I am giving a report Thursday to the heads of the Group of 20 governments, including President Obama, suggesting creative ways for the world to continue investing in development despite fiscal constraints. I hope three key ideas become part of congressional deliberations over the coming weeks.
First, programs funded by U.S. generosity have been a core component of this 50-year project of raising living standards around the world.
Aid is targeted to fill specific gaps in development. The most important of these gaps is innovation. When the private sector doesn’t have incentive, and poor governments don’t have the money, smart aid pays for breakthrough solutions. The green revolution that fed a billion people in the 1950s and ’60s never would have happened without advanced agricultural science funded by U.S. aid. In just the past 10 years, millions of children have been saved from diseases such as measles and whooping cough by vaccines that Americans paid for through their contribution to an organization called the GAVI Alliance. Immunization is a great example of how aid can be effective. Thirty-six cents worth of measles vaccine protects a child for a lifetime.
Second, development isn’t just good for people in poor countries; it’s good for all of us. It used to be that the world was, roughly speaking, one-third rich and two-thirds poor. Now, the number of dynamic, healthy, highly educated countries is much higher, which is a recipe for prosperity. Imagine the world economy without Brazil, China, India, Indonesia, South Korea, Mexico or Turkey.
If countries that are currently poor can feed, educate and employ their people, then over time they will contribute to the world economy. On the supply side, they’ll increase the production of key commodities such as food, keeping prices lower. On the demand side, as their citizens are more productive, they’ll become important markets for trade.
But if people don’t get access to basic necessities, continued suffering will lead to economic stagnation and instability. It is, for example, not only unconscionable but also a strategic mistake to allow famine to devastate the livelihoods of millions of people in the Horn of Africa.
Third, the United States is not doing development alone. We spend about 1 percent of our total budget on aid, as do dozens of donor countries.
And with only a few exceptions, the amount poor countries spend on their own development is much greater than the amount donors invest. Ethiopia, for example, has in the past five years built 15,000 rural health posts to provide improved services for its citizens.
There is also a group of rapidly growing countries — including Brazil, China and India — that combine recent experience with development and significant technical capacity, giving them the insight and the skill to have special impact. For instance, China is sequencing 10,000 varieties of rice to help small farmers cope with climate change. These efforts can make a big difference. For example, a new submergence-tolerant rice variety being used in flood-prone areas of Bangladesh and India can more than double farmers’ yields. We predict that 20 million farmers will be planting this variety in the next six years.
The private sector hasn’t always invested as much in development as it should because the market incentives haven’t always been clear, but there are ways to encourage involvement. In my report to the G-20, I’ll make half a dozen recommendations for mobilizing tens of billions of dollars annually from private sources. The African diaspora is sitting on $50 billion in savings that could fund development in their home countries if it were captured through diaspora bonds.
If the transaction costs on remittances worldwide were cut from an average of 10 percent to an average of 5 percent, it would unlock $15 billion a year in poor countries. In addition, there are trillions of dollars in sovereign wealth funds, and a portion could be reserved for key infrastructure projects in poor countries.
Sometimes Americans get the impression that we’re shouldering the whole burden of development and that, ultimately, our aid doesn’t make a big difference. I see it very differently. We’re providing strategic investments that link up with many other investments to systematically make a better, more prosperous and safer world. If we do it right, we can keep shrinking the number of countries where aid is needed to zero.
The writer is chairman of Microsoft and co-chair of the Bill & Melinda Gates Foundation.