U.S. Department of State / December 2009
Volume 14 / Number 12

http://www.america.gov/publications/ejournalusa.html
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eJournal USA

© AP Images/Charles Dharapak

About This Issue

President Barack Obama addressed the Ghanaian parliament in Accra in July 2009.

I

n 2009, a new U.S. administration took office. Even
as it confronted formidable problems, its top leaders
spoke confidently to their counterparts in other nations,
identifying “good governance” as a fundamental foundation
for democracy, social justice, and economic development.
“With better governance, I have no doubt that Africa
holds the promise of a broader base of prosperity,” said
President Obama in Ghana.
This principle has assumed growing importance in U.S.
development assistance policy. The newest U.S. development
agency, the Millennium Challenge Corporation, requiresthat recipient nations meet an array of good governancebenchmarks. In these pages, top executives from thatorganization explain this new philosophy and how it differsfrom the past. Other articles will provide snapshots of thesepolicies at work.
Leaders of many nations increasingly acknowledge thelink between stable, predictable, honest government andeconomic prosperity. In this edition of eJournal USA, African
leaders offer their thoughts about good governance in one
article, and another African official explains how better trade
policies boost economic opportunity. A prominent Peruvian
economist explains how better governance can endow thepoor with property rights that will aid an escape from poverty.
Billions of people worldwide can achieve greater prosperity
through the same methods, he argues. And a representative of
the corporate world describes the conditions of governancethat must be in place if large companies are going to makeinvestments in the developing world.
To begin the discussion, we’ll cite a definition of good
governance as “participatory, consensus oriented, accountable,transparent, responsive, effective, efficient, equitable, inclusive,and follows the rule of law. It assures that corruption isminimized, and the views of minorities are taken into accountand the voices of the most vulnerable in society are heard
in decision-making. It is also responsive to the present andfuture needs of society.” That definition first appeared in a
United Nations publication a couple of years ago and is widely
quoted.
Some other things we’ve learned in researching thispublication: Good governance protects order and safety,
without constraining individuals in pursuit of theiropportunities and expression of their ideas. Good governanceis rooted in the belief that citizens who thrive and prosper
will spread their prosperity into their communities to employ,enrich, and inspire others.
Good governance stands in bright light and allows itself
to be seen without cause for concealment or subterfuge. Good
governance dispenses justice evenly, without regard to anindividual’s wealth, status, or connections. Good governanceis not capricious or arbitrary, but constant, predictable, andapplied in equal measure to citizens of all classes, colors, andreligions.
										The Editors

eJournal USA 1

U.S. Department of State / December 2009 / Volume 14 / Number 12

http://www.america.gov/publications/ejournalusa.html

Governance and Growth
Governance

4

U.S. Foreign Assistance Enters New Eraof Opportunity
An Interview With Darius Mans and Ken
Hackett
The Millennium Challenge Corporation (MCC) isa U.S. government development program advancing
economic growth in an atmosphere of good
governance and sustainability.

9	Ethiopian American Takes Helmat MCCAn Obama administration appointment brings a
new chief executive to the agency.

10

Improving Morocco’s Fishing
Industry
An MCC program in the Kingdom of Morocco
works to expand and modernize the nation’s
traditional fishing industry.

11

15

The Foundations for Sustainable
Growth in Latin America
Liliana Rojas-Suarez, Economist and Authorof Growing Pains in Latin America
Basic principles of reduced regulation, legal
protections, and access to opportunity are universal
in the need to promote economic growth, but
regional characteristics must also be considered in adevelopment strategy.

19

Property Rights: A Way Out of Poverty
and WarHernando de Soto, Economist and Author of
The Mystery of Capital
A lack of access to property rights is keeping half theworld’s population locked in poverty.

23

Business Looks for Good Governancein Developing Markets
Scott Eisner, Executive Director, Africa
Business Initiative, U.S. Chamber of Commerce
Political stability, reliable infrastructure, and an
educated workforce are among the characteristics
that corporations seek as they survey new locations.

Texting for Profits
An MCC program in Armenia introduces digitaltechnologies to help farmers prosper.

12 Africans Taking the Lead
Leaders from Ghana, Rwanda, and the African
Union Commission explain their ideas on good
governance in Africa.

eJournal USA 2

Growth27

Strength in Numbers: The Power ofRegional Trade
Mweusi Karake, Director of Public Relations,
Common Market for Eastern and Southern
AfricaNineteen member countries strive to improve
regional governance to boost intra-continental tradeand prosperity.

34

30

Naga City Works for Transparency
and Accountability
An Interview With Jesse Robredo
A veteran mayor in a medium-size Filipino city
describes local steps toward good governance andthe results.

37 	Reforms Promote Business inIndian Cities
Mierta Capaul and Jana Malinska,
	Co-authors, Doing Business in India 2009
Regional governments in various parts of India
are reducing regulatory barriers to starting andoperating a business, according to researchers at
the International Finance Corporation of theWorld Bank.

Building High-Impact Businesses
	Elmira Bayrasli, Vice President, Policy andOutreach, Endeavor
Endeavor is a 10-year-old, U.S.-basedorganization that finds entrepreneurs inemerging economies and gives them advice andsupport to launch high-impact businesses andcreate jobs.

41 	Additional Resources
A selection of books, articles, and Web sites.

eJournal USA 3

U.S. Foreign Assistance Enters New Eraof Opportunity
Ownership, results, andaccountability are thehallmarks of aid agreementsthat the Millennium Challenge
Corporation (MCC) has formed
with 19 developing nations. The
agency, established by the U.S.
Congress in 2004, has disbursed
almost $7 billion in poverty
reduction programs. This support
is disbursed only to countries that
demonstrate their capability torule justly, control corruption,and create economic freedoms
that will be attractive to theprivate sector.
Darius Mans is MCC’s
vice president for compact
implementation and was serving
as the acting chief executive
Cape Verde entered a $110-million compact with MCC in 2005. Improving vendors’ access to markets
officer of MCC when thiswith road and highway improvements is one goal of the compact with the island nation off the coast ofWest Africa.
interview was conducted.
Ken Hackett is a member
anchored in the country’s own development priorities.
of MCC’s congressionally appointed board of directors. He is
Second is the importance of ensuring that thealso president of Catholic Relief Services, the international
assistance that is provided is focused on achieving very
humanitarian agency of the U.S. Catholic community. The
concrete results. On MCC’s Web site [www.mcc.gov],
two spoke with eJournal USA Managing Editor Charlene
you’ll see a “Results” page, which defines — for every
Porter.
compact we are supporting around the world, now in 19
countries — the concrete, tangible results these programs
Question: Mr. Mans, how has MCC changed the gameare aimed at achieving. It’s very important that all of us bein the delivery of U.S. foreign assistance?
very focused on results, getting value for the investmentof U.S. taxpayer dollars.
Darius Mans: MCC’s principles in providing
The third core principle is the importance ofdevelopment assistance are based on the lessons ofaccountability, making sure that countries are driving
experience over the past 60 years. Our founders took
the development programs and achieving value froma hard look at what was working and what wasn’t andthe support they are getting. That accountability runs
focused on three core principles.
in two directions. One is making sure the countries are
One is the central importance of country ownership.
being held accountable for achieving the agreed results,
Countries have to take responsibility for pursuing soundbut also very importantly, accountability within thepolicies and defining their priorities for development, andcountry. Every compact is implemented and overseen
they have to drive the implementation of programs. It’s
by a local entity, often called the Millennium Challengevery important that the support the outside world gives is
eJournal USA 4

Courtesy of MCC

An Interview With Darius Mans and Ken Hackettdevelopment, social development, and poverty reduction.
I want to be part of it, if I can.”So I was lucky enough to be chosen for a seat on theboard in the first year, 2004. I’ve been very pleased withthe way the organization has evolved. The mission of theorganization has moved forward, learning lessons andimproving. It’s been tremendously successful.
Q: Did you perceive the MCC proposal to be a gamechanger at that time?
Hackett: Absolutely. This was a new way of undertaking
development, as Darius said, built on a lot of lessons
learned over the last 40 or 50 years. Other agencies
haven’t been able to learn those lessons. I saw MCC as anentity that was ready to apply new models, test them out,
discard them if they didn’t work, and move on. So now
five years into it, we’ve evolved in a very positive way.

Courtesy of MCC

Q: One of the game-changing principles that MCC
employed was the application of objective criteria inthe selection of nations with which it would establish apartnership. Mr. Mans, please describe those.

The Koranco pineapple farm in Ghana offers technical assistanceand vocational training to help small fruit growers launch their own
enterprises. Working to develop agribusiness is one of the initiativesof Ghana’s MCC compact, an almost $550-million agreement signed
in 2007.

Account, and typically there are stakeholder groups thatplay a key role in providing oversight. MCC wants to be
sure that within the societies themselves there is strong
accountability for achieving the results we all have agreed
are important.

Mans: Our program is premised on providing support tocountries that have a demonstrable commitment to ruling
justly, to investing in their own people, and to providing abusiness climate, grounded in economic freedoms, that is
attractive for the private sector. We have 17 indicators inthese three broad categories. One of the difficult hurdles
in order to qualify for MCC assistance is a proven trackrecord with respect to the control of corruption. For

MCC Countries
MCC has dedicated poverty reduction compacts
with the following countries for a totalcommitment of nearly $7 billion.

Q: Mr. Hackett, you had been in the foreign aid field
for decades prior to the formation of the Millennium
Challenge Corporation, starting as a Peace Corps
volunteer almost 40 years ago. How did you perceive thewhole idea of MCC when it was first announced?
Ken Hackett: As this was evolving, I said to one of mystaff who was participating in some of the discussions, “Ifthis really turns into what it seems to be moving towards,
this will be almost the ideal in terms of economic

eJournal USA 5

Armenia
Benin
Burkina Faso
Cape VerdeEl Salvador
Georgia
Ghana
Honduras
LesothoMadagascar

Mali
Mongolia
MoroccoMozambique
Namibia
Nicaragua
SenegalTanzania
VanuatuCourtesy of MCC

Shops marketing the traditional crafts of El Salvador are getting support through the $461-million compact with MCC launched in 2006. Artisans
are getting training in how to expand product designs, grow sales, develop new markets, and increase incomes.

us, that is fundamental because one of the clear lessons
from development experience is that — without taking
seriously the anticorruption agenda — investments anddevelopment assistance don’t achieve very much.
MCC uses 17 policy indicators to score and selectcountries. Every year, the board looks at the performanceof countries on those indicators. We do it in the following
way: MCC ranks countries based on their performanceon the 17 indicators in comparison to other countries intheir income category. It’s very important for countries to
see where they stand relative to their peers. That has been
an incredibly powerful incentive for countries to stay thecourse and continue reforms. They all look to see, “Howare we doing?”
I was recently at a reception of the Government of
Afghanistan, and if you look at their performance against
the 17 indicators, they are very far from being eligible for
an MCC compact. But the government official I met atthat event not only knew about our indicators, but alsosaid, “Give us time, we want to become eligible. That iswhat we are focused on achieving.”

At an event co-hosted by MCC and InterAction
on the margins of the U.N. General Assembly meetingin September, the Government of Sierra Leone said thecabinet uses the 17 indicators to set out their reform
program because they want to be sure that one day they
become eligible for assistance. Clearly, MCC’s eligibility
criteria have become a very powerful carrot and reward
for performance. The countries we are supporting meet
our criteria and give us a commitment to continue tomaintain eligibility. They see the criteria as being animportant anchor for their own programs for reform.
Q: Are you suggesting that the MCC criteria areconveying a message well beyond the nations withwhich you have compacts to other governments in thedeveloping world?
Mans: Yes, this is what we call the MCC effect, and we
see it in country after country.
Hackett: This is one of the most remarkable elements,

eJournal USA 6

this open and transparent process for selection. You’lleven see the criteria for suspension and termination on
the MCC Web site for anybody to read. You continually
run into ministers of finance or planning who arequestioning their counterparts in MCC countries: “How
did you get into the MCC process? What do we have to
do?” It’s really created a wonderful and successful model.

Worldwide Programs
MCC has approved nearly $7.4 billion inprograms that support country-determined
programs relating to:• Agriculture and irrigation• Transportation (roads, bridges, ports)• Water supply and sanitation• Access to health services• Finance and enterprise development• Anticorruption initiatives• Land rights and access• Access to education• Access to electricity

Q: These criteria are markedly different from how aid
decisions were made in the Cold War, for instance, aren’t
they, Mr. Hackett?
Hackett: Absolutely. We are now in a completely
different situation. The expectations are that the
distribution of assistance should be about a country
producing results. The results should be visible, and theprocess transparent and sustainable. It is not just about
being friendly. That’s a positive and remarkable change.
Our European friends are also taking considerable
interest in this model. The British, the French, and theGermans are taken with this whole idea. I hope there will
be better and more robust opportunities for collaboration
around this kind of model.
Q: Mr. Hackett mentions those criteria that can end
a compact. How has your board put those into use in2009?
Mans: The MCC model was tested this year and proved
its durability. In a couple of countries, MCC has had toeither completely terminate or partially suspend parts of acompact because of a pattern of performance in countries
which simply do not meet our standards.
In Madagascar, because of a military coup, the MCC
board had to make the very tough decision to terminatethat program one year before its scheduled completion.
It was difficult because Madagascar was MCC’s very firstcompact. It was coming to the end of its fourth year withjust one more year to go. They were well on their way tosuccessfully completing the compact, but then the coup
occurred in March 2009.
So the board, quite rightly, decided this is not thekind of country we should be partnering with andterminated the Madagascar program. Despite the recent
termination, a tremendous amount was accomplishedwithin the compact and for the people of Madagascar
to reduce poverty through economic growth. We didn’t
get everything done that we set out to do, but it led tosome positive and irreversible changes in the way thegovernment does rural development.

We also had some similar concerns in Armenia in theaftermath of the February 2008 presidential election. The
elections resulted in a very violent aftermath which led
to a real crackdown. The pattern of actions taken by theGovernment of Armenia was inconsistent with MCC’scommitment to good governance. As a result, the board
decided to put the road construction program on hold.
We’ve had similar stories in Nicaragua and Honduras
in 2009. When MCC sees a pattern of actions that isinconsistent with the principles of MCC, inconsistent
with the sound performance that originally made themeligible for funding, then the MCC board acts — even ifthat action means to end assistance. That’s very different
from the traditional approach of other donors.
Q: How do you think the board’s actions on terminationand suspension are being perceived? Are they sendingout a cautionary message on the consequences of
undemocratic or uncivil government action?
Mans: I think so. Consistently in country after country,
what we have seen is that people have looked at thedecisions the board has taken and recognized that thisreflects a shortcoming on the part of governments.
It is governments that are being held accountable forthe actions they take. This is not some arbitrary andcapricious act that the United States is taking for politicalreasons. It is instead based on a clear violation of the basic
standards of trust and confidence that are at the heart ofthe partnership that we have in each country.
MCC compacts are designed to benefit the poorin those countries — and to reduce poverty througheJournal USA 7

economic growth. In the cases of Madagascar, Armenia,
Honduras, and Nicaragua, hundreds of thousands ofpeople have benefited from MCC programs.
Q: Let’s move on to some of your successes. I’ll ask eachof you for a favorite story about how you have seen
MCC’s compacts enable the mutual growth of good
governance and economic development.
Mans: One we are proud of is Cape Verde, one of ourvery early compacts. It’s a country that has a tremendous
track record with respect to good governance in Africa.
Even so, the government used the compact to improvetheir performance in good governance.
Through the compact, MCC provided assistance tosupport improvement in public financial management
and procurement. The focus was to develop much bettersystems that would be used to provide oversight on
implementing the investments being supported by thecompact. Those investments were so successful that, infact, I wish we had their financial management system in
the United States. They can go to a map, show you where
an investment project is taking place. They can drill down
to tell you exactly what the progress is with the physicalimplementation of the project against the targets. They
can go down to the level of invoices for absolutely every
contract in connection with that project. They have very
tight controls around the use of funding.
This was so successful under the MCC compactthat the government decided to use this system as theplatform for how the Cape Verdean government does
business overall. The government also used the compact
as an opportunity to accelerate its reforms regarding thebusiness climate. The time and cost to start a business inCape Verde have been slashed because of the commitmentof this government to improving their performance. It’s apartnership we are very proud of.
Hackett: I’ll take the Ghana compact, which is moving
into its third year now. It is framed to address the real
economic issues facing the majority of the agrariancommunity in that country. It operates in three different
geographic areas, and one of those is where I spent myPeace Corps volunteer service in the late 1960s. So I havea special feeling for this program. When I saw what the
government was envisioning for this part of the country
and the farmers there, I said, “That’s perfect! That’s
exactly what’s going to change the economic dynamic for
those farmers on the Afram Plains.”

They are going to add a range of support services
in the communities that will together lift the economic
situation in a positive way. From production, tomarketing, to health and community education, this is
the comprehensive approach they envisioned. And I think
it will bring some magnificent changes in that particulararea and other areas of the country as well.
Because these plans are flowing out of consultationsin the countries themselves, there is a much more
dynamic, relevant approach. And generally I feel they aregoing to be more successful than previous models.
Q: You mentioned that some of these countries areapproaching the end of their five-year compacts. What’s
going to happen then?
Mans: The board will be discussing this very issue in
December, the question of second compacts with a given
country. A couple factors will come into consideration:
obviously, their performance on their first compact but
also their continued eligibility: Do they meet the criteriafor MCC funding?
If a country is to become eligible for a second
compact, we need to squarely answer the question,“What is the exit strategy?” We do not want to have a
50-year relationship with a country. Instead, how do
we ensure that we are not engendering aid dependence?
How do we make sure that countries wean themselves
off development assistance, become able to mobilize
resources on their own, and attract the private investmentthat ensures sustainable, long-term growth?
Hackett: That’s one of the challenges the board will
have to deal with. But basically we want to see long-termsustained success in economic growth in these countries,
because that’s how you make an impact on poverty.
A related issue is that some of the problems
we’re facing in terms of overall economic and social
development go across borders. The board and staff
are asking questions such as, “Should MCC begin tothink about regional investments that could change thedynamic in different ways?” These are things that wehaven’t dealt with yet, but we hope that we can look atsome options and be transformative and ready to change
and evolve as situations change.
Q: When elections change the party in power in the
United States, it is common that the different politicalphilosophies will also bring on significant change incertain programs, even abandonment of initiatives started

eJournal USA 8

under a previous administration. But in this case thathasn’t happened after the 2008 election. Why?
Mans: A couple of reasons. Effective and smart aid isa core principle of the Obama administration’s global
development and engagement policy. In the president’s
speeches, whether in Prague, Accra, or Cairo, theimportance of creating opportunity and building capablestates rings through all those speeches. The administration
has “walked the talk” on this and provided strong support
for MCC in a couple of very concrete ways.
The president’s request to the Congress for funding
MCC included a 63 percent increase. That’s a strong
show of support because what MCC is doing is very
consistent with where the administration wants to go interms of global development.
Second, we have a nominee to serve as MCC’s
next chief executive officer, Mr. Daniel W. Yohannes,
which is also a very strong show of support from theadministration for what MCC is doing. Mr. Yohannes
has a background embodying what MCC is trying
to do. He is an Ethiopian American who came to theUnited States at a young age and succeeded in business.
He has a tremendous track record of management andphilanthropy with a keen interest in development. And heis the nominee of the administration to lead MCC.
Both of these are concrete demonstrations of theadministration’s strong support for MCC.
Hackett: Before Secretary [of State Hillary] Clinton wasnamed [to the cabinet], the four private board members
called upon her in the Senate to ask her whether she
would be a champion for MCC in the Senate. She said, “I
really think MCC is the right concept and I will support
it to the extent I can.” Then a couple months later she
became secretary of state and chairman of the MCC
board. So I think we have support where it is necessary,and I am heartened that this administration has kept up
one of the great new initiatives of our government.
Mans: As the acting CEO, it’s great for MCC to see thestrong engagement of the secretary as chair of the board
and the tremendous interest and deep passion she has fordevelopment. She also sees MCC playing a strong role in
the administration’s focus on elevating development as atool to advance U.S. interests and to support countries
that are on the move in pursuing their development
objectives. 

Ethiopian American Takes Helm at MCC

ACourtesy of MCC

former banker stepped into the job of chief executive officer for the Millennium
Challenge Corporation (MCC) in December 2009 after appointment by President
Obama and confirmation by the U.S. Senate.
Daniel W. Yohannes is an Ethiopian American who immigrated to the United States
as a teenager. He is from the state of Colorado, where he had a career in banking before hebecame a private investor specializing in real estate, financial institutions, and the renewableenergy sector.
Yohannes appeared before the Senate Foreign Relations Committee prior to his
confirmation. He told the committee, “I’m confident that MCC’s antipoverty partnerships
Daniel W. Yohannes
worldwide will generate sustainable economic growth and opportunity, and this isjoined MCC in
fundamental to enhancing our collective security and common humanity for a more
December 2009.
prosperous, peaceful world.”
Yohannes continued, “It is challenging to replace patronage with partnership, to deliver smart aid that mattersby encouraging some policies, country-led development, and sustainable results. MCC offers some important lessons
on where to start. MCC lays an innovative foundation to address the complex problem of global poverty.”
Though he has been in the United States for decades, Yohannes has not forgotten the challenges confronting
his native Ethiopia. “I grew up with poor neighbors who wondered if they would eat that day or if they could afford
immunizations,” Yohannes told the Senate committee. “I came to the United States at the age of 17, determined topersevere against all challenges.” eJournal USA 9

Improving Morocco’s Fishing Industry

arvesting thebounty of thesea is an ancient andhonorable way to makea living in the Kingdomof Morocco. But despite
their hard and dangerous
work, this livelihood
has not delivered a pathout of poverty to fishingfamilies, in large part
because of the many
Wholesale markets (top)and landing sites for fishinghurdles that separate
craft (right) are both set
fishers from the mostfor improvement under the
profitable markets.
agreement between MCC andthe Kingdom of Morocco.
It’s a long way
between that satisfying
moment when a catch is pulled from the sea
and when a beautifully prepared fish is placed
before admiring diners. Poor seaside landing sites,
inadequate processing facilities, lack of wholesalemarkets, and inadequate refrigerated transport
are all difficulties that prevent the fisherman fromgetting the best possible rewards for his efforts.
The Millennium Challenge Corporation is
working with the Kingdom of Morocco to improveand modernize the trip that the fishers’ catchmakes to market, allowing greater profit for themand delivery of a fresher and healthier product toMoroccan consumers inland.
The Small-Scale Fisheries Project is expected tobenefit approximately 25,000 fishers, boat owners,
wholesale fish merchants, mobile fish vendors, andtheir household members. One of the first steps inimproving the delivery chain for this industry willbe the construction of boat-landing sites equipped

Courtesy of MCC

Hwith the proper commercial infrastructure to
move the catch efficiently and in keeping withenvironmental and sanitary standards.
The construction and modernization of
six wholesale markets, mostly in the interior of
the country, will strengthen market integration,
support greater numbers of buyers and sellers, andresult in a more efficient market price. Further, it isanticipated that investments
to improve standards ofhygiene, handling, andpreservation of fish in thecold chain will contribute to
the maintenance of the valueof fish and greater sales.
Courtesy of MCC

The Kingdom of Morocco has met the Millennium
Challenge Corporation’s standards for good governanceand entered a compact with the assistance agency.
The kingdom has developed a project to improve
infrastructure supporting the fishing industry.
Modernization of the delivery chain between the sea
and the markets will profit fishermen and deliver a
fresher product to consumers.

Not only will the project boost the fishingindustry, it may also improve the diets ofMoroccans. With the creation of a more efficientand sanitary delivery chain, part of the catch thatwas previously used for animal feed will now end
up on consumers’ plates, providing an additionalsource of protein to the inland population. The
benefits will be widely spread, and at the other endof the delivery chain, mobile vendors on speciallyequipped mopeds will be able to increase the value
and volume of fish sold in their inland-marketing
range. It is estimated that the incomes of thevendors will increase more than 60 percent, an
increase that could go a long way towards liftingthem out of poverty. eJournal USA 10

Courtesy of MCC

Texting for Profits

Rafik Smbatyan checks his cell phone to see what the markets
are offering for his crop, a technology made available tofarmers through an information service supported by the MCC
compact with Armenia.

The Armenian government used Millennium Challenge
Corporation support to improve the competitive positionof farmers trying to sell their produce. Greater access to
information gives Armenian farmers a better chance for
profits in the marketplace.

K

nowing how to get the best price for the productyou are selling is a key element to success in themarketplace. It’s true whether you are selling coal orcoats.
Or cucumbers. That’s what Rafik Smbatyan
has to sell. But his problem was he didn’t know how
the market valued his product. Smbatyan grows
cucumbers in the Gegharkunik region of Armenia.
Since the collapse of the Soviet Union, only farmers
with friends and relatives living near major wholesalemarkets had access to reliable information about
current market prices. Farmers often sold theirproduce at reduced prices through intermediaries,
losing profits because of their lack of up-to-date
information.
Then ARMIS came into Smbatyan’s life. That’s
the Armenian Agricultural Market Information
System, a service that distributes daily fruit andvegetable prices from the large city markets, using text
messages sent over the country’s extensive cell phone
network.
Smbatyan and other farmers pay a small fee
for the service, allowing them to dial in a code to amarket-specific phone number, which then triggers
an automated text response from a central database of
market information. This information puts Smbatyan
in a much better position to bargain with food
wholesalers, improves his competitive position in themarketplace, and increases profits.
“Thanks to this system, I was able to sell mycucumbers at a much higher price. Before this[system], I wasn’t aware of prices and was constantly
losing.”Of course, Smbatyan isn’t the only farmer making
use of ARMIS, funded by the Millennium Challenge
Corporation. Hundreds are. “The list of crops has
been enlarged, and plans are under way to include
markets of other regions also,” says information
specialist Nora Alanakay.
Farmers received close to 3,000 SMS messages
from the system in its first year. Smbatyan alone has
exchanged close to 75 messages, attempting to get themost up-to-date market information. He’ll be using
the system more soon, as another crop of greenhousevegetables matures.
In addition to the cell phone messaging, ARMIS
maintains a Web site providing more information
about food quality standards, agricultural sector
developments, and new technology. Farmers have
paid a small fee for the service, ensuring the long-termsustainability of ARMIS operations. eJournal USA 11

Africans Taking the Lead

The International Center for Documentary Arts

African leaders see good governance as a key to economic development

Rwandan President Paul Kagame is shown on the giant screens above the stage at the 2009 business conference sponsored by the
Corporate Council on Africa. Kagame shared the stage with other African leaders discussing good governance.

In a Washington forum in September 2009, several
African leaders shared a stage and expressed their viewson the connection between good governance and economic
development. Their combined voices made a strong statementthat the tacit acceptance of corruption and government
service for select elites alone is not acceptable in the 21st
century. The officials spoke before a crowded hall at aconference on Doing Business in Africa sponsored by the
Corporate Council on Africa.
Ghana President John Atta MillsFirst of all, every political leader, especially in Africa,
should ask himself or herself, “Why am I in power?” To
me the answer is very simple. The only justification forbeing in power is to help improve the living standards ofour people. Nothing else matters. The second question[is], “How do I do this?” By making sure you have thenecessary resources, you have the manpower; you create

the necessary environment to promote businesses, either
locally or to attract foreign direct investment.
Foreign direct investment has no fixed allegiance or
nationality. It goes where it is most welcome. Now for us
in Ghana, we have realized that we cannot go it alone.
The days of xenophobia are over; now there is economic
interdependence among states. … Therefore, if you wantto know why people want to invest, the reasons are many:
They want markets, they want political stability, theywant to make sure there is the ease of doing business, thecost is low. We found out that it is important for us tohave regional integration. In unity lies strength.
We are a group of very poor countries, but we arevery rich in natural resources, and, therefore, we have very
common interests if we pool our resources. For example,
if we strengthen cooperation amongst us, we can havecommon services, common infrastructure, common
energy programs. We think, therefore in West Africa, theneed for us to integrate is now more important than ever.
…

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© AP Images/ Seth Wenig

John Atta Mills, president of Ghana, speaks at the United Nations
headquarters in New York in 2009.

The important thing is we should all realize,
especially in West Africa, that the people who voted us
into power don’t owe us anything. They only want us
to help them improve their standard of living, and it isimportant that we bear this in mind. Sometimes certain
events, certain positions taken by us, political leaders, arehelping our people to lose confidence in us. What do ourpeople have? It is only hope for a better future, and wecannot disappoint them.
Rwanda President Paul Kagame
In Rwanda today, we are trying to do the best wecan, to be the best we can be ourselves. We are working
on the environment for business but also for citizens who
participate.
I think what we have done to bring Rwanda toward
greater prosperity from our tragic history of genocide iswhat other people can do also. It’s not magic, stabilizing
our country. It’s making sure there is peace and security,
building institutions of governance that will deliver the
public good as required, and then interacting with the restof the world. …
For us to be able to make it easy for people to dobusiness in Rwanda, we had to take stock of what thesituation has been in Rwanda, in the region, generally,on our continent. We had to identify … what theyexperience as difficulties or constraints for people to
do business, whether in Rwanda or in our region.
After we identified those obstacles, then we started
working on removing them, … whether it was putting
in place institutions that would deal with matters ofinvestment and trade, or making sure the environment
was conducive, or putting in place laws and regulations
that would facilitate most efficiently and effectively
establishing a new business. More importantly, having
put all these in place, you have to make sure these policies
work. If you don’t follow through and make sure thesepolicies serve the people they are supposed to serve, thenthings will go wrong.
What we want to accomplish next builds on what is
put in place today and builds on the self-belief that we
can actually do these things. I speak not only of Rwanda,
but of Africa, what Africa needs to do for itself. It willtake Africa, and Africans ourselves, to take the lead intransforming our societies and developing our economies.
Even though we may partner with different people, wemust take the lead ourselves.
Infrastructure is very important in facilitating
businesses. You cannot talk about increased volumes oftrade when there are no roads, there are no rails, there areproblems of air transport. Infrastructure of this kind isnecessary. At the same time, you can’t talk about increased
investments unless you can show you will be able tosupply electricity to industries. You cannot talk aboutcommunication and all that comes with it unless you areable to put in place the Internet and make that accessible
nationally, regionally, or by linking to international
systems.
Focusing on infrastructure and believing that we canactually do it is what we are building on. The other major
focus is on how we uplift our people and bring them toparticipate in business at different levels. This is the best
way to fight poverty, through business. This is our major
focus in the next few years to come.
African Union Commission Chairperson
Jean Ping[Mr. Ping began his remarks citing the population of
Africa, which exceeds 1 billion persons. The population of
Africa is set to double by 2050, according to the Population
Reference Bureau.] How can you think that such acontinent is a problem? It is an opportunity. The sizeof the continent, as a continent, is 30.3 million square
kilometers [roughly 11.7 million square miles]. … The

eJournal USA 13

© AP Images/Thierry Charlier

The dimensions of Europe
are almost exactly those of
the USA. If you take it into
Africa, ECOWAS [Economic
Community of West African
States] is today about 390
million inhabitants. … So if
there is an integration there,
and the competition is possible,
the integration is one of thebest tools if we want to competewith the rest of the world. Thiscountry, the United States, thebiggest economy, one of thebiggest countries in the world,thought there was a necessity
to unite with Canada and
Mexico to have the NAFTA[North American Free Trade
African Union Commission Chairperson Jean Ping speaks to the media in this 2008 photograph.
Agreement], to increase thedimension of this market. So for us it is an imperative
continent is probably the most important reservoir oftoday to increase the dimension of all of our markets.
raw materials. So you see the problem is that today this
There is for us a necessity to work together. It is asame continent is divided by 165 borders in 53 countries.
crucial issue for us if we want to survive. … So you can see the necessity for us to combine theefforts. … There is a necessity of having a free flow oftransit, products, human beings, etc. You can imagine
The opinions expressed in this article do not necessarily reflect the views orthat we live in a world which is characterized, on the one
policies of the U.S. government.
hand, by globalization; on the other hand, by regional
integration. [The European countries] had been fighting
for centuries; the two world wars were there. Who could
have imagined that this continent could be united in theEuropean Union? But it is a necessity for them if theywant to survive.

eJournal USA 14

The Foundations for Sustainable Growthin Latin America
Liliana Rojas-Suarez© AP Images/Eduardo Verdugo• In the early 1980s,
the inability of many
countries to service theirexternal debt halted
foreign capital inflows,
and growth rates plunged
throughout the rest of thedecade.
• In the early
1990s, market-based
economic reforms anddebt negotiations withexternal creditors brought
economic recovery, until
many countries suffereddeep banking crises thatstunted growth, startingwith Mexico in 1995.
• Latin Americancountries grewsignificantly from 2003
The skyline of Panama City’s financial district offers a scenic backdrop for this construction worker. Once
considered a haven for criminals or drug smugglers attempting to launder money, Panama has been working
to 2007, due to further
to clean up banking practices and clamp down on corruption.
reform efforts, improved
financial regulation, andmacroeconomic stability, but the recent global financial
The nations of Latin America have been unable to sustain
crisis overtook economic growth achieved earlier in theeconomic progress in recent decades, despite brief spurts
decade. Some countries are currently showing signs ofof progress. Better governance and stronger institutional
recovery, but others, such as Mexico and the Central
foundations can help improve economic growth, according toAmerican countries, are still facing serious difficulties.
one prominent analyst.
Thus, despite the impressive reforms of the last
Liliana Rojas-Suarez is a senior fellow at the
20 years, most countries in Latin America have been
Washington, D.C.-based Center for Global Development
unable to generate sustainable higher growth. Instead,and the author of Growing Pains in Latin America. She has
the persistence of high poverty and income inequality
a Ph.D. in economics and has held previous positions withindicators has caused discontent toward the market-based
Deutsche Bank, the Inter-American Development Fund, andreforms among large segments of the population.
the International Monetary Fund.

Over the past three decades Latin American
leaders have introduced a number of reforms
designed to enhance and sustain economic
growth. But that period, instead, has seen a series of
economic crises:

Problems in Achieving Sustained Growth
These developments beg a question that looks far
beyond the current crisis: How can better governancehelp Latin American countries accelerate economic
growth and ensure its sustainability? The answer lies

eJournal USA 15

Courtesy of Liliana Rojas-Suarez

since the 1970s, is due largely to the decline of military
in identifying the main foundations for growth in theregimes. Of course, being the most democratic region inregion. Policymakers must identify the factors that can
the developing world does not mean that all countries
encourage the accumulation of physical and humanshare the same degree of democracy. Indeed, some
capital, as well as improvements in technology that are
indicators give very low ratings to democracy in Bolivia,
needed to spur economic growth. Foundations for growth
Ecuador, Nicaragua, Venezuela, and most recently
need to be appropriately recognized if policy makers are
Honduras. Nevertheless, the relatively high level ofto design and implement adequate reforms for sustained
democracy in Latin America plays an important role ingrowth. These foundations depend on the specificachieving sustainable growth. A significant proportion
economic, social, and political features of Latin America.
of voters must share in the benefits of reforms if they are
Latin America has particular features that can guideto be sustainable. Further, any backlash against marketthe identification of the region’s growth foundations.
based reforms can be expressed through democratic
While there are undoubtedly large differences amongprocesses and undermine the chances of further reform.
countries, important characteristics of the region as a
Skepticism about reforms is a consequence of thewhole make Latin America unique, typified by three
region’s high economic inequality. Latin America has
broad features. The first is of an economic nature: Latin
persistently had one of the mostAmerica is the most financiallyunequal income distributions
open of the world’s developing
since the 1960s, and its income
regions. The second is political:
inequality surpassed that of
Latin America is the world’s most
sub-Saharan Africa in 2005 (seedemocratic developing region. The
United Nations University: http://
third encompasses both the economic
www.wider.unu.edu/research/and the social arenas: Latin America
Database/en_GB/wiid/). Evidence
is also the region with the greatest
suggests that income inequality
economic and social inequality.
over a certain level is likely to
Being financially open means
reduce growth, in general, andthat few restrictions (none in somestymie the reform process in Latincountries) limit international capital
America, in particular. In a region
flows. With a few exceptions (mostcharacterized by high levels of
notably Argentina, Ecuador, andboth democracy and inequality,
Venezuela), Latin American countries
the already tenuous backing of
have significantly reduced capital
market-based reform could easily
controls over the last two decades,
be destabilized by a shock of evenstarting with the so-called Brady Plan Liliana Rojas-Suarez is an economist with thelesser magnitude than the current
that allowed for the resolution of
Washington-based Center for Global
Development.
economic downturn.
the debt crisis that had plagued theregion. Financial openness facilitatedFoundations for Growth in Latin America
the region’s increased access to international markets.
With very low domestic saving ratios, policy makers
in Latin America sought to support their development
These three characteristics of the region identify
efforts with capital inflows, especially with foreign direct
the foundations that reforms need to address in orderinvestment. But greater financial openness implied ato foster sustainable growth. Because Latin America has
policy to let market forces assess the performance ofchosen to maintain a market-oriented growth model,
the economy through the behavior of the international
the basic foundations to build from are those that create
capital markets. Thus, increased integration into the
incentives for the functioning of those markets.
international capital markets has increased both financing
Secure property rights: This means protection
capacity and vulnerability to changes in foreign investors’of private property but also assurances that workers
perceptions of a country’s creditworthiness.
and entrepreneurs will be allowed to benefit fromOn the political side, by several measures, Latin
their investments, whether they are in human capital,
America is the most democratic region of the developing
plant and equipment, or research in new technologies.
world. Latin America’s democratization, on the rise
Essentially, the population needs to feel confident thateJournal USA 16

© AP Images/Natacha Pisarenko

having the weakest property
rights in the world. Two
exceptions in the region are
Chile and Costa Rica, whichhave strong institutionalframeworks that have actually
been getting stronger since thereform efforts of the 1990s.
Sufficiently equal
opportunities: This
foundation calls for a levelingof the playing field for marketbased interaction to broad
segments of society. Thismeans reducing barriers to
new businesses begun bypeople who don’t have politicalor financial clout.
The majority of theregion’s population lacks
access to financing, due toeither inadequate regulatory
requirements or impediments
These restaurant workers and about 30 colleagues took over a pizzeria in Buenos Aires whencreated by a weak institutional
the owners were ready to abandon the business during Argentina’s economic crisis of 2002. The
government passed a law to help worker-run companies through cooperatives or under the state’s
framework. For example, inownership.
spite of its good intentions
to protect the poor, interest
rate caps on banking loans have hurt the provision of
the returns from their work and investment will notcredit to small enterprises. This is because, facing thisbe unexpectedly seized by the state or the politicallyconstraint, banks prefer to lend to safer borrowers like
powerful. Securing property rights as a national policy oflarge companies and wealthy individuals.
good governance sets clear rules of the game. Contracts
However, some reforms are strengthening
will be respected and contract disputes will be resolved.
opportunities. In Costa Rica, the increased liberalization
Property rights have been violated often in the recentof trade and the diversification of export activities
history of the region. A well-known case is the freezing
have had positive effects on equalizing opportunities.
of bank deposits in the 2001 Argentinean crisis. In that
Women in the textile sector, for example, have foundepisode, depositors suffered large losses in wealth.
employment in manufacturing where they previously had
Another example comes from Brazil, where, in spite
access only to lower productivity jobs. Also, in Brazil,of reforms to the legal system, property rights protectionchanges in minimum age requirements and a new rule
is weak. In a political climate where democratization
for calculating benefits made eligibility for pensions more
has given greater voice to a large class of economicallynearly similar for poor and rich workers.
disenfranchised people, there are strong incentives
Sufficient economic and political competition toto overlook the law as a way to ameliorate income
avoid dominance by elites: This foundation is importantdisparities. For example, it has become accepted practiceand distinct from the first two because, despite secure
for landless peasants to trespass on rural land and forproperty rights and equal opportunities, the bulk of thehomeless families to trespass on urban land. Judges often
state’s resources might still be funneled to a relatively
bias their contract enforcement decisions to favor thesmall favored group of individuals and companies,
poorer party. This weakened enforcement of law is areducing incentives to invest for the politicallyserious obstacle to productive private investment.
unconnected investors.
The global indices of property rights distinguish
An example of lack of enforcement of this
Latin America, together with South Asia and Africa, aseJournal USA 17

foundation was demonstrated by the privatization of
Mexico’s public telephone company in 1990, which
was implemented without an appropriate institutionalframework and resulted in predatory behavior and the useof monopoly power.
While necessary, these three foundations alone
are not sufficient to achieve sustained growth in Latin
America. Because of the region’s long history of recurrent
economic crises and its reputation for extremely highlevels of fiscal deficits and inflation rates, investors willtend to flee at the first sign of economic problems,
exacerbating any crisis. Thus, for the market-based model
to be sustainable in the region a fourth foundation isnecessary.
Macroeconomic stability: Stability depends upona well-functioning economy with manageable debt, pricestability, and healthy fiscal accounts, enabling otherreform to deliver sustainable growth. In the past, crises
resulting from the lack of macroeconomic stability have
led to severe recessions and fiscal adjustments. These
adjustments generally led to cuts in social expendituresand in infrastructure spending, which harm the poor anddiminish long-term growth prospects.
Latin America has made its greatest progress in laying
this foundation in recent years. Since the early 2000s,
many countries began to improve their fiscal positions
and to reduce their levels of external debt. Moreover,central banks implemented anti-inflationary monetary
regimes and accumulated large stocks of foreign exchange
reserves as self-protection from adverse external shocks.
In the most recent global fiscal crisis, Brazil, Colombia,
Chile, and Peru have all benefited from these advances.
The region needs well-functioning markets, butthat need may conflict with the expressed desires oflarge segments of the population. This is a clash that canthreaten sustained growth. To resolve this conflict, thefifth foundation for sustained growth in Latin America
calls for:

Broad sharing of the benefits from growth: If
only certain segments of society benefit from increased
economic growth, there may be a political backlash fromthose who do not. In Latin America, large numbers ofpeople are either unemployed, pensioners, students, orother dependents. However, these people also need tobenefit from growth-enhancing reforms. If they do not,they might become strong opponents of reforms.
This last foundation has been missing in mostcountries during the reform process of the 1990s and theearly 2000s. For example, in Costa Rica, downsizing the
public sector weakened many government programs that
ensured the broader sharing of benefits, like education,
public infrastructure, and social assistance. This helped tosolidify an anti-reform political party.
The Way Forward
Strengthening these foundations needs to be apriority for Latin American policy makers if growth isto be sustainable. The good news is that practical anddoable proposals are being pursued in many countries,
and I describe them in my book Growing Pains in
Latin America (2009). An important conclusion going
forward is that, despite the commonalities regarding thefoundations for growth, the reforms and policies that areneeded differ greatly between countries in the region.
No one-size-fits-all type of prescription can apply to theunique economic, social, and political characteristics ofeach Latin American country. 
See Rojas-Suarez (ed), Growing Pains in Latin America: An
Economic Growth Framework as Applied to Brazil, Colombia, Costa Rica,
Mexico and Peru, (2009), Center for Global Development.

The opinions expressed in this article do not necessarily reflect the views orpolicies of the U.S. government.

eJournal USA 18

Property Rights:
A Way Out of Poverty and War© AP Images/Silvia Izquierdo

Hernando de Soto

Residents of urban shantytowns frequently lack legal property rights though their families may have lived in the location forgenerations. These children play in the Rocinha slum of Rio de Janeiro.

The world’s poor are not without assets. Better governancewill allow the poor to prove their assets and use them asleverage to achieve greater prosperity.
Hernando de Soto is a Peruvian economist and authorof The Mystery of Capital. He is the cofounder andpresident of the Institute of Liberty and Democracy (ILD),
a nonprofit organization based in Lima that assists heads ofstate of developing and former Soviet countries in creating
inclusive market economies by reforming property andbusiness rights.

Globalization has increased prosperity aroundthe world, yet billions of people in developing
countries are still stuck in poverty, ripe forsocial unrest and terrorist recruiters. According to theCommission on Legal Empowerment of the Poor, which
I cochaired with former U.S. Secretary of State Madeleine

Albright, two-thirds of the world’s population — 4
billion people — cannot prove what they own, where
they are employed, or what businesses they run. Without
legal title to their houses, land, and small businesses, theycannot leverage these assets and are forced to operate
outside the law in shadow economies. There, theycreate their own norms and practices that are so full of
shortcomings that it is impossible to improve their lives.
The Institute of Liberty and Democracy (ILD) calls thiscondition “extralegality.”
Our mission is to help developing countries
create inclusive market economies by giving all theirpeople access to the legal tools that will help them pullthemselves — and their countries — out of poverty: legal
property rights, legal forms of business to divide laborand to prosper, and identity devices to allow expansion of
their markets beyond family and friends.

eJournal USA 19

Courtesy of ILD

to reducing poverty. Legal ownership meansthat you have collateral to go to a bank andqualify for a loan to build and expand abusiness. Whether it’s ownership, whether
it’s credit, whether it’s capital, whether it’s
identification, none of the things that makea modern economy are possible without legal
property.
In every country where we have worked,
we have found that the reason most people
and businesses are operating in the extralegal
economy is not that they are criminals or
culturally unprepared for benefiting froma market economy, as some social scientists
have claimed. Underground economies
flourish because it is too difficult to enter
the legal system due to bureaucratic costs,
discriminatory regulations, and just plain
bad law. Good governance is not just aboutproviding social services and security;
governments must also give their people anappropriate legal framework that will welcome
Peruvian economist Hernando de Soto is president of the Institute for Liberty andthem into the market and empower them to
Democracy and author of The Other Path: The Economic Answer to Terrorism.
unleash the potential of their assets.
Poor people are blocked fromaccumulating
capitalin many countries. Without clear
Governments in many developing countries seemand secure property rights, they can’t capture investment.
to overlook the fact that close to 80 percent of their
Without a legal document to represent value, they arereal estate and businesses are not legally recorded inunable to use their homes to guarantee credit. Stucktheir property systems and governed by the rule of law.
in shantytowns with nothing to lose, the poor are ripe
In the United States, every piece of land, every house,targets for terrorist recruiters who promise to protect theirevery automobile, every airplane, every patent, every
assets by using force. The ILD, in fact, helped put themanuscript for a book or a film has its virtual counterpart
Shining Path terrorists out of business in Peru by offering
recorded and described in documents and databases. This
the poor the safer alternative of legal property. According
recorded existence makes the asset available to be used
to the Shining Path’s leader, Abimael Guzman at the time,
for collateral. An undocumented house or business in athis strategy was meant “to turn the masses away fromshantytown, however, cannot be mortgaged.
their historical objective.” The general responsible for
In fact, the poor own the majority of the world’s
counterinsurgency operations in the early 1990s, Jaime
assets and enterprises — some US $10 trillion worth, by
Salinas, has since said that the ILD’s ideas and activitivies
ILD estimates, doomed to remain “dead capital” unlesswere crucial to defeating terrorism.
it can be legalized to become governed and identified
With that success in mind, Afghan authorities, as
by standard rules. Many developing countries are still
well as Provincial Reconstruction Teams in Afghanistan
struggling to understand how the potential wealth lockedand Human Terrain Teams in Iraq, have asked ILD toin their own extralegal economies might be unleashed toprovide them with plans to adapt these strategies to theirbenefit both the poor and the society at large.
fight against insurgency and drug trafficking.
The Power of Property Rights
Globalization’s Challenge
Actions by developing world countries to establish
clearer property rights and give their poor easier access to
Globalization is here to stay, but it will remain an
the legal means to record what they own will contributeeasy target for its opponents as long as only the elites
eJournal USA 20

Worldwide Impact of ILD’s Institutional
Reform Program
We typically get requests for the ILD’s multistage
reform program from a head of state. ILD then sends ina small team and recruits much larger local teams, which
we train in our methodology. The next and crucial stepis a diagnosis of the country’s legal and extralegal sectors.
This requires comprehensive research in urban and rural
areas to assess the size of the country’s extralegal economy.
When we report that information to the head of state, we
also describe the characteristics of the extralegal economy,
why people prefer it, and its value in terms of deadcapital. Only with that information in hand can we moveto the Reform Design and Implementation phases. As weadvance, however, governments have a tendency to push
us out, which is a healthy sign. The local teams then takeover our work.
Client countries are often shocked by our findingsof massive informality within their economies. But wealso demonstrate that there is massive economic —and political — potential that they can tap by simply
committing to institutional reform. The government’s
support is essential, especially to confront the opposition© AP Images/Dolores Ochoa

are globalized. This is especially true in the developingworld and the former Soviet-dominated nations. The
challenge is to give the majority of the world’s people andbusinesses a stake in international trade. That requires
developing countries to give access to the legal tools that
entrepreneurs in rich countries take for granted: property
rights, limited liability, asset shielding, organizing
management hierarchies, and the ability to issue shares.
The eagerness to create inclusive market economies
is strong among the political leadership in developing
and former Soviet-dominated nations. Thirty-five headsof state have invited the ILD to help them, and I havepersonally met with 32 of them. Since ILD’s founding in
1984 and the successful property and business reforms in
Peru, the institute has worked with 20 countries in Latin
America, Africa, the Middle East, Central Asia, and theformer Soviet Union.
Establishing the institutional framework for amodern, inclusive market economy is difficult work —complicated, laborious, boring, and not very romantic.
An easily understandable system must be created that
conforms to its beneficiaries’ traditions as well as theirterritorial and business models. But God is in the details,
as the saying goes, and that is also true for legal reform.

Ecuador’s Vice President Lenin Moreno (right) examines documentswith Shuar indigenous leader Manuel Chuinda when the Shuar gained
land titles in 2007.

of the bureaucratic and business elites that benefit fromthe status quo.
The best argument on behalf of legal property andbusiness reform is that it works. Twenty years after the
ILD’s reform efforts in our native Peru helped formalize
1.7 million urban real estate assets and made it easierto create businesses, life has improved for our poor, andthe middle class has grown significantly. Our GDP has
been growing at about 8 percent per year recently. Muchof that growth comes from construction, mining, andexports of agro-industrial goods. These sectors would nothave been able to grow without solid property rights toland and mines.
Impressed by our achievements in Peru, thegovernment of El Salvador invited the ILD to adapt
those reforms in the aftermath of civil war. By the end of
2003, the ILD-designed real estate formalization system
had brought 1 million Salvadorans under the rule of law,and also helped the peaceful settlement of ex-combatants
and refugees on productive land. Today, the Salvadoranregistry system handles more than US $800 million in
mortgages yearly.
In 2004, the ILD submitted a report to thegovernment of Egypt, funded by the U.S. Agency forInternational Development/Egypt. The government has
since moved forward with 14 of our 20 reform proposals
to integrate the extralegal economy into Egypt’s economic
mainstream. In 2009, the World Bank’s Doing Business
report rated Egypt as one of its “top reformers.”
In the Philippines, President Gloria Macapagal
Arroyo created the Urban Asset Reform Program, basedon the ILD’s 1999 to 2003 research. By the end ofher government, she had issued four executive orders

eJournal USA 21

and initiated seven programs on land titling, tenure,mortgages, and other “asset reforms.”
Based on the ILD´s work in Tanzania in 2005-2007,
the government has put institutional reform at the centerof their MKURABITA program. The ILD’s influence
has also spread to countries where we have never worked,
such as Ghana, South Africa, Thailand, India, and Russia.
In his 2005 State of the Union address, for example,
then-President Vladimir Putin announced that he hadtitled some 350,000 dachas, based, according to his chiefof staff, on the ILD Reform Program.
The ILD’s work has also influenced the protocolsof large multilateral organizations. The World Bank’s
popular Doing Business series was inspired by the ILD’s
research in Peru. And just last year, the U.N. General
Assembly voted to add the Commission of Legal
Empowerment of the Poor’s recommendations to its
agenda.
Developed nations should also not forget theimportance of a thorough accounting of property rights.
Look at the global financial crisis that began in 2008,
triggered by a collapse of financial instruments derived
from the subprime mortgage market in the United States.
Pooled with other mortgages, and then sliced, diced,
repackaged, and sold to investors around the world,
these “derivatives” became untethered to their underlying
assets; worse still, they were never documented,

standardized, or registered in a way that they could be
easily traced — as is the legal requirement for the restof the property documents that account for everythingelse we own, from cars and houses to businesses andpatents. In short, the financial community created its
own “shadow economy” of an estimated US $600 trillion
worth of financial instruments that we still have not
located and weeded out. They became the infamous“toxic assets” that froze the global credit system, because
banks and financial institutions were not sure which of
their counterparts they could trust.
For us Third Worlders, most of our property
documents are “toxic” — not registered, difficult to
identify, and with a value so opaque that ordinary people
cannot build trust in each other. While the U.S. economy
has already begun to grow, most of our businesses
operate in the face of a chronic credit crunch. That is
why bringing the rule of law to emerging markets may
be the most important measure that can be taken to
help these countries end poverty. It is not possible in the
21st century to overcome poverty and exclusion without
widespread legal business and property rights — thegateway to prosperity. The opinions expressed in this article do not necessarily reflect the views orpolicies of the U.S. government.

eJournal USA 22

Business Looks for Good Governancein Developing Markets© AP Images/Tran Van Minh

Scott EisnerThis KFC restaurant is among the Western businesses that have moved into Ho Chi Minh City over the last decade as Vietnam has become
more open to globalization.

“Foreign direct investment has no fixed allegiance or
nationality,” said Ghanaian President John Atta Mills at a
recent business summit. “It goes where it is most welcome.”
President Mills knows that to attract capital investment from
U.S.-based corporations and other multinationals, developing
nations must offer political stability, rule of law, and abusiness-friendly economic climate. Corporate investment
decisions are neither subjective nor arbitrary, but instead
represent a hard-headed assessment of whether a given nation
offers the good governance required for operations to thrive.
Scott Eisner is the executive director of the Africa
Business Initiative for the U.S. Chamber of Commerce.

T

he developing world is the last growth frontier for
many major corporations, and the U.S. business
community is avidly seeking opportunities
there. The benefits of investing in developing nations
are many: lower-cost labor, abundant natural resources,
and large consumer markets to name a few. In a global
economy, however, these countries are often anomalies
for sophisticated companies to operate in. Seemingly
insurmountable problems — such as political instability,
uneducated workforces, murky business environments,
and poor infrastructure — are preventing Americancompanies from competing for the last marketplaces
where they might continue expansion. The potential

eJournal USA 23

© AP Images

But many other criteria are entirely within
the realm of government action. Are taxes, tariffs,
and regulations onerous? Is doing business simple,
straightforward, and easy? Is corruption rife? Is
the judiciary fair and efficient? Governments
can enact and enforce laws that will create agood operating environment for business andmake their nations more attractive investment
destinations.
For instance, companies need reasonableguarantees that their investments will be
secure regardless of the political winds within aparticular national economy. In most industries, if
a corporate executive believes that the company’s
people, facilities, and other investments would be
unsafe because of an ongoing political situation or
recent political upheaval in a given country, thefirm will not invest there. The risk is too great.
Interestingly, American companies are notnecessarily looking at democratically governed
nations as potential investment destinations.
Political stability with a nonviolent regime isgenerally sufficient for companies when looking
at a nation’s governance as part of its matrix
in determining where to invest. Security ofinvestment is requisite.
In addition to political stability, having an
educated workforce is key to attracting foreign
The logo for Coca-Cola is a common site in Shenzhen, China. This U.S.-based
direct investment (FDI). American companies
company has a global presence rivaling that of any multinational corporation,
operatewith a unique business model. The
providing beverages in more than 200 countries.
majority of Fortune 500 companies (an index
of top companies compiled annually by a respected
problems simply may outweigh the opportunities in manybusiness periodical) enter a new market with a longcompanies’ internal cost-benefit analyses. Twenty years
term view. By and large, these companies expect theirago, the U.S. Chamber of Commerce developed a simple
international branches to be self-sufficient, and they
document titled “Twelve Rules for International Investors:
want them to employ local workers. They recognize that
What goes into a U.S. company’s decision to invest
local people can navigate their own domestic businessoverseas?” Its aim was to explain to foreign governments
environment more easily than expatriates, and they know
the criteria that U.S. multinationals use when gauging
that improving the local standard of living and the local
whether and where to invest abroad. Forbes magazine has
economy will ultimately lead to a larger consumer base.
used these rules in preparing its annual “Best Countries
A large part of the success of American companies
for Business” report.
internationally is based on their nonimperialistic mode ofinvesting. This cooperative outlook can be an enormous
Good Governance Attracts Investment
benefit to an investment destination with the potential
to provide employment for the locals. Understandably
Some of the criteria for attracting investment — thethen, it is imperative for a country’s population to havesize of the domestic market or the availability of raw
the education or technical background to be employedmaterials — are realities that governments cannot change
by a major American firm. Companies find that lack of
at will. Either a country is blessed with natural resources,
education is one of the biggest hurdles in the developing
or it is not. If an internal market is small, no law can beworld, and many of them find it necessary to include apassed to make it big.
eJournal USA 24

eJournal USA 25© AP Images/Altaf Qadri

technical school or training
course as part of theirinitial investment. This
adds to the cost of doing
business, as well as to thetimeline for getting thatbusiness running.
Aside from politicalstability and a skilledworkforce, companies thatare considering investmentin the developing world
require a number of otherbasic necessities in order
to invest in a particularnation. Investors need
In May 2009 Wal-Mart Stores, Inc. opened its first outlet in India. The retailing giant operates almost 4,000transparent processes forstores in 15 nations worldwide.
establishing and doing
business in a country. The
requirements cannot change without notice. Further,international investment, as in the case of Panama or
American investors need to operate within a system that
Rwanda. For instance, the Panamanian government offers
has a level playing field. All American firms are boundforeign and domestic investors a range of incentives,by the Foreign Corrupt Practices Act, and so they cannot
including tax credits and fixed-rate import duties. And
pay bribes without risking penalty by the American
this year Rwanda was named by the World Bank as thejustice system. Therefore, it is difficult for American
fastest global business reformer in terms of the ease ofcompanies to compete in a nation that operates on adoing business.
bribe system.
Singapore is another compelling example. A small
Another baseline element needed to attract private
island state with no natural resources to speak of has
sector investment is transparent and reliable rule of law.
become an industrial powerhouse with one of the
Corporations need assurance that a country’s justicehighest standards of living in the world. Or consider
system works. They must have confidence that if they are
the difference between South Korea and its northernsued or need to take legal action, a fair outcome can beneighbor, which arguably enjoys a better resource
achieved.
endowment. South Korea is now home to one of thelargest and most dynamic economies in the world and a
A Good Business Environment
prosperous society, while North Korea’s state-controlled
economy is reliant on international donors to feed its
people.
Beyond those basic elements, companies are looking
As a cautionary example, recent actions by thefor a business-friendly environment. The executives who
government of Ecuador reveal the price of antibusinessparticipated in the U.S. Chamber of Commerce’s 2009
policies in terms of forfeited investment and jobs. The
study, A Conversation Behind Closed Doors: How Corporate
business climate has deteriorated as the Ecuadorian
America Really Views Africa, said that many developing
government undertook the largest uncompensatednations vying for the attention of investors are making
expropriation of a U.S. investment anywhere in the world
positive changes to their domestic business environments.
in recent decades (the 2006 seizure of US $1 billion in oil
These are the countries that will be attracting FDI.
field assets); interfered in a judicial proceeding of major
Simple adjustments — such as making multiple-entry
significance; raised tariffs; and is now threatening to seize
business visas affordable and easy to obtain — go a longthe intellectual property of international companies. The
way with possible investors. Offering an effective “oneresults are clear: Foreign investment as a percentage ofstop shop” that guides investors through the local process
GDP in the 2005-2007 period was among the lowestof establishing a business makes it less daunting.
in the Latin American region (alongside Venezuela andClearly, some countries succeed wildly in attracting© AP Images/Mary Ann Chastain

communicate in a timely
manner? The old adage has
never been truer — time ismoney. On a recent textile
factory tour in Ethiopia, I
was told that in order for
the factory to receive a new
design, an employee had todownload it in a city thatis a four-hour drive away,burn it to a CD, and drive
the four hours to deliver the
new order. If any alterations
are made to the design, theprocess repeats itself. Thisis clearly not a cost-effective
way to run a business, but inBMW built its first auto manufacturing plant outside of Germany in the U.S. state of South Carolina
a country with very limitedin the 1990s. Better access to the U.S. market and stability of government were among the factors
influencing BMW’s decision. This 1996 photo shows German Defense Minister Volker Ruehe (left) andInternet access, it is reality.
South Carolina Governor David Beasley in a Z3 Roadster during a tour of the BMW auto plant.
The majority ofcharacteristics that theAmerican private sector looks for in prospective
Bolivia), according to the U.N. Economic Commission
investment destinations are not capital-intensive. Instead,for Latin America and the Caribbean.
the necessary changes require the determination of theAnother huge detraction for companies researchingnation’s government to become an attractive place forinvestment in a particular country is the absence of
doing business. If a country can achieve political stability
basic infrastructure. The untapped potential of Africa’s
and clamp down on corruption to create a transparent
agricultural sector is a quintessential example. Subbusiness environment, educating citizens and building
Saharan Africa has massive tracts of arable land and isout the necessary infrastructures will follow — either
home to an enormous variety of agricultural products;from private investment or through international
however, a large amount of the food grown never makes
assistance. 
it to market. A lack of road infrastructure in this region
prevents efficient transport of produce, so frequently
crops rot before they reach buyers. If a reliable network
The opinions expressed in this article do not necessarily reflect the views orof rail and roadways linked farmland to ports andpolicies of the U.S. government.
major urban marketplaces, countless major agriculturalcompanies would be investing there.
Electric and telecommunications infrastructures are
as important in the global economy as transportation.
Can vendors and buyers and employees and employers

eJournal USA 26

Strength in Numbers: The Power ofRegional Trade© AP Images/Sayyid Azim

Mweusi Karake

Ethiopian coffee growers sort through newly harvested beans. The
nation’s membership in COMESA gives growers access to moremarkets in the region.

Nations of eastern and southern Africa have been working
for most of this decade to build an alliance to strengthen theirposition as an economic and trading force. They recognizethat good governance and consistent policies throughout theirregion will create a better atmosphere for business and trade.
An improved business climate will provide their people greater
opportunities for jobs and prosperity.
Mweusi Karake is the head of public relations at
the Common Market for Eastern and Southern Africa(COMESA), working from the organization’s headquarters in
Lusaka, Zambia.

Neighboring nations of the world are teaming
up in regional trade groups, improving accessto regional markets, and strengthening theireconomic integration. By committing the partners toclear and enforceable rules, these organizations promotetransparency and good governance. The trend is marked
by a string of acronyms stretching across the globe —APEC, Asia-Pacific Economic Cooperation; ASEAN, theAssociation of Southeast Asian Nations; NAFTA, the North
American Free Trade Agreement; and, of course, the world’s
most advanced regional market, decades in the making, theEU, the European Union.
Now, here comes COMESA [coh-MAY-suh], theCommon Market for Eastern and Southern Africa.
COMESA has 19 member countries: Burundi,
Comoros, Congo Democratic Republic, Djibouti, Egypt,
Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi,
Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda,
Zambia, and Zimbabwe. Fourteen of these states are alreadyin a free trade area.
Trade development among our member nations is thecornerstone of our agenda, and we have pursued a variety ofsteps to liberalize and facilitate trade throughout our region
in a process that economists call “integration.” We also havea vision for our relationship to lead to a common market
and achieve monetary union, following the same course as
the Europeans.
The COMESA Free Trade Area [FTA] gives us a
type of trade bloc in which our countries have agreed toeliminate tariffs and quotas when we trade among ourselves.
The next step for us in this process of economic integration
will be to form a “customs union,” whereby we retain our
free trade arrangements but also adopt a common policy
for an external tariff imposed on goods imported fromnonmember nations. Our heads of state finalized the key
instruments to create the Customs Union in June 2009.
We envision that this union will improve commerce
and trade in Africa in a variety of ways. For example, today
goods being imported from Japan to Rwanda pass underthe eyes of border officials at multiple points — as they
are off-loaded from a ship at Mombasa, Kenya; when they
pass overland from Kenya into Uganda; then again, as they
pass the national border into neighboring Rwanda. They
receive a final inspection from officials in Kigali. Under
the Customs Union, the goods will simply be inspected
and cleared only once in Mombasa. We believe reduced

eJournal USA 27

inspections for goods will
benefit both business andthe consumer, streamlining
trade, reducing costs, andeliminating opportunities
for corruption that canarise at each inspection
point.
Strength in Numbers© AP Images/Khalil Senosi

With a regional
population of 400 million
and a gross domestic
product of almost
US $420 billion, ours is
an attractive region forinvestment and trade inthis globalized world.
Enhancing regional
trade arrangements allows
African leaders attend the 2007 COMESA summit. Seen here from left are Zimbabwean President Robert
our member nations to
Mugabe, King Mswati lll of Swaziland, Ugandan President Yoweri Museveni, and Ethiopian Prime Minister Meles
Zenawi.
better prepare themselves
to become fully engaged
risks that investors may perceive arising from the politicalas active players in the global economy. This training
atmosphere. Member countries of ATI must contributein regional commerce allows industries to grow at amoney into the insurance fund, a scheme that creates
manageable pace until they are ready to graduate into the
incentives for countries to deal with investors responsibly.
larger world of global trade. In addition, regional alliances
Through ATI, COMESA covers investments thatof nations with a unified position wield more clout whenmight be seized and nationalized by an overzealous
they step into international fora than does an individual
government. ATI also covers losses that an investor might
nation pursuing an isolated national position.
incur through other government action, inaction, orThe arrangement promotes good governance becauseinterference. This insurance also covers losses caused by war,
it promotes transparent, competitive, and rule-based
civil disturbance, civil commotion, or terrorism.
trade. COMESA has created institutions to ensure thatrules agreed upon by member nations are respected. The
Economic Benefits of Integration
COMESA Court of Justice, for example, allows aggrieved
parties, be they individuals or countries, to seek redress.
The court was established by the COMESA Treaty
This process of economic integration has gainedin 1994 as one of the organs of COMESA. Currently, thewide acceptance in both economic theory and practicecourt is composed of 12 judges, coming from 12 different
since the end of World War II. In many parts of themember states of COMESA. The judges of the court
globe, regional agreements have created more favorable
are persons of impartiality, independence, and integrity,environments for the development of good governance, thewho also fulfill the conditions required for holding highprivate sector, improved infrastructure, public institutions,judicial office in their respective countries. The court’sand civil society. As this development progresses andindependence is demonstrated by the fact that thematures, economic integration in a region is also thought
COMESA Secretariat and other COMESA institutions
to contribute to enhanced peace, security, and improved
have lost cases before the court.
interaction with other world regions.
To provide additional protections for free market
Certainly some interests may stand to lose in thisprinciples and property rights protection, COMESA has set process. For example, countries that were highly dependent
up the Africa Trade Insurance Agency (ATI), which covers
on import duties may incur temporary losses in the shorteJournal USA 28

© AP Images

flow of goods and services as producers take advantage
run when the Customs Union becomes fully operational.
of the larger markets to distribute and sell their goods.
We are prepared to mitigate and adjust to those losses
Greater trade will result within the region as Customs
and are already doing so. In September 2009, COMESAUnion producers hold a price advantage for their goods
disbursed close to 15 million euros to Rwanda andover those imported from nonunion countries. The CCU
Burundi for their losses incurred due to the removal
nations will come to agreement on harmonizing theiror reduction of import duties under the East Africa
respective tax polices so the regional playing field will be
Customs Union arrangement for the June 2008-Juneleveled, and efficiency in production and competiveness2009 financial year. COMESA is also looking at how towill increase. Other policy agreements are likely to result,
mitigate possible social costs, such as the loss of national
sending a message to the global investment community
jobs among clearing and forwarding agents whosethat stability and certainty are improving throughout
numbers will diminish as the number of inspection points
the region, creating a more favorable atmosphere forfor goods is reduced.
investment.
Significant gains have already been achieved by ourEstablishing, operating, and consolidating the CCU
member nations and their citizens. The elimination ofis work that still lies before us,barriers to intra-COMESA tradeand it will require determination
has contributed to phenomenal
and unwavering commitment
growth in our region. Tradefrom political leaders in both theincreased five-fold from US $3
executive and legislative arms ofbillion in the year 2000 to US $15
government. Judiciary systems mustbillion in 2009. Goods such as foodalso rise to their role as protectors
products and building materialsof the regional laws, so thatare moving across the borders ofcompanies and investors know that
COMESA nations in the greatest
their interests under the law will bevolumes.
protected in the implementation of
Our FTA has catered also to
integration programs.
the small cross-border trader underThe stakeholders in our future
the COMESA Simplified Trade­— the public and private sectors
Regime (STR), mainly women andand civil society organizations —youth who trade in small quantities.
must recognize that this process is
Crossing national borders by bus,in the best interest of our families,
truck, bicycle, and even on foot,our countries, and our region.
these traders carry goods normally
The COMESA Customs Union
valued at less than US $500 and,can serve as an important building
thus, are not required to present a
block for continental progress.
certificate of origin for the goods.
Vanilla pods are sorted in Madagascar, another
If we do not work together in an
These transactions are minute
COMESA member.
organized and orderly manner,in the grand scheme of global
Africans will not be able to engage successfully with acommerce, but they make a substantial difference inglobalized world.
the lives of the people who trade in small quantities of
An African renaissance must be supported throughproducts such as maize meal, sugar, beans, and beverages.
ever-stronger African institutions that promote a united,
Because women are very active in this level of commerce,strong, and free continent with a global voice and a role
the small cross-border trade contributes to providing foodin global processes. COMESA is an institution working
for children and fees for their schools. We all know thattoday to bring that vision into reality. 
women’s income has a direct bearing on the welfare of ourhomes, particularly in rural households.
The Next Step

The opinions expressed in this article do not necessarily reflect the views orpolicies of the U.S. government.

A COMESA Customs Union (CCU) will build on
the success of the last decade, resulting in an enhanced
eJournal USA 29

Naga City Works for Transparency
and Accountability

Courtesy of Randyvic Villaflor-Naga City Visitors Center

An Interview With Jesse Robredo

The City of Naga publishes the Citizens Charter every three years, detailing the city’s duties and responsibilities to the people.

A medium-sized city in the Philippines has developed areputation as a model of good government practice. It is
not a reputation earned through a single act or declaration,
but through one action after another, month after month,year after year. Naga has served its people consistently andreliably, winning their confidence and trust.
Jesse Robredo has been the elected mayor of the cityof Naga for most of the last 20 years. He came into city
government with two advanced degrees and experience
working in a consumer foods corporation.
Naga has received more than 150 awards —international, national, and regional — for its soundand innovative practices. It has been recognized for costeffectiveness by Foreign Direct Investment magazine andfor its excellence in public service by the United Nations.
Mayor Robredo governs the city with a 13-member city
council, and he talked with eJournal USA managing editor
Charlene Porter.

Question: Mr. Mayor, how do you describe theconnection between good governance and economic
development?
Jesse Robredo: It’s important to us that we demonstrate
good governance practices in order to secure theconfidence of our constituency and the taxpayers.
Confidence will encourage businesses to invest in the city.
Confidence will encourage them to pay the necessary
taxes so that we can use the money for investing ininfrastructure and investing in other activities related topromoting the development of the city.
Good governance means applying the rule of law,
being transparent in all the transactions at City Hall,setting metrics in all that we do, and making these
metrics known to everyone. We’re making City Hall
accountable to certain measurable standards that we haveto convey to the residents of the city.

eJournal USA 30

It’s not just saying, “Oh, we practice good governancein Naga.” Instead, we say, “These are the specifics of
how we do it. This is what you can expect of the city
government. These are the obligations required of us as
we serve the people and develop the city.”
Q: Give me some examples of those specifics you
mention.

Courtesy of Randyvic Villaflor-Naga City Visitors Center

Robredo: Since 2001, we have been issuing what wecall the Citizens Charter. We passed a local law requiring
City Hall to have the Citizens Charter updated every
three years. That charter tells you exactly what the city
government is going to do for residents of the city.
For instance, issuance of business permits, issuance ofbuilding permits, who is responsible, what are the fees,
and the like.
All that information is published in a book. The
book is distributed to residents of the city so they know
exactly what they can expect of their City Hall. This
minimizes corruption significantly. When you know
the procedures, when you know who is responsible forthe procedures, it makes the system transparent andaccountable.
We have another local law that compels us to havenongovernmental organizations and representatives
present in everything that we do in the city. That law,in fact, establishes what we call the Naga City People’s
Council. It is a federation of all nongovernmentalorganizations in the city. This council nominates theirrepresentatives for committees of the city government.
In the committee in the city council, they are part of thequorum. They can vote; they can debate with the elected
officials. That law was passed sometime in the mid-1990s.
Prior to that, we did the first-ever referendum in thePhilippines when people were asked to vote on certain
development issues that would have long-term impact
on the development of Naga. So we called the vote, andI think it was the first and only time a local government
unit asked people to vote on development issues. The
citizens were asked, first, whether they would like thecity to put up a new commercial district; second, if theywould allow the city to borrow money to fund this new
district; and third, whether the city should impose what
we call a color coding of tricycles [motorcycles with sidecars]. These are motorcycle public utility vehicles, and we
wanted to color code them to facilitate passenger accessand delineation of the different routes. It was a traffic
management issue.
When we conducted the referendum on the newcommercial district, essentially we were trying tobuild stakeholdership for that idea among the public.
Significant public money was needed to develop it, sothat was why we had the vote. After that vote, support
for the project was not justfrom the city council but
all throughout the city. We
had to ensure continuity of
support for the project. Whenyou have that, you promotepredictability, stability, andinspire business confidence.

Mayor Jesse Robredo says, “Good governance means applying the rule of law, being transparent in all
the transactions at City Hall.”eJournal USA 31

Q: You mention the actions
the city took to createtransparency in permitting
and regulation of businesses.
Transparent policies are very
attractive to businesses as
they consider expanding theiroperations to new areas. Havethese Naga City actions paid
off with business investment?
Robredo: The biggest mall
operator in the Philippines is
Shoemart, or SM. They set

up a mall in the new commercial district, creating 2,000
jobs and an investment worth 1 billion [Philippine] pesos[US $21.3 million]. The reason they were able to do thiswas because of the referendum that established Central
Business District 2. Central Business District 2 waslegislated by city government and developed so we cancreate more space for commercial development in the city.
That referendum ensured constituency support.
The outcomes really are supported by the processes.
When we invest infrastructure money, we always say weneed to do more with less, so that we can do more. Whenyou save government money, government is able to do
more. So for us, it is a combination of using legislation,
engaging the constituencies, and securing support sothat we’ll be able to come up with new areas and sites fordevelopment. When you do that, and people realize they
are getting their money’s worth, you go back to the cycleof collecting taxes.
We raised taxes twice in the last five years. On bothoccasions, the Chamber of Commerce passed resolutions
effectively saying, “City Hall, go ahead, raise property
taxes.” This speaks of how we have changed the attitudeof city residents. When taxpayers are saying, “Go ahead,raise taxes,” it tells you they are confident about how theirmoney is being spent, they’re involved in the developmentof city planning, and they are willing to share the burden.
That’s the most important aspect of how we do our workin the city.
Q: How big a city is Naga?
Robredo: Around 160,000 live in the city full time, but
the daytime population is about 300,000 to 350,000 as
people come into the city to work and study. We havethree universities, and most of the jobs in the region are
in the city. The computation of national government
fund transfers to the city is based on the nighttime
population, so you might say we’re getting the shorterend of the bargain. But in the bigger view, these people
contribute to the economic development of the city, so
we don’t mind it.
Q: As you were growing up in the Philippines, Ferdinand
Marcos was in power. His era is now recognized as being
seriously corrupt. What influence might those years have
had on your philosophy about governance?
Robredo: When I was younger, my career path was
geared towards working in a private company and moving
up the corporate ladder. But when Senator Benigno

Aquino was assassinated in 1983, I joined a left-leaningorganization, and it dawned on me that there are more
important things in life than getting a good corporatejob.
I joined the marches in Ayala Avenue in protest of
the death of Senator Aquino. After Marcos left, I was
asked if I was interested in working in government. I
was able to take a one-year leave from my company, andthey allowed me to return home to Naga to work ingovernment. After a year of working in the government,
people asked me to run for mayor. So I said, “Why not?”
Q: And you were only 29 years old?
Robredo: Yes, when I took over during my first term, I
was only 29. I served three terms from 1988 until 1998.
Then I was out of office for three years because of term
limit laws. Then I was reelected in 2001, and I’ll serve
until 2010.
Q: So as the People Power movement forced Marcos outof power, you became a young man with greater visions
for his country?
Robredo: That’s correct. And as they say, you better put
your money where your mouth is. I was single then;it was a good time for me to work in the government
without too much pressure from family and with moretime to think about what I could do for the community
and the city.
Q: You have received significant recognition andattention for the policies that you have worked to put inplace there. What kind of ripple effect are your actions
and the attention you have received causing in other cities
and communities in the Philippines?
Robredo: We have what we call the People’s
Empowerment Law of the city. Now they have passed asimilar law in probably five other cities in the country
and several more towns. So the concept of sharing powerand empowering the constituency is a trend that willcontinue in the future.
The People’s Empowerment Law recognizes thecontribution of organized groups in the city. There’s
a people’s council and they have a voice in all thecommittees of the city. The more difficult challenge is
how you engage regular households, where people aren’tinterested in policy but are just interested that garbage
is collected, street lights are functioning, and roads are

eJournal USA 32

paved. The basic services provided. So we said, “Let’scome up with another form of engagement that will allow
the regular household to talk to us.” So we passed theI-governance law: “I” stands for information openness,
inclusive governance, interactive engagement, andinnovative management.
The budget of the city is published and is accessible
to anyone. These tools are catching on elsewhere in thePhilippines. In 2001 we passed the first citizens charterin the Philippines, and now there is a national law that
requires everyone to have a citizens charter.
We have another project: Reinventing the City
School Board. We are partnering with a nongovernmentalorganization, the Synergeia Foundation. Basically the
focus is improving the quality of public education byenhancing parent participation and empowering theschools. So these are innovations that are more related togovernance rather than just bringing in new resources.
I’ve gone to other provinces to advocate and to speakon these issues as a resource person. So we’re competentand confident enough to be a resource city in all of
this. The opinions expressed in this interview do not necessarily reflect the views
or policies of the U.S. government.

eJournal USA 33

Building High-Impact Businesses

Courtesy of Endeavor

Elmira Bayrasli

Andy Freire (left) and Santiago Bilinkis built Office Net, the largest office supply business in Latin America, with support from Endeavor.

Entrepreneurs can neither thrive nor contribute to generalprosperity if bribes and false financial statements thwart
their business. But there are promising entrepreneurs indeveloping countries who want to operate with transparency
and honesty like those in the developed world. Endeavor,
a nonprofit organization, finds those entrepreneurs, directs
them to the capital and counsel they need, and so empowers
business people with vision, drive, and dreams to create jobs
and prosperity in their communities.
Elmira Bayrasli is the vice president of policy andoutreach for Endeavor, based in New York City.

E

veryone envied Andy Freire and Santiago Bilinkis.
Right out of university during the 1990s, both
had respectable, well-paying corporate jobs in theirnative Argentina at Proctor & Gamble, a multinational
manufacturer of personal-care and household products.

Jobs were, and still are, hard to come by in emerging
markets like Argentina. There were few innovators
willing to take risks and create jobs. So, in the local wayof thinking, anyone who did have a job was lucky. But
Andy and Santi quit their corporate jobs and focused
their energies on starting an office supply sales company,
OfficeNet. Their idea was inspired by a business model
popularized by the computer manufacturer Dell: market
office supplies to customers through catalogs. Because
they wouldn’t maintain a storefront, they would saveon overhead and be able to offer customers competitive
prices.
“Crazy,” was the response they got from almost
everyone.
Andy and Santi were told that in order to getdeliveries on time and acquire customers, they would
have to pay bribes and falsify financial statements. The

eJournal USA 34

Courtesy of Endeavor

practice sounds dishonest to Western business people, but
it wasn’t at that time and place. That was simply the way
business was done in Argentina.
Andy and Santi would not pay bribes, grease palms,
or falsify financial statements. They wanted to run abusiness ethically, transparently, and in service of thecustomer. They dreamed of replicating the success storyof Tom Stemberg, the Boston entrepreneur who started
the multimillion-dollar office supply store Staples. Andyand Santi wanted to make OfficeNet the Staples of Latin
America. And that is exactly what they said to Linda
Rottenberg back in 1998 when she was just kicking off
Endeavor.
The Seeds of Endeavor
Endeavor was Rottenberg’s idea to help emerging
market entrepreneurs, an idea born one day when she
was riding in a cab in Buenos Aires. She learned that her
driver had an engineering degree. Why was he driving acab? she asked. Why wasn’t he an entrepreneur?
“What’s an entrepreneur?” the driver asked. He had
never heard the word “entrepreneur” because back in the
1990s the word didn’t exist in Spanish.
Rottenberg set out to find emerging-market
entrepreneurs with big visions, passion, and high-impact
potential. She wanted to provide them with the mentors,
networks, and tools to help them take their enterprise to
the next level.
This support would enable high-impact
entrepreneurs to scale up their businesses, building avibrant, investment-friendly private sector and a robust
middle class. At the same time, she envisioned that these
entrepreneurs could become inspiring role models intheir communities and their countries.
Rottenberg had seen the miracle that microfinance
had performed throughout Latin America. With loansof just $50 or $100, millions of recipients were able tostart businesses and work their own way out of poverty.
Maybe the same strategy could help struggling businesses
become major enterprises.
Rottenberg knew multimillion-dollar investments
were being poured into the big firms in emerging
markets, owned by wealthy families. But no investors
were willing to risk capital on promising entrepreneurs
like Andy and Santi. They’d started a business but needed
additional support to grow.
Endeavor helped Andy and Santi strengthen theoperations, management, and financing of their company.
Endeavor helped them get capital to grow their business

Linda Rottenberg (left) is the cofounder and chief executive officer
of Endeavor. She is seen here with Leila Velez, a cofounder of Beleza
Natural hair salons, a company that expanded with Endeavor support.

without paying bribes or resorting to unethical businesspractices. Endeavor put Andy and Santi in touch withTom Stemberg from Staples to advise them on building
and expanding OfficeNet.
By 2004 Staples had bought OfficeNet and helped
it become the largest office supply business in Latin
America. More importantly, it changed the playing fieldin Argentina. Impressed by Andy and Santi’s example,
other Argentine businesses started keeping a single set of
accurate accounting records and refused to pay bribes.
They paid suppliers and delivered services to customers
on time. They were eager to replicate OfficeNet’s success.
By 2007 OfficeNet had created 700 jobs.
Endeavor Expands
Today Linda Rottenberg’s dream has become reality
in 11 emerging-market countries around the world:
Argentina, Brazil, Chile, Colombia, Egypt, India, Jordan,
Mexico, South Africa, Turkey, and Uruguay.
Along the way, thousands of hopeful business people
have worked their way to a new prosperity, like Leila
Velez from Brazil.
Leila grew up in a favela in Rio de Janeiro. Her
father was a janitor and her mother a maid. By all
accounts, Leila’s future was bleak, but she had a bigger
dream.
With her cousin Zica, Leila developed an in-store“hair care experience,” centered around a product theycreated, a hair relaxer that wouldn’t be sold on store
shelves. Leila and Zica wanted to open a salon, andeJournal USA 35

women interested in the product would come to havetheir hair treated by a professional.
“Crazy,” people told them. “Poor people in the favela
won’t pay to have their hair done,” they were told. Leila
and Zica knew otherwise. “Poor people want to feel
beautiful too,” Leila told me one day.
Neither Leila or Zica had chemistry degrees. They
had never worked in a research and development lab.
But from years of working in beauty salons, they began
to create their own hair-relaxing solution. They didn’t
get it right the first couple of times. Their husbands’
hair fell out after treatments with one formula, and theexperiments continued.
Eventually, however, the product worked, and theycalled it Beleza Natural. They set out to open their firstsalon. Within their first year of operation, the hair careexperience they’d invented had become so popular thatwomen waited up to four hours to have their hair treatedwith Beleza Natural.
Leila and Zica knew they had created something highimpact. And then they met Endeavor.
Endeavor helped connect the hair care entrepreneurs
to top business leaders in Brazil. Those business leaders
guided the Beleza Natural pair to open their own
manufacturing facility and encouraged them to open up
other salons throughout Rio. Most importantly, as Leila
says, “Endeavor gave me the confidence to believe in
my dreams, to think big, and believe that I can be a big
business leader too.”Today Beleza Natural employs more than 1,000
people. The company operates six salons in Brazil and amanufacturing facility. In 2008 it generated more than
US $30 million in revenues.
The Endeavor Guide to Success
In screening thousands of candidates for its
assistance, Endeavor has come to recognize that thosewith high-impact potential come into the process at
different stages, in different industries, and with varying
support needs. There’s no one-size-fits-all definition ofa “high-impact entrepreneur,” but as a rule, Endeavor
looks for visionary entrepreneurs running high-potential
businesses that demonstrate innovation and have annual
revenues from US $500 thousand to US $20 million.
Endeavor’s portfolio includes IT-providers, engineers,architects, fashion designers, and even butchers.
Once selected, Endeavor provides high-impact
entrepreneurs with services customized for eachentrepreneur. Over the past 11 years, Endeavor has

built a dynamic VentureCorps, a network of local andinternational business leaders who provide experienced
advice, contacts, and support to meet the specificneeds of entrepreneurs. Endeavor’s services focus onproviding mentorship to local and global business leaders,managerial talent from blue-chip companies and top
business schools, and access to difficult-to-penetrate
networks.
Endeavor is fundamentally a development model:
Our mission is to enable high-impact entrepreneurshipto thrive in developing countries, as it does in North
America. Consider, for example, Silicon Valley. The
California community that has come to be known as awell of information technology innovation is not justa bunch of tech-entrepreneurs in the same place. It’s acommunity that supports entrepreneurs and includes
universities with great research and development capacity,
investors willing to take real risk, advisors who provide
critical support, and a community that celebrates
entrepreneurship.
In 2006 I met New York Times columnist ThomasFriedman in Uruguay, where he was meeting with anumber of Endeavor entrepreneurs from that country. He
was learning for the first time about Endeavor’s work tounleash high-impact entrepreneurship around the world.
I sat next to him and could see how engaged hewas with the entrepreneurs and their ideas. A few weeks
later, he exchanged messages with Endeavor’s CEO
Linda Rottenberg. They talked about how Endeavor’s
efforts represent the embodiment of the principles
Friedman described in his 2005 book about globalization,
The World Is Flat. Endeavor is making communities
more secure, while also helping countries move out ofinternational aid into international investment.
In a revised edition of The World Is Flat released
in 2007, Thomas Friedman included a chapter about
Endeavor’s work. In it he describes Endeavor’s model andhow it is encouraging promising entrepreneurs to pursue
their dreams.
“Too often, we have antipoverty debates but notpro-entrepreneurship debates.” Friedman wrote. “Theinspirational power of a local business success story is
incalculable: There is no greater motivator for the poor
than looking at one of their own who makes it big andsaying: ‘If she can do it, I can do it.’” The opinions expressed in this article do not necessarily reflect the views orpolicies of the U.S. government.

eJournal USA 36

Reforms Promote Business in Indian Cities

Photo by Adam Jones, adamjones.freeservers.com

Mierta Capaul and Jana Malinska

A shopkeeper tends his stall in the market in Madurai, India.

Government policies go a long way toward enabling or
impeding the success of business enterprises. In a federal state,those policies can vary widely from one jurisdiction to thenext. A publication released this year by the International
Finance Corporation and the World Bank examines India’s
frequently significant differences in local government
practices and policies relating to business regulation. The
report covers regulations that affect seven stages in the life ofa small to midsize domestic enterprise.
Mierta Capaul and Jana Malinska are co-authors of
Doing Business in India 2009. The report was produced bya World Bank Group team at the request of the Department
of Industrial Policy and Promotion of India’s Ministryof Commerce and Industry. Further information on the fullreport and its many researchers and contributors is availableat www.doingbusiness.org/india.

Consider this scenario: A young Indian returns
from her studies abroad with a great idea for a
new business, but she needs to decide where to
set up shop. Going through the official procedures tostart her company would take the least time in Noida (30days). But business permits and fees would cost the leastin Patna (38 percent of income per capita) — only about
half as much as in Mumbai. What if she needs to build awarehouse and hook it up to utilities? Obtaining all thepermits needed would take about 80 days in Bengaluru

eJournal USA 37

Toward Business-Friendly Regulation

Gains in the Business Environment

India owes much of its economic success toliberalization reforms initiated in 1991. Opening up
to trade and investment and pursuing deregulation,
privatization, and tax reforms helped boost average
economic growth to 8.5 percent a year in 2005-2008 andlift 300 million people out of extreme poverty.
Still, recent growth has failed to create enough jobs
to absorb the huge increase in India’s labor force. A study
by the Indian Ministry of Statistics shows that 90 percentof the labor force is still employed in the informal sector,
with little job and income security. The faster pace ofgrowth in richer states widens the already existing gap
with poorer states. Promoting inclusive growth is one of

Doing Business in India 2009 records significant
business reforms at the national, state, and municipal
levels in 14 of the 17 locations it benchmarks. These
include computerizing records, putting business andtax registration online, and setting up “single-window
systems” for applications — all making it easier forbusinesses to comply with rules and regulations.
Registration of a business is the first contact a newentrepreneur has with government regulators, and thereforms have made the registration process easier. A
Ministry of Corporate Affairs initiative, MCA21, madebusiness registration electronic. Getting a company
name approved now takes two days in all 17 cities,

eJournal USA 38

Courtesy of USAID

and Hyderabad, twice as fast as theaverage of 161 days found in themember states of the Organization
for Economic Co-operation andDevelopment. It would take six
months longer in Kolkata. And
what if the new entrepreneur’sbusiness dealings should lead to a
dispute that needs to be resolvedin court? That process tends to betime-consuming across India. But
while it’s likely to take 20 months
in Guwahati, it could take four
years in Mumbai.
All Indian cities have a similar
legal and institutional framework,
but local regulations and local
implementation of national laws
vary. The economic reforms of
the 1990s gave the states greater
Indian women are turning excess produce into mango bars, using a solar dryer. The small businessenterprise began with support from the U.S. Agency for International Development.
autonomy, especially in land andlicensing matters. This contributed
to the large variations in local government regulations
the key development objectives in India’s 11th Five-Yearand practices across India — variations that matter forPlan.
business activity.
To help unleash the potential of local entrepreneurs,
Doing Business in India 2009 studies businessnational, state, and municipal governments need toregulation from the perspective of a small to mediumcontinue working toward a regulatory environment
size domestic firm. It examines 17 locations across India,
that encourages firms to operate in the formal sector
including Mumbai, to measure which reforms haveand to grow. Reforms that cut red tape, clarify property
worked, where, and why. The report looks at seven topics
rights, and streamline regulatory compliance can yieldof local jurisdiction and practice: starting a business,
big payoffs for firms and workers. The good news is that
dealing with construction permits, registering property,
regulatory reforms are taking place. But their pace haspaying taxes, trading across borders, enforcing contracts,
varied across the country, and India still has a way to go
and closing a business.
to compare favorably with international good practices.

down from four to six days in 2006. The electronic
copy of the certificate of incorporation is available intwo to three days, compared with nine to 10 days in2006. Bhubaneshwar and Hyderabad made value addedtax (VAT) and professional tax registration easier byintroducing single-access points, and Patna and Ranchi
reduced the stamp duty on incorporation documents.
Local governments also reformed processes for
dealing with construction permits. Computerization andgreater administrative efficiency accelerated approvals
for building permit applications by 25 days on average.
Bengaluru, Gurgaon, and Hyderabad introduced effective
single-window systems for building permit applications.
Ahmedabad and Chennai made it possible for builders to
submit their plans electronically for automatic scrutiny
against the building rules and zoning plans. Along with
Bengaluru and Hyderabad, they also enabled builders to
track their applications online. In 10 of the 17 cities, theapplication forms are available online — saving businesses
at least one trip to the municipality, and an entire
afternoon that might otherwise have been spent in traffic.
Bengaluru is the best performer in the ease of dealing
with construction permits. Globally, the city would rank
72nd out of 181 economies, ahead of Italy (81) andjust behind Norway (67). Its example shows that a city
can adopt environmentally beneficial policies without
imposing an extra burden on business. The Bengaluru
Municipal Corporation reserves the right to order theplanting of two trees on plots larger than 200 square
meters at the time the building permit is approved — noseparate visits are necessary. In Mumbai, by contrast,
entrepreneurs have to visit the Tree Authority twice andwait a month for the Tree Committee’s meeting to get anapproval when building a warehouse.
How long entrepreneurs have to wait to register theirproperty also depends on where their business is located.
If in Jaipur, the building will be registered and ready tohouse new business in 24 days, five times as fast as in
Bhubaneshwar, where it takes 126 days. Jaipur is among
the cities that computerized their land records, making iteasier for entrepreneurs to search for encumbrances andregister their sale deeds. Gurgaon, India’s top performer
in registering property, increased the speed of propertytransfers by developing customized software and training
registry employees. Several states cut their stamp duty
rates, such as Delhi (from 8 percent to 6 percent formen and from 6 percent to 4 percent for women),to encourage entrepreneurs to formally register theirproperty.
Overall, the report finds, it is easiest to start andoperate a business in Ludhiana, Hyderabad, andBhubaneshwar, and most difficult in Kochi and Kolkata.
But for governments committed to reform, it is the paceof reform that matters, not the absolute ranking. Whilesome locations perform better than others in the overall
ranking, even the lowest-ranking ones have some areasof good practice. For example, while Kolkata ranks last
overall among the 17 locations benchmarked, it has thesecond lowest business start-up costs. For other cities,
that’s a practice worth emulating.
National Reforms in a Global Context
National reforms have increased the efficiency oftax systems. In 2005 the national government began
introducing a uniform VAT rate in all Indian states,
eliminating some of the cascading effects caused by local
taxes. By 2008 all states had adopted the VAT system. In
2007 the central sales tax rate was cut from 4 percent to
3 percent.
India has also improved its legal and regulatory
framework in ways that have eased contract enforcement
and bankruptcy in the past two decades. In 2008 theSupreme Court of India allowed electronic filing of cases.
E-filing systems are being planned for the state highcourts in the near future and eventually in the district
courts as well. A new Web site, Indian Courts [http://
www.indiancourts.nic.in], provides a single point of accessto information relating to the Supreme Court and all 21
high courts. Litigants can check the status of their cases
and browse information on each court’s judgments, rules,
and judges.
Despite the reforms, India’s regulatory environment
still has a long way to go before reaching international
benchmarks that will help unleash entrepreneurial
forces. Across the 17 cities, business start-up takes 12
procedures and 34 days on average — 10 procedures
and one month more than in Australia, ranked third
on the ease of starting a business. The main sources ofdelay are procedures to register the company for taxes,
social security, and health care. Enforcing a contract
takes 961 days on average. That’s faster than elsewhere in
South Asia, but slower than in Brazil (616 days) and inHong Kong, China (211 days), the global leader in theease of enforcing contracts. Compared with economies
worldwide, cities in India lag most in the ease of closing abusiness and paying taxes.
The Doing Business in India 2009 study has
limitations. Doing Business rankings do not tell thewhole story about an economy’s business environment.

eJournal USA 39

The indicators do not account for all factors importantfor doing business — for example, macroeconomic
conditions, infrastructure, workforce skills, or security.
But improvements in an economy’s ranking do indicatethat the government is creating a regulatory environmentthat is more conducive to business. And there is no
doubt that the study provides a useful road map forgovernments who are serious about regulatory reform.
States today compete fiercely for industry. Thatshould lead governments to reform business conditions inways that benefit all entrepreneurs — rather than taking
the easy way out by offering special incentives and land
to a few big enterprises. Moreover, global competition
is becoming increasingly local. It is not only countries
that compete with each other but, increasingly, specificlocations — Kolkata versus Monterrey (Mexico) or São

Paulo (Brazil), rather than India versus Mexico or Brazil.
Local governments seeking to fully exploit the potentialof local businesses — and convince investors that they
offer more profitable opportunities than competitors —may need to pick up the pace of reform. For information on the report’s data, methodology, and contributors, visit
www.doingbusiness.org/india and www.doingbusiness.org.

The opinions expressed in this article do not necessarily reflect the views orpolicies of the U.S. government.

eJournal USA 40

Additional Resources
A selection of books, articles, and Web sites
BOOKS AND ARTICLESÅslund, Anders. How Capitalism Was Built: The
Transformation of Central and Eastern Europe, Russia andCentral Asia. New York, NY: Cambridge University Press,
2007.
Balme, Richard and Didier Chabanet. European
Governance and Democracy: Power and Protest in the EU.
Lanham, MD: Rowman and Littlefield Publishers, 2008.

Henderson, Sarah L. Building Democracy inContemporary Russia: Western Support for Grassroots
Organizations. Ithaca, NY: Cornell University Press, 2003.
Johnston, Michael. Syndromes of Corruption: Wealth,Power, and Democracy. Cambridge, UK; New York, NY:
Cambridge University Press, 2005.
Krastev, Ivan. Shifting Obsessions: Three Essays on the
Politics of Anticorruption. Budapest, Hungary: Central
European University Press, 2004.

Baum, Matthew A., and David A. Lake. “The Political
Economy of Growth: Democracy and Human Capital.”
American Journal of Political Science, vol. 47, no. 2 (2003):
pp. 333-347.

Leeson, Peter T. “An-arrgh-chy: The Law of Economics
of Pirate Organization.” Journal of Political Economy, vol.
115, no. 6 (2007): pp. 1049-1094.

Comeau, Ludovic Jr. “Democracy and Economic
Growth: A Relationship Revisited.” Eastern Economic
Journal, vol. 29, no. 1 (2003): pp. 1-21.

Mandelbaum, Michael. Democracy’s Good Name: The Rise
and Risks of the World’s Most Popular Form of Government.
New York, NY: Public Affairs, 2007.

Dabrowski, Marek, Ben Slay, Jaroslaw Neneman, eds.
Beyond Transition: Development Perspectives and Dilemmas.
Aldershot, Hants, UK; Burlington, VT: Ashgate, 2004.

Mungiu-Pippidi, Alina. “Corruption: Diagnosis andTreatment.” Journal of Democracy, vol. 17, no. 3, July
2006, pp. 86-100.

De Soto, Hernando. The Mystery of Capital: Why
Capitalism Triumphs in the West and Fails Everywhere Else.
New York, NY: Basic Books, 2000.

Oppenheim, Lois H. Politics in Chile: Socialism,
Authoritarianism, and Market Democracy. 3rd ed. Boulder,
CO: Westview Press, 2007.

Doucouliagos, Hristos, and Mehmet Ali Ulubasoglu.
“Democracy and Economic Growth: A Meta-Analysis.”
American Journal of Political Science, vol. 52, no. 1 (2008):
pp. 61-83.

Rojas-Suarez, Liliana, and Nancy Birdsall, eds.
Financing Development: The Power of Regionalism.
Washington, DC: Center for Global Development, 2004.

Gerring, John, William T. Barndt, and Philip Bond.
“Democracy and Growth: A Historical Perspective.”
World Politics, vol. 57, no. 3 (2005): pp. 323-364.

Rojas-Suarez, Liliana, ed. Growing Pains in Latin
America: An Economic Growth Framework as Applied
to Brazil, Colombia, Costa Rica, Mexico, and Peru.
Washington, DC: Center for Global Development, 2009.

Harrison, Lawrence E. The Central Liberal Truth: How
Politics Can Change a Culture and Save It from Itself. New
York, NY: Oxford University Press, 2006.

Root, Amanda. Market Citizenship: Experiments in
Democracy and Globalization. Los Angeles, CA: Sage,
2007.

Harrison, Lawrence E., and Peter L. Berger, eds.
Developing Cultures: Case Studies. New York, NY:
Routledge, 2006.
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Shin, Doh Chull, and Russell J. Dalton, eds. Citizens,
Democracy, and Markets Around the Pacific Rim:
Congruence Theory and Political Culture. New York, NY:
Oxford University Press, 2006.
Stahler-Sholk, Richard, Harry E. Vanden, and GlenDavid Kuecker, eds. Latin American Social Movementsin the Twenty-First Century: Resistance, Power, and
Democracy. Lanham, MD: Rowman and Littlefield, 2008.
Tavares, Jose, and Romain Wacziarg. “How Democracy
Affects Growth.” European Economic Review, vol. 45(2000): pp. 1341-1378.
West European Politics in the Age of Globalization [by]Hanspeter Kriesi ... [et al.]. Cambridge, UK; New York,
NY: Cambridge University Press, 2008.

Center for the Study of Democracy (CSD)
CSD at the University of California, Irvine, sponsors
research and education aimed at improving the
democratic process in the United States and expanding
democracy around the world.
http://www.democ.uci.edu
Common Market for Eastern and Southern Africa(COMESA)COMESA, through its 19 member states, works toachieve sustainable economic and social progress throughincreased cooperation and integration in all fields ofdevelopment, including trade, customs and monetary
affairs, transport, communication and information
technology, industry and energy, and environment andnatural resources.
www.comesa.int/
The Corporate Council on Africa (CCA)
A Washington-based initiative that partners U.S.
businesses with small to medium operations in southern
Africa, the CCA has enabled more than US $1.5 billion
in transactions and created more than 17,000 jobs in thedecade of its existence.
http://www.africacncl.org

INTERNET SITES

U.S. Government
Millennium Challenge Corporation
http://www.mcc.gov/
Overseas Private Investment Corporation (OPIC)
http://www.opic.gov
U.S. Agency for International Development (USAID),
Global Development Commons
http://www.usaid.gov/about_usaid/gdc/
U.S. Department of Commerce, International Trade
Administration
http://trade.gov/index.asp
U.S. Department of State, Office of Development
Finance
http://www.state.gov/e/eeb/ifd/odf/index.htm
Private Sector
Center for Global Development (CGD)
CGD is an independent, nonprofit policy researchorganization that is dedicated to reducing global poverty
and inequality and to making globalization work for thepoor.
http://www.cgdev.org/

Economic Strategy Institute (ESI)ESI is dedicated to assuring that globalization works withmarket forces to achieve maximum benefits rather thandistorting markets and imposing costs.
http://www.econstrat.org
Endeavor.org
Endeavor is a 10-year-old, U.S.-based organizationthat gives entrepreneurs in emerging economies advice,guidance, and support to launch high-impact businesses
that will lead to economic development in theircommunities.
http://endeavor.org
Global Integrity
Global Integrity provides in-depth reports on the state of
public integrity and corruption in 25 countries.
http://www.globalintegrity.org/2004/country.aspx
Globalisation InstituteThis think tank was founded in 2005 with the aim of
examining how globalization can be harnessed to workfor the world’s poorest people.
http://www.globalisationinstitute.org/index.php

eJournal USA 42

Institute for Liberty and Democracy [Instituto Libertady Democracia] (ILD)
ILD offers technical assistance to governments to develop
legal tools that enable citizen participation in both local
and international markets.
http://www.ild.org.pe
ILD studies conducted in each of 12 countries in Latin
America reveal the size and practices of their extralegal
economies.
http://www.ild.org.pe/idb/executive_reports
International Finance Corporation (IFC)
IFC, part of the World Bank, fosters sustainable economic
growth in developing countries by financing private sector
investment, mobilizing capital in the international financial
markets, and providing advisory services to businesses andgovernments.
http://www.ifc.org/
The Library of Economics and Liberty
The library is dedicated to advancing the study of
economics, markets, and liberty, offering resources in
economic thought for students, teachers, and researchers.
http://www.econlib.org/index.html
Opportunities for the Majority Initiative
This initiative promotes and finances market-based,sustainable business models that engage private sector
companies, local governments, and communities in thedevelopment and delivery of quality products in lowincome communities in Latin America and the Caribbean.
http://www.iadb.org/topics/om/index.cfm
Transparency International
This global civil society organization is considered a leader
in the fight against corruption, and it publishes the annual
Corruption Perception Index.
http://www.transparency.org
U.S. Chamber of Commerce, International Division
The Chamber’s International Division works incollaboration with 112 American Chambers of Commerce
operating in 99 countries to expand global engagement.
http://www.uschamber.com/international/default.htm

World Movement for Democracy
The World Movement for Democracy is a global networkof activists, academics, policy makers, and funders who
cooperate in the promotion of democracy.
http://www.wmd.org
FILMOGRAPHY

Africa Open for Business (2005)
Running time: 60 minutes
Producer: Carol Pineau
Summary: This documentary challenges the stereotypes
and proves Africa cannot be easily defined. It profiles
companies in Nigeria, Kenya, Ghana, Lesotho, Senegal,
Botswana, Uganda, Zimbabwe, and Somalia.
The Business of Development (2004)
Running time: 14-part television series
Producer: World Television
Summary: Over the past decade, sustainable development
and corporate social responsibility have become core
concerns for businesses, large and small. Companies aregoing beyond main business activities to seek creative
solutions for development.
Commanding Heights (2002)
Running time: Three-part television series
Producer: WGBH/PBS (Public Broadcasting Service)
Summary: This PBS series tells the inside story of the world
economy, the struggle between governments and markets,and the battle over globalization.
The Mystery of Capital Among the Indigenous Peoples of
the Amazon
http://www.ild.org http://www.ild.org.pe/idb/executive_
reportspe/indigenous-peoples-amazon/video
Running time: 28 minutes
Producers: Bernardo Roca Rey and Hernando de Soto;
Institute for Liberty and Democracy Production
Summary: Hernando de Soto presents a documentary ofsignificance with findings from indigenous communities in
Alaska, Canada, and the Peruvian jungle.

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The Power of the Poor With Hernando de Soto (2009)http://www.ild.org.pe/news/the-power-of-the-poor-PBS
Running time: 60 minutes
Producer: Free to Choose Media; John Templeton
Foundation
Summary: TV documentary examines how Hernando de
Soto’s ideas and the ILD’s legal reforms in Peru helped
defeat terrorism and assisted other developing nations
around the world in their own fight against poverty,
exclusion, and terrorism.
Wide Angle: Ladies First (2005)
Running time: 55 minutes
Producer: WNET Wide Angle
Summary: This film depicts Rwanda as a model of feminist
opportunity because of a constitution that mandates women
hold at least 30 percent of all positions in government andother decision-making positions.

eJournal USA: “Entrepreneurship and Small Business,”
vol. 11, no. 1 (January 2006)
http://www.america.gov/publications/ejournalusa/0106.html
eJournal USA: “Markets and Democracy,” vol. 13, no. 6(June 2008)
http://www.america.gov/publications/ejournalusa/0608.html
eJournal USA: “Transforming the Culture of Corruption,”vol. 11, no. 12 (December 2006)
http://www.america.gov/publications/ejournalusa/1206.html
Human Rights in Brief. Washington, DC: U.S.
Department of State Bureau of International Information
Programs.
http://www.america.gov/publications/books/human-rights-inbrief.html

PUBLICATIONS FROM THE BUREAU OF
INTERNATIONAL INFORMATION PROGRAMSDemocracy in Brief. Washington, DC: U.S. Department ofState Bureau of International Information Programs.
http://www.america.gov/publications/books/democracy-in-brief.
html

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