Thank you for the opportunity to speak today. I'm pleased and honored to be here at Harvard University, and have an opportunity to discuss the evolving development landscape in Asia with you.
It is a distinct privilege for me to lead USAID's Asia Bureau, particularly since it is such an exciting time to be focusing on Asia and the Pacific. There has been much talk recently about the U.S. government's so-called "pivot" to Asia. Our engagement, our commitments, and the strategic rebalancing towards Asia that has been recently articulated by President Obama, Secretary Clinton and Secretary Panetta reflect a recognition that the next century will be written largely in the Asia Pacific. For us to remain a central part of the story, we need to increase our engagement in an integrated strategic approach to the region. By investing in key partnerships across Asia and advancing regional dynamism in sustainable ways, we are investing in our own future.
Today, I want to share some thoughts with you all on how Asia is transforming the global development landscape. For those of you who may be unfamiliar with USAID's work, the U.S. Agency for International Development is an agency of the U.S. Government that provides economic, development, and humanitarian assistance to improve the lives of people around the globe.
USAID was set up in 1961 by President John F Kennedy, at the same time that the Peace Corps was created, and last year both USAID and the Peace Corps celebrated our 50th anniversaries.
But our development partnership in Asia dates back even further, with assistance programs in many countries like India, Nepal, Philippines, Korea, Taiwan, and Indonesia that began in the 1950s.
And indeed some of the greatest development success stories of the past half century come from Asia, generating benefits that have spanned the globe. Successes like the Green Revolution in India that saved tens of millions from famine in the 1960s; or in Bangladesh, oral rehydration therapy for diarrheal disease treatment that is only a tenth of the cost of alternative treatments and is credited with saving tens of millions of children's lives globally.
The last half century has also seen many Asian countries emerge from being recipients of aid to becoming aid donors in their own right. South Korea and Taiwan are two leading examples of this. And still others such as India and China have emerged as a new class of donors, being both recipients and providers of aid.
Today, Asia represents more than half the world's population, and is the most dynamic and fastest-growing region in the world. Currently, three of the four largest economies in the world by purchasing power parity are in Asia. By 2025, the region's trade volume is expected to almost double, led by China, India, Vietnam, and Indonesia. 1
Despite this economic success, there continue to be significant pockets of poverty and development challenges throughout the region. In 2010, Asia was home to 62 percent of the world's hungry and 70 percent of its undernourished children, despite the fact that much of the region produces high levels of food on a per capita basis. 2 The threat of pandemics and natural disasters looms over Asia, which has 16 of 21 of the world's mega-cities and 60% of all large-scale natural disasters. 3
And more than any other region of the world, Asia is under threat from global climate change and other pressures on the region's environment, such as the lack of access to clean water and air, degradation of natural resources, and loss of biodiversity, all of which undermine sustainable development.
Gender inequality, gender-based violence and human trafficking remain significant challenges in many parts of the region
And while a growing number of Asian countries have transitioned to democracy, the progress has been uneven, halting, and, many fear, reversible due to weak and fragile institutions of governance.
These two competing narratives unfolding in Asia were the subject of a recent study by the Asian Development Bank, titled "Asia 2050: Realizing the Asian Century". The study explores the question: will Asian countries continue the growth of the past 50 years or will they fall into the middle income trap that stalls growth and development progress?
The optimistic scenario assumes that Asian economies can maintain their momentum for another 40 years. In this scenario, Asia's GDP increases tenfold from $17 trillion in 2010 to $174 trillion in 2050, or half of global GDP, commensurate with its share of the global population.
But the pessimistic scenario in the ADB study projects that these fast-growing economies fall into the middle income trap in the next 5-10 years, and the slow- or modest-growth economies fail to improve their record; in other words, Asia follows the pattern of Latin America. In this scenario, Asia's GDP in 2050 would reach only $65 trillion - less than one-third of global GDP.
And the challenges which threaten to derail the optimistic scenario are rooted in the development challenges I enumerated earlier - poverty and increasing inequality, competition for scarce resources , the effects of climate change, failure to invest in human capital through education and unleashing the potential of women and girls, and weak governance and fragile institutions that are ravaged by corruption.
We are optimistic that these pitfalls can be avoided and this could indeed be an Asian Century, or more accurately an Asia Pacific Century, one in which the ties that bind the United States to its Asia Pacific partners will grow ever closer. At USAID, we are adapting our programs and policies to both reflect this new Asian landscape and to further support its emergence.
While much of our programs are aimed at tackling the core challenges of food security, health, education and environment as well as disaster response, we are looking increasingly at integrated approaches that build resilient societies -- whether it is integrating disaster risk reduction into program design, or ensuring that our food security programs are integrating climate resilient crop varieties and focusing on undernourished populations
But increasingly, new and innovative models of development and partnership are emerging in Asia that are inspiring us to rethink what we do, how we do it and with whom.
First, we are seeking more meaningful partnerships with governments. President Obama launched an effort called Partnership for Growth emphasizing that American engagement-if deployed creatively-could help catalyze private-sector investment in countries best positioned for future growth.
Along with the State Department and the Millennium Challenge Corporation, USAID is leading the Partnership for Growth effort in collaboration with countries poised to become the next set of emerging markets.
For instance, in the Philippines, we have worked in close partnership with the government to conduct joint economic analyses of their binding constraints to growth and develop joint action plans to address those constraints. Last November, Secretary Clinton and the Philippines Secretary of Foreign Affairs Albert Del Rosario signed the joint statement of principles that reflects our governments' mutual goal to place the Philippines on a path to sustained, more inclusive economic growth, and elevate it to the ranks of high-performing emerging economies. We jointly affirmed a five-year Joint Country Action Plan that prioritizes creating a more transparent, predictable, and consistent legal and regulatory regime; fostering a more open and competitive business environment; strengthening the rule of law and increasing efficiency in the court system; and supporting fiscal stability through better revenue and expenditure management.
By working together with the Government of Philippines to define the critical needs, the Partnership for Growth ensures foreign aid emphasizes mutual accountability-working collaboratively with partner governments that demonstrate a strong commitment to economic reform.
The private sector is another important part of our Asia strategy. As the Asian economies grow more robust, so has the private sector. Across the continent, we are finding that the private sector has much to offer as a driver of development innovations and solutions. We know that a key ingredient for every country that's grown its way out of the poverty has been the emergence of a strong and dynamic private sector.
And while the development community has a long history of strengthening institutions and developing human capital, we have not always engaged in a meaningful way with the private sector.
That is changing, particularly in Asia, where USAID is embracing a new way of collaborating with the business community.
In India, we are pioneering a new approach to working with the private sector. A key part of our strategy is to partner with private sector companies to develop cost-effective and scalable solutions to serve the bottom of the pyramid to help address some of India's toughest challenges. For instance, India has developed some of the most interesting models of low cost healthcare, like Aravind Eye Hospitals, which provide quality eye for every level of the pyramid.
Some of the most innovative financing and business development models have been coming from India and adapted in Kenya, Ethiopia and other parts of the world. India is uniquely situated to be the source of new models for development. With one foot in the developing world, and the other in the developed world, with its dynamic and robust private sector, and a strong culture of social entrepreneurialism, Indians are developing new frugal technologies and innovations to meet the needs of its population.
The Indian government also recognizes the importance of the private sector in addressing some the country's most intractable problems. For that reason, the National Innovation Council announced a $1 billion National Innovation Fund to provide early stage financing to social entrepreneurs.
To build on that platform, USAID is working with Indian civil society and the private sector to nurture the best solutions and bring those ideas to scale. We created an initiative called the Millennium Alliance to develop high impact public private partnership to meet these challenges.
Once proven ideas emerge, the Indian government and private sector can then take the development solutions that are incubated and scaled in India and share them regionally or globally. The USAID development partnership in India wants to have an outsized impact that have the potential to solve problems locally and globally.
We are already seeing some success with this new model. USAID recently invested in a mobile technology to track the attendance of doctors in clinics and hospitals. Surveys in India had revealed that doctors were not showing up for work more than 60 percent of the time. USAID has identified a simple, innovative method of addressing absenteeism among health workers. A modest grant to an Indian entrepreneur helped further refine a technology using mobile phones to capture thumb impressions and track health work attendance. As you can guess, this simple technology has the potential to transform other sectors and could be used around the world.
Aside from direct relationships with government, we recognize that across Asia south-to-south and trilateral collaboration are becoming a new model for development. As Asian governments enhance their regional and global engagement, many are establishing their own aid agencies to manage increasing assistance programs. This opens new possibilities for leveraging lessons learned and best practices for an even greater global impact. From India to Indonesia and Korea to Kazakhstan, we are forming strategic partnerships with new Asian donors from emerging economies to address shared challenges and to spearhead solutions to development challenges within and across their borders.
As you can see, we believe Asia offers a fascinating and exciting opportunity to be the world's development laboratory- a region familiar with development challenges but also brimming with new ideas and innovations, tools and technologies, with the potential to find transformative and sustainable solutions to some of our world toughest challenges.
As the development landscape around us has fundamentally changed, so too are we changing the way we do business at USAID. To maximize our resources in a tough economy, we are focusing on high-impact, sustainable, and cost-effective programs.
This new way of doing business requires new tools on our part. One important aspect of our new approach is the ability to evaluate evidence and assess impact. We are returning to our roots -- resurrecting rigorous, analytical, and evidence-based decision making in everything that we do.
Universities such as this one are at the vanguard of thinking and research on development policy. Harvard, in particular, has had a rich history of partnership with USAID around the world. The constraints to growth analysis used in the Philippines for the Partnership for Growth was modeled on the growth diagnostics methodology pioneered by Professors Hausmann, Rodrick, and Velasco at the Kennedy School of Government. This analysis was critical to the new strategy with the Philippine Government.
We want to do more. For this reason, USAID has recently launched a new initiative called University Engagement to take our long history of working with universities to the next level by building deeper partnerships with academic institutions to provide the framework and analytical thinking to tackle some of the most stubborn development challenges.
In conclusion I would note that it is not only an exciting time to be working in Asia, but it is also an exciting time to be working in the field of development.
There are so many new tools and technologies, lessons learned, and best practices that are informing a new approach to development. While the challenges ahead are daunting, I am hopeful that this changing Aidscape in Asia is one that can truly usher in an Asia Pacific Century
- Remarks by Administrator Rajiv Shah at National V. Hetman Economic University, Kiev, Ukraine
- USAID Asia Bureau Senior Advisor Manpreet Anand at a Carnegie Endowment for International Peace Conference on U.S.-Japan Strategies for Supporting Myanmar
- Remarks of USAID Asia Mission Director Michael Yates at the Launch for the Center for Civil Society and Nonprofit Management
Last updated: June 20, 2014