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We still have much to do to adapt our arrangements for administering foreign aid to the fact that a successful aid program must be a process of partnership. Foreign aid is not something a donor does for or to a recipient; it is something to be done with a recipient. This is the reason for the growing emphasis on self-help by aid recipients. There is by now a strong consensus-although far from complete unanimity-that foreign aid in all its forms will produce maximum results only in so far as it is related to maximum self-help. This is the opinion of leading public officials and development scholars in developing countries as well as in advanced countries.
The broad concept of partnership and self-help applies to technical assistance projects, in which the purpose increasingly is to establish effective permanent institutions in the developing countries. Therefore foreign technical advice and training are made available only if those receiving aid commit themselves to establish the necessary administrative and legal framework, provide necessary budget funds, make available appropriate trainees and, on a specified timetable, take over full management and support of the enterprise.
As for technical assistance, we need to upgrade substantially the quality of our work. Aid donors and recipients need jointly to set higher standards of excellence for their joint work. I think more needs to be demanded of aid recipients by way of serious commitment, major improvements in policies, responsibility for funding and providing personnel. And I think more needs to be demanded of aid donors: higher quality resources, applied over longer periods, with persistence, imagination and a greater sense of personal involvement and pride in the outcome.
The concept of partnership and self-help applies to capital projects as well. Here, too, there is increasing agreement that completing a physical structure-a factory, a dam, a stretch of road-is not enough. What is needed in a developing country is the capacity to plan, execute and maintain capital projects, and the commitment of funds, talent and other resources to sustain them.
Also, more emphasis ought to be placed on the word "development" and less on the word "banking." I certainly do not mean to slight banking values; unless a project meets sound technical and economic standards, it will end up as a net drain on a developing country's economy, not a net contribution to its growth. But funding is in a sense the lesser part of the task. The greater part is to deal with the capital project in its broader setting, and to take full advantage of the opportunities the project presents for institutional changes-through training, through policy improvements, through the development of competence in operations and maintenance-so that a particular project will make a maximum contribution to national development.
Some of our A.I.D. people in the field feel so strongly about this point that they have suggested it is a mistake to think-as we customarily do-of technical assistance and capital assistance as separate categories. They suggest that the objective invariably should be to develop institutional capacity in the developing country, and that technical and capital aid should be related in whatever combination is needed to achieve the desired results. I am not yet ready to accept this idea wholly, but I believe it is very much worth thinking about as we try to improve the process of aid administration.
In recent years the concept of partnership and self-help has progressed in other ways. Both bilateral and multilateral aid donors have increasingly expressed interest in broad questions of development policy in the receiving countries-questions such as whether fiscal and monetary policies are inflationary; whether all foreign-exchange resources, received both from exports and from foreign aid, are being applied under a sensible set of priorities; whether educational, tax, land and other reforms that may be needed are in fact under way. And aid recipients have increasingly recognized the propriety of such an interest by the donor countries. We are past the stage in most countries where an interest in matters of this type by an aid donor is considered an unwarranted invasion of the recipient's independence. What is involved here are not political "strings" but elements of a partnership based on the shared objective of achieving the most rapid possible progress toward a self-sustaining and satisfactory rate of economic growth.
This partnership relationship is inherently delicate, but it is strongly founded on mutual interest and self-respect. The aid donor recognizes that the recipient, as an independent country, must and will make its own decisions on budget and fiscal policy, foreign exchange, educational priorities and other national policies affecting development. And the aid recipient recognizes that the donor, as an independent country, must and will decide whether aid requested for a given project or purpose will in fact be likely to achieve the results desired, given the policies that the receiving country proposes to follow. We in the United States consider that it is entirely up to an aid recipient what development policies it wishes to adopt. But it is equally up to us, as an aid donor, to decide whether the circumstances presented in a country will permit external assistance to yield significant results.
The meeting ground between these interests of recipients and donors obviously should be a broad measure of agreement on what policies in fact make the most sense for a particular country at a particular time, and it is in this area that there have been some very important developments in recent years. I would mention three, not in any particular order of importance.
First, the United States has increased its competence for dealing with the broad questions of development policy in aid-receiving countries. A.I.D. Mission Directors and their staffs in the field have a higher degree of understanding and sophistication. With the support they can call on from Washington, they are able to deal flexibly with the broad range of development issues which they encounter. None of us is fully satisfied with the quality of our work, but there is no doubt it has increased significantly over the last several years. And we see evidence of a parallel increase in the competence of the ministries and agencies of other donor governments, such as Britain, Germany and Japan.
Second, in Latin America an international organization, the Inter-American Committee for the Alliance for Progress (CIAP), has been established for the specific purpose of reviewing progress under the Alliance. This Committee, made up of six Latin American members and one from the United States, reviews the situation in each Latin American country at least once a year, and makes judgments and recommendations concerning the improvements that aid-receiving countries ought to make in their policies, and the extent and nature of the assistance that donors should provide. The CIAP is a promising arrangement, providing sound technical judgments by an agency in which the Latin Americans themselves play the leading role. We hope that similar arrangements may be developed for other regions.
Third, the World Bank is expanding its use of consortia and consultative groups, and using them as a basis for reaching common judgments among donors and recipients as to the policies that are appropriate for particular developing nations. The Bank now has set up more or less formal groups for eight countries, and several more are likely in the future. These are promising instruments for achieving three objectives at once: to increase the quality of development policies in an aid-receiving country; to increase understanding among aid donors as to its actual situation and real requirements; and to increase the quality-and if appropriate the amount-of the aid made available to that country.
In summary, while there is much change and improvement under way, there is still far to go-for both students and practitioners-before it can be said that we are soundly administering foreign aid in accordance with the concept of partnership and maximum self-help.
A second element of consequence in current thinking about foreign aid is the growing emphasis that is being given to pluralism in the developing countries. I believe there is now ample evidence and a growing consensus supporting the proposition that those countries will develop fastest which rely most heavily on multiple sources of private and local initiative and energy-in contrast to countries which rely most heavily on central direction and control.
Let me make perfectly clear what I mean. I am not talking about a distinction between planned and unplanned development. National planning in a developing country seems to me essential, not only to establish national policies on fiscal and monetary matters, educational priorities and so forth, but also to establish those policies and systems of incentives which will in fact bring forth maximum private and local initiative. A sensible national development plan in my opinion can and should be aimed at building a pluralistic society.
Furthermore, I am not talking about a simple distinction between public and private activities. There are many examples in developing countries of private activities which are centralized and monopolized to an extent that greatly hampers growth. There are at least as many examples of national governments which are overcentralized, thereby stifling the enormous potential energy of local government. My point, therefore, relates to the great importance in both the public and the private sector of establishing arrangements and incentives which will call forth the initiative and energy of small units, groups and individuals.
There can be no doubt of the importance of this concept, but we are only beginning to examine its implications and to build them systematically into our programs and administrative processes. For example, we have not given enough weight to the goal of simplifying tariffs, rectifying exchange rates, and liberalizing import controls. These measures would permit hundreds and thousands of private businessmen and farmers to make better decisions and take more rapid actions, resulting in quicker and sounder investment and growth. Steps of this kind have in fact had such results in Greece, in Korea, in Pakistan and in other countries. It is important not only to simplify regulations and replace physical controls with those working through the market, but also to avoid frequent change in the rules, so that large numbers of decision-makers can act with reasonably firm expectations about the future.
Second, it is likely that we can and should learn more than we have from such successful cases as the Joint Commission on Rural Reconstruction on Taiwan, the locally based rural works program in East Pakistan, and the credit unions and rural cooperatives in Latin America. They can teach us how to help rural communities organize and apply their latent energy to their own problems and thus achieve high rates of growth in agricultural production and rural living standards.
Third, we can do much more to establish direct connections between private organizations and individuals in the advanced countries and the problems they can help to solve in the developing countries-as A.I.D. has done with considerable success in helping to establish savings-and-loan systems in several Latin American countries, primarily by supporting the efforts of leaders in the United States' savings-and-loan industry.
Fourth, we could do more to help establish and support private American organizations designed for specialized tasks in the developing countries: for example, the American Institute for Free Labor Development, established by the A.F.L.-C.I.O. to work with labor unions in Latin America; or the International Executive Service Corps, established by a group of private business leaders to provide American volunteers to work with individual business firms in developing countries.
These are only illustrations-of which a far longer list could easily be prepared-of ways in which it should be possible to administer assistance in more imaginative and more flexible ways, so as to induce and support private and local groups in developing countries to deal with their own problems. This is extremely important because these measures can stimulate not only economic and social progress, but also the development of more democratic societies.
My last major point relates to research and evaluation. It is my impression that the organizations which carry out aid programs do not have a distinguished record of building into those programs strong elements of research and evaluation. Certainly this is true of A.I.D., the agency I know best.
This is unfortunate on at least two counts. First, foreign assistance is a relatively new activity and plainly we have an enormous amount to learn about how to conduct it effectively. We have lost much valuable time and have failed to learn from much valuable experience, because we have not had adequate research and evaluation programs. Second, the process of foreign assistance is inherently dependent on research. It is often described as a method of transferring know-how, but this is plainly wrong; it is instead a process of developing know-how-a process of finding out what will work in Nigeria, not of transferring what has been found to work in Nebraska. If we understood our own business better, it might well be that the whole process of foreign aid would be seen as a research process, aimed at learning how to move a particular society, with its special and unique characteristics of history and culture and physical geography, toward specified objectives.
However that may be, there can be no doubt of the importance of incorporating far stronger programs of research and evaluation into our aid administration. We in the Agency for International Development have been trying to make some headway in this direction. For example: (a) For the last three years, we have organized special summer research projects on the economic aspects of development, drawing together faculty members and graduate students from a number of universities for a summer of research work that benefits them and greatly benefits us; (b) Over the last four years, we have gradually built up a program of research grants, financing such varied activities as trying to increase production of high-protein grain legumes in Asia, and developing a new mathematics curriculum for elementary schools in Africa. In this we have had the guidance of a distinguished advisory committee of research scientists chaired by Dr. Walsh McDermott of Cornell University; (c) A year ago we persuaded Colonel George Lincoln, of the West Point social science faculty, to spend his sabbatical examining A.I.D.'s systems of evaluation, and recommending improvements in them. Colonel Lincoln's report, based on extensive field work in Latin America, is a valuable guide that is now being applied throughout the Agency.
In these ways and others, A.I.D. is taking steps to improve its own performance. We still have far to go, particularly in finding how we can build into every aspect of our work the spirit of research on development problems. We also have done far too little in a systematic way to help create research competence in the developing countries themselves.
Whatever part of the aid business one examines, wherever one looks in the developing countries, one sees large and challenging opportunities for improving the administration of aid so as to achieve more rapid economic, social and political progress. Our mood should be restless, inquiring, impatient-for there is much to be done.