Well,
good morning, and let me begin by thanking President Lee and the Korean
Government for the excellent preparation and for the example that we
have heard about and see for ourselves here in Busan. And let me also
thank the OECD for helping to organize this Fourth High-Level Forum on
Aid Effectiveness.
I’m pleased to be the first American Secretary
of State to attend such a forum. We’ve already heard some excellent
addresses with a lot food for thought, and I imagine that all of the
prior speeches will be studied and relied upon as we judge the outcomes
of our efforts here at Busan. Let me therefore say that I will put my
entire remarks on our website for anyone who wishes to read them, but
let me make a few comments about how I see what we are doing here today
together, because I think it’s important that we recognize the
accomplishments that have occurred, in some places quite dramatically,
as we have heard not only about Korea but also about Rwanda. But let us
also acknowledge honestly the challenges and the problems that we must
address if we expect to see greater progress.
It’s imperative to
recognize a fact that is important in all of our deliberations. Official
development assistance from governments and multilateral organizations
is no longer the primary driver of economic growth. In the 1960s, such
assistance represented 70 percent of the capital flows going into
developing countries. But today, because of private sector growth and
increased trade, domestic resources, remittances, and capital flows, it
is just 13 percent – even as development budgets have continued to
increase.
So what does that mean for us? Well, with official
development assistance representing a much smaller share of the
resources flowing into developing countries, we have to think
differently about how we use it. I believe it must serve as a catalyst
to spark self-sustaining progress – by helping to reduce risks that
prevent companies from doing business in developing countries; by
helping governments and domestic financial institutions expand credit to
local small and medium enterprises; by working with governments to
address the structural barriers to advancement, especially for women –
and we’ve heard already about education, but there are also outdated
land tenure laws and access to capital that are real impediments – and
by lending technical assistance that helps governments build their
capacity to better serve their own citizens.
In short, we need to
continue shifting our approach and our thinking from aid to investment,
investments targeted to produce tangible returns. And we have to be very
honest about it, because wise investors choose their investments
carefully. They manage for risks; they amplify their impact by trying to
draw even more participants to the table. But when a particular
investment is not producing the projected returns, there have to be
tough decisions made about whether to modify or eliminate it.
So
even as we point to progress, I don't think it’s appropriate for us to
dwell on our accomplishments, but instead I’d rather talk honestly about
what each of us – traditional donors, emerging economies, developing
countries, the private sector, civil society, and NGOs – can do now to
deliver on the commitments we have made and to produce the results we
seek.
I recognize that the changes we’ve seen in development mean
that old distinctions – like “donor” and “recipient” – are less
relevant, since many emerging economies are both donors and recipients,
but it is still worth taking stock of what each of us is called to do.
I’ll
begin with traditional donors, including the United States and the
multilateral organizations represented here. Of the 13 measures of
progress we all agreed to in Paris six years ago, we have achieved just
one, and that just barely, related to coordination. Now, I recognize
that these metrics are aspirational, but I believe we can and must do
better. So let me describe a few of the concerns we hear about
traditional donors and what the United States is attempting to do in
response.
First, we need to get serious about what we mean when we
talk about country ownership of development strategies. Let’s be clear.
Too often, donors’ decisions are driven more by our own political
interests or our policy preferences or development orthodoxies than by
our partners’ needs. But now our partners have access to evidence-based
analysis and best practices, so they can better decide what will work
for them. We have to be willing to follow their lead. We have tried to
do that in the three-plus years in the Obama Administration, starting
with recognizing that development needed to be elevated alongside
defense and diplomacy as one of the three pillars of our foreign policy.
So we set about working not only through the State Department, but
USAID and the Millennium Challenge Corporation to do just that. So, for
example, our new U.S. Global Health Initiative supports country-led
plans to try to strengthen health systems so our partners can eventually
address more of their own health needs.
But we’ve also found that
too often we see countries shifting resources out of their national
budgets once donor money comes in, whether it is in a parallel
organization or through the national ministries. So we have a substitute
effect instead of a cumulative one. So as we make decisions about
country-led development strategies, our partners have to be working with
us in ways that truly set the outcomes we are trying to achieve and
then hold both of us accountable for doing so.
Second, our
partners express concerns about what is called “tied aid”: requirements
that some development contributions must be acquired through firms in
our own countries. We certainly understand the benefits of untying aid
and we attempted to do so. While we cannot commit to have untied all
American assistance, we are working to untie as much as possible. And
actually in – between 2005 and 2009, we more than doubled the percentage
of assistance that is untied, from 32 percent to 68 percent. But one of
the reasons tied aid has persisted is in order to get political support
for the budgets that we turn into official development assistance. So
we try to untie as much as possible, but recognize the political
constraints that we and others operate under.
Third, we hear from
our partners that we need to focus on the right measures of success. All
of us know the difference between inputs and outputs, but sometimes we
confuse both with outcomes. Too often, we measure success by what we put
in – namely the number of textbooks delivered to schools or seeds
provided to farmers – rather than what we get out. We know textbooks
alone don’t lead to a well-educated workforce and that seeds alone
cannot produce a thriving agricultural sector. So we have to be clear
about what our outcomes should be and then hold ourselves and all of our
partners to them. Within our government, the Millennium Challenge
Corporation has been a pioneer in this area. And USAID recently adopted a
new measurement and evaluation model that has been broadly recognized
as the gold standard.
Fourth, we hear that we need to be more
flexible. And the truth is that we make and implement decisions more
slowly than the private sector and often more slowly than some emerging
economies. Now, of course, we do have to demand due diligence to make
sure that dollars are spent effectively and efficiently, but I admit
that, over time, our procedures have become bureaucratic and cumbersome.
So we should take, with your help, a hard look at how we streamline our
protocols so we can invest faster and adjust our strategies more
quickly without sacrificing either high standards or outcomes. The
United States, through USAID’s Forward agenda, is working to streamline
our procurement process and channel more resources into government
ministries that can use them efficiently.
And finally, I want to
say a word about coordinating our efforts. This has been a topic of
development conferences for so long that it is a cliché, but it is also
still a problem. Many donors, like ourselves, have multiple agencies
that engage in development. The United States Government alone has more
than 15. And all too often, we require different measures of success, so
it is easy to see how our good intentions can create frustrating
burdens for our partners.
So we are trying some different
approaches. Through the Obama Administration’s new Partnership for
Growth, the United States is working intensively with four partner
countries – El Salvador, Ghana, Tanzania, and the Philippines – to
identify their biggest impediments to growth, and then to coordinate the
efforts of every U.S. agency, from Agriculture to Treasury, in helping
them overcome these barriers. In addition, our Feed the Future program
now helps our partners bring together international donors to invest in
the country’s plan to improve agriculture and food security.
So in
all of these areas, from country ownership to coordination, the United
States is responding to the concerns we have heard. We are guided by
President Obama’s Policy Directive on Global Development and by the
first-ever Quadrennial Diplomacy and Development Review that I
commissioned to make a blueprint for how State and USAID become more
nimble, more effective, and more accountable. We recently launched a
Foreign Assistance Dashboard at
www.foreignassistance.gov,
which lets anyone with an internet connection see where we’re investing
and how much. And today we are taking another step. I’m pleased to
announce that the United States will join the International Aid
Transparency Initiative, and we will – (applause) – report data in a
timely, easy-to-use format.
But just as traditional donors can
work smarter and do better, so can others as well. We welcome the
emerging economies that are embracing the responsibility to help solve
shared challenges. For example, Brazil and Japan are partnering with
Mozambique, whose climate and soil condition are similar to Brazil’s, to
expand its soybean crop. And Mexico, like Brazil, is sharing lessons
with all of us from its innovative conditional cash transfer programs.
All
of us must live up to the international standards that the global
community has committed to, starting with a commitment to help countries
become more self-reliant. That means, for example, helping countries
with natural resources escape the so-called “resource curse” that leaves
them rich in oil, gold, or other commodities but poor by many other
measures. And while national sovereignty is an important principle, it
cannot become an excuse for avoiding scrutiny of development efforts,
not if we want results. Transparency helps reveal our weaknesses so we
can improve our work.
Being an accountable partner also means
refusing to look the other way when leaders repress their own people.
This year, the World Bank reported evidence that respect for economic
freedom and civil and political liberties helps explain why some
countries achieve better long-term economic outcomes than others. Well,
it stands to reason. Any plan for growth that depends on opening new
businesses will also depend on an environment where citizens can
exchange ideas and compete for customers freely, and where all people
have a chance to contribute to progress. It also depends on strong
institutions: impartial courts, a competent, honest police force, a free
press to call out corruption.
Finally, I know that the historical
distinction between developed and developing countries still influences
how some see development, with traditional donors on one side, emerging
economies and developing nations on the other. That won’t work anymore.
We need every provider of assistance at the table, emerging and
traditional, public and private. And we need to make sure we get past
the old divisions so we can deliver results for everyone.
This
brings me to our developing-country partners. Today, we know donors must
do more to support country ownership, but we also have to expect more
from developing countries. The political will must be mobilized to take
on the biggest obstacles to a country’s own development. For some, it
may be a court system where the rule of law only applies to some of the
people some of the time, or a system of laws that prevent women from
owning or inheriting property. For others, it may be a tax system that
makes it easy for people to avoid paying, or fails to levy taxes at all.
And for many, it is a ruling elite who protect their own interests at
the expense of their fellow citizens. And in many places, it remains
security, and I applaud the countries of Central America, who are
working together to take on one of the biggest barriers to development,
the lack of sufficient security, by working to reform a criminal justice
sector and fight corruption.
All of these challenges require
leaders who have the courage to make tough choices and who are willing
to tell powerful people something they don’t want to hear, that their
taxes are going up, for example, or that their special privileges are
going away. Elites in developing countries need to support political
leaders who take on these tough issues that will benefit everyone by
making the pie even bigger.
Developing countries also need to be
smart shoppers. Be wary of donors who are more interested in extracting
your resources than building your capacity. Some funding might help fill
short-term budget gaps, but we’ve seen time and again is that these
quick fixes will not produce sustaining results.
And finally, the
developing countries represented here should recognize that the domestic
and foreign private sector can play a productive role in development.
Now, I understand that some of you may be reluctant to buy that, for
understandable reasons. You have seen corporations put their profits
ahead of your interests in the past, and you have suffered the
consequences. But today, we see companies truly exercising corporate
responsibility, like IBM and Unilever, offering sustainable solutions
for development problems. If the business climate in a country is
improved, if businesses can start without having to pass money through
many hands and go through many hoops, you will see results, and you can
create more opportunities for more people.
We recently saw an
announcement in Haiti, where the Government of Haiti, working with a
Korean company, Sae-A, is putting together a $70 million investment by
one of the largest garment manufacturers in the world to help build that
company’s first textile mill that will eventually employ 20,000 people.
But it wasn’t only the employment. It was also building a school and
building housing and helping to model what could work, coming straight
out of the Korean experience.
And now, let me say a word to our
partners from the private sector and civil society. I want to thank our
civil society partners for your tireless efforts to improve lives around
the world and congratulate you on developing the Istanbul principles
for development effectiveness. Now it is time to get to work.
(Applause.) And let me say, most importantly, like traditional donors,
you must end the practice of creating your own strategies independent of
a country-led plan. It is in your interest – (applause) – to coordinate
with government agencies and other NGOs. Otherwise, we see you, what
President Kagame very eloquently described, which is parallel programs
that do not build capacity and leave sustainable outcomes.
As for
the private sector, as you well know, some, if not many, in the
development community are still reluctant to work with you. You can help
bridge this divide. Don’t wait for activists to push you to set
industry guidelines for workplace safety, pay, transparency, or other
issues. Take these steps yourselves and build trust.
The potential
is enormous. USAID, under Raj Shah’s leadership, recently launched a
new partnership with the World Food Program and PepsiCo. Together, we
will invest $6 million in Ethiopia, Prime Minister, to help smallholder
farmers grow more chickpeas. Pepsi will buy those chickpeas and turn
them into a high-energy paste, which the World Food Program will then
distribute to malnourished children throughout the Horn of Africa. Let’s
expand on models like this. We need new types of public-private
partnerships, new mechanisms for sharing technology, and new ways to
align your business interests with development goals.
And there is
one last challenge I want to discuss, and that is to echo the eloquence
of Queen Rania: leveraging the impact that women can have on effective
development. If we didn’t know before, certainly a growing body of
research should convince us that nations which invest in women’s
employment, health, and education tend to have more economic growth;
farmers are more productive, children healthier and better educated. So
for our part, the United States is putting women at the center of our
development efforts, and we are collecting data – (applause) – to make
sure we’re having the impact we want.
In just a little while, I
will attend a meeting for the gender issues, and I thank Korea for
cosponsoring that. That will be chaired by Michelle Bachelet, where we
will announce our program for trying to collect data to convince those
who remain unconvinced to invest in your girls and your women if you
wish to develop. (Applause.)
So today, I’m asking all of us to
take a hard look at where we need to improve, starting with my own
country’s shortcomings, because the stakes are too high for anything
else. And as we look ahead to future gatherings where our work will be
discussed, we need to be able to say that out of Busan we really made a
difference, we learned from our mistakes, we took on the hardest
problems, and we held all of us, with no exceptions, to the highest
standards, and then we delivered on our commitments. Not just a
commitment to a certain level of funding, or even to a series of
principles, as important as those are, but the ultimate commitment to
improving the lives of millions of people and to helping those who are
on the frontlines doing development work day in and day out, and a
commitment to the idea that every person, boy or girl, should have the
right to fulfill his or her God-given potential in the world of the 21
st
century. That is, after all, the purpose of development, and that is
the goal of this forum, and it is an honor to join all of you in working
to achieve it.
Thank you very much. (Applause.)
