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U.S. Department of State

Diplomacy in Action

11. Promote Broad-Based Growth in Developing and Transitional Economies


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Developing and transitional economies make the necessary policy changes to create environments capable of supporting sustained economic growth.

Over the long term, the prosperity of America benefits as transitional and developing nations expand their economies and open their markets. Economic growth that reduces poverty and provides opportunity can further regional stability and complements the advance of democracy and rule of law. Sustainable development also ameliorates global problems such as high population growth, the spread of infectious diseases, and environmental degradation.

The Department seeks this goal primarily through promoting the movement away from centrally controlled economies to market-based economies and by helping to make free markets work in developing nations. This is achieved by pursuing sound macroeconomic policies, promotion of private sector trade and investment, and financial market reforms in developing and transitional countries. The Department assists developing economies through coordination of efforts with donor nations, international financial institutions and other multilateral organizations.

Strong economies contribute to regional stability and democracy, while paving the way for more open markets for U.S. exports. Working with international financial institutions and other U.S. agencies such as Treasury, EXIM, and Commerce, the Department of State promotes policy reforms that lead to open markets and pluralistic societies in developing and transition economies.   This year we have put particular emphasis on sound domestic policies and good governance as key conditions for development and growth as we have planned for two important international meetings, the Financing for Development Conference and the World Summit on Sustainable Development, to be held in 2002.  In response to the events triggered by the terrorist attacks of September 11, the United States took the lead to initiate a comprehensive, long-term international reconstruction effort for Afghanistan.   

Supported Development Banks

The Department works closely with multilateral and regional development banks to promote growth in developing economies. Adequate funding for these institutions is crucial to U.S. international economic and political interests, including in Afghanistan, where they will play a key role in the international reconstruction effort.  

Supported Eastern Europe

The Support for Eastern European Democracy (SEED) program assists countries in the region to continue their successful transition from communism to market democracies. The United States is extensively engaged in working with SEED countries to undertake the reforms necessary to qualify for graduation.

Supported Africa and the Caribbean

During 2001 we have worked to continue to implement the African Growth and Opportunity Act (AGOA) and enhancements to the Caribbean Basin Initiative (CBI) both of which foster sustainable development in their regions by increasing trade with the United States.  


National Interest

Economic Prosperity

Performance Goal #

ED-01

Strategic Goal

Promote broad-based growth in developing and transitional economies.

Outcome Desired

Significant advances in reducing global poverty over the next 5 to 10 years in line with the international development targets; adoption of market-based economies by former Communist countries; and integration of these and other developing economies into world economic systems such as the WTO.

Performance Goal

Initiating the global debt reduction program for all eligible Heavily Indebted Poor Countries (HIPC) who qualify with macroeconomic reforms and effective poverty reduction strategies before the end of FY '02, while integrating the former Communist countries into the international economic institutions and making them eligible for assistance from international financial institutions.

FY '01 RESULTS AS OF 9/30/01

         Goal partially achieved.  A cyclical slowdown in the United States and other major economies, exacerbated by the September 11th attacks, dampened prospects for growth and development.  IMF has revised downward its 2001 growth estimate to 2.4%.   

         Maintain strategy to take advantage of economic recovery expected in 2002 and the opportunities resulting from the 2001 WTO round in Doha.  IMF sees "good reasons" to expect recovery in 2002.

         No program evaluations completed; none planned in FY '02.

         We expect to advance U.S. growth and development goals via two summit-level meetings in 2002, the Financing for Development Conference, and World Summit on Sustainable Development.

         Afghanistan reconstruction will focus significant effort and resources in 2002 and beyond.

         Interagency coordination is adequate.

         Customers and stakeholders can expect a return to faster world economic growth; growing demands for development assistance from states neighboring Afghanistan; and progress on recognizing domestic action as a key component of growth and development. 


Performance Indicator

FY '99 Baseline
FY '00 Actual
FY '01 Target
FY '01 Actual

Average developing country GDP growth rate

Average transition country GDP growth rate

Reduction of world population living in abject poverty

Number of countries receiving HIPC debt relief

3.5% for CY

0.8% for CY

1.2 billion people

4 countries

4.8% for CY

2.6% for CY

1% reduction

10 countries in total

4.4% for CY

3.9% for CY

1-2% reduction

22 countries in total

Not available at the time the report was printed.

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Verification

Source:  World Bank:  IMF

Storage:  World Economic Outlook Report

Complementary U.S. Government Activities (Non-Department of State)

Treasury Department, Department of Commerce, Export-Import Bank, OPIC, U.S. Trade Representative, U.S. Customs Service

Lead Agency

Department of State/EB

Partners

U.S. Agency for International Development, IMF, World Bank, Regional Development Banks, UNDP, ILO, WTO, OECD, UNCTAD, UNICEF, FAO, G-8



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