitimacy and leadership of anNDS process, as described here, an independentgrouping of civic and political leaders that reflects thesociety’s diverse polity should actually manage the for-mulation of an NDS.

An NDS process enhances its participants’ and thegeneral public’s understanding of policy issues and cat-alyzes a national dialogue on strategic policy objectivesfor the country. For an NDS process to be successful,meaningful inclusion and public participation must beensured. Although this is a challenging undertaking, itis a valuable and necessary way of generating policiesfor broadly shared development within a country.

An NDS process also presents an opportunity toconsider development in the wider regional and globalcontext and to assess the impact of the internationalpolicy environment on national developmentprospects. Global economic and environmental inte-gration has expanded significantly the influence ofexternal actors over areas of national decision making,which can severely constrain the ability of countries todetermine and pursue their preferred developmentpath. A country-owned NDS process can provide a

much-needed opportunity to evaluate the appropriate-ness and efficacy of dominant and orthodoxdevelopment paradigms. It must not only work to fos-ter debate on heterodox development options andapproaches within the democratic processes of coun-tries but also to communicate agreed-upon nationalpriorities to external actors. As the overarching docu-ment that frames national and internationaldevelopment efforts, it can play a crucial role in ensur-ing the accountability of international organizations tonational democratic political processes.

The process surrounding a national vision andstrategy in any country will be different depending onthe historical context and the nature of its institutions.GDI believes in building on existing initiatives, plans,and strategies. It does not prescribe a particularmethodology for formulating an NDS but insteadworks with local counterparts to examine alternativechoices and select the most appropriate approaches. Asa result, GDI’s assistance can concern any part of thepolicy-making cycle: visioning and strategy formula-tion, alignment with donor programs, implementation,harmonization of the operational systems of govern-

GDI COUNTRY WORK THROUGH THE NDS CYCLE

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ments and donors, or monitoring and evaluationefforts. The following sections briefly present thisprocess and explain how GDI works to strengthen theprocess in its partner countries.

3.3. GDI Support of NDS Formulation,Implementation, Monitoring, and Evaluation

NDS FormulationFormulating an NDS represents a significant commit-ment for a country and requires broad support fromthe outset. Domestic stakeholders, beginning with thegovernment, must be fully committed to the process.

In addition to high-level and sufficiently broad-based support, a minimally enabling environmentmust exist to support an NDS process. This includesbasic freedom of speech, assembly, and movement,access to information, and an environment in whichlocal actors do not fear for their basic security. In addi-tion, in most developing countries, a basic level ofsupport must exist in the international community foran NDS process that can be translated into both politi-cal and financial support.

GDI engagement begins only upon invitation bythe host country. At an early stage in the process, GDIconsults with other national stakeholders, includingpolitical parties, the business community, socialgroups, and the donor community, to determine thatits role is welcome and considered useful. Only thencan detailed terms of reference for an NDS process bedeveloped that provide the basis for resource mobiliza-tion and the subsequent launch of the policy dialogueand NDS formulation.

A terms-of-reference document is created to pin-point where a country’s needs fall on a spectrum thatranges from a broad societal vision to a comprehensiveand detailed national strategy and plan. As noted,GDI’s advice and support will be tailored to these par-ticular needs.

A national visioning exercise can utilize variousmethodological approaches and tools, but dialogue willgenerally focus on a critical examination of lessonslearned from the past, the philosophy of the socioeco-

nomic system, and assumptions about the factorsaffecting the country’s future that are relevant to shap-ing a vision. While this reflective process is intenseand often contentious because competing stakeholderviewpoints on such matters can prove to be difficult toreconcile, it is a crucial step in establishing the com-mon ground needed for addressing policy issues. Thisis particularly important in divided societies or coun-tries in transition. Similarly, when circumstances callfor strategic planning, methodologies are varied, butattention focuses on defining goals and objectives,strategic orientations, and more detailed policy frame-works at the macro and sectoral levels.

Regardless of specific circumstances, or whetherthe emphasis is on visioning or strategic policy plan-ning, it is important to identify and build upon localnetworks and initiatives and to tap into existing socialcapital as part of a participatory process. A hallmark ofGDI’s approach is to seek ways of bringing stakehold-ers together to bridge differences across divisions thatare obstacles to development. It is important tostrengthen existing organizations and work throughdemocratic institutions. This approach is carried up toand through the process of debating and approving anNDS in the national legislature.

President Carter is available to personally assist theNDS process at high levels, and GDI has the opportu-nity to marshal resources, as required, from theAmericas, Conflict Resolution, and Democracy pro-grams of The Carter Center. GDI also brings to bearon NDS formulation the Millennium Institute’sThreshold 21 integrated development model. T21 is atransparent, computer-based decision-support tool thatintegrates the economic, social, and environmentalaspects of development, allowing stakeholders fromgovernment and civil society to explore a wider rangeof development policy alternatives, assess their impactover a 20- to 50-year horizon, and draw clear compar-isons of their relative benefits in terms of reachingspecific national goals. The Threshold 21 model pro-vides a consistent and transparent means of translatingthe national vision into the medium-term expenditure

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framework, an essential step for donor alignment,monitoring, and evaluation.

In Guyana, GDI helped catalyze production of anNDS. This effort was the first major participatory policy-making initiative since the country’s return todemocracy, which generated widespread support acrosssocial and political divisions and laid the basis forGuyana’s Poverty Reduction Strategy Paper. It also rein-forced the country’s constitutional reform process andremains today a widely accepted reference point for thecountry’s ongoing dialogue on inclusive governance. InMozambique, GDI supported formulation of a long-term vision with a set of strategic policy thrusts.Mozambique’s Agenda 2025 was unprecedented in itseffective inclusion of both ruling and opposition politi-cal forces, its approval by parliament, and itsacceptance by government and civil society as the basisfor the future revision of Mozambique’s PovertyReduction Strategy Paper. Agenda 2025 notably sug-gests the need to reorient macroeconomic policy toenable broadly based growth and employment cre-ation.

The efforts of citizens in Guyana and Mozambiqueto formulate an NDS with the assistance of GDI havefundamentally altered national policy dialogues for thebetter, shifting the terrain on which policy discussionstake place. It has helped bring many new participantsinto the national policy debate and shifted its locus outof the narrow confines of the Ministry of Finance andthat ministry’s dialogue with international developmentagencies. It has widened the scope of the debate, intro-ducing essential development policy questions thatpreviously were not discussed within the country.

In Albania, GDI facilitated civil-society participa-tion in the Poverty Reduction Strategy Paper process,which over time has grown into a more comprehensivestrategy known as the National Strategy for Social andEconomic Development. However, the government,civil society, and the donor community acknowledgethat these processes did not permit Albanians toexplicitly consider their long-term national vision.They have asked GDI to provide support in this area

as part of the ongoing National Strategy for Social andEconomic Development process. These efforts willallow Albanians to harmonize objectives, such as theMillennium Development Goals and those associatedwith European integration, within a vision of theirnational aspirations.

NDS Implementation, Monitoring, and EvaluationWhile formulating a consensus NDS is challenging,ensuring that a strategy and set of policies are effective-ly implemented can be even more daunting. Atransparent and consistent relationship must be estab-lished between a long-term vision and strategy, existingsector plans, and instruments such as a medium-termexpenditure framework and the annual budget.Ministries should formulate action plans that definethe results to be achieved, the means to achieve them,and the indicators of success. In many countries, thePoverty Reduction Strategy Paper is the nexus linkingthe medium-term strategies with the annual budgetprocess and, as such, will be the focal point for trans-lating an NDS into operational policies and programs.There is an important role for the Threshold 21 toolduring this phase of an NDS.

Donor assistance programs should be reviewedand aligned with country priorities while operationalpractices and procedures are harmonized with thecountry’s development management systems.Strengthening government systems for policy analysisand decision making, reporting and monitoring ofpublic actions, as well as public financial managementare key areas of focus. An impartial actor can facilitatereforms and ensure that donors develop the confi-dence to rely on government systems. This is critical tosustaining ownership of the policy agenda throughimplementation, reducing the transaction costs associ-ated with aid delivery, and enhancing the legitimacy ofdemocratically elected governments.

Strengthening government systems is a high prioritybut cannot alone ensure the successful implementationof an NDS. Considerable investment must be made in

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ensuring that civil-society institutions, including thoseassociated with the private sector, can play a conse-quential role in implementation and ensuringaccountability.

With these needs in mind, GDI offers support to:■ promote alignment and harmonization of inter-

national cooperation with the country’s nationalvision and strategy process;

■ strengthen government institutions for moreeffective development management;

■ strengthen civil society capacity to monitor pub-lic policy and encourage accountability; and

■ create lasting mechanisms for civic dialogue to con-tinue long-term analysis, dialogue, and planning.

For instance, in Mali, where a national vision anda Poverty Reduction Strategy Paper already exist butlack a prioritized plan of action, GDI uses theThreshold 21 model to clarify the national govern-ment’s development priorities in order to target andalign donor assistance more effectively. InMozambique, GDI has promoted the definition oflinkages between the country’s Poverty ReductionStrategy Paper and its long-term national vision andstrategy, while, as noted, Guyana’s Poverty ReductionStrategy Paper was formulated on the basis of a pre-existing NDS.

GDI supports efforts to promote the harmoniza-tion of donor practices so that available aid money isused more efficiently to reduce poverty. In Mali, forexample, GDI supports the government as it formu-lates a clear, decisive action plan to direct donorharmonization efforts; GDI also will reinforce govern-ment implementation of the plan in cooperationwith donors.

In the area of dialogue with donors, GDI is pre-pared to mediate disagreements between countries andthe donor community, drawing on the internationalcredibility of The Carter Center. Such mediation canrefer to an NDS as a whole or to specific developmentpolicy issues.

Implementing an NDS that contains policy reformsmight require changing institutional frameworks and

ways of thinking. Therefore, a program of implementingpolicy change usually will contain support for institu-tional strengthening. This is an area in which policyreform design often falls short. In Mali, for example,GDI is working to support institutional change, fromthe reorganization and streamlining of governmentdevelopment management functions to instituting sys-tems to better track aid flows, to improve governmentefficiency and effectiveness in directing external aidtoward national development priorities.

A successful national strategy requires that collabo-ration between government and civil society becontinued through the implementation and monitor-ing stages. Although formulating and carrying outimplementation plans is classically a governmentresponsibility, when civil society plays a significant rolein developing an NDS, the knowledge it has gained inthe process can be useful to the implementation andmonitoring process. While governments take overallresponsibility for monitoring results, civil society shouldplay a critical role. For this reason, one of the aims andoutcomes of GDI work in a country often is a strength-ened capacity of civil society to monitor and evaluatethe implementation of an NDS. In Mozambique, forexample, GDI has helped enhance the capacity of civil-society organizations to undertake these efforts and toeducate the public on them. In Albania, GDI hashelped build a network of regional focal points for civil-society participation in the national strategy process.GDI’s efforts to enhance open governance and publicaccess to information, as it is doing in Mali, are vital tothe aim of promoting strategic policy reforms and gov-ernment accountability that will improve developmentprospects. This is part of a larger process of invigoratingexisting democratic institutions and processes andstrengthening accountability of these institutions to theneeds of the public.

In addition, the exact ways in which policies areimplemented often affect the content of the reforms,so those who proposed the reforms, along with thegeneral public, should be involved in helping overseeimplementation. Putting this into practice may necessi-

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tate the creation of institutions that spur publicinvolvement and continued engagement in importantissues impacting their future.

The efforts of The Carter Center and its partnersin Mozambique and Guyana have created demand fornew institutions and permanent public forums formaintaining nonpartisan and participatory research,dialogue, and debate on the strategic choices facingcountries. This is often a gap in the institutional land-scape of developing countries, because governmentsmay exclusively focus on immediate challenges, whiledomestic think tanks are short of resources anddependent on short-term donor funding. The CarterCenter is prepared, with its partners, to help createinstitutions and mechanisms for strategic policy analy-sis and dialogue.

3.4 Enhancing the Coherence of the GlobalDevelopment ArchitectureThe international development community hasincreasingly come to recognize that an NDS-styleprocess should serve as the cornerstone of nationallydriven development. International agreements such asthe Millennium Declaration, the MonterreyConsensus, the Rome Declaration on Harmonization,and the Paris Declaration on Aid Effectiveness explicit-ly underline the right and responsibility of countries todefine for themselves the policies and institutionalforms that best suit their unique development needsand circumstances. However, these agreements alsoacknowledge the need for greater coherence in theinternational financial architecture to provide a trulyenabling environment for national developmentefforts. GDI believes that, without greater progress onthis agenda, efforts to achieve MillenniumDevelopment Goals and ultimately sustainable humandevelopment will falter, and the international commu-nity’s professed commitment to country ownership willring hollow to countries struggling to compete on anuneven playing field.

GDI works actively in the international develop-ment community to advocate for greater coherence of

the international development architecture, defined asthe policies and practices of industrialized countriesand global institutions pertaining to trade, aid,finance, migration, technology, investment, security,and environment. The impact of such policies on thedevelopment prospects of poor countries has comeinto greater focus in recent years. A well-known exam-ple is the case of Mali, whose economy lost $43million, or 1.7 percent of GDP, in 2001 due to theprice-suppressing impact of U.S. cotton subsidies. Bycontrast, Mali received only $38 million of foreign aidfrom the United States the same year. In anotherexample, Guyana is forced to overinvest in health andeducation worker training to counter the impact ofactive teacher and nurse recruitment programs ofNorth American municipalities. While developingcountries must find creative ways to take advantage ofglobal opportunities, rich countries must also acknowl-edge the impact of their policies on the fragileeconomic and fiscal resource base of developing coun-tries. Development mediation applied to such global,systemic issues is facilitated through GDI’sDevelopment Cooperation Forum.

4. PROMOTING CHANGE THROUGH THEGDI DEVELOPMENT COOPERATION FORUMGDI leverages the impact of its country programs andpartnerships through its periodic, high-levelDevelopment Cooperation Forums, which are con-vened at The Carter Center under the chairmanshipof President Carter. The forums draw lessons frompartner-country experiences and generate consensusand political will needed among decision makers toreform policies and practices that constrain the abilityof countries to escape poverty and realize their owndevelopment goals.

Past forums laid the basis for the establishment ofGDI, defined the core principles it would promote,reviewed and validated its pioneering pilot work onGuyana’s NDS, and led to an expanded circle of GDIpartner countries. At its forum in 2002, the core prin-ciples GDI has promoted for more than a decade were

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validated as the basis of contemporary best practice indevelopment cooperation. At the forum, World BankPresident Jim Wolfensohn commended PresidentCarter and The Carter Center for recognizing and act-ing on the fundamental importance of countryownership of national development strategies longbefore many in the international community did.

The forum provides a venue for government lead-ers and international policy-makers to explorecontemporary development challenges, communicatedirectly with developing country leaders, benefit fromthe lessons learned from GDI’s work, and define prag-matic solutions for action. Aside from governments

and international organizations, the forums bringtogether representatives of civil society, oppositionpolitical parties, and the private sector from GDI’spartner countries, as well as scholars and representa-tives of nongovernmental organizations. The forumsgenerate public attention, motivate individuals andgroups to return home to apply new ideas, create newnetworks, and generate new initiatives leading to moreeffective sustainable development policies and prac-tices. Forums are often timed to take advantage ofother official gatherings to provide a less formal venuein which to explore critical topics.

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Overview: The Carter Center was founded in 1982 byformer U.S. President Jimmy Carter and his wife,Rosalynn, in partnership with Emory University, toadvance peace and health worldwide. A nongovern-mental organization, the Center has helped to improvelife for people in more than 65 countries by resolvingconflicts; advancing democracy, human rights, andeconomic opportunity; preventing diseases; improvingmental health care; and teaching farmers to increasecrop production.

Accomplishments: The Center has observed 67 elec-tions in 26 countries; helped farmers double or triplegrain production in 15 African countries; mediated orworked to prevent civil and international conflictsworldwide; intervened to prevent unnecessary diseasesin Latin America and Africa; and strived to diminishthe stigma against mental illnesses.

THE CARTER CENTER AT A GLANCE

Budget: $49.1 million 2005-2006 operating budget.

Donations: The Center is a 501(c)(3) charitable organi-zation, financed by private donations from individuals,foundations, corporations, and international develop-ment assistance agencies. Contributions by U.S. citizensand companies are tax-deductible as allowed by law.

Facilities: The nondenominational Cecil B. DayChapel and other facilities are available for weddings,corporate retreats and meetings, and other specialevents. For information, 404-420-5112.

Location: In a 35-acre park, about 1.5 miles east of down-town Atlanta. The Jimmy Carter Library and Museum,which adjoins the Center, is owned and operated by theNational Archives and Records Administration and isopen to the public. 404-865-7101.

Staff: 160 employees, based primarily in Atlanta.

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453 FREEDOM PARKWAY

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carter center gdi - dcf 2005 report

Documents

forum agenda

jimmy carter

list of forum participants

carter centers approach

human rights

world bank

chairmans report s ince

appendix c