Meeting the Development Challenge: Treasury Secretary John Snow

The following op-ed appeared in Japanese in the Nihon Keizei Shimbun on Jan. 29, 2005.

At this year's World Economic Forum (WEF) meeting in Davos, participants will give special attention to the issue of development, trying to understand just what makes it happen and what makes change possible. A new Global Governance report by the WEF, in fact, suggests that 2005 may turn out to be the "year of change," if countries can only tap the potential for development that private enterprise holds.

Under the leadership of President Bush, the United States has established policies that bolster and reward the efforts of countries to create the conditions that lead to genuine development. Our approach is founded on the belief that countries themselves must create the conditions necessary for economic growth. Development assistance can play an important role in lifting people out of poverty, but the primary driver of growth and development is private sector investment and trade liberalization.

Moreover, meaningful development requires structural reforms. The most important of these reforms are establishing democracy and the rule of law, controlling corruption, investing in people, and executing sound fiscal and monetary policy.

The new global consensus on development reached at Monterrey, Mexico, in 2002 endorses this approach. The Monterrey Consensus calls on developing countries to establish sound economic and social policies, and for developed countries to support these efforts through an open trading system, private capital flows, and additional development assistance.

We have seen some encouraging signs of commitment and progress toward those goals. Nicaragua has developed a one-stop program to assist investors and entrepreneurs as they open a business. This program has substantially reduced the time necessary to set up new ventures, and has stimulated private sector development and job creation. In Madagascar, the government has pursued a proactive anti-corruption campaign to enforce the rule of law when granting permits for extractive industries, which will have the added benefit of protecting the environment. The government of Georgia has doubled its investment in health care and increased teacher salaries by two-thirds, laying the groundwork for a healthy and well-educated workforce of the future.

Recognizing the powerful potential of working with countries that have sound economic and social policies, the Bush Administration moved decisively to make good on the commitment we made at Monterrey. Since 2000, we have increased our development assistance by nearly 90 percent. We have committed $15 billion over five years to combat the HIV/AIDS pandemic, a major obstacle to development in Africa and the Caribbean. We have significantly raised our grant assistance to the poorest countries, while also increasing trade and investment opportunities through renewal of the African Growth and Opportunity Act. We have provided more than $1.2 billion of financing to secure improved access to clean water supplies for over 9.5 million people in developing countries and to adequate sanitation for an additional 11.5 million.

The United States is particularly proud of the Millennium Challenge Account, an innovative program that provides development assistance to countries that rule justly, invest in their people, and encourage economic freedom. This program makes available $2.5 billion (to date) separate from and in addition to our current assistance programs. In his 2006 budget, President Bush will seek additional funds for the MCA, and disbursements will begin supporting projects this year.

With these efforts, the United States has reached well ahead of schedule its Monterrey commitment to increase development assistance by 50 percent between 2000 and 2006. Yet the Bush Administration recognizes the imperative to do more. While seeking greater debt relief for the poorest countries, we will press ahead with key initiatives in the coming year aimed at supporting individual nations' efforts to create the conditions for development.

In advancing a pro-trade WTO Doha round, we have proposed the elimination of all global tariffs on consumer and industrial goods by 2015 and substantial cuts in farm tariffs and trade distorting subsidies. Trade liberalization on such a grand scale would deliver tremendous benefits to the world's poor. We will also work closely with the Multilateral Development Banks (MDB) to expand their assistance to the private sector, including small- to medium-sized enterprises. In addition, we will work to secure improvements in the business environment of developing countries, a condition integral to private-sector development, economic growth, and job creation.

The meeting at Davos is an encouraging sign of an invigorated international focus on understanding the causes of poverty. We now know what the building blocks necessary for meaningful development are. They include economic, social and political reforms in developing countries. The United States is committed to supporting those nations that undertake such reforms. Only with their enactment will we all be successful in our combined efforts to defeat poverty and improve peoples' lives.