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2016: une année décisive

Les décideurs politiques et les spécialistes du développement sont désormais confrontés à une nouvelle série d’enjeux suite à l’établissement, par consensus mondial, du triumvirat composé du Programme d’action d’Addis-Abeba, du Programme d’action 2030 et de l’Accord de Paris [1]  : mise en œuvre, suivi et passage en revue. Les professionnels des politiques de développement doivent aborder ces enjeux tout en y intégrant ces trois piliers du développement durable que sont le développement social, la croissance économique et la protection environnementale, sans oublier les trois volets intersectoriels du consensus mondial précités, tout cela en opérant au sein d’un contexte dans lequel la planification des politiques reste accomplie de façon cloisonnée. Ils doivent également incorporer le caractère universel de ces nouveaux accords en tenant compte des différentes circonstances nationales ; à savoir les divers besoins, réalités, capacités, niveaux de développement nationaux, de même que les diverses priorités et politiques nationales. Ils doivent aussi accroître considérablement l’allocation des ressources et les moyens de mise en œuvre (comme le financement, le renforcement des capacités et le transfert de technologies) pour changer les choses et améliorer les nouveaux partenariats réunissant plusieurs parties prenantes en vue de restreindre les mouvements mondiaux de toutes sortes (notamment la migration, le terrorisme, les maladies, la fiscalité, les phénomènes météorologiques extrêmes et la révolution numérique) dans un monde résolument interconnecté. Il va sans dire que la tâche est très ambitieuse !

Ces difficultés sont à l’origine de nouveaux accords nationaux et internationaux visant à honorer les engagements pris pour répondre à ces enjeux sans précédent. Plusieurs États africains ont déjà commencé à créer des comités interministériels et des groupes de travail pour assurer l’alignement entre les objectifs mondiaux et les processus, les aspirations et les priorités actuels. 

L’Afrique prépare, en collaboration avec la communauté internationale, le premier Forum politique de haut niveau depuis l’adoption du programme d’action 2030 qui aura lieu en juillet 2016 et dont le thème sera « Veiller à ce que nul ne soit laissé pour compte ». Afin d’éclairer le leadership, l’orientation et les recommandations relatifs au Programme d’action 2030, six pays africains [2] parmi les 22 États membres de l’ONU se sont portés volontaires pour présenter des études nationales sur le travail accompli en vue d’atteindre les Objectifs de développement durable (ODD), soit une opportunité unique de fournir un examen objectif sans compromis et de mettre en avant les leviers d’exploitation et les limites à surmonter afin d’avoir un impact.

Les Nations Unies ont déployé de nombreux efforts de coordination parallèlement au travail de terrain réalisé par l’Afrique : en premier lieu, la création d’un groupe de travail interinstitutions chargé de préparer le forum sur le financement du développement de suivi synchronisé avec le Forum mondial pour l’infrastructure, qui consultera sur les investissements en infrastructures, un aspect crucial pour le continent ; un groupe composé de 10 représentants nommés dont la mission consiste à soutenir le Mécanisme de facilitation des technologies aux fins du développement, du transfert et de la diffusion de technologies pour les ODD, soit un autre aspect très important pour l’Afrique ; et enfin une équipe de conseillers indépendants dont la mission consiste à fournir des conseils sur le positionnement à plus long terme du système de développement de l’ONU dans le contexte du Programme 2030 communément appelé  « UN fit for purpose », parmi tant d’autres efforts.

Ces obligations bureaucratiques écrasantes pèseront à elles seules lourdement sur les capacités limitées de l’Afrique. C’est la raison pour laquelle le continent à tout intérêt à regrouper ses ressources en tirant parti de ses robustes réseaux régionaux pour atténuer cet obstacle de façon cohérente et coordonnée et en capitalisant sur la convergence entre les textes nouvellement adoptés et l’Agenda 2063, le programme de transformation mis en place par l’Union Africaine sur une durée de 50 ans, avec l’aide d’institutions panafricaines.

Régionalisation en Afrique : l’engrenage menant vers la phase suivante du développement

Outre les échelons nationaux et internationaux, il convient de tenir compte d’une troisième dimension : l’échelon régional. Ainsi, les trois principaux accords conclus en 2015 privilégiaient le soutien aux projets et aux cadres de coopération encourageant l’intégration régionale et sous-régionale, en particulier en Afrique. [3] C’est la raison pour laquelle des politiques industrielles communes et cohérentes relatives aux chaînes de valeur régionales formulées par des institutions régionales renforcées et portées par un leadership transformationnel volontariste s’imposent comme le meilleur moyen de favoriser l’insertion de l’Afrique au sein de l’économie mondiale.

L’Afrique considère depuis longtemps l’intégration économique régionale, partie intégrante de ses principaux « piliers », à savoir les huit Communautés économiques régionales (CER), comme étant une stratégie de développement de base.

Le continent s’est manifestement engagé dans cette voie : l’été dernier, trois CER, le Marché commun pour l’Afrique de l’Est et de l’Afrique australe (COMESA), la Communauté d’Afrique de l’Est (CAE) et la Communauté de développement de l’Afrique de l’Est (SADC) ont créé le Traité de libre-échange tripartite (TFTA) regroupant 26 pays, avec plus de 600 millions d’habitants et un PIB global de mille milliards de dollars US. Cet accord tripartite ouvre la voie à l’accord « méga-régional » de l’Afrique, la Zone de libre échange continentale (CFTA) et à l’instauration d’une vaste communauté économique africaine. Si la régionalisation permet la libre circulation des personnes, des capitaux, des biens et des services, c’est la connectivité intra-africaine accrue en découlant qui stimulera les échanges commerciaux au sein de l’Afrique, favorisera la croissance, créera des emplois et attira des investissements. Il devrait enfin faire démarrer l’industrialisation, l’innovation et la compétitivité. À ces fins, les institutions panafricaines, soucieuses d’exploiter les récentes performances favorables enregistrés par le continent, redoublent d’efforts pour créer un environnement propice à l’harmonisation des politiques et des réglementations et aux économies d’échelle.

Infrastructure and régionalisation

L’infrastructure, sans laquelle toute connectivité est impossible, constitue indéniablement le fondement de tout futur plan de régionalisation. Outre l’intégration du marché et le développement industriel, le développement des infrastructures est l’un des trois piliers de la stratégie du TFTA. De la même manière, l’agence pour le Nouveau partenariat économique pour le développement en Afrique (NEPAD), l’organe technique de l’Union africaine (UA) chargé de planifier et coordonner la mise en œuvre des priorités continentales et des programmes régionaux, a adopté l’intégration régionale en tant que méthode stratégique pour l’infrastructure. Le NEPAD a d’ailleurs organisé, en juin 2014, le Sommet de Dakar sur le financement des infrastructures ayant abouti à l’adoption du Programme d’action de Dakar qui présente des options en matière de mobilisation d’investissements dans des projets de développement des infrastructures, en commençant par 16 projets bancables clés issus du programme de développement des infrastructures en Afrique (PIDA). Il est intéressant de noter que ces « mégaprojets du NEPAD visant à transformer l’Afrique » ont tous une portée régionale.

Pour voir la carte des 16 mégaprojets du NEPAD visant à transformer l’Afrique, Cliquez ici

En complémentant les efforts du NEPAD et du TFTA, le Réseau d’affaires continental a été formé pour promouvoir le dialogue entre les secteurs public et privé sur la thématique de l’investissement en infrastructures régionales. Le Fond Africa50 pour l’infrastructure a été constitué en guise de nouvelle plateforme de prestation gérée commercialement en vue de combler l’énorme vide au niveau du financement des infrastructures en Afrique, un trou évaluée à 50 milliards de dollars US par an.

L’élaboration de propositions propres et les progrès institutionnels récemment observés témoignent de la détermination de l’Afrique à accélérer le développement des infrastructures, et donc la régionalisation. Lors du dernier sommet de l’UA, le Comité d’orientation des chefs d’État et de gouvernement a approuvé l’institutionnalisation d’une Semaine PIDA organisée par la Banque africaine de développement (BAD) en vue d’assurer le suivi des progrès accomplis.

L’élan des projets énergétiques régionaux en Afrique

Les partenariats énergétiques indiqués ci-dessous illustrent les avantages potentiels des méthodes de mise en œuvre et de suivi transfrontalières : l’Africa Power Vision (APV) réalisée avec Power Africa, le modèle du Centre pour les énergies renouvelables et l’efficacité énergétique(ECREEE) de la CEDEAO accompagnant l’initiative Énergie Durable pour Tous (SE4LL), une initiative mise en œuvre par la plateforme Africaine et la solution Africa GreenCo basée sur le PIDA.

• Africa Power Vision : Les ministres Africains de l’énergie et des finances réunis à l’occasion du Forum économique mondial (FEM) de Davos en 2014 ont décidé de créer l’APV. La vision fournit un modèle stratégique de mobilisation de ressources afin de permettre aux entreprises, aux industries et aux foyers africains d’avoir un accès plus rapide à l’énergie moderne. Elle dresse une liste de projets énergétiques basés sur des priorités régionales établies par l’Afrique et extraites en grande partie du Programme d’action prioritaire du PIDA, à savoir l’éventail de projets à court terme devant être achevés à l’horizon 2020. Le projet hydroélectrique Inga III qui changera les règles du jeu, l’emblématique projet solaire DESERTEC Sahara et la gigantesque ligne de transport d’électricité nord-sud couvrant la quasi-totalité du TFTA sont parmi les 13 projets sélectionnés. La note conceptuelle et le plan de mise en œuvre intitulés « De la vision à l’action » élaborés par le NEPAD, en collaboration avec l’initiative Power Africa dirigée par le gouvernement américain ont été approuvés lors du Sommet de l’UA de janvier 2015. Le paquet présente des mesures permettant de surmonter les impasses afin d’atteindre des objectifs quantifiables, la « méthode d’accélération » basée sur l’Outil de classement de projets par ordre de priorité (PPCT en anglais), l’atténuation des risques et le financement de projets d’électricité. Une conception innovante a été élaborée pour éviter les doublons, économiser des ressources, améliorer la coordination et encourager des actions transformatrices en établissant des Conseillers transactionnels Power Africa – APV portant deux casquettes, qui supervisent les plans d’investissement jusqu’à la clôture financière si et quand des projets énergétiques d’intérêt commun viennent à se chevaucher. Globalement, comme il est basé sur le PIDA, le partenariat APV permet de mutualiser les expertises tout en promouvant l’intégration économique régionale au niveau de l’électrification.

• Centre pour les énergies renouvelables et l’efficience énergétique de la CEDEAO : Le secrétaire général des Nations Unies, Ban Ki-moon a lancé l’initiative Énergie durable pour tous dans le monde entier dès 2011, dans le triple objectif de garantir l’accès universel à des services énergétiques modernes, doubler le taux mondial d’amélioration de l’efficacité énergétique et doubler la proportion d'énergies renouvelables dans le bouquet énergétique mondial à l’horizon 2030. Depuis sa création, SE4ALL a suscité un fort enthousiasme sur le continent et compte désormais 44 pays africains participants. Par conséquent, la plateforme africaine SE4ALL a été la première plateforme lancée en 2013. Organisée par la BAD en partenariat avec la Commission de l’UA, le NEPAD et le Programme des Nations Unies pour le développement (PNUD), son rôle consiste à faciliter la mise en œuvre de SE4ALL sur le continent. Le troisième atelier annuel de la plateforme africaine de SE4ALL tenu à Abidjan en février dernier a révélé le potentiel de cette « coalition créative » (Yumkella 2014) pour produire des résultats tant au niveau des plans d’action nationaux et des approches régionales concertées conformes à la vision continentale qu’à celui de l’ODD7 pour l’énergie et aux Contributions prévues déterminées au niveau national (CPDN) créés pour l’Accord de Paris. Avant tout, l’atelier a prouvé que la plateforme est capable de commencer efficacement à harmoniser les processus pour obtenir un résultat dans les différents pays. En dépit du fait que les États membres de la CEDEAO participent à SE4ALL, les ministres ouest-africains ont chargé leur centre énergétique régional, le CEREEC, de coordonner la mise en œuvre des Programmes d’action de SE4ALL (PA), qui sont des documents décrivant les mesures que doivent prendre les pays pour satisfaire les objectifs en matière d’énergies renouvelables et de là les Prospectus d’investissement (PI), les documents présentant les critères d’investissement relatifs aux PA. Par conséquent, la Politique relative aux énergies renouvelables (PER) et la Politique relative à l’efficacité énergétique (PEE) de la CEDEAO ont été formulées et adoptées. Un cadre de surveillance régional visant à enrichir un Cadre de suivi mondial, le système de mesure et de préparation de rapports SE4ALL, est en cours de conception. L’efficace modèle du CEREEC, en créant un pont entre les inventaires nationaux et les acteurs mondiaux, est sur le point d’être reproduit dans deux autres régions d’Afrique, la CAE et la SADC, avec l’appui de l’Organisation des Nations Unies pour le développement industriel (ONUDI).

• Africa GreenCo : Enfin, des initiatives comme Africa GreenCo sont en cours d’incubation. Ce véhicule prometteur, actuellement financé au moyen d’une subvention accordée par la Fondation Rockefeller, se veut à la fois un négociant et un courtier en électricité indépendamment géré dont la fonction consiste à déplacer de l’électricité là où elle est nécessaire. Ainsi, Africa GreenCo cherche à capitaliser sur les projets énergétiques du PIDA : en sa qualité d’acheteur intermédiaire solvable, elle prévoit d’utiliser à l’avenir son statut régional en guise de valeur ajoutée au niveau de la garantie contre les risques. À ce jour, Africa GreenCo continue à peaufiner les aspects juridiques, réglementaires, techniques et financiers de sa future structure et forge des liens avec des parties prenantes clés du secteur (États membres, banques de développement multilatérales, services publics africains de génération et d’interconnexion appelés pools énergétiques) avant l’achèvement de son étude de faisabilité en juin 2016.

Devancement et changement de paradigme à l’horizon : vers le transnationalisme

Les partenariats précités indiquent des tendances encourageantes en direction d’une coopération plus symbiotique entre les différentes parties prenantes. Comme ils relèvent d’initiatives « faites maison », il est important de ne pas perdre de vue la dimension continentale. D’une part, les plans élaborés par l’Afrique ont plus de chances de réussir que des solutions importées uniformes et d’autre part, des efforts cohérents et combinés allant dans la même direction renforcent la confiance et l’émulation et attirent des soutiens. Ceci implique que pour remplir les accords intergouvernementaux, il est nécessaire avant tout de les adapter aux réalités locales à travers un processus d’intégration respectueux de l’espace politique. Cette intégration peut ensuite faire l’objet d’ajustements en fonction d’expériences fondées sur des données et des preuves concrètes. Entre ces engagements mondiaux et les procédures nationales, la dimension nationale demeure le lien indispensable : permettre aux pays de contourner le caractère artificiel de leurs frontières héritées de l’époque coloniale et leur offrir des choix concrets pour éradiquer la pauvreté dans l’unité. L’intégration régionale est donc le préambule à l’opérationnalisation du développement durable au sein de l’Afrique et une étape clé de son parcours en direction d’une participation active sur la scène mondiale. La régionalisation peut également faire évoluer les relations internationales, à condition qu’elle aille de pair avec un multilatéralisme équitable et une gestion durable des connaissances globales. C’est pourquoi l’ouverture qui en découle et la complexité rencontrée sont autant de paramètres utiles pour enrichir la conception de réponses locales pertinentes.

Ces réussites ouvrent de grandes perspectives en termes de nouvelles expériences et synergies. Elles représentent pour moi la promesse d’un monde meilleur. Celle que je me plais à imaginer est empreinte d’écosystèmes mutuellement bénéfiques pour les personnes et la planète. Elle encourage les liens inversés où tout le monde est gagnant, c’est-à-dire un monde où les économies en développement ont des retombées plus positives sur les pays industriels. C’est un monde où, par exemple, une région d’Afrique pourrait tirer des leçons de la crise grecque et vice-versa : un monde où la Chine pourrait tirer des enseignements du Corridor de développement de Maputo pour sa ceinture économique de la route de la soie. Un monde dans lequel des instituts jumelés effectuant des travaux de recherche conjoints dans les différents centres de connaissances régionaux prospéreraient, où des « fab labs » innovateurs pourraient ambitionner une aventure spatiale basée sur des déchets électroniques recyclés en imprimantes 3D. Dans un tel monde, des collaborations innovantes dans les domaines des sciences, des technologies, de l’ingénierie et des mathématiques (STEM) seraient encouragées. Celles-ci encourageraient la participation des femmes, et aussi celle de la diaspora en vue de développer des avancées techniques solides du point de vue écologique. Des efforts proportionnels, une volonté sans faille, une ingénuité autochtone et une créativité sans limites mettent cet avenir plus souriant à notre portée.

Au-delà de la reconnaissance de la voix africaine tout au long des processus intergouvernementaux, l’Afrique doit désormais consolider ses avancées en maintenant fermement sa position et en protégeant ses gains tout au long de la phase préliminaire. Le continent doit de toute urgence définir des tactiques spécifiques offrant le plus grand potentiel en termes d’inclusion et de création de capacités de production. Parallèlement, les acteurs du développement africain doivent démarrer un cycle vertueux d’apprentissage par la pratique en vue de créer une philosophie de développement endogène prenant en considération les meilleures pratiques adaptables et les échecs. Néanmoins, la seule approche capable de produire à la fois une transformation structurelle et un changement informé conformes aux stratégies à long terme propres au continent et dirigées par lui est… l’intégration régionale.  

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[1] Issus respectivement des négociations intergouvernementales à l’occasion de la Troisième Conférence sur le financement du développement (FFD3), l’Agenda du développement post 2015 et la Conférence des Nations Unies sur les changements climatiques (COP21).

[2] Égypte, Madagascar, Maroc, Sierra Leone, Togo et Ouganda

[3] Comme précisé au Programme d’action d’Addis-Abeba par exemple : « Nous engageons instamment la communauté internationale, notamment les institutions financières internationales et les banques multilatérales et régionales de développement, à accroître leur soutien aux projets et aux cadres de coopération qui favorisent cette intégration régionale et sous régionale, notamment en Afrique, et qui améliorent la participation et l’intégration des entreprises et notamment des petites entreprises industrielles, en particulier celles des pays en développement, dans les chaînes de valeur mondiales et les marchés mondiaux. »

       

       

       

       

Bruce Katz presented a speech on demographic shifts in the country's largest 100 metropolitan areas and how various leaders, including those in Seattle, will meet the policy challenges of a changing nation.

Introduction:
Today, I would like to present our findings from a major research initiative at the Metropolitan Policy Program, which is accompanied by an interactive website: the State of Metropolitan America. Our report examines the demographic trends that have affected the top 100 metropolitan areas so far this decade, covering the year 2000 through the year 2008. We find a nation in demographic transformation along five dimensions of change.

Watch video of the speech on the Seattle Channel »

We are a growing nation.  Our population exceeded 300 million back in 2006 and we are now on our way to hit 350 million around 2025.

We are diversifying.  An incredible 83 percent of our growth this decade was driven by racial and ethnic minorities. 

We are aging.  The number of seniors and boomers exceeded 100 million this decade.

We are selectively educating. Whites and Asians are now more than twice as likely to hold a bachelors degree as blacks and Hispanics.

We are a nation divided by income. Low-wage workers saw hourly earnings decline by 8 percent this decade; high wage workers saw an increase of 3 percent.  

With this background, I will make three main points today.

First, America’s top 100 metropolitan areas are on the front lines of our nation’s demographic transformation.  The trends I’ve identified—growth, diversity, aging, educational disparities, income inequities—are happening at a faster pace, a greater scale and a higher level of intensity in our major metropolitan areas.  

Second, the shape and scale of demographic transformation is profoundly uneven across metropolitan America.  This variation only partially reflects the traditional division of our country into regions like New England or the Middle Atlantic or the Mountain West. Rather a new “Metro Map” of the nation is emerging that unites far flung communities by their demographic realities rather than their physical proximity. 

Finally, demographic transformation requires action at both the macro and metro scale.  The federal government and the states need to lead where they must to address the super-sized challenges wrought by fast change.  Metropolitan areas must innovate where they should in ways that are tailored to their distinct challenges and opportunities.  And the geography of transformation at the metro scale requires new institutions and ways of governing.

These policy and institutional changes will not be easy.

But let’s remember one thing.  In the global context, the United States is a demographically blessed nation.  Established competitors like Japan, Britain and Germany are either growing slowly or actually declining; rising nations like China remain relatively homogenous. 

In a fiercely competitive world, our growth and diversity may be America’s ace in the hole.

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• Full Speech

      

       

       

The G-20 Summit begins in Brisbane, Australia this Saturday, November 15. Leaders are descending on the city to tackle the biggest economic challenges facing the planet. A major theme of the discussions will likely be convergence—the rapid approach of average incomes in low- and middle-income countries towards those in advanced economies—and its sustainability. In a recent brief in the Brookings Global Think Tank 20 series, I explore this issue in the sub-Saharan African context, examining what has been holding the region back, how Africa might reach the rapid convergence seen by other emerging economies, and if and how convergence might be sustained. For my full brief, see here.

As most know, despite the “growth miracles” happening on the continent, sub-Saharan Africa still has a long way to go. Africa’s economic growth started much later and has gone much slower than the rest of the developing world; thus its per capita income gap against advanced economies still remains quite large. In fact, Africa hasn’t even converged with other emerging economies (see Figure 1). 

In addition to slow growth, Africa faces many, many challenges: Conflict-ridden countries still face a declining income per capita, and inequality is rampant. While Africa’s poverty rate is dropping, its share in global poverty is not: In 1990, 56 percent of Africans lived on under $1.25 a day, meaning that they represented 15 percent of those in poverty worldwide. Over the next 20 years, the region’s poverty rate dropped to 48 percent, but its share of global poverty doubled. At this rate, many predict that by 2030 Africa’s poverty rate will fall to 24 percent, but represent 82 percent of the world’s poor (Chandy et al., 2013). 

Of the utmost importance for convergence, though, is the issue of structural transformation in the region. If sub-Saharan Africa can reduce its reliance on unproductive and volatile sectors, it will build a foundation on which economic growth—and convergence—can be sustained.

Current African Economies: Agriculture, Natural Resources and Services

Currently, African economies are characterized by a reliance on natural resources, agriculture and a budding services sector. Natural resources are, and will likely continue to be, major drivers of Africa’s economic growth: About 20 African countries derived more than 25 percent of their total merchandise exports in 2000-2011 from them. Unfortunately, this dependence on natural resources comes hand-in-hand with challenges such as financial volatility, rent-seeking behavior, and a loss of competitiveness, among many others—making a turn away from them necessary for long-term, sustainable growth. Similarly, most African economies depend heavily on the low-yield agriculture sector—its least productive sector and with the lowest income and consumption levels.

While labor has been moving out of the agriculture sector, it is moving into the services sector. From 2000-2010, the agriculture labor force share fell by about 10 percent while services grew by 8 percent (McMillan and Harttgen, 2014). While much of the movement into the services industry has been into productive areas such as telecommunications and banking, most service sector jobs in sub-Saharan Africa are informal.  Although informal activities offer earning opportunities to many people, they are often unstable and it is far from clear that they can be an engine of sustainable and inclusive high economic growth. In addition, growth in the services sector overall has historically not shown the economic returns that industry has.

If policymakers can enhance productivity in the services sector, then growth could take off even more rapidly, but until then, the highly productive manufacturing sector will be the key to Africa’s convergence. (For more on this, see the attached PowerPoint presentation.)

The Missing Piece: African Industry

Industrialization in Africa is low: Manufacturing–the driver of growth in Asia—employs less than 8 percent of the workforce and makes up only 10 percent of GDP on the continent (Rodrik, 2014). In comparison to the 8 percent growth in the services sector from 2000-2010, manufacturing saw only 2 percent growth (McMillan and Harttgen, 2014). In addition, the region’s manufacturing sector is dominated mostly by small and informal (and thus less productive) firms. Since the research has shown that industry was key to the explosive and continued growth in Asia and Europe, without concentration on or support of the manufacturing sector, African economies are not likely to replicate those convergence dynamics (Rodrik, 2014). Thus, Africa’s slow pace of industrialization means that, in addition to its late start time and its past sluggish growth, the region has another obstacle towards convergence.

There is hope, however; there are already hints that structural transformation might be happening. The recent rebasing of Nigeria’s economy revealed some important new trends. There, the contribution from oil and gas to GDP fell from 32 to 14 percent, and agriculture from 35 to 22 percent. At the same time, the telecommunication’s contribution sector rose from 0.9 to 9 percent, and manufacturing from 2 to 7 percent.

Achieving a successful economic transformation will help capitalize on improved growth fundamentals and achieve high and sustained per capita growth rates. However, for such a process to yield lasting benefits, it is crucial to better understand the ongoing structural changes taking place in Africa. This is an important task for economists studying Africa and, in addition to achieving a “data revolution,” both meta-analysis and case study methods can be useful complements to the current body of research on the continent.

References

Chandy, Laurence, Natasha Ledlie, and Veronika Penciakova. 2013. “Africa’s Challenge to End Extreme Poverty by 2030: Too Slow or Too Far Behind?” The Brookings Institution, Washington D.C. April 2013, http://www.brookings.edu/blogs/up-front/posts/2013/05/29-africachallenge-end-extreme-poverty-2030-chandy

McMillan, Margaret and Ken Harttgen. 2014. “What is Driving the Africa Growth Miracle?” NBER Working Paper No. 20077, April. http://www.nber.org/papers/w20077

Rodrik, Dani. 2014. “An African Growth Miracle?” NBER Working Paper No. 20188, June. http://www.nber.org/papers/w20188

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• Download the related powerpoint

      

Policy Brief #173

America needs to transform its energy system, and the Great Lakes region (including Minnesota, Wisconsin, Iowa, Missouri, Illinois, Indiana, Ohio, Michigan, Kentucky, West Virginia, western Pennsylvania and western New York) possesses many of the needed innovation assets. For that reason, the federal government should leverage this troubled region’s research and engineering strengths by launching a region-wide network of collaborative, high intensity energy research and innovation centers.

Currently, U.S. energy innovation efforts remain insufficient to ensure the development and deployment of clean energy technologies and processes. Such deployment is impeded by multiple market problems that lead private firms to under-invest and to focus on short-term, low-risk research and product development. Federal energy efforts—let alone state and local ones—remain too small and too poorly organized to deliver the needed breakthroughs. A new approach is essential.

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	The federal government should systematically accelerate national clean energy innovation by launching a series of “themed” research and commercialization centers strategically situated to draw on the Midwest’s rich complex of strong public universities, national and corporate research laboratories, and top-flight science and engineering talent. Organized around existing capacities in a hub-spoke structure that links fundamental science with innovation and commercialization, these research centers would engage universities, industries and labs to work on specific issues that would enable rapid deployment of new technologies to the marketplace. Along the way, they might well begin to transform a struggling region’s ailing economy. Roughly six compelling innovation centers could reasonably be organized in the Great Lakes states with total annual funding between $1 billion and $2 billion. To achieve this broad goal, the federal government should: Increase energy research funding overall. Adopt more comprehensive approaches to research and development (R&D) that address and link multiple aspects of a specific problem, such as transportation. Leverage existing regional research, workforce, entrepreneurial and industrial assets.

America needs to transform its energy system in order to create a more competitive “next economy” that is at once export-oriented, lower-carbon and innovation-driven. Meanwhile, the Great Lakes region possesses what may be the nation’s richest complex of innovation strengths—research universities, national and corporate research labs, and top-flight science and engineering talent. Given those realities, a partnership should be forged between the nation’s needs and a struggling region’s assets.

To that end, we propose that the federal government launch a distributed network of federally funded, commercialization-oriented, sustainable energy research and innovation centers, to be located in the Great Lakes region. These regional centers would combine aspects of the “discovery innovation institutes” proposed by the National Academy of Engineering and the Metropolitan Policy Program (as articulated in “Energy Discovery-Innovation Institutes: A Step toward America’s Energy Sustainability”); the “energy innovation hubs” created by the Department of Energy (DOE); and the agricultural experiment station/cooperative extension model of the land-grant universities.

In the spirit of the earlier land-grant paradigm, this network would involve the region’s research universities and national labs and engage strong participation by industry, entrepreneurs and investors, as well as by state and local governments. In response to local needs and capacities, each center could have a different theme, though all would conduct the kinds of focused translational research necessary to move fundamental scientific discoveries toward commercialization and deployment.

The impact could be transformational. If built out, university-industry-government partnerships would emerge at an unprecedented scale. At a minimum, populating auto country with an array of breakthrough-seeking, high-intensity research centers would stage a useful experiment in linking national leadership and local capacities to lead the region—and the nation—toward a more prosperous future.

The Great Lakes Energy System: Predicaments and Possibilities

The Great Lakes region lies at the center of the nation’s industrial and energy system trials and possibilities. No region has suffered more from the struggles of America’s manufacturing sector and faltering auto and steel industries, as indicated in a new Metropolitan Policy Program report entitled “The Next Economy: Rebuilding Auto Communities and Older Industrial Metros in the Great Lakes Region.”

The region also lies at ground zero of the nation’s need to “green” U.S. industry to boost national economic competitiveness, tackle climate change and improve energy security. Heavily invested in manufacturing metals, chemicals, glass and automobiles, as well as in petroleum refining, the Great Lakes states account for nearly one-third of all U.S. industrial carbon emissions.

And yet, the Great Lakes region possesses significant assets and capacities that hold promise for regional renewal as the “next economy” comes into view. The Midwest’s manufacturing communities retain the strong educational and medical institutions, advanced manufacturing prowess, skills base and other assets essential to helping the nation move toward and successfully compete in the 21st century’s export-oriented, lower-carbon, innovation-fueled economy.

Most notably, the region has an impressive array of innovation-related strengths in the one field essential to our nation’s future—energy. These include:

• Recognized leadership in R&D. The Great Lakes region accounts for 33 percent of all academic and 30 percent of all industry R&D performed in the United States.
• Strength and specialization in energy, science and engineering. In FY 2006, the Department of Energy sent 26 percent of its federal R&D obligations to the Great Lakes states and is the second largest federal funder of industrial R&D in the region. Also in 2006, the National Science Foundation sent 30 percent of its R&D obligations there.
• Existing clean energy research investments and assets. The University of Illinois is a key research partner in the BP-funded, $500 million Energy Biosciences Institute, which aims to prototype new plants as alternative fuel sources. Toledo already boasts a growing solar industry cluster; Dow Corning’s Michigan facilities produce leading silicon and silicone-based technology innovations; and the Solar Energy Laboratory at the University of Wisconsin-Madison, the oldest of its kind in the world, has significant proficiency in developing practical uses for solar energy. Finally, the region is home to the largest U.S. nuclear utility (Exelon), the nation’s largest concentration of nuclear plants and some of the country’s leading university programs in nuclear engineering.
• Industry potential relevant to clean energy. Given their existing technological specializations, Midwestern industries have the potential to excel in the research and manufacture of sophisticated components required for clean energy, such as those used in advanced nuclear technologies, precision wind turbines and complex photovoltaics.
• Breadth in energy innovation endeavors and resources. In addition to universities and industry, the region’s research laboratories specialize in areas of great relevance to our national energy challenges, including the work on energy storage systems and fuel and engine efficiency taking place at Argonne National Laboratory, research in high-energy physics at the Fermi National Accelerator Laboratory, and the work on bioenergy feedstocks, processing technologies and fuels occurring at the DOE-funded Great Lakes BioEnergy Research Center (GLBRC).
• Regional culture of collaboration. Finally, the universities of the Great Lakes area have a strong history of collaboration both among themselves and with industry, given their origins in the federal land-grant compact of market and social engagement. GLBRC—one of the nation’s three competitively awarded DOE Bioenergy Centers—epitomizes the region’s ability to align academia, industry and government around a single mission. Another example is the NSF-supported Blue Waters Project. This partnership between IBM and the universities and research institutions in the Great Lakes Consortium for Petascale Computation is building the world’s fastest computer for scientific work—a critical tool for advancing smart energy grids and transportation systems.

In short, the Great Lakes states and metropolitan areas—economically troubled and carbon-reliant as they are—have capabilities that could contribute to their own transformation and that of the nation, if the right policies and investments were in place.

Remaking America’s Energy System within a Federal Policy Framework

America as a whole, meanwhile, needs to overcome the massive sustainability and security challenges that plague the nation’s energy production and delivery system. Transformational innovation and commercialization will be required to address these challenges and accelerate the process of reducing the economy’s carbon intensity.

Despite the urgency of these challenges, however, a welter of market problems currently impedes decarbonization and limits innovation. First, energy prices have generally remained too low to provide incentives for companies to commit to clean and efficient energy technologies and processes over the long haul. Second, many of the benefits of longrange innovative activity accrue to parties other than those who make investments. As a result, individual firms tend to under-invest and to focus on short-term, low-risk research and product development. Third, uncertainty and lack of information about relevant market and policy conditions and the potential benefits of new energy technologies and processes may be further delaying innovation. Fourth, the innovation benefits that derive from geographically clustering related industries (which for many years worked so well for the auto industry) have yet to be fully realized for next-generation energy enterprises. Instead, these innovations often are isolated in secure laboratories. Finally, state and local governments—burdened with budgetary pressures—are not likely to fill gaps in energy innovation investment any time soon.

As a result, the research intensity—and so the innovation intensity—of the energy sector remains woefully insufficient, as pointed out in the earlier Metropolitan Policy Program paper on discovery innovation institutes. Currently, the sector devotes no more than 0.3 percent of its revenues to R&D. Such a figure lags far behind the 2.0 percent of sales committed to federal and large industrial R&D found in the health care sector, the 2.4 percent in agriculture, and the 10 percent in the information technology and pharmaceutical industries.

As to the national government’s efforts to respond to the nation’s energy research shortfalls, these remain equally inadequate. Three major problems loom:

The scale of federal energy research funding is insufficient. To begin with, the current federal appropriation of around $3 billion a year for nondefense energy-related R&D is simply too small. Such a figure remains well below the $8 billion (in real 2008 dollars) recorded in 1980, and represents less than a quarter of the 1980 level when measured as a share of GDP. If the federal government were to fund next-generation energy at the pace it supports advances in health care, national defense, or space exploration, the level of investment would be in the neighborhood of $20 billion to $30 billion a year.

Nor do the nation’s recent efforts to catalyze energy innovation appear sufficient. To be sure, the American Recovery and Reinvestment Act (ARRA) provided nearly $13 billion for DOE investments in advanced technology research and innovation. To date, Great Lakes states are slated to receive some 42 percent of all ARRA awards from the fossil energy R&D program and 39 percent from the Office of Science (a basic research agency widely regarded as critical for the nation’s energy future). However, ARRA was a one-time injection of monies that cannot sustain adequate federal energy R&D.

Relatedly, the Great Lakes region has done well in tapping two other relatively recent DOE programs: the Advanced Research Projects Agency–Energy (ARPA-E) and Energy Frontier Research Centers (EFRCs). Currently, Great Lakes states account for 44 and 50 percent of ARPA-E and EFRC funding. Yet, with ARPA-E focused solely on individual signature projects and EFRC on basic research, neither initiative has the scope to fully engage all of the region's innovation assets.

The character and format of federal energy R&D remain inadequate. Notwithstanding the question of scale, the character of U.S. energy innovation also remains inadequate. In this respect, the DOE national laboratories—which anchor the nation’s present energy research efforts—are poorly utilized resources. Many of these laboratories’ activities are fragmented and isolated from the private sector and its market, legal and social realities. This prevents them from successfully developing and deploying cost-competitive, multidisciplinary new energy technologies that can be easily adopted on a large scale.

For example, DOE activities continue to focus on discrete fuel sources (such as coal, oil, gas or nuclear), rather than on fully integrated end use approaches needed to realize affordable, reliable, sustainable energy. Siloed approaches simply do not work well when it comes to tackling the complexity of the nation’s real-world energy challenges. A perfect example of a complicated energy problem requiring an integrated end-use approach is transportation. Moving the nation’s transportation industry toward a clean energy infrastructure will require a multi-pronged, full systems approach. It will depend not only upon R&D in such technologies as alternative propulsion (biofuels, hydrogen, electrification) and vehicle design (power trains, robust materials, advanced computer controls) but also on far broader technology development, including that related to primary energy sources, electricity generation and transmission, and energy-efficient applications that ultimately will determine the economic viability of this important industry.

Federal programming fails to fully realize regional potential. Related to the structural problems of U.S. energy innovation efforts, finally, is a failure to fully tap or leverage critical preexisting assets within regions that could accelerate technology development and deployment. In the Great Lakes, for example, current federal policy does little to tie together the billions of dollars in science and engineering R&D conducted or available annually. This wealth is produced by the region’s academic institutions, all of the available private- and public-sector clean energy activities and financing, abundant natural resources in wind and biomass, and robust, pre-existing industrial platforms for research, next-generation manufacturing, and technology adoption and deployment. In this region and elsewhere, federal policy has yet to effectively connect researchers at different organizations, break down stovepipes between research and industry, bridge the commercialization “valley of death,” or establish mechanisms to bring federally-sponsored R&D to the marketplace quickly and smoothly.

A New Approach to Regional, Federally Supported Energy Research and Innovation

And so the federal government should systematically accelerate clean energy innovation by launching a series of regionally based Great Lakes research centers. Originally introduced in the Metropolitan Policy Program policy proposal for energy discovery-innovation institutes (or e-DIIs), a nationwide network of regional centers would link universities, research laboratories and industry to conduct translational R&D that at once addresses national energy sustainability priorities, while stimulating regional economies.

In the Great Lakes, specifically, a federal effort to “flood the zone” with a series of roughly six of these high-powered, market-focused energy centers would create a critical mass of innovation through their number, size, variety, linkages and orientation to pre-existing research institutions and industry clusters.

As envisioned here, the Great Lakes network of energy research centers would organize individual centers around themes largely determined by the private market. Based on local industry research priorities, university capabilities and the market and commercialization dynamics of various technologies, each Great Lakes research and innovation center would focus on a different problem, such as renewable energy technologies, biofuels, transportation energy, carbon-free electrical power generation, and distribution and energy efficiency. This network would accomplish several goals at once:

• Foster multidisciplinary and collaborative research partnerships. The regional centers or institutes would align the nonlinear flow of knowledge and activity across science and non-science disciplines and among companies, entrepreneurs, commercialization specialists and investors, as well as government agencies (federal, state and local) and research universities. For example, a southeastern Michigan collaboration involving the University of Michigan, Michigan State University, the University of Wisconsin and Ford, General Motors, and Dow Chemical could address the development of sustainable transportation technologies. A Chicago partnership involving Northwestern and Purdue Universities, the University of Chicago, the University of Illinois, Argonne National Lab, Exelon and Boeing could focus on sustainable electricity generation and distribution. A Columbus group including Ohio State University and Battelle Memorial Institute could address technologies for energy efficiency. Regional industry representatives would be involved from the earliest stages to define needed research, so that technology advances are relevant and any ensuing commercialization process is as successful as possible.
• Serve as a distributed “hub-spoke” network linking together campus-based, industry-based and federal laboratory-based scientists and engineers. The central “hubs” would interact with other R&D programs, centers and facilities (the “spokes”) through exchanges of participants, meetings and workshops, and advanced information and communications technology. The goals would be to limit unnecessary duplication of effort and cumbersome management bureaucracy and to enhance the coordinated pursuit of larger national goals.
• Develop and rapidly deploy highly innovative technologies to the market. Rather than aim for revenue maximization through technology transfer, the regional energy centers would be structured to maximize the volume, speed and positive societal impact of commercialization. As much as possible, the centers would work out in advance patenting and licensing rights and other intellectual property issues.Stimulate regional economic development. Like academic medical centers and agricultural experiment stations—both of which combine research, education and professional practice—these energy centers could facilitate cross-sector knowledge spillovers and innovation exchange and propel technology transfer to support clusters of start-up firms, private research organizations, suppliers, and other complementary groups and businesses—the true regional seedbeds of greater economic productivity, competitiveness and job creation.
• Build the knowledge base necessary to address the nation’s energy challenges. The regional centers would collaborate with K-12 schools, community colleges, regional universities, and workplace training initiatives to educate future scientists, engineers, innovators, and entrepreneurs and to motivate the region’s graduating students to contribute to the region’s emerging green economy.
• Complement efforts at universities and across the DOE innovation infrastructure, but be organizationally and managerially separate from either group. The regional energy centers would focus rather heavily on commercialization and deployment, adopting a collaborative translational research paradigm. Within DOE, the centers would occupy a special niche for bottom-up translational research in a suite of new, largely top-down innovation-oriented programs that aim to advance fundamental science (EFRCs), bring energy R&D to scale (Energy Innovation Hubs) and find ways to break the cost barriers of new technology (ARPA-E).

To establish and build out the institute network across the Great Lakes region, the new regional energy initiative would:

• Utilize a tiered organization and management structure. Each regional center would have a strong external advisory board representing the participating partners. In some cases, partners might play direct management roles with executive authority.
• Adopt a competitive award process with specific selection criteria. Centers would receive support through a competitive award process, with proposals evaluated by an interagency panel of peer reviewers.
• Receive as much federal funding as major DOE labs outside the Great Lakes region. Given the massive responsibilities of the proposed Great Lakes energy research centers, total federal funding for the whole network should be comparable to that of comprehensive DOE labs, such as Los Alamos, Oak Ridge and others, which have FY2010 budgets between $1 and $2 billion. Based on existing industry-university concentrations, one can envision as many as six compelling research centers in the Great Lakes region.

Conclusion

In sum, America’s national energy infrastructure—based primarily upon fossil fuels—must be updated and replaced with new technologies. At the same time, no region in the nation is better equipped to deliver the necessary innovations than is the Great Lakes area. And so this strong need and this existing capacity should be joined through an aggressive initiative to build a network of regional energy research and innovation centers. Through this intervention, the federal government could catalyze a dynamic new partnership of Midwestern businesses, research universities, federal laboratories, entrepreneurs and state and local governments to transform the nation’s carbon dependent economy, while renewing a flagging regional economy.

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Saudi deputy crown prince and defense minister Mohammad bin Salman is just wrapping up a heavily hyped visit to Washington, aimed at reinforcing the kingdom’s partnership with the United States. Recent years have frayed what is traditionally the central strategic relationship for Riyadh, principally over the Obama administration’s nuclear diplomacy with Iran.

Since the conclusion of the Iranian nuclear deal last July, the perennial antagonism between Riyadh and Tehran has reached a dangerous pitch, fueling the violence that rages in Syria, Iraq, and Yemen and the undercurrent of instability that saturates the region. And the fallout of their rivalry has left its mark well beyond the boundaries of the Gulf, exacerbating volatile energy markets and, by extension, the global economy. 

Within OPEC, Riyadh and Tehran are eyeing each other warily, and their continuing differences torpedoed a proposed ceiling on oil production at OPEC’s latest meeting. The outcome was not surprising; a similar effort to agree on a production freeze between the group and a handful of non-OPEC producers fizzled in April. In the meantime, any incentives for drastic measures to address soft oil prices have abated as oil prices creep back up to approximately $50 a barrel. 

Iran and Saudi Arabia have plenty of reasons to continue pumping for the foreseeable future. Since the lifting of nuclear-related sanctions in January, Iranian leaders have been determined to make up for lost time and lost revenues, already defying expectations by quickly raising production to levels that hadn’t been reached since November 2011 and aggressively cutting prices in hopes of winning back its pre-sanctions export market. 

The centrality of oil to the legitimacy and autonomy of both regimes means that these plans are little more than publicity stunts.

Meanwhile, Saudi Arabia appears prepared to continue pumping at record-high levels, part of a larger strategy aimed at maintaining market share and driving down non-OPEC production. The two states’ economic incentives are compounded by their fierce geostrategic and sectarian rivalry, which has intensified, as evidenced by the standoff over Iranian participation in the annual pilgrimage to Mecca.

But even as the two states duel over oil production and prices, both Saudi Arabia and Iran are conspicuously planning for a post-oil future. Leaders in both countries have decreed an end to the era of oil dependency, endorsing ambitious blueprints for restructuring their economies that—if implemented—would ultimately transform state, society, and the wider region. The centrality of oil to the legitimacy and autonomy of both regimes means that these plans are little more than publicity stunts. Still, just imagine for a moment what it would mean for Iran, Saudi Arabia, and the Middle East if these grandiose agendas were adopted.

Competing and complementary visions

Tehran’s plan actually dates back more than a decade, with the 2005 release of its “20 Year Perspective” (sometimes called “Vision 2025”). The plan laid out extravagant expectations: rapid growth and job creation, diversification away from oil, a knowledge-based economy. Intervening developments—sanctions that targeted Iran’s oil exports and helped expand non-oil trade—have only bolstered the rhetorical commitment of Iran’s supreme leader, Ayatollah Ali Khamenei, to a “resistance economy” in which oil exports constitute a minor part.

“One of our most serious losses is dependence on oil,” Khamenei bemoaned in a 2014 speech. “I am not saying that oil should not be used. Rather, I am saying that we should reduce our dependence on selling crude oil as much as we can.” 

Not to be outdone, Saudi Deputy Crown Prince Salman announced Saudi “Vision 2030,” to address what he described as “an addiction to oil.” The plan, which has met with equal doses of fanfare and skepticism since its announcement last month, aims to create a “thriving economy” and end Saudi dependence on oil revenues by 2020. Vision 2030 includes provisions to sell off a small stake in the kingdom’s state oil company, Saudi Aramco, and create the world’s largest sovereign wealth fund to manage the country’s income, as well as goals of creating 450,000 new private sector jobs, cutting public sector wages, and tripling the country’s non-oil exports all within the same abbreviated time frame.

Jeopardizing domestic stability

There is one hitch, however: these aspirations, though laudable, are preposterously unmoored from current political and economic exigencies. The institutions of governance and the structure of power in resource-rich states such as Saudi Arabia and Iran are organized around the state’s role as purveyors of vital social and economic goods. Riyadh and Tehran distribute cash handouts, provide jobs in already-bloated state bureaucracies, and levy few taxes. Diversifying away from reliance on oil would essentially require Riyadh and Tehran to radically curtail this distributive role, inviting historic social and political changes that could ultimately compromise regime ideology and weaken state legitimacy. 

[T]hese aspirations, though laudable, are preposterously unmoored from current political and economic exigencies.

In Saudi Arabia, the supply of these benefits is central to the monarchy’s legitimacy. To diversify away from oil, which currently accounts for over 70 percent of government revenues, Riyadh would have to drastically cut spending, far more than it already has. Not only would this further slash subsidies and hike fees, it would also effectively force Saudi workers—two-thirds of whom are employed by the state—to take up private sector jobs, 80 percent of which are currently staffed by expatriates. To accomplish this transition would require fundamental changes to the incentive structure for the Saudi labor force: a much broader willingness to accept low-skill, low-wage jobs, as well as the requisite improvements in education and productivity to support larger numbers of Saudi nationals moving into private sector positions.

For the Saudi economy to be truly competitive, Riyadh would have to initiate dramatic changes to a central component of the Saudi social compact—women’s rights and freedoms. The Vision 2030 document boasts that over 50 percent of Saudi university graduates are women and pledges to “continue to develop their talents, invest in their productive capabilities and enable them to strengthen their future and contribute to the development of our society and economy.” 

But the domestic Saudi labor force is overwhelmingly male, and even the plan’s modest aspirations to raise female participation in the workforce from 22 to 30 percent are likely to run into logistical and social obstacles. Shortly after announcing Vision 2030, Deputy Crown Prince Salman said Saudi Arabia is not yet ready to let women drive. A diversified economy will not emerge in the kind of constricted social environment mandated by the Saudi interpretation of sharia (Islamic law). 

Iran’s Islamic Republic doesn’t have the same degree of gender segregation, but Iran’s official interpretation of Islam has still constrained female participation in the workforce. Iran employs an equally low percentage of women—according to a 2014 U.N. report around 16 percent—and women’s unemployment is more than double that of men (nearly 20 percent).

A Saudi man walks past the logo of Vision 2030 after a news conference in Jeddah, Saudi Arabia June 7, 2016. Photo credit: Reuters/Faisal Al Nasser.

The bigger challenge for Iran will be truly opening up its economy to foreign direct investment. This remains hotly contested among the leadership, even in the aftermath of the nuclear agreement and the lifting of related sanctions. While there is some consensus around the need for foreign capital and technology, hardliners including Khamenei are determined to insulate Iran from any accompanying cultural influence and dependency. As the supreme leader recently inveighed, the global economy is “a plan and system that has been devised mainly by Zionist capitalists and some non-Zionists with the purpose of usurping the economic resources of the whole world...If a country merges its economy with the global economy, this is not a source of pride, rather it is a loss and a defeat!”

This deeply-rooted paranoia has provided a convenient platform for the Islamic Republic to galvanize citizens’ loyalty to the state and hostility to outside interference. And it also inhibits the liberalization that makes foreign investment possible: measures to enhance transparency and security, develop more attractive legal and fiscal frameworks, shrink the role of the state, and undertake an array of other structural reforms. Without these measures, Tehran will struggle to capitalize on its extraordinary reengagement with the world. 

While Saudi Arabia has maintained a more consistent and mutually beneficial pattern of foreign investment, its leadership too will have to revamp its approach if it is to broaden its economic base. For Riyadh, the challenge is less one of attracting foreign capital than of developing a sustainable influx of technology and expertise to develop sectors other than energy. The kingdom will also have to overcome serious regulatory hurdles and a proclivity for mammoth (and often white elephant) projects.

Compromising regional clout

Riyadh and Tehran will need to balance their economic aspirations and their approach to the region, too. Historically, their role in global energy markets has largely shielded both states from the fallout of regional instability. The world’s need for reliable oil at reasonable prices has inculcated the commitment of outside powers to secure transportation of resources and considerable autonomy for Riyadh and Tehran from the implications of their own policies. 

As a result, Saudi Arabia and Iran can fund nefarious activity across the region, violate the civil and human rights of their citizens and other residents, and carry out belligerent foreign policies without severe repercussions for their oil revenues. Only in the past five years has Tehran seen the limits of the world’s reluctance to jeopardize its investment with a major oil exporter; and the recent reversal of the U.N. condemnation regarding the Saudi-led coalition in Yemen demonstrates that Riyadh remains insulated.

Saudi Arabia and Iran can fund nefarious activity across the region, violate the civil and human rights of their citizens and other residents, and carry out belligerent foreign policies without severe repercussions for their oil revenues.

Regional developments make the prospect of economic diversification even less likely, as sensitivity to such developments will only increase if either country successfully develops its non-oil sectors. At the same time, regional stability is a basic prerequisite for economic diversification. Robust growth and good governance throughout the Middle East would provide the optimal context for the economic transformation of Iran and Saudi Arabia, since the marketplace for their non-oil exports is concentrated in the immediate neighborhood. But such transformation would require both countries to put economic priorities that serve their general populations above the ideological and religious agendas—supported by oil rents—that propel their regional and international influence and that provide a large portion of their autonomy in foreign policymaking. 

Technocrats in both countries understand this intuitively. At a 2015 conference on Iran’s economy, President Hassan Rouhani wondered “How long can the economy pay subsidies to politics?” He added that the country’s economy “pays subsidies both to foreign policy and domestic policy. Let us try the other way round for a decade and pay subsidies from the domestic and foreign policy to the economy to see [what] the lives and incomes of people and the employment of the youth will be like.” The problem, of course, is political will: neither country is prepared to elevate the interests of its people over the demands of ideology.

Imagining an unlikely future

Can either Iran or Saudi Arabia really kick the oil habit? It seems exceptionally unlikely. Even as Khamenei extols the need for inward-focused development, Tehran is racing to expand crude output level to four million barrels per day by March 2017. 

Oil enabled the creation of the modern Middle Eastern state and fueled the rise of both countries to regional predominance. Oil is a vector for their regional rivalry, and it provides prestige and funds to be used in other arenas of competition. A genuine diversification of the two largest economies in the Middle East and North Africa would jeopardize their revenue streams and domestic legitimacy, as well as their efforts to assert their primacy across the Islamic world.

[N]either country is prepared to elevate the interests of its people over the demands of ideology.

“All success stories start with a vision,” Deputy Crown Prince Salman is quoted as saying on the Vision 2030 website. But vision is insufficient to bridge the gap between aspiration and reality; a serious agenda to implement either the Saudi or the Iranian vision would require painful compromises to regime ideology and a fundamental overhaul of the institutions and the structure of power in both countries. 

Imagine, though, for a moment, that these far-fetched ambitions were quite serious, and that both the Saudi and Iranian leadership were determined to do what was necessary to truly wean their economies off oil dependence. Consider what it might mean for the region if these grandiose ambitions were not simply the illusions of overpriced consultants and embattled technocrats—if a leadership emerged in one or both of the Middle East’s most powerful actors prepared to invest political capital in a genuine transformation of priorities and policies. What might be possible if Tehran and Riyadh sought to compete for economic opportunities instead of fueling violence and sectarianism around the region? If instead of a vicious sectarian and geopolitical rivalry, these two old adversaries engaged in a race to the top?

What will it take to move these visions from wishful thinking to reality? More than rhetoric, to be sure. But even the articulation of improbable objectives will have its impact. As documented in a recent book, Iran’s post-revolutionary experience demonstrates that the regime’s reliance on promises of economic gains has generated public expectations for effective and accountable governance. Now Iranians and Saudis have been told by their leaders—who happen to be officially infallible—that the time has come to transcend oil. What might happen if they believe it?

       

       

Partisan gridlock and political extremism threaten to tear down the pillars of public policy and render the U.S. government utterly dysfunctional, argues Senior Fellow Thomas Mann, co-author with Norman Ornstein—resident scholar at the American Enterprise Institute—of It’s Even Worse Than It Looks (Basic Books, 2012). He argues that a flood of super-PAC money, negative ads and cowed mainstream news media are contributing to the problem.

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• Mann: Blame for Gridlock Is Squarely on Republican Party

      

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Many clinicians have terrific ideas for improving the quality and cost of health care, but often don’t know how to navigate the frequently baffling landscape of payment and delivery reform options. To address this need in clear, practical terms, we are pleased to announce the third MEDTalk event in the “Merkin Series on Innovations in Care Delivery.” The series is designed to support clinicians and policymakers who’ve always wondered how delivery reform occurs, but didn’t know where to begin.

Our third case drew on the experiences of the Community Asthma Initiative, an enhanced pediatric asthma intervention, and their efforts in sustainability. The event featured seven brief “TED-style” talks that consider the challenges of delivering pediatric care, while tackling non-medical factors that drive suboptimal care, improving patient and family quality of life, and reducing costs. The agenda included firsthand experiences from patients, payers, policymakers, and clinical leadership from Massachusetts and Arkansas. Sustainable improvement strategies and the financial mechanisms available to encourage innovations in asthma were explored.

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• MEDTalk: Pediatric Asthma and Transforming Care for the Most Vulnerable
• A Day in the Life: The Patient Experience
• Challenge Accepted: Delivery of Asthma Care in a Triple Aim World
• The Community Asthma Initiative: A Case Study in Clinical Innovation
• Paying for Asthma Care: Options for Tackling Challenges
• State Medicaid Innovation: Opportunities and Barriers
• A Tale of Success: How to Get the Payer on Board
• Lessons Learned and the Path Forward
• Question and Answer Session

       

Ohio, like most other states in the country and particularly its neighbors in the Great Lakes region, is still reeling from the “Great Recession.” This economic crisis, the worst in a half century, has devastated economies across the globe.

While economists have declared that the recession has abated, it will be a long time before the businesses, households, and government treasuries across the country, and specifically in the state of Ohio, shake off the effects. And when the recession’s grip finally breaks, what will Ohio’s economy and landscape look like?

The choices that Ohio’s people and its leaders make—starting now and continuing over the next few years—will determine that answer. Ohioans can decide whether to shy away from manufacturing after the loss of so many jobs, or to transform the state’s old manufacturing strengths, derived from its role in the auto supply chain, into new products, markets, and opportunities. They can decide to opt out of the national shift to a lower-carbon economy, or to be at the forefront of developing clean coal and renewable energy industries and jobs.

They can choose a workforce system that is aligned to the true metropolitan scale of the economy and oriented to the needs of workers and employers. They can choose transformative transportation networks over more roads; smaller, greener, stronger cities; collaboration and regional cooperation to save money, reduce duplication, and bolster regional competitiveness. And instead of trying to go it alone in the 21st century global marketplace, they can maximize the federal resources on offer to support Ohio’s economic transformation and choose to compete effectively for new federal investments.

This report, Restoring Prosperity: Transforming Ohio’s Communities for the Next Economy, lays out some of the specific policy options that will help Ohioans restore the prosperity that the state enjoyed for much of the 19th and 20th centuries, but that it has been struggling to regain for at least a decade, if not longer.

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• Executive Summary
• Bruce Katz's Speech in Ohio

       

2015 is a pivotal year. Three major workstreams among all the world’s nations are going forward this year under the auspices of the United Nations to develop goals, financing, and frameworks for the “post-2015 sustainable development agenda.” First, after two years of wide-ranging consultation, the U.N. General Assembly in New York in September will endorse a new set of global goals for 2030 to follow on from the Millennium Development Goals (MDGs) that culminate this year. Second, to support this effort, a financing for development (FFD) conference took place in July in Addis Ababa, Ethiopia, to identify innovative ways of mobilizing private and public resources for the massive investments necessary to achieve the new goals. And third, in Paris in December the final negotiating session will complete work on a global climate change framework. 

These three landmark summits will, with luck, provide the broad strategic vision, the specific goals, and the financing modalities for addressing the full range of systemic threats. Most of all, these three summit meetings will mobilize the relevant stakeholders and actors crucial for implementing the post-2015 agenda—governments, international organizations, business, finance, civil society, and parliaments—into a concerted effort to achieve transformational outcomes. Achieving systemic sustainability is a comprehensive, inclusive effort requiring all actors and all countries to be engaged.

These three processes represent a potential historic turning point from “business-as-usual” practices and trends and to making the systemic transformations that are required to avoid transgressing planetary boundaries and critical tipping points. Missing from the global discourse so far is a realistic assessment of the political decisions and institutional innovations that would be required to implement the post-2015 sustainable development agenda (P2015).

For 2015, it is necessary is to make sure that by the end of year the three workstreams have been welded together as a singular vision for global systemic transformation involving all countries, all domestic actors, and all international institutions. The worst outcome would be that the new Sustainable Development Goals (SDGs) for 2030 are seen as simply an extension of the 2015 MDGs—as only development goals exclusively involving developing countries. This outcome would abort the broader purposes of the P2015 agenda to achieve systemic sustainability and to involve all nations and reduce it to a development agenda for the developing world that by itself would be insufficient to make the transformations required.

Systemic risks of financial instability, insufficient job-creating economic growth, increasing inequality, inadequate access to education, health, water and sanitation, and electricity, “breaking points” in planetary limits, and the stubborn prevalence of poverty along with widespread loss of confidence of people in leaders and institutions now require urgent attention and together signal the need for systemic transformation.

As a result, several significant structural changes in institution arrangements and governance are needed as prerequisites for systemic transformation. These entail (i) political decisions by country leaders and parliaments to ensure societal engagement, (ii) institutional innovations in national government processes to coordinate implementation, (iii) strengthening the existing global system of international institutions to include all actors, (iv) the creation of an international monitoring mechanism to oversee systemic sustainability trajectories, and (v) realize the benefits that would accrue to the entire P2015 agenda by the engagement of the systemically important countries through fuller utilization of  G20 leaders summits and finance ministers meetings as enhanced global steering mechanisms toward sustainable development.   Each of these changes builds on and depends on each other.

I. Each nation makes a domestic commitment to a new trajectory toward 2030

For global goal-setting to be implemented, it is essential that each nation go beyond a formal agreement at the international level to then embark on a national process of deliberation, debate, and decision-making that adapts the global goals to the domestic institutional and cultural context and commits the nation to them as a long-term trajectory around which to organize its own systemic transformation efforts. Such a process would be an explicitly political process involving national leaders, parliaments or rule-making bodies, societal leaders, business executives, and experts to increase public awareness and to guide the public conversation toward an intrinsically national decision which prioritizes the global goals in ways which fit domestic concerns and circumstances. This political process would avoid the “one-size-fits-all” approach and internalize and legitimate each national sustainability trajectory.

So far, despite widespread consultation on the SDGs, very little attention has been focused on the follow-up to a formal international agreement on them at the U.N. General Assembly in September 2015. The first step in implementation of the SDGs and the P2015 agenda more broadly is to generate a national commitment to them through a process in which relevant domestic actors modify, adapt, and adopt a national trajectory the embodies the hopes, concerns and priorities of the people of each country. Without this step, it is unlikely that national systemic sustainability trajectories will diverge significantly enough from business-as-usual trends to make a difference. More attention needs to now be given to this crucial first step.  And explicit mention of the need for it should appear in the UNGA decisions in New York in September.

II. A national government institutional innovation for systemic transformation

The key feature of systemic risks is that each risk generates spillover effects that go beyond the confines of the risk itself into other domains. This means that to manage any systemic risk requires broad, inter-disciplinary, multi-sectoral approaches. Most governments have ministries or departments that manage specific sectoral programs in agriculture, industry, energy, health, education, environment, and the like when most challenges now are inter-sectoral and hence inter-ministerial. Furthermore, spillover linkages create opportunities in which integrated approaches to problems can capture intrinsic synergies that generate higher-yield outcomes if sectoral strategies are simultaneous and coordinated.

The consequence of spillovers and synergies for national governments is that “whole-of-government” coordinating committees are a necessary institutional innovation to manage effective strategies for systemic transformation. South Korea has used inter-ministerial cabinet level committees that include private business and financial executives as a means of addressing significant interconnected issues or problems requiring multi-sectoral approaches. The Korea Presidential Committee on Green Growth, which contained more than 20 ministers and agency heads with at least as many private sector leaders, proved to be an extremely effective means of implementing South Korea’s commitment to green growth.

III.  A single global system of international institutions

The need for a single mechanism for coordinating the global system of international institutions to implement the P2015 agenda of systemic transformation is clear. However, there are a number of other larger reasons why the forging of such a mechanism is crucial now.

The Brettons Woods era is over. It was over even before the initiative by China to establish the Asia Infrastructure Investment Bank (AIIB) in Beijing and the New Development Bank (NDB) in Shanghai. It was over because of the proliferation in recent years of private and official agencies and actors in development cooperation and because of the massive growth in capital flows that not only dwarf official development assistance (concessional foreign aid) but also IMF resources in the global financial system. New donors are not just governments but charities, foundations, NGOs, celebrities, and wealthy individuals. New private sources of financing have mushroomed with new forms of sourcing and new technologies. The dominance of the IMF and the World Bank has declined because of these massive changes in the context.

The emergence of China and other emerging market economies requires acknowledgement as a fact of life, not as a marginal change. China in particular deserves to be received into the world community as a constructive participant and have its institutions be part of the global system of international institutions, not apart from it. Indeed, China’s Premier, Li Keqiang, stated at the World Economic Forum in early 2015 that “the world order established after World War II must be maintained, not overturned.”

The economic, social and environmental imperatives of this moment are that the world’s people and the P2015 agenda require that all international institutions of consequence be part of a single coordinated effort over the next 15 years to implement the post-2015 agenda for sustainable development. The geopolitical imperatives of this moment also require that China and China’s new institutions be thoroughly involved as full participants and leaders in the post-2015 era. If nothing else, the scale of global investment and effort to build and rebuild infrastructure requires it.

It is also the case that the post-2015 era will require major replenishments in the World Bank and existing regional development banks, and significantly stronger coordination among them to address global infrastructure investment needs in which the AIIB and the NDB must now be fully involved. The American public and the U.S. Congress need to fully grasp the crucial importance for the United States, of the IMF quota increase and governance reform.  These have been agreed to by most governments but their implementation is stalled in the U.S. Congress. To preserve the IMF’s role in the global financial system and the role of the U.S. in the international community, the IMF quota increase and IMF governance reform must be passed and put into practice. Congressional action becomes all the more necessary as the effort is made to reshape the global system of international institutions to accommodate new powers and new institutions within a single system rather than stumble into a fragmented, fractured, and fractious global order where differences prevail over common interests.

The IMF cannot carry out its significant responsibility for global financial stability without more resources. Other countries cannot add to IMF resources proportionately without U.S. participation in the IMF quota increase.   Without the US contribution, IMF members will have to fund the IMF outside the regular IMF quota system, which means de-facto going around the United States and reducing dramatically the influence of the U.S. in the leadership of the IMF. This is a self-inflicted wound on the U.S., which will damage U.S. credibility, weaken the IMF, and increase the risk of global financial instability. By blocking the IMF governance reforms in the IMF agreed to by the G-20 in 2010, the U.S. is single-handedly blocking the implementation of the enlargement of voting shares commensurate with increased emerging market economic weights.  This failure to act is now widely acknowledged by American thought leaders to be encouraging divergence rather than convergence in the global system of institutions, damaging U.S. interests.

IV. Toward a single monitoring mechanism for the global system of international institutions

The P2015 agenda requires a big push toward institutionalizing a single mechanism for the coordination of the global system of international institutions.  The international coordination arrangement today, is the Global Partnership for Effective Development Cooperation created at the Busan High-Level Forum on Aid Effectiveness in 2011.  This arrangement, which recognizes the increasingly complex context and the heightened tensions between emerging donor countries and traditional western donors, created a loose network of country platforms, regional arrangements, building blocks and forums to pluralize the architecture to reflect the increasingly complex set of agents and actors. This was an artfully arranged compromise, responding to the contemporary force field four years ago.

Now is a different moment. The issues facing the world are both systemic and urgent; they are not confined to the development of developing countries, and still less to foreign aid. Geopolitical tensions are, if anything, higher now than then.  But they also create greater incentives to find areas of cooperation and consensus among major powers who have fundamentally different perspectives on other issues. Maximizing the sweet spots where agreement and common interest can prevail is now of geopolitical importance.  Gaining agreement on institutional innovations to guide the global system of international institutions in the P2015 era would be vital for effective outcomes but also importantly ease geopolitical tensions.

Measurement matters; monitoring and evaluation is a strategic necessity to implementing any agenda, and still more so, an agenda for systemic transformation.  As a result, the monitoring and evaluation system that accompanies the P2015 SDGs will be crucial to guiding the implementation of them.  The UN, the OECD, the World Bank, and the IMF all have participated in joint data gathering efforts under the IDGs  in the 1990s and the MDGs in the 2000s.   Each of these institutions has a crucial role to play, but they need to be brought together now under one umbrella to orchestrate their contributions to a comprehensive global data system and to help the G20 finance ministers coordinate their functional programs.   

The OECD has established a strong reputation in recent years for standard setting in a variety of dimensions of the global agenda.  Given the strong role of the OECD in relation to the G20 and its broad outreach to “Key Partners” among the emerging market economies, the OECD could be expected to take a strong role in global benchmarking and monitoring and evaluation of the P2015 Agenda.  The accession of China to the OECD Development Centre, which now has over fifty member countries, and the presence and public speech of Chinese Premier Li Keqiang at the OECD on July 1^st, bolsters the outreach of the OECD and its global profile.

But national reporting is the centerpiece and the critical dimension of monitoring and evaluation.  To guide the national reporting systems and evaluate their results, a  new institutional arrangement is needed that is based on national leaders with responsibility for implementation of the sustainable development agendas from each country and is undertaken within the parameters of the global SDGs and the P2015 benchmarks.

V.   Strengthening global governance and G20 roles

G-20 leaders could make a significant contribution to providing the impetus toward advancing systemic sustainability by creating a G-20 Global Sustainable Development Council charged with pulling together the national statistical indicators and implementing benchmarks on the SDGs in G-20 countries.  The G-20 Global Sustainable Development Council (G-20 GSDC) would consist of the heads of the presidential committees on sustainable development charged with coordinating P2015 implementation in G-20 countries.  Representing systemically important countries, they would also be charged with assessing the degree to which national policies and domestic efforts by G20 countries generate positive or negative spillover effects for the rest of the world.  This G-20 GSDC would also contribute to the setting of standards for the global monitoring effort, orchestrated perhaps by the OECD, drawing on national data bases from all countries using the capacities of the international institutions to generate understanding of global progress toward systemic sustainability. 

The UN is not in a position to coordinate the global system of international institutions in their functional roles in global sustainable development efforts.  The G-20 itself could take steps through the meetings of G-20 Finance Ministers to guide the global system of international institutions in the implementation phase of the P2015 agenda to begin in 2016. The G-20 already has a track record in coordinating international institutions in the response to the global financial crisis in 2008 and its aftermath. The G-20 created the Financial Stability Board (FSB), enlarged the resources for the IMF, agreed to reform the IMF’s governance structure, orchestrated relations between the IMF and the FSB, brought the OECD into the mainstream of G-20 responsibilities and has bridged relations with the United Nations by bringing in finance ministers to the financing for development conference in Addis under Turkey’s G-20 leadership. 

There is a clear need to coordinate the financing efforts of the IMF, with the World Bank and the other regional multilateral development banks (RMDBs), with the AIIB and the BRICS NDB, and with other public and private sector funding sources, and to assess the global institutional effort as whole in relation to the P2015 SDG trajectories.  The G-20 Finance Ministers grouping would seem to be uniquely positioned to be an effective and credible means of coordinating these otherwise disparate institutional efforts.  The ECOSOC Development Cooperation Forum and the Busuan Global Partnership provide open inclusive space for knowledge sharing and consultation but need to be supplemented by smaller bodies capable of making decisions and providing strategic direction.

Following the agreements reached in the three U.N. workstreams for 2015, the China G-20 could urge the creation of a formal institutionalized global monitoring and coordinating mechanism at the China G-20 Summit in September 2016. By having the G-20 create a G-20 Global Sustainable Development Council (G-20 GSDC), it could build on the national commitments to SDG trajectories to be made next year by U.N. members countries and on the newly formed national coordinating committees established by governments to implement the P2015 Agenda, giving the G-20 GSDC functional effectiveness, clout and credibility.   Whereas there is a clear need to compensate for the sized-biased representation of the G20 with still more intensive G-20 outreach and inclusion, including perhaps eventually considering shifting to a constituency based membership, for now the need in this pivotal year is to use the momentum to make political decisions and institutional innovations which will crystallize the P2015 strategic vision toward systemic sustainability into mechanisms and means of implementation.

By moving forward on these recommendations, the G-20 Leaders Summits would be strengthened by involving G-20 leaders in the people-centered P2015 Agenda, going beyond finance to issues closer to peoples’ homes and hearts. Systemically important countries would be seen as leading on systemically important issues.  The G-20 Finance Ministers would be seen as playing an appropriate role by serving as the mobilizing and coordinating mechanism for the global system of international institutions for the P2015 Agenda.  And the G-20 GSDC would become the effective focal point for assessing systemic sustainability not only within G20 countries but also in terms of their positive and negative spillover effects on systemic sustainability paths of other countries, contributing to standard setting and benchmarking for global monitoring and evaluation.    These global governance innovations could re-energize the G20 and provide the international community with the leadership, the coordination and the monitoring capabilities that it needs to implement the P2015 Agenda. 

Conclusion

As the MDGs culminate this year, as the three U.N. workstreams on SDGs, FFD, and UNFCC are completed, the world needs to think ahead to the implementation phase of the P2015 sustainable development agenda. Given the scale and scope of the P2015 agenda, these five governance innovations need to be focused on now so they can be put in place in 2016.

These will ensure (i) that national political commitments and engagement by all countries are made by designing, adopting, and implementing their own sustainable development trajectories and action plans; (ii) that national presidential committees are established, composed of key ministers and private sector leaders to coordinate each country’s comprehensive integrated sustainability strategy; (iii) that all governments and international institutions are accepted by and participate in a single global system of international institutions;   (iv) that a G-20 monitoring mechanism be created by the China G-20 in September 2016 that is comprised of the super-minister officials heading the national presidential coordinating committees implementing the P2015 agenda domestically in G-20 countries, as a first step;  and (v) that the G-20 Summit leaders in Antalya in November 2015 and in China in September 2016 make clear their own commitment to the P2015 agenda and their responsibility for its adaption, adoption and implementation internally in their countries but also for assessing G-20 spillover impacts on the rest of the world, as well as for deploying their G-20 finance ministers to mobilize and coordinate the global system of international institutions toward achieving the P2015 agenda.

Without these five structural changes, it will be more likely that most countries and actors will follow current trends rather than ratchet up to the transformational trajectories necessary to achieve systemic sustainability nationally and globally by 2030.

References

Ye Yu, Xue Lei and Zha Xiaogag, “The Role of Developing Countries in Global Economic Governance---With a Special Analysis on China’s Role”, UNDP, Second High-level Policy Forum on Global Governance: Scoping Papers, (Beijing: UNDP, October 2014).

Zhang Haibing, “A Critique of the G-20’s Role in UN’s post-2015 Development Agenda”, in Catrina Schlager and Chen Dongxiao (eds), China and the G-20: The Interplay between an Emerging Power and an Emerging Institution, (Shanghai: Shanghai Institutes for International Studies [SIIS] and the Friedrich Ebert Stiftung [FES], 2015) 290-208.

Global Review, (Shanghai:  SIIS, 2015,) 97-105.

Colin I. Bradford, “Global Economic Governance and the Role International Institutions”, UNDP, Second High-level Policy Forum on Global Governance: Scoping Papers, (Beijing: UNDP, October 2014).

Colin I. Bradford, “Action implications of focusing now on implementation of the   post-2015 agenda.”, (Washington: The Brookings Institution, Global Economy and Development paper, September 2015).

Colin I. Bradford, “Systemic Sustainability as the Strategic Imperative for the Future”, (Washington: The Bookings Institution, Global Economy and Development paper; September 2015). 

Wonhyuk Lim and Richard Carey, “Connecting Up Platforms and Processes for Global Development to 2015 and Beyond:  What can the G-20 do to improve coordination and deliver development impact?”, (Paris: OECD  Paper, February 2013).

Xiaoyun Li and Richard Carey, “The BRICS and the International Development System: Challenge and Convergence”, (Sussex: Institute for Development Studies, Evidence Report No. 58, March 2014).

Xu Jiajun and Richard Carey, “China’s Development Finance: Ambition, Impact and Transparency,” (Sussex :  Institute for Development Studies, IDS Policy Brief, 2015).

Soogil Young, “Domestic Actions for Implementing Integrated Comprehensive Strategies:  Lessons from Korea’s Experience with Its Green Growth Strategy”, Washington: Paper for the Brookings conference on “Governance Innovations to Implement the Post-2015 Agenda for Sustainable Development”, March 30, 2015).

       

       

Community colleges are a vital part of America’s opportunity structure, not least because they often provide a way into higher education for adults from less advantaged backgrounds. Each year there are around 10 million undergraduates enrolled at public, two-year colleges. Among first-generation students, nearly 38 percent attend community colleges, compared to 20 percent of students with college-educated parents.

Credentials from community colleges—whether short vocational courses or two-year associate degrees—can be valuable in the labor market. In theory, community colleges also provide an on-ramp for those seeking a bachelor’s degree; in fact, four out of five students enrolling intend to get a 4-year degree.

But the potential of community college is often unrealized. Many students are not ready. Quality varies. Pathways are often unclear and/or complex. Only about 40 percent of those enrolling earn a degree within six years. Just 15 percent acquire a 4-year degree, according to analyses by Doug Shapiro and Afet Dundar at the National Student Clearinghouse Research Center.

Transfers rates from community college vary dramatically by state

The degree of alignment and integration between community and four-year colleges is much greater in some states than others. Some use common course numbering for 2- and 4-year institutions, which helps students find the classes they need without racking up costly excess credits. In others, universities and community colleges have tried to align their curriculum to ensure that students’ transfer credits will be accepted.

Individual institutions like Queensborough College (part of the CUNY system) and Miami-Dade College have streamlined course sequences to help their students stay on track to transfer into 4-year schools, as Thomas Bailey, Shanna Jaggers, and Davis Jenkins describe in their book, Redesigning America’s Community Colleges. There’s some indirect evidence that these initiatives increased retention and graduation rates.

These policy differences help to explain the very different stories of transfer rates in different states, revealed in a recent study by Davis Jenkins and John Fink. One important measure is the proportion of students transferring out of community college with a certificate or associate degree already in hand:

Florida tops the list, partly because of state legislation requiring that community colleges grant eligible transfer students degrees—but also because of concerted investments at the state and institutional levels to improve 2-year institutions.

Another measure of success is the proportion of those who transfer ending up with a four-year degree. Again, there are significant variations between states:

Since community colleges serve so many more students from poor backgrounds, the importance of the transfer pathway for social mobility is clear. Many who struggle at high school may begin to flourish in the first year or two of post-secondary education. As their skills are upgraded, so their opportunities should widen. But too often they become trapped in the silos of post-secondary education. We should continue to support efforts like pathway programs that explicitly attempt to build bridges between community colleges and high-quality four year institutions through the creation of clear and consistent major-specific program maps. Such programs allow students starting out at community colleges to easily chart out the specific, clear, and coherent set of steps needed to eventually finish their post-secondary education with a four-year degree.

Tuning an American engine of social mobility

The mission of community colleges since their inception a century ago has been to broaden access to education. Today that means providing a solid education to all students, but also providing opportunities to move on to other institutions.

       

Editor's Note: This article was the first published in the June 2008 World Cities Summit edition of ETHOS.

At the dawn of a new century, broad demographic, economic and environmental forces are giving American cities their best chance in decades to thrive and prosper. The renewed relevance of cities derives in part from the very physical characteristics that distinguish cities from other forms of human settlement: density, diversity of uses and functions, and distinctive design.

Across the United States (U.S.), a broad cross section of urban practitioners—private investors and developers, government officials, community and civic leaders—are taking ambitious steps to leverage the distinctive physical assets of cities and maximise their economic, fiscal, environmental and social potential.

A special class of urban interventions—what we call “transformative investments”—is emerging from the millions of transactions that occur in cities every year. The hallmark of transformative investments is their catalytic nature and seismic impact on markets, on people, on the city landscape and urban possibilities—far beyond the geographic confines of the project itself.

Recognising and replicating the magic of transformative investments, and making the exception become the norm is important if U.S. cities are to realise their full potential.

THE URBAN MOMENT
The U.S. is undergoing a period of dynamic change, comparable in scale and complexity to the latter part of the nineteenth century. Against this backdrop, there is a resurgence in the importance of cities due to their fundamental and distinctive physical attributes.

Cities offer a broad range of physical choices—in neighbourhoods, housing stock, shopping venues, green spaces and transportation. These choices suit the disparate preferences of a growing population that is diverse by race, ethnicity and age.

Cities are also rich with physical amenities—mixed-use downtowns, historic buildings, campuses of higher learning, entertainment districts, pedestrian-friendly neighbourhoods, adjoining rivers and lakes—that are uniquely aligned with preferences in a knowledge-oriented, post-industrial economy. A knowledge economy places the highest premium on attracting and retaining educated workers, and an increasing proportion of these workers, particularly young workers, value urban quality of life when making their residential and employment decisions.

Finally, cities, particularly those built in the nineteenth and early twentieth centuries, are compactly constructed and laid out along dense lines and grids, enhancing the potential for the dynamic, random, face-to-face human exchange prized by an economy fuelled by ideas and innovation. Such density also makes cities perfect agents for the efficient delivery of public services as well as the stewardship of the natural environment.

Each of these elements—diversity, amenities and density—distinguishes cities from other forms of human settlement. In prior generations, these attributes were devalued in a nation characterised by the single family house, the factory plant, cheap gas, and environmental profligacy. In recent history, many U.S. cities responded by making the wrong physical bets or by replicating low-density, suburban development—further eroding the very strengths that make cities distinctly urban and competitive.

Yet, the U.S., a nation in demographic and economic transition, is revaluing the quality of life uniquely offered by cities and urban places, potentially altering the calculus by which millions of American families and businesses make location decisions every year.

DELIVERING "CITYNESS": THE RISE OF TRANSFORMATIVE INVESTMENTS
Across the U.S., a practice of city building is emerging that builds on the re-found value and purpose of the urban physical landscape, and recognises that cities thrive when they fully embrace what Saskia Sassen calls “cityness”.¹

The move to recapture the American city can be found in all kinds of American cities: global cities like New York, Los Angeles and Chicago that lie at the heart of international trade and finance; innovative cities like Seattle, Austin and San Francisco that are leading the global economic revolution in technology; older industrial cities like Cleveland, Pittsburgh and Rochester that are transitioning to new economies; fast-growing cities like Charlotte, Phoenix and Dallas that are regional hubs and magnets for domestic and international migration.

The new urban practice can also be found in all aspects or “building blocks” of cities: in the remaking of downtowns as living, mixed-use communities; in the creation of neighbourhoods of choice that are attractive to households with a range of incomes; in the conversion of transportation corridors into destinations in their own right; in the reclaiming of parks and green spaces as valued places; and in the revitalisation of waterfronts as regional destinations, new residential quarters and recreational hubs.

Yet, as the new city building practice evolves, it is clear that a subset of urban investments are emerging as truly “transformative” in that they have a catalytic, place-defining impact, creating an entirely new logic for portions of the city and a new set of possibilities for economic and social activity.

We define these transformative investments as “discrete public or private development projects that trigger a profound, ripple effect of positive, multi-dimensional change in ways that fundamentally remake the value and/or function of one or more of a city’s physical building blocks”.

This subset of urban investments share important characteristics:

• On the economic front, transformative investments uncover the hidden value in a part of the city, creating markets in places where markets either did not exist or were only partially realised.
• On the fiscal front, transformative investments dramatically enhance the fiscal capacity of local governments, generating revenues through the rise in property values, the growth in city populations, and the expansion of economic activity.
• On the cognitive front, transformative investments redefine the identity and image of the city. They effectively “re-map” previously forgotten or ignored places by residents, visitors and workers. They create nodes of new activities and new places for people to congregate.
• On the environmental front, transformative investments enable cities to achieve their “green” potential by cleaning up the environmental residue from prior industrial uses or urban renewal efforts, by enabling repopulation at greater densities to occur and by providing residents, workers and visitors with transportation alternatives.
• On the social front, transformative investments have the potential, while not always realised, to alter the opportunity structure for low-income residents. When carefully designed, staged and leveraged, they can expand the housing, employment and educational opportunities available to low-income residents and overcome the racial, ethnic and economic disparities that have inhibited city performance for decades.

DISSECTING SUCCESS: HOW AND WHERE TRANSFORMATIVE INVESTMENTS TAKE PLACE
The best way to identify and assess transformative investments is by examining exemplary interventions in the discrete physical building blocks of cities: downtowns, neighbourhoods, corridors, parks and green spaces, and waterfronts.

Downtowns
If cities are going to realise their true potential, downtowns are compelling places to start. Physically, downtowns are equipped to take on an emerging set of uses, activities and functions and have the capacity to absorb real increases in population. Yet, as a consequence to America’s sprawling appetite, urban downtowns have lost their appeal. Economic interests, once the stronghold in downtowns, have moved to suburban town centres and office parks, depressing urban markets and urban value.

Across the US, downtowns are remaking themselves as residential, cultural, business and retail centres. Cities such as Chattanooga, Washington, DC and Denver have demonstrated how even one smart investment can inject new energy and jumpstart new markets. The strategic location of a new sports arena in a distressed area of downtown Washington, DC fits our definition of a transformative investment. Leveraging the proximity of a transit stop, the MCI Arena was nestled within the existing urban fabric on a city-owned urban renewal site. The arena’s pedestrian-oriented design strengthened, rather than interrupted, the continuity of the 7th Street retail corridor.² Today, the area has been profoundly transformed as scores of new restaurants, retail and bars dot the arena’s surroundings. Residents and visitors rely heavily on the nearby transit to come to this destination.

Neighbourhoods
Ever since the physical, economic and social agglomeration of “city” was established, the function of neighbourhoods has remained relatively untouched. While real estate values of neighbourhoods have shifted over time in response to micro- and macro-economic trends, a subset of inner city communities have remained enclaves of poverty. Victims of earlier urban renewal and public housing efforts, millions of people are consigned to living in neighbourhoods isolated from the economic and social mainstream.

Cities such as St. Louis, Louisville and Atlanta have been at the forefront of public housing (and hence neighbourhood) transformation, supported by smart federal investments in the 1990s. For example, the demolition of the infamous high-rise Vaughn public housing project in St. Louis enabled the construction of a new human scale, mixed-income housing development in one of the poorest, most crime-ridden sections of the city. This redevelopment cured the mistakes made by failed public housing projects, by restoring street grids, providing quality design, and injecting a sense of social and physical connection. Constructing a mix of townhouses, garden apartments and single family homes helped catalyse other public and private sector investments.

What made this investment transformative was that it included the reconstitution of Jefferson Elementary, a nearby public school. Working closely with residents, and with the financial support of corporate and philanthropic interests, the developer helped modernise the school, making it one of the most technologically advanced educational facilities in the region. A new principal, new curriculum, and new school programmes helped it become one of the highest performing inner city schools in the state of Missouri.

Corridors
City corridors are the physical tissue that knit disparate parts of a city together. In the best of conditions, corridors are multi-dimensional in purpose, where they are destinations as much as facilitators of movement. In many cities, however, corridors are simply shuttling traffic past blocks of desolated retail and residential areas or they have become yet another cookie cutter image of suburbia—parking lots abutting the main street, standardised buildings and design, and oversized and cluttered signage.

Cities like Portland, Oregon and urban counties like Arlington, Virginia have used mass transit investments and land use reforms to create physically, economically and socially healthy corridors that give new residents reasons to choose to live nearby and existing residents reasons to stay.

Portland conceived a streetcar to spur high density housing in close-in neighbourhoods that were slowly shedding old industrial uses. The streetcars traverse a three-mile route through residential areas, the water front, to the university. Since its construction, the streetcar has not only expanded transportation choices, it has helped galvanise new destinations along its route—including new neighbourhoods, retail clusters, and economic districts.

Parks and Open Space
City green spaces (such as parks, nature trails, bike paths) were initially designed to provide the lungs of the city and an outlet for recreation, entertainment and social cohesion. As general conditions declined in many cities, the quality of urban parks also declined, to the great consternation of local residents. Green spaces were turned into under-used, if not forgotten, areas of the city; or worse still, hot spots of crime and illegal activity. Such blight discouraged cities to transform outmoded uses (such as manufacturing areas) into more green space. In cities with booming development markets, parks failed to be designed and incorporated into the new urban fabric.

Across the US, cities are pursuing a variety of strategies to reclaim or augment urban green spaces. Cities like Atlanta, for example, have created transformative parks from outmoded economic uses, such as manufacturing land along urban waterfronts or by converting old railway lines into urban trail-ways.

Cities like Scranton have reclaimed existing urban parks consumed by crime and vandalism. This has required creative physical and programmatic investments, including: redesigning parks (removing physical and visibility barriers such as walls, thinning vegetation, and eliminating “dark corners”); increasing the presence of uniformed personnel; increasing the park amenities (such as evening movies and other events to increase patronage);³ and providing regular maintenance of the park and recreational facilities.⁴

Waterfronts
Many American cities owe their location and initial function to the proximity to water: rivers, lakes and oceans. Waterfronts enabled cities to manufacture, warehouse and ship goods and products. Infrastructure was built and zoning was aligned to carry out these purposes. In a knowledge-intensive economy, however, the function of waterfronts has dramatically changed, reflecting the pent-up demand for new places of enjoyment, activities and uses.

As with the other building blocks, cities are pursing a range of strategies to reclaim their waterfronts, often by addressing head-on the vestiges of an earlier era.

New York has overhauled the outdated zoning guidelines for development along the Brooklyn side of the East River, enabling the construction of mixed-income housing rather than prescribing manufacturing and light industry uses.

Pittsburgh and many of its surrounding municipalities have embarked on major efforts to re-mediate the environmental contamination found in former industrial sites, paving the way for new research centres, office parks and retail facilities.

Milwaukee, Providence and Portland have demolished the freeways that separated (or hid) the waterfront from the rest of the downtown and city, and unleashed a new wave of private investment and public activities.

WHAT IS THE RECIPE FOR SUCCESS?
The following are underlying principles that set these diverse investments apart from other transactions:

Transformative Investments advance “cityness”: Investments embrace the characteristics, attributes, and dynamics that embody “city”—its complexity, its intersection of activities, its diversity of populations and cultures, its distinctively varied designs, and its convergence of the physical environment at multiple scales. Project by project, transformative investments are reclaiming the true urban identity by strengthening aspects of the ‘physical’ that are intrinsically urban—be it density, rehabilitation of a unique building or historic row, or the incorporation of compelling, if not iconic, design.

Transformative Investments require a fundamental rethinking of land use and zoning conventions: In the midst of massive economic global change, 21st century American cities still bear the indelible markings of the 20th century. In the early 20th century, for example, government bodies enacted zoning to establish new rules for urban development. While originally intended to protect “light and air” from immense overbuilding, later versions of zoning added the segregation of uses—isolating housing, office, commercial and manufacturing activities from each other. Thus, transformative investments require, at a minimum, variances from the rigid, antiquated rules that still define the urban landscape. In many cases, examples of successful transformative investments have become the tool to overhaul outdated and outmoded frameworks and transform exceptions into new guidelines.

Transformative Investments require innovative, often customised financing approaches: Cities have distinctive physical forms (e.g., historic buildings) and distinctive physical visions (e.g., distinct districts). Yet private and even public financing of the American physical landscape, for the most part, is standardised and routinised, enabling the production of similar products (e.g., single family homes, commercial strips) at high volume, low cost and low quality. Transformative investments, however, require the marrying of multiple sources of financing (e.g., conventional debt, traditional equity, tax-driven equity investments, innovative financing arrangements, public subsidy, patient philanthropic capital), placing stress on project design and implementation. In addition, achieving social objectives often require building innovative tax and shared equity approaches into particular transactions, so that appreciations in property value can serve higher community purposes (e.g., creating affordable housing trust funds). As with regulatory frames, the evolution from exceptional transactions to routinised forms of investments is required to ensure that transformative investments become more the rule rather than the exception.

Transformative Investments often involve an empirically-grounded vision at the building block level: While a vision is not a necessary pre-requisite for realising transformative investments, cities that proceed without one have a higher probability of making the wrong physical bets, siting them in the wrong places, or ultimately creating a physical landscape that fails to cumulatively add up to “ cityness”. It is easy to find such examples around the country, such as isolated mega-projects (a new stadium or convention centre) or waterfront revitalisation efforts that constructed the wrong projects, having misunderstood the market and the diversifying demographic.

Telescoping the possibilities and developing a bold vision must be done through an empirically-grounded process. A visioning exercise should therefore include: an economic and market diagnostic of the building block; a physical diagnostic; an evaluation of existing projects; and the development of a vision to transform the landscape. From here, disparate actors (public, private, civic, not-for-profit) will have the best instruments to assess whether a physical project could meet specific market, demographic and physical needs—increasing its chances of becoming truly transformative.

Transformative Investments require integrative thinking and action: Transformative investments are often an act in “connecting the dots” between the urban experiences (e.g., transportation, housing, economic activity, education and recreation), which are inextricably linked in reality but separated in action. This requires a significant change in how cities are both planned and managed.

On the public side, it means that transportation agencies must re-channel scarce infrastructure investments to leverage other city building goals beyond facilitating traffic. It means that agencies driving a social agenda, such as schools and libraries, have to re-imagine their existing and new facilities to integrate strong design and move away from isolated projects.

In the private sector, it means understanding the broader vision of the city and carefully siting and designing investments to increase successful city-building and not just project-building. It means increasing their own standards by using exemplary design and construction materials. It means finding financially beneficial approaches to mixed income housing projects and mixed use projects instead of just single uses. In all cases, it requires holistic thinking that cuts across the silos and stovepipes of specialised professions and fragmented bureaucracies.

BUILDING GREAT CITIES
For the first time in decades, American cities have a chance to experience a measurable revival. While broader macro forces have handed cities this chance, city builders are also learning from past mistakes. After investing billions of dollars into city revitalisation efforts, the principles underpinning particularly successful and catalytic projects—transformative investments—are beginning to be clarified. The most important lesson for cities, however, is to embrace “cityness”, to maximise what makes them physically and socially unique and distinctive. Only in this way will American cities reach their true greatness.

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• ¹Saskia Sassen defined the term “cityness” to be the concept of embracing the characteristics, attributes, and dynamics that embody “city”: complexity, the convergence of the physical environment at multiple scales, the intersection of differences, the diversity of populations and culture, the distinctively varied designs and the layering of the old and the new. Sassen, S., “Cityness in the Urban Age”, Urban Age Bulletin 2 (Autumn 2005).
• ²Strauss, Valerie, “Pollin Says He’ll Pay for Sports Complex District, Awaits Economic Boost, Upgraded Image”, Washington Post, Thursday, 29 December 1994.
• ³Personal communication from Peter Harnik, Director, Center for City Park Excellence, Trust for Public Land, 6 June 2005.
• ⁴Harnik, Peter, “The Excellent City Park System: What Makes it Great and How to Get There”. San Francisco, CA: The Trust for Public Land, 2003. Available online at http://www.tpl.org/tier3_cd.cfm?content_item_id=11428&folder_id=175

      

Event Information

On February 2 and 3, 2010, the Brookings Institution Metropolitan Policy Program and Lazard convened leaders from the public sector, energy, infrastructure, finance and venture capital communities for an in-depth conversation focused on innovative policy and business practices that will help build the next American economy.

California Governor Arnold Schwarzenegger and Pennsylvania Governor Edward G. Rendell provided the keynote remarks. Both stressed the need for strategic investments in innovative infrastructure and energy practices going forward.

Framing the conference was the notion that the next American economy must be export-oriented, low carbon, innovation-fueled and opportunity rich—an idea which has been proposed by leading economists such as Director of the National Economic Council Larry Summers. It is with this mindset that Brookings and Lazard put together high-level, dynamic panels that centered around the private sector needs for building out the next American economy—and the policy implications. Specifically, they focused on how the traditional industry leaders (e.g., utility companies), the new industry leaders (e.g., venture capital investors), and public sector leaders can work together to move our country forward, especially within the metro areas where the resources and networks that drive innovation are rooted.

For media coverage of the event, please visit the following:

Time Is Running Out: The New York Times – Bob Herbert

Watching China Run: The New York Times – Bob Herbert

High Hopes for Clean-Energy Jobs: The Wall Street Journal - Rebecca Smith

Campaign for 'Next American Economy' Begins: San Francisco Chronicle - Andrew Ross

Bruce Katz, Vice President and Director, Metropolitan Policy Program, Brookings Institution		Vernon Jordan, Senior Managing Director, Lazard and California Governor Arnold Schwarzenegger
Wall Street Journal reporter Rebecca Smith leads a conversation with business leaders		Pennsylvania Governor Edward Rendell
Conference participants Jim Robinson of RRE Ventures and Michael Ahearn of First Solar		From left: Bob Herbert (New York Times), Mallory Walker (Walker and Dunlop) and George Bilicic (Lazard)

Video

• The Keys to American Competitiveness

Audio

• The Next American Economy: Transforming Energy and Infrastructure Investment

Transcript

• Transcript (.pdf)
• Bruce Katz's delivered remarks (.pdf)

Event Materials

• 0203_transcript
• 0203_nextecon_katz
• 0203_overview
• 0203_agenda
• 0203_nextecon_pres

      

       

       

Policy makers at all levels, federal and state and local governments, are depositing great faith in innovation as a driver of economic growth and job creation. In the knowledge economy, universities have been called to play a central role as knowledge producers. Universities are actively seeking to accommodate those public demands and many have engaged an ongoing review of their educational programs and their research portfolios to make them more attuned to industrial needs. Technology transfer is a function that universities are seeking to make more efficient in order to better engage with the economy.

By law, universities can elect to take title to patents from federally funded research and then license them to the private sector. For years, the dominant model of technology transfer has been to market university patents with commercial promise to prospect partners in industry. Under this model, very few universities have been able to command high licensing fees while the vast majority has never won the lottery of a “blockbuster” patent. Most technology transfer offices are cost centers for their universities.

However, upon further inspection, the winners of this apparent lottery seem to be an exclusive club. Over the last decade only 37 universities have shuffled in the top 20 of the licensing revenue ranking. What is more, 5 of the top 20 were barely covering the expenses of their tech transfer offices; the rest were not even making ends meet.[i] It may seem that the blockbuster patent lottery is rigged. See more detail in my Brookings report.

That appearance is due to the fact that landing a patent of high commercial value is highly dependent on the resources available to universities. Federal research funding is a good proxy variable to measure those resources. Figure 1 below shows side by side federal funding and net operating income of tech transfer offices. If high licensing revenues are a lottery; then it is one in which only universities with the highest federal funding can participate. Commercial patents may require a critical mass of investment to build the capacity to produce breakthrough discoveries that are at the same time mature enough for the private investors to take an interest.

Figure 1. A rigged lottery?

High federal research funding is the ticket to enter the blockbuster patent lottery

               

Source: Author elaboration with AUTM data (2013) [ii]

But now, let’s turn onto another view of the asymmetry of resources and licensing revenues of  universities; the geographical dimension. In Figure 2 we can appreciate the degree of dispersion (or concentration) of both, federal research investment and licensing revenue, across the states. It is easy to recognize the well-funded universities on the East and West coast receiving most of federal funds, and it is easy to observe as well that it is around the same regions, albeit more scattered, that licensing revenues are high.

If policymakers are serious about fostering innovation, it is time to discuss the asymmetries of resources among universities across the nation. Licensing revenues is a poor measure of technology transfer activity, because universities engage in a number of interactions with the private sector that do not involve patent licensing contracts. However, this data hints at the larger challenge: If universities are expected to be engines of growth for their regions and if technology transfer is to be streamlined, federal support must be allocated by mechanisms that balance the needs across states. This is not to suggest that research funding should be reallocated from top universities to the rest; that would be misguided policy. But it does suggest that without reform, the engines of growth will not roar throughout the nation, only in a few places.

Figure 2. Tech Transfer Activites Depend on Resources

Bubbles based on Metropolitan Statistical Areas and propotional to size of the variable

      

Recently the University of Massachusetts Amherst courted controversy when it announced that it would not admit Iranian students into some programs in the College of Engineering and in the College of Natural Sciences. The rule sought to comply with sanctions on Iran, but facing strong criticism from faculty and students the university reversed itself and replaced the ban with a more flexible policy that would craft a special curriculum for Iranian students in the fields relevant to the ban. It is not yet clear how that policy will be implemented, but what has become patently clear is that a blanket ban on students by national origin is a transgression of the principles of an open society including academic freedom. Very rarely will the knowledge created and taught at universities present a security risk that justifies the outright exclusion of an entire nationality from participating in the research and learning enterprise.

A controversial ban

Section 501 of the Iran Threat Reduction and Syria Human Rights Act of 2012 explicitly denies visas to Iranian nationals seeking study in fields related to nuclear engineering or the energy sector. After the controversy and in consultation with the State Department, the university replaced the ban for a policy of “individualized study plans” for Iranian students in the sanctioned fields. Questions remain as to the practicality of crafting study plans that exclude the kind of knowledge Iranians are not supposed to learn. One can imagine the inherent difficulty of asking some students to skip a few chapters of the textbook or to take a coffee break outside the lab when certain experiments are conducted.

In a recent column, philosopher Behnam Taebi reminded us of a similar controversy when the Dutch government tried to restrict admission of Iranian students. He offers a valuable lesson from both experiences: “the Iranian academic community has traditionally been a bastion of reformism—a tendency Western governments and universities have every interest in encouraging” and correctly concludes that a ban of Iranian students is self-defeating.

Universities export knowledge and values

The costs of constraining technology transfer could indeed outweigh the benefits of study programs that entail technical and cultural exchange at the same time. American universities export knowledge and technology but also they export American values.

Surely, not all values for export are exactly the height of civilization. Skeptics may point out that conspicuous consumption and reality TV are not worth disseminating but these critics would do well recalling that neither social posing nor voyeurism were invented in the U.S.; what we see here are just new bottles for very old wine. In contrast, the best values for export are those of the American political tradition. Living in the U.S. affords international students a regular exposure to that tradition in informal settings such as community life and churchgoing, and in more formal ones, through the stupendous collections of university libraries and the campus curriculum on American history and political thought.

Aside of the lofty and the frivolous, however, there are a few values that are inherent to university life. Of course, the U.S. does not have a monopoly on those values—they are inherent to all universities in stable democracies—but they are certainly part of the experience of any international student. Consider these three:

Stability: Students appreciate the relative quietude of university life. In the U.S., most campuses are physically designed as a refuge from the frantic pace of modern life and provide the peace and safety necessary to allow the mind to concentrate, grow, and discover. Students coming from countries troubled by political instability and conflict are able to stop worrying about questions of subsistence or survival and can devote their attention to solve the puzzles of nature and society.

Meritocracy: Another value characteristic of academia is meritocracy. The system has its flaws but academia more than other walks of life assigns rewards based on clear standards of performance. There are systemic problems and no absence of prejudice, but hard work and talent tend to be given their due.

Social awareness: A third value is a collective concern with public affairs in the local, national, and global spheres. Not everyone in the academic community is socially engaged, but within campus there is a steady supply of debate on contemporary issues and ample opportunity for voluntary work. Visitors will find it easy to engage friends and colleagues in relevant debates and join them in meaningful action on and off campus.

Technology transfer is good diplomacy

Many international students remain in the U.S. after concluding their training but they also keep ties to their families and scientific communities in their countries of origin. Others return home and may seek to reproduce there the stability, meritocracy, and engagement with social issues that were constitutive of their time at an American university. Some will seek reform within their own universities and a few will go further and press for reform to their country's political system. Spreading the values of academic life in democratic societies is a legitimate and powerful approach to spreading democratic values around the world.

Technology transfer as a term of art has evolved to recognize the two-way exchange of knowledge between research and industrial organizations. Likewise, values move both ways and international students enrich American life by injecting their spheres with their own values for export. The policy of American universities of remaining open to all nationalities is both instrument and symbol of an open society. Technology transfer by means of advanced training is indeed good diplomacy.

      

       

       

The eurozone has three problems: national debt obligations that cannot be met, medium-term imbalances in trade competitiveness, and long-term structural flaws.

The short-run problem requires more of the monetary easing that Germany has, with appalling shortsightedness, been resisting, and less of the near-term fiscal restraint that Germany has, with equally appalling shortsightedness, been seeking. To insist that Greece meet all of its near-term current debt service obligations makes about as much sense as did French and British insistence that Germany honor its reparations obligations after World War I. The latter could not be and were not honored. The former cannot and will not be honored either.

The medium-term problem is that, given a single currency, labor costs are too high in Greece and too low in Germany and some other northern European countries. Because adjustments in currency values cannot correct these imbalances, differences in growth of wages must do the job—either wage deflation and continued depression in Greece and other peripheral countries, wage inflation in Germany, or both. The former is a recipe for intense and sustained misery. The latter, however politically improbable it may now seem, is the better alternative.

The long-term problem is that the eurozone lacks the fiscal transfer mechanisms necessary to soften the effects of competitiveness imbalances while other forms of adjustment take effect. This lack places extraordinary demands on the willingness of individual nations to undertake internal policies to reduce such imbalances. Until such fiscal transfer mechanisms are created, crises such as the current one are bound to recur.

Present circumstances call for a combination of short-term expansionary policies that have to be led or accepted by the surplus nations, notably Germany, who will also have to recognize and accept that not all Greek debts will be paid or that debt service payments will not be made on time and at originally negotiated interest rates. The price for those concessions will be a current and credible commitment eventually to restore and maintain fiscal balance by the peripheral countries, notably Greece.