Economic Development Overseas, Why Not at Home?

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Introduction: I spent some 16 years leading teams or advising foreign governments (mostly during wars) on economic, political. and social (education and health) development.  Eventually, I learned as did my colleagues, that the effort and money the US (and other nations) invested as “development assistance,” was more selfishly than charitably motivated. It advanced the political, security or economic interests of the United States.  However, that’s a subject for another day.

Here, I would like to describe the international development profession and mention some of its processes, principles, cautions and lessons-learned.  Our primary objectives were/are to relieve poverty and help raise the capacity of local populations and their governments to the point where they themselves can sustain and build on progress made.

For years, I’ve wondered why the United States doesn’t do what other countries do; namely, draw from the experiences and knowledge of international development and apply them to America’s own pockets of poverty and underperforming economies.  However, I was recently reminded of a major reason why they don’t: American politics.

The Trump Administration released, in late April, an outline of its 2018 budget priorities.  Among them were a number of proposed budget cuts: 40% to foreign aid, 36% to the State Department and the Agency for International Development (AID) and many others. Reading/listening to comments about the cuts, I recalled the much earlier dogged efforts of Senator Jesse Helms (who died in 2008) to kill AID and US international development work.

Helms pursued a multi-year campaign to shrink government and banish international development by eliminating three agencies: the Information Agency (USIA), the Arms Control and Disarmament Agency (ACDA) and AID.  He succeeded in closing USIA and ACDA and reduced AID from a highly regarded, very effective agency of 16,000 (1978) to a contract manager of 1,400 (2017). His last attempt to close AID occurred in 2000, during President-elect G. W. Bush’s transition.

Essentially, those sharing Senator Helms’ opinion of small government and foreign assistance, believe this latter responsibility lies first with the people and governments of these countries. They should seize the initiative, they maintain, and pull themselves out of their third- and fourth-world status.  Strongly influencing these views is a widespread, but false, notion of how much the US spends annually on foreign assistance.  Many were/are convinced it’s a large percentage of the US GDP.  It isn’t and never was.

National foreign assistance is measured by the percentage of GDP, not the absolute amount a country spends. Thus, the US’s $33 Billion ranks #1 of all participating governments.  However, its 0.7% of GDP is exceeded by other countries: Norway, Sweden, Denmark and Luxembourg (1%) and by the UAE (1.17%). Put another way, each American citizen paid $80.37 per year (2015) on foreign assistance. By contrast, each spent $101.76 and $126.02 respectively on candy and soft drinks.

Throughout the following paragraphs, I’ll provide examples, war stories, of lessons I learned.

Key Elements of Successful Economic Development:

US and Business Development: Many American states, cities, counties and towns do have economic development departments or officers.  However, they seldom look to the 72 year record of international planning and program implementation for insights, guidance, mistakes made or even inspiration. Rather they are largely concerned with attracting new companies to open or invest in their jurisdictions in order to lower unemployment and expand opportunities. Business development is an important element of improving local economies, but there are others.

International Development and the Community Profile: International economic developers know each host country or region is idiosyncratic.  Thus, each requires a plan tailored to it as well as possible linkages between different internal aspects of a troubled economy, e.g. between local education/training and modern work requirements or public health and employability. This background is essential to maximize potential economic improvement because there are always reasons why a local/national economy is falling behind or failing.  In my particular work, a constant reason was years of war.

Therefore, those engaged internationally know they must first understand in some detail the society, the economy, the constraints and the advantages of each place where they will work. Without this, they will be unable to sit down with community representatives and together prepare a draft local development plan. If the outside development team is not well informed, local community reps will not become involved to the degree necessary.

Once agreed on, the plan will inevitably need to be adjusted as the implementation moves forward.

Determining the general nature of a community is a very important first research topic: is it rural, a rust-belt city or town, or one whose population is internally divided because of religious, ethnic or other issues? What is the economic history of the community? Steady growth or gradual decline as traditional employment faded? What are the demographics of the population, i.e. age, work status, single heads of household, education level, literacy rate, income distribution, health/disabilities, addictions, density of residents per square mile etc.?

How many are receiving assistance from some level of government and for what? What is the relationship between the residents and their local government and vice versa?  Is it responsive? What public services are provided and what do the recipients think of them? What about societal attitudes towards education and work?

War Story: I discovered in Afghanistan that a principal endemic reason for the lack of economic advancement, beyond 40 years of war, tribalism, death and destruction, was Afghans’ cultural  attitude towards their bosses in any context.  An Afghan employee will do nothing without the express approval of the most senior manager, farm or business owner – and this crushes most initiative.

I was advising the head of the Afghan Civil Service, who had gotten permission from the country’s president to organize a large international conference and I was helping his managers and their staffs pull it together.

Ten days before the event, I asked if the conference program had been finished. No, they said because the director general had not authorized them to purchase the special paper needed. I convinced them he would be angry if there was no program. They went to the factory and picked up the paper. When the boss learned what they had done, he threatened to fire them if they did anything more without his approval.

War Story: In Kosovo I learned a totally unexpected lesson because I didn’t think it was necessary to research attitudes of international organizations and Western European and American businesses.  I was wrong.

The project I was managing was the introduction of a fairly sophisticated website in Pristina (the capital city) on which all the Kosovar businesses could post their products, their track record, pricing and delivery options.  The purpose of this web site was to allow the large number of US and foreign military forces, international organizations and large non-governmental organizations present in Kosovo to satisfy their needs for bread, milk, soft drinks, potatoes, vegetables, beer, paper products etc. from local suppliers. The monthly purchases amounted to millions of dollars.

Our expectation was that as these large international purchases were made, the local Kosovar economy would expand, employ more people, prosper and fewer young men would join local ethnic militia groups.

Not one US or international organization purchased one potato or one case of beer through the website. The reason: their procurement offices didn’t want to change their normal practice of filling their needs from Western sources in Europe or North America. Thus, while they could have saved their organizations tens of thousands of dollars every month and simultaneously developed the local economy, they chose not to. After four months, we closed our super website, and lost our $750,000 investment. 

Program Implementation 

War Story: In Iraq, I learned two crucial lessons about program implementation. Don’t provide equipment small or large to any organization or person without ensuring that they know how to operate, maintain and repair it, and where to get parts. The second is to be careful to avoid creating a dependency.

After a year of receiving generators from the US military, Iraqi villages would ask the local US Army unit (usually recently arrived) for a new one when the other broke down. This practice continued for years. Ditto with the local farmers: the Iraqi Government had established a process to obtain seeds and fertilizer, but it was easier and faster to get it from the Americans, so the long-term solution was ignored.

Building self-sufficiency must be the primary goal of all economic development. 

Buy-in from Local Community: Armed with this detailed profile, it is possible to work productively with local citizens to custom fit a development program to the tolerances and capacities of their community and to begin implementing it.  However, before initiating any activity, It is essential that key leaders are invested in the plan and are part of its execution. Otherwise, it won’t succeed.

The larger lesson was that changing established routines and minds, even of modern, Western people, is not easy. Trying to do the same with Afghans or Iraqis, whose attitudes and ways of doing things have evolved somewhat over 3000 years, is even harder. The same would be true in different parts of the United States.

Setting Standards for Program Achievement

War Story: In Bosnia, Croatia and Afghanistan I learned one very important truth about program design: start at the level where the community is, not where you want it to be.

Had we done that, rural small businesses, local village government offices that for the most part stacked papers on floors and surfaces where the stacker, but no one else, knew exactly was there. However, we created massive confusion and vacant stares when we distributed hundreds of laptops and told them how to create computer files.

The other inhibitor, not considered, was that very few had dependable energy supplies. After we left, they returned to the pile system and sold some of the computers. Had we started with file cabinets and folders and trained on organizing by subjects and waited six months, they would have felt more comfortable moving to computers after they got a generator.

Conclusion: These are just a few of the insights and best-practices, or at least better practices, I gained through working in six different countries over a number of years.  While my war stories would have different backgrounds in the United States, I believe some of the situations and solutions would be familiar and applicable to different American communities.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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