Diseases such as AIDS and malaria are not only enormous human tragedies, but economic tragedies as well. We must continue to work urgently though bilateral channels and our international institutions to deal with these pandemic diseases. On AIDS especially, it is important that the IFIs continue to help governments build capacity to cope with the challenge, while providing guidance to their own country teams to take it into account in all relevant projects. If we do not at least do this, the future economic and financial costs, in terms of lost production and health, could be overwhelming and could be upon us sooner than we may think. Finally, in discussing choices with respect to investment in people, it is appropriate to comment on the social consequences of governments engaging in disproportionate military spending.
Every nation has legitimate defense needs.
Moreover, it scares off productive investment and trade when it becomes symbolic of an unstable society. In a world of competition for aid, it is difficult, if not impossible, to support foreign assistance for countries that put disproportionate emphasis on military spending relative to investment in their people. Even if social investment priorities are correct, however, they will have little lasting benefit in countries where governance is weak and economic decisions are distorted by corruption. Governance failures and corruption exist everywhere in the world, and impose high economic and financial costs. Yet until quite recently, corruption was a politically impolite subject to raise in an international setting.