The interests of the developed world are closely associated with the success of the developing world, asserted Harvard President Lawrence H. Summers as this year’s Edward L. Godkin lecturer. Summers drew a standing-room-only crowd at Monday’s forum (April 7), where he delivered an almost-hour-long talk on “Globalization and American Interests.”
“From a security, moral, and economic perspective,” said Summers, who served as treasury secretary during the Clinton Administration, “the most important determinant of our success will be what happens in the developing world.”
Stability in the developing world, however, will only be realized through economic growth, he said. “While growth may not in every case be sufficient to produce improvement in human development, the overwhelming preponderance of evidence is that increases in an economy’s growth rate are associated with very substantial improvement in almost all of the things we care about.”
Summers emphasized that the rate at which countries grow is substantially determined by their ability to integrate with the global economy, their capacity to maintain sustainable government finances, and their ability to put in place an institutional environment in which contracts can be enforced and property rights can be established.
“I would challenge anyone to identify a country that has done all three of these things and has not grown at a substantial rate,” said Summers. “And I would challenge anyone to identify a country, for any significant period, that has been held back either by excessive trade links with the global economy, overly sound public finances, or property rights and contracts that are excessively enforceable.”
For some nations, central to the task of development will be to catch up to the developed world by establishing their own capacities, he said. “The answer lies overwhelmingly in their own policy choices,” said Summers.
Whether or not these countries grow depends upon the policies they make, concluded Summers. He noted that it would be nice to think that small changes in the policies of the developed world will make a difference. However, he added, such is not the case.
“Our success as a country,” he said, “will depend upon our interaction with the developing world. We must approach these challenges in a tough, neutral way.”