Sachs wants to make HIID the world's No. 1 adviser on development

By Ken Gewertz

Gazette Staff

Jeffrey Sachs became director of the Harvard Institute for International Development (HIID) on July 1, 1995. The choice was an inspired one. To say that Sachs is well qualified for the position would be an understatement.

Sachs has worked on economic reform throughout the world, specializing in designing programs of revolutionary change to aid governments mired in inflation and debt. As an adviser to the president of Bolivia from 1986 to 1990, he helped design and implement a program that reduced Bolivia's annual inflation rate from 40,000 to 10 percent. In 1989 he advised Poland's Solidarity Movement, and in 1990-91 he helped that country make a transition from Communism to a free market economy. From 1991 to 1994, he led a team of economists who advised Russian President Boris Yeltsin on economic reform issues. He has also advised the governments of Estonia and Slovenia.

These and other activities prompted Time to call him "the world's best known economist." He has written, co-written, and edited many books, including: Macroeconomics in the World Economy, Economics of Worldwide Stagflation, Peru's Path to Recovery, Poland's Jump to the Market Economy, and volume one of The Transition in Eastern Europe.

Sachs was born in Detroit in 1954. He received his bachelor's degree summa cum laude from Harvard in 1976, and his master's and doctoral degrees from Harvard in 1978 and 1980, respectively. He joined the Harvard faculty in 1980 and is currently the Galen L. Stone Professor of International Trade.

The following interview was conducted by Ken Gewertz, staff writer for the Gazette.

What are your goals for HIID?

I hope that HIID will be the world's center for development thinking. And given Harvard's resources and given this institution's traditions and activities all over the world, I think we are the best placed of any academic center in the world to provide a comprehensive view of development problems and to help think through those problems.

How are you building toward that goal?

I put research first and most important because without being at the frontier of the issues, it's hard to maintain leadership either in teaching or advising. So first and foremost, we're trying to build up our research capacities so that we're covering the main issues with the greatest depth and sophistication. There's building to do as there is in any institution, but we already have a tremendous base, and I think there's also been a great deal of progress.

How close do you think HIID is to achieving that preeminent position?

Well, the great strength of HIID is a long-standing involvement all over the world in real development issues and a wonderful reputation that goes along with that. I've been traveling extensively since becoming director, and everywhere I go HIID is renowned and respected, and this gives us the ability to attract leading scholars, to get involved in important research projects, and to win interesting contracts for advisory work. We're swamped with work, which is a pleasure. What I think is most important for the future is making HIID a much more integral part of the University than it has been. It's been a very active institute, and of course it's had connections with the University. But it really hasn't played the role it should play as the integrative institution that links together the seven faculties of the University that constitute this place -- the Business School, the Ed School, the School of Public Health, the Medical School, the Law School, the Faculty of Arts and Sciences, and the Kennedy School. I see this place as being an effective crossroads for leading scholars and scholar-practitioners from all of these faculties who understand that almost any development issue cuts across normal faculty lines.

Can you give some examples of projects that have started since you've become director?

On a research level, we're doing a major study of the interaction of legal development and economic development in Asia, commissioned by the Asian Development Bank. We have interdisciplinary teams in six Asian countries actively at work, and we're looking at a very broad and important range of issues: how has legal development occurred in Asia in the last 30 years? How has it related to the very rapid growth of the region? How has it related to the historical traditions in the particular countries? Does law work hand in hand with economic development? Does it lag or does it lead the process? Do laws easily get transplanted from model countries to other countries looking to upgrade legal systems? The project not only involves the Law School and the Economics Department, but we're drawing on East Asian specialists from around the University.

The Asian Development Bank has also commissioned us to produce a study involving a team of more than 30 researchers on the general question of Asia's economic future. The results will appear as a volume in celebration of the Asian Development Bank's 30th anniversary, which will be celebrated in Japan in 1997. David Bloom, the deputy director of HIID, and I are leading this team, which will be looking at a wide range of issues: environmental degradation, demographic transitions, population dynamics, health dynamics, economic growth, poverty issues. We have faculty from the School of Public Health, and the Economics Department, as well as specialists in sociology, education, and other disciplines working on this project.

HIID is known for advising developing countries on issues like agriculture, education, finance, public health, and so on. Will there be any changes in this area?

Advisory work is a core undertaking of HIID. In fact, it's the reason HIID was established in the first place. But advising is important not only in its own right but also in terms of intellectual development. The theory of HIID is that you can't really understand development conceptually without being involved deeply in the development process itself, and in the formulation of development policy. So advising is actually an input to intellectual thought as much as intellectual thought is an input into advising. Advising is not something one does merely for its possible contribution to solving problems, although of course that's very important, but it's also something you do to understand better what these issues really involve, testing the theories and getting so deeply involved that one understands the problems in a much more solid way, more deeply than you can from the armchair.

What are some of HIID's new advising projects?

We are working with the leadership of Ukraine right now at the very highest levels of the government to help fashion the next steps of market reform in that country. We're having an ongoing series of meetings with the leadership of the country to really think through a very dramatic and dynamic strategy to make a breakthrough in market reform.

We've also been commissioned by the seven countries of Central America to work on a major study with INCAE, a university that has its headquarters in San Jose, Costa Rica, with campuses all over Central America. The study is a major three-year effort to think through the economic future of Central America. My colleague Theodore Panayotou, who is an environmental specialist, and I have met repeatedly with the leaders of the seven Central American countries to talk about this project. We're undertaking this project with Michael Porter of the Business School, so it's another case of cross-disciplinary work. In fact, Michael was the originator of one major piece of this work and has made great progress on it. So now we have a very broad-based study under way, which again is trying to integrate straight economic analysis with business analysis, environmental analysis, and political analysis, to think through the core strategic development issues for Central America's future, not just growth, but the rule of law, democratization, business development, and environmental sustainability.

We also have work going on all over sub-Saharan Africa, which has traditionally been a major concern of ours. It's the poorest region of the world, and one which has seen almost no economic growth for about 20 years. We're working with a large number of governments and research institutes in Africa to try to think through new strategies for growth. Currently, we're working with the governments of Mozambique, Malawi, Zambia, South Africa, Burkina Faso, Ethiopia, and Kenya, and we're in active communication and discussion with many other governments as well. So we're really trying to develop a comprehensive and deeper view of the development issues and trying to think very hard about why the traditional IMF and World Bank programs haven't worked yet to get these countries onto a growth path, and what might be done about it. In early October, we had 14 African finance ministers here for a conference on development issues. It sparked wonderfully frank and open discussions on issues of mutual interest, and we're planning to continue that.

We have another project on environmental issues in Central and Eastern Europe and the former Soviet Union including the Central Asian states. We have a large team in Cambridge working on these issues, and we have teams in Moscow, Poland, Hungary, Romania, and other countries. The project is supported by the U.S. Agency for International Development. We started this fall with a seminar here at Harvard that includes faculty from some of the science departments and from the School of Public Health to talk about environmental problems in Russia.

In addition, we run year-round workshops all over the world on specific areas, macro economics, education policy, environmental management, tax policy, public investment strategy, and so on. We're running a major school on market economics in Vietnam. We're helping to set up new advanced programs in Bolivia, Singapore, and in other parts of the world.

We're involved in more than 80 countries right now, and that means that we now have expertise in almost any country in the world, usually some resident experience, but almost always some intensive knowledge of the area. So if we're working in Indonesia, for example, we also know pretty deeply what's going on in Vietnam or Thailand or Malaysia or Korea, where similar problems have already been addressed. So if questions come to us about nontraditional exports or the electronic sector or export processing zones or tax policy, this institute has the capacity to say, "Well, here's how it's been done in seven other cases. It seemed to work well in three, did not work well in four, these are the lessons that we've drawn from it." That's the kind of scope and depth I want to make sure that we have, and on an even broader set of issues and an even deeper and richer field experience.

At HIID you're working at the highest levels with presidents and finance ministers, but you're also working with rural villagers, people on the other end of the socio-economic spectrum. Is there any conflict between these two approaches?

The tradition here has been mostly advising at the government level, although the work has important effects at the village level as well. For example, we were very helpful in working with the Indonesian government to set up the most successful large-scale microfinance program in the world. But the focus of the work has been primarily with the main rural bank in Indonesia to help them figure out how to design and manage a microfinance program on a large scale -- a program that helps millions of people in small villages, towns, and rural areas. And one of the reasons we have remarkable expertise in this area is that we have anthropologists, finance specialists, and economists spending a lot of time in villages and observing how the process works on a grassroots level. As a result of the expertise we've gained in Indonesia, the Indian Central Bank has asked us to advise them on microfinance in India. And we're also working at a policy level with the World Bank, which is taking a new and very active interest in microfinance. So I'd say that the tradition has been to study what happens in the villages and then take those lessons and try to apply them at the national level. And now the world environment is changing so fast that countries really need some expertise, some comparative analysis to be able to understand how they fit into what has become a global economy. We believe that the most effective way to address this need is to have people working all over the world at the local level, trying to understand people's behavior and then translating that, when possible, into general lessons for development.