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Budget Justification
FY 2001
>> Return to Home Page >> Central Programs >> Global Programs >> Economic Growth
CENTER FOR ECONOMIC GROWTH
AND AGRICULTURE DEVELOPMENTEncouraging Broad-Based Economic Growth and Agricultural Development (G/EGAD)
Economic growth translates into overall improvements in the economic and social well-being of people in developing countries. Better incomes result in increased food consumption and, often, diets of better quality; greater opportunities for micro and small enterprises to flourish; and improvements in health, education, mortality and morbidity. Growth also brings increased trade flows and opens markets to U.S. exports.
Agriculture development is the engine for economic growth in many countries. Widespread increases in agricultural productivity not only result in larger food supplies but in increased rural incomes. These increases in turn support growth in local trade and off-farm employment as well as improved rural-urban linkages.
Through Global's Center for Economic Growth and Agricultural Development, USAID's central programs promote broad-based economic growth and agricultural development by providing technical leadership, managing field support mechanisms, developing partner organizations with special expertise in effective approaches, and funding and monitoring global activities implemented by international organizations and networks. Efforts focus on achieving five objectives.
933-001. Improved access to financial and business development services, particularly to the microenterprises of the poor.
U.S. Financing Table for 933-001 (Microsoft Excel Document - 27 kb)
Helping poor entrepreneurs start and build viable, productive businesses is a key element of USAID's economic growth strategy. USAID's central programs have been providing technical leadership and operational support to the successful Agency-wide Microenterprise Initiative launched in 1994. (This initiative will be renewed in FY 2000 to provide a challenging framework for the next generation of USAID-funded microenterprise development efforts.) Central programs provide: competitive grant funding to private voluntary organizations (PVOs) and nongovernmental organizations (NGOs) for business and financial services for microentrepreneurs; and strategic, policy and program support to field missions on their microfinance and microenterprise development efforts. Central programs also conduct research, training, and capacity-building activities to improve the quality of programming and routinely disseminate information on the best practices for microenterprise development.
From a baseline of 331,000 active low-income borrowers in 1994, USAID-supported institutions reached a record number of 3.5 million borrowers with active loans totaling $1.3 billion in FY 1998. Eighty-four percent of the borrowers are women, and 83% of the loans were "poverty" loans, (i.e., loans at or below $300 in the Africa, Latin America and Caribbean, and Asia and Near East regions and at/or below $1,000 in Europe and Eurasia). USAID has played a leadership role among microfinance practitioners and donors to ensure that best practices for microfinance and business development services are increasingly applied. USAID's field support mechanisms have facilitated microenterprise development work in 62 countries with 654 local and international partners. The operational research program and a comprehensive impact assessment project help to move the frontiers of microenterprise development forward. By working with other international donors in the Consultative Group to Assist the Poorest and with the active U.S.-based Microenterprise Coalition, USAID ensures that its experience is available to other donors and practitioners as well.
The Micro and Small Enterprise Development (MSED) program utilizes guaranty authority to promote the development of micro and small enterprises in USAID assisted countries by entering in risk sharing arrangements with private financial institutions. In FY 2001, the Agency did not request an appropriation to MSED activities. However, a request of $15 million was made for transfer authority under a new consolidated Development Credit Authority (DCA). It is anticipated that the sector served by current MSED authority will be amply served by having access to the DCA. By continuing to offer a risk sharing guarantee program, banks are encouraged in partner countries to expand their small loan portfolios, while a complementary training program provides skills development for bankers and entrepreneurs for small-scale lending. Innovative mechanisms to provide guarantees for loans to nongovernmental microfinance organizations have also been developed; these facilitate poor entrepreneurs' access to microloans.
933-002. Improved food availability, economic growth and conservation of natural resources through agricultural development.
U.S. Financing Table for 933-002 (Microsoft Excel Document - 28 kb)
Agricultural development is a key component of USAID's sustainable development program. It can ensure increased food supply, generate rural income and employment growth, provide commodities essential to underpin urban income growth, and foster sustainable management of the environment.
Implementing a portfolio of global research activities, USAID central programs support the development of production, processing, and marketing capacity to meet the challenge of providing a growing population with access to a safe and nutritious food supply. Long-term support to the international agricultural research system enhances production of the staple foods of the poor. Since the days of the Green Revolution, this system has helped to achieve a robust growth in productivity that has enabled many countries and families to meet their current food needs. USAID programs promote continued growth in yields, projected at roughly one percent per annum for root crops and three percent annually for grains. These productivity gains will be worth billions of dollars to farmers and developing country economies, and will help to ensure more affordable food for consumers, both for the urban as well as the rural poor.
Collaborative research support programs (CRSPs), implemented with the U.S. land grant university system, complement the work of the international research system by engaging American and developing country scientists in research that returns benefits to both countries in the area of food security and related environmental challenges. USAID programs also link this long-term commitment to improved agricultural productivity with near-term needs by focusing on food access and consumption, and associated nutrition and health benefits. In FY 2001, USAID will continue to introduce and disseminate improved quality (Vitamin A, iron, protein, etc.) crop and vegetable varieties in areas with substantial at-risk populations, especially targeting women and children. Improved high-value products (e.g., livestock, fish) will be introduced, as well as value-added processing techniques to increase both incomes and availability. These gains, which link rural and urban sectors, will be promoted through policy and marketing activities.
Given both the increasing commercialization and importance of trade in agriculture, and the limitations on public resources, USAID is looking increasingly to the private sector - both U.S. and developing world - to address issues of input supply, technology transfer, product processing and marketing. Activities underway seek to encourage and disseminate information on how this process can be enhanced and developing countries brought more effectively into the modern world economy. Central program agricultural activities also seek to identify "win-win" approaches whereby increased agricultural production can be combined with improved, sustainable management of the natural resource base, through a combination of technological and sociological methods.
Growth in the agricultural sector and the economy generally depends on establishing a positive enabling policy environment. Many developing countries continue to suffer from policy and regulatory regimes that act as deterrents to sustainable agricultural productivity. These issues are being addressed largely in the context of trade, food security and agribusiness development (both input supply and output marketing) activities in the developing countries. USAID will continue to promote increased efficiency through links among its scientific, commercial and policy partners, helping to create new opportunities for businesses and investors.
USAID also contributes directly to helping alleviate hunger and malnutrition for some of the more than 800 million people who are hungry. Continuing in FY 2001, USAID central programs and field missions will contribute directly to relief efforts through agricultural rehabilitation in war-torn countries (e.g., Angola, Mozambique, Rwanda) and regions affected by natural disasters (e.g., Honduras, Nicaragua, Greater Horn of Africa). USAID programs provide advanced technical support, such as satellite-generated environment and infrastructure data and agro-climatically appropriate seeds, to relief operations.
933-003. Appropriate and functioning economic policies, market reforms and institutions are developed to accelerate economic growth in emerging markets and priority countries.
U.S. Financing Table for 933-003 (Microsoft Excel Document - 27 kb)
USAID, through its central programs, manages a portfolio of research and field support activities to identify best practices regarding reforms of economic policy, financial markets, legal and institutional systems, general business, trade, investment, and privatization. Areas of strategic emphasis during FY 2001 include: development of country trade, including the use of e-commerce approaches to trade expansion; increased country competitiveness in globalizing markets, including capacity-building to promote participation in the World Trade Organization; poverty reduction strategies in development assistance; the use of sustainable social safety nets in emerging markets; and workforce development to address the challenges of globalization. Central programs will provide technical leadership to the Agency in these areas by carrying out analyses, developing model programs, and by offering training and technical assistance based upon identified best practices. Central programs will continue to provide technical assistance to regional bureaus and mission programs, both by its own staff, and by mobilizing appropriate consulting teams. Approximately 100 activities totaling $100 million in 38 countries will be supported during FY 2001.
933-006. Private sector business linkages support U.S. technology transfer in support of development objectives.
U.S. Financing Table for 933-006 (Microsoft Excel Document - 27 kb)
The American economy is the most robust in the world, due in large part to the combination of the drive of American businesses to remain competitive and of continual advances in technology. When businesses in other countries emulate the best of American business practices and develop partnerships with American businesses, the citizens of both countries tend to benefit.
However, linking up with American businesses can be daunting for all but the largest firms in the countries that USAID serves. Small businesses in the United States similarly find that doing business with companies in transitional and developing economies can be a venture into the unknown. Yet, increasing numbers of small businesses are getting involved internationally as they seek out trade and investment opportunities.
Many state governments, often in cooperation with business groups, have set up programs to assist small businesses in their state to enter or expand their international operations. USAID is collaborating with such programs in 26 states. Because USAID has a long history with most developing economies, it is uniquely positioned to help American businesses establish linkages with businesses in these countries. Furthermore, USAID's worldwide programs in technology and management for specific sectors (namely environment, energy, health, agriculture, and information) give the Agency the ability to be particularly helpful in these sectors.
Since 1996, central programs have been building an effective network that links businesses that can contribute to economic development in targeted sectors. Known as the Global Technology Network (GTN), it now has representatives in 17 countries who actively seek out companies that could significantly improve their business by partnering with a U.S. company or a company in certain other participating countries. The representatives prepare "leads" that are forwarded via the Internet to industry specialists who match the lead against a database of close to 2,000 American companies that have joined the Network. When good matches are identified, electronic notices are sent to the companies transmitting the leads. GTN personnel follow up on leads, when appropriate, to facilitate communication until a deal is struck or until it is abandoned. GTN also works in collaboration with numerous federal agencies, including the U.S. Department of Commerce, the Export-Import Bank, U.S. Department of Agriculture, the Small Business Administration, Environmental Protection Agency and Overseas Private Investment Corporation.
Since 1994 and through the end of FY 1998, more than 110 deals have been consummated valued at more than $125 million. These deals represent businesses in 26 states, 12 countries, and all five sectors. The results include, for example, improved water supplies in India and the Philippines; diminished air pollution in Malaysia; and more processed food production in Mexico, Russia and Turkey.
The focus in FY 2001 will be on building a more effective GTN by clarifying operational procedures, building alliances with local business associations, and covering more of the operating costs through the generation of fees.
933-007. Increased science and technology cooperation among Middle Eastern and developing countries, and utilization of U.S. and Israeli technical expertise by developing countries.
U.S. Financing Table for 933-007 (Microsoft Excel Document - 27 kb)
USAID manages competitively awarded grants and other development assistance programs that foster collaboration between Israel and other countries in applying science and technology to address development goals in the Middle East, Africa, Asia, Latin America, and the Central Asian Republics. Israel excels in such areas as arid lands management, irrigation, solar energy, biotechnology, biological pest control, and aquaculture. These programs provide a mechanism to utilize Israeli technical capabilities to address the needs of developing countries around the world, and to promote technical cooperation with Israel's Arab neighbors. USAID funding catalyzes cooperation that otherwise would not have occurred. This contributes to the Middle East peace process and to development. Technical results include advances in saline and arid lands agriculture, improved agricultural water management technology, improved biopesticide strategies, increased understanding of tropical diseases, and increased knowledge of threats to the environment. Progress toward the political goal of support for the peace process has been exhibited by the increase in direct communication, travel, and information exchanges between researchers in the Middle East.
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Last Updated on: September 18, 2000 |
