President Barack Obama will travel to Mexico and then to the 5th Summit of the Americas in Port of Spain, Trinidad, beginning on April 16th. He would do well to remember Ronald Reagan's seemingly obvious but fundamentally important comment on returning from his first trip to South America as President: "These Latin American countries are all very different from each other."

It's crucially important for the new U.S. government at its senior levels to take seriously the oft-repeated advice of regional experts to disaggregate "Latin America" -- to understand its complex diversity. Emphasizing this is now more important than ever.

During the past 20 years, under administrations of both parties, Washington has tended to underline the supposed convergence within the region: toward democratic governance, market-oriented economies, regional economic integration and policies of macroeconomic and fiscal balance. These convergent trends were real, though never universal, and they have been significant, though never as fully consolidated as Washington liked to claim.

Key differences persist among the many countries of Latin America and the Caribbean. Some of the differences are growing, not shrinking. And U.S. policy should focus on how different countries of the Americas cluster along five separate dimensions.

The first is the degree of demographic and economic interdependence with the United States: highest and still growing in Mexico, Central America and the Caribbean: lowest and likely to remain low in South America, and especially in the Southern Cone. Countries such as Mexico, El Salvador, Jamaica, the Dominican Republic and others, which have significant fractions of their population living and working in the United States, pose "intermestic" issues -- combining international and domestic facets -- from immigration to medical insurance, pensions to drivers licenses, remittances to youth gangs.

A second dimension is the extent to which the countries have opened their economies to international competition: by far most fully in Chile; a great deal in Brazil, Colombia, Mexico, Peru, Panama and some Central American nations; and less so in other countries. A key challenge in the current world economic crisis will be to shore up the trend toward open economies by resisting domestic pressure for protectionism in our own case.

A third distinguishing dimension is the relative advance of democratic governance (checks and balances, accountability, and the rule of law): historically strong in Chile, Uruguay, and Costa Rica; increasingly, if quite unevenly, robust in Brazil; gaining ground in Mexico over the past twenty years but with ups and downs, hard struggle and major recent setbacks; arguably declining, or at least at risk, in Argentina; under great strain in Venezuela, most of the Andean nations, much of Central America and Paraguay; and exceptionally weak in Haiti. The Obama administration can make an important positive difference on these issues by respecting the rule of law at home and internationally, and by nurturing democratic governance abroad with patience, restraint and skill, mainly through nongovernmental organizations.

A fourth dimension is the relative effectiveness of civic and political institutions beyond the state (the press, trade unions, religious organizations, and nongovernmental entities): strongest in Chile, Uruguay, Costa Rica, the Dominican Republic and perhaps Argentina; growing but still severely challenged in Brazil and Mexico; slowly regaining stature but still quite problematic in Colombia; weak in Peru, Bolivia, Ecuador, Paraguay, Venezuela, most of Central America and Haiti. Washington can help strengthen nongovernmental institutions, but it should do so as much as possible through multilateral organizations, and in strict accordance with each country's laws.

Finally, countries differ regarding the extent to which traditionally excluded populations are incorporated: this includes more than 30 million marginalized, disadvantaged, and increasingly politically mobilized indigenous people -- especially in Bolivia, Ecuador, Guatemala, the Peruvian highlands, and southern Mexico -- and Afro-Latin Americans in countries where they are still the object of racial discrimination. The very fact of President Obama's rise to the presidency has probably done more to affect this issue than years of more direct policies, but enhanced U.S. support for poverty alleviation targeted at excluded populations would also be helpful.

Hemisphere-wide summit conferences like the meeting in Trinidad have their place as a way of building communication and rapport, and they offer mutually convenient photo opportunities. But major progress on substantive issues can only be achieved with clusters of countries with comparable or complementary issues and concerns. Recognizing this reality should be the starting point for reframing U.S. policies in the Americas.

      

       

       

President Barack Obama’s visit to the George Herbert Walker Bush Library in College Station, Texas this week highlights the crucial role of America’s volunteer traditions in addressing critical issues at home and abroad. The two presidents will commemorate the 20^th anniversary of the Points of Light movement, championed by the 41^st president, and advance the United We Serve initiative of President Obama.

Michelle Nunn, CEO of Points of Light Institute and daughter of former Democratic Senator Sam Nunn noted in Huffington Post that “demand, idealism and presidential impact are leading American volunteerism to its…most important stage – the movement of service to a central role in our nation’s priorities.”

The bipartisan nature of America’s vibrant service movement is also reflected in the landmark Kennedy-Hatch Serve America Act signed into law by President Obama earlier this year and pending Global Service Fellowship legislation introduced by Senators Feingold and Voinovich.

In a recent Brookings Global Views policy brief, “International Volunteer Service: A Smart Way to Build Bridges,” Lex Rieffel, Kevin Quigley and I articulate policy options for the new administration to advance President Obama’s call for engaging service on the global level. President Obama’s speech in Cairo on June 4 called for turning “dialogue into interfaith service, so bridges between peoples lead to action – whether it is combating Malaria in Africa, or providing relief for a natural disaster.”

Following the president’s Cairo speech, the administration assembled a laudable Global Engagement Initiative across the administration to implement and track results in scaling up initiatives of service and interfaith action. The potency of coupling American service with foreign assistance was documented in Indonesia and Bangladesh through successive Terror Free Tomorrow polls showing increased favorable ratings for our nation and decreased support for terrorism.

The Building Bridges Coalition has organized an impressive array of over 210 organizations dedicated to expanding American volunteerism internationally, as part of a new “Service World” policy coalition gearing up for the 50^th anniversary of the Peace Corps. This new “international service 2.0” incorporates NGOs and faith-based groups, universities and corporations as new development actors advocating multilateral service and achieving impacts on issues ranging from Malaria to peacebuilding and climate change.

A Foundation Strategy Group report commissioned by Brookings and Pfizer, “Volunteering for Impact” assessed best practices in the increasing array of international corporations engaging volunteers such as IBM’s Corporate Service Corps, GE Volunteers and Pfizer’s Global Health Fellows.

Around the globe, initiatives such as Cross Cultural Solutions and an emerging global service and peacebuilding alliance in hot spots from Kenya to Mindanao are giving substance to the president’s call in Cairo. The collaboration of Presidents Clinton and G.H.W. Bush on humanitarian assistance after the tsunami, and this week’s service dedication with the Obama administration and former President Bush, bode well for the bipartisan extension of our nation’s noble voluntary service traditions in the international context where they are urgently needed.

      

Over 200 delegates from 50 countries gather this week in Washington for the Presidential Summit on Entrepreneurship. The summit hosts entrepreneurs to teach and learn innovative ways to strengthen professional and social relationships between the U.S. and the Islamic world. During his first major address to the Muslim world, delivered in Cairo last June, President Obama pledged to increase engagement through entrepreneurship, exchange programs and multilateral service initiatives.

Volunteer-led development initiatives have begun to act on Obama’s call for citizen diplomacy and private-sector engagement. The Initiative on International Volunteering and Service at Brookings and the Building Bridges Coalition have fueled an emerging legislative initiative that calls for increasing the role of international volunteers in the U.S. diplomatic agenda and development programs. This Service World Initiative has drawn from Brookings research outlining options to advance the president’s call for multilateral service.

As seen last year, for the first time in history, the majority of the world’s population lived in urban areas. And this trend is accelerating at an unprecedented rate. By 2050, urban dwellers are expected to make up about 70 percent of Earth’s total population. These informed 21st century urban citizens demand 24-7 connectivity, smart electric grids, efficient transportation networks, safe food and water, and transparent social services. All these demands place a huge strain on existing city infrastructures and the global environment. Most affected by this rapid urban boom, are the emerging markets. So how do we tackle this development dilemma?

One way is for highly-skilled experts, from a range of countries, to volunteer their time in emerging markets to help improve economic development, government services and stimulate job growth. This type of pro-bono program has many benefits. It benefits the urban areas in these emerging markets by leveraging intelligence, connecting systems and providing near-term impact on critical issues such as transportation, water, food safety, education and healthcare. It benefits the expert volunteers by fostering their teamwork skills, providing a cultural learning experience, and broadening their expertise in emerging markets.

IBM, which chairs the Building Bridges Coalition’s corporate sector, hosts a range of volunteer-led global entrepreneurship programs that improve economic stability for small- and medium-sized businesses, increase technology in emerging markets and open doors for the next generation of business and social leaders. This program connects high-talent employees with growing urban centers around the world and fosters the type of leadership to help IBM in the 21st century.

Recently, IBM sent a group of experts to Ho Chi Minh City as part of its Corporate Service Corps, a business version of the Peace Corps. This was the first Corporate Service Corps mission to be made up of executives, and the first to help a city in an emerging market analyze its challenges holistically and produce a plan to manage them. As a result, the city has now adopted a 10-year redevelopment plan that includes seven pilot programs in areas ranging from transportation to food safety. IBM will also help the city set up academic programs to prepare young Vietnamese to launch careers in technology services. IBM will continue this program throughout the next couple years to evolve the next set of global business and cultural hubs utilizing the volunteer hours of some of its most seasoned experts.

The Presidential Summit this week will further Obama’s call to “turn dialogue into interfaith service, so bridges between peoples lead to action.” The policy initiative of the Building Bridges Coalition, coupled with entrepreneurial innovations such as IBMs, can foster greater prosperity and service between the U.S. and our global partners.

      

High unemployment, the Gulf oil spill, and mounting fiscal worries clouded our July 4th celebrations. Yet, one patriotic highlight in President Obama's first year was bipartisan support of the Serve America Act, which expanded opportunities for Americans of all ages to meet urgent domestic challenges through community and national service. In the process, Americans who otherwise would have been unemployed are engaging in productive work, at low cost to taxpayers, to meet problems like the high school dropout epidemic. Similar efforts can expand volunteer service abroad.

As President Obama made clear in his first major policy speech to the international community in Cairo, Egypt, the world must unleash its collective imagination through social innovators, entrepreneurs and citizen diplomats to contribute to global development, respond to natural disasters, and initiate interfaith action to tackle preventable diseases like malaria. The moment is now.

Fifty years after John F. Kennedy's call for a Peace Corps, we might reconsider our obligations to meet needs around the world. President Kennedy said that the Peace Corps would be serious when 100,000 Americans were serving abroad each year. Although the Peace Corps is America's flagship international service program, today less than 8,000 volunteers are spread across 77 countries. Since 1961, America has sent and returned nearly 200,000 volunteers, a number significantly less than the millions Kennedy envisioned by his Peace Corps' 50th year. Had the Peace Corps grown at the rate Kennedy envisioned, the course of our country's foreign policy, diplomatic strategy and global awareness over the past 50 years would be very different.

Last week, ServiceWorld, an international service coalition of more than 300 non-profits, colleges, corporations and faith-based institutions, released a bold plan to meet President Kennedy's goal of mobilizing 100,000 Americans every year - and one million over a decade - to serve abroad. The proposed Sargent Shriver International Service Act calls for doubling Peace Corps to 15,000 by 2015, lowering costs per volunteer, and forging partnerships with the hundreds of non-profits that have emerged since its creation. Doubling of the Peace Corps is a goal that both Presidents George W. Bush and Barack Obama have embraced.

Volunteers for Prosperity will tap 75,000 skilled Americans for flexible term assignments to work on international challenges Congress and many Presidents have made priorities, such as HIV/AIDS, malaria, and clean water. Global Service Fellows will enable Members of Congress to nominate top talent from their districts and states, as they do for the military academies today, to serve for up to one year abroad. Together with the Peace Corps, these efforts will meet John Kennedy's goal of mobilizing 100,000 Americans to serve abroad each year.

The Service World plan focuses on multi-lateral partnerships and exchanges so Americans serve side-by-side with people from other countries, including in the United States. Under the plan, both skilled and non-skilled volunteers of all classes and ages will serve abroad for both long- and short-term assignments and veterans have specific opportunities to utilize their many skills in a civilian capacity. We believe an inclusive and mobile model of volunteering will contribute to the development of a new generation of global leaders, provide skills for U.S. citizens to compete in a global economy, increase international awareness, strengthen development, and improve the image of America abroad.

Volunteer service by people of all nations should become a common strategy in meeting pressing challenges in education, health, the environment, agriculture and more. By having national policies that engage more Americans in international service at every stage of life, we will be sharing our most valuable assets - the skills, talents and perspectives of our people - to make a significant difference in communities and nations throughout the world.

      

In late October at the United Nations Economic and Social Commission for Asia and the Pacific (UN ESCAP) headquarters in Bangkok, a multi-stakeholder coalition was launched to promote the role of youth and civil society in advancing post-2015 United Nations Sustainable Development Goals (SDGs). The youth initiatives, fostering regional integration and youth service impact in the Association of Southeast Asian Nations (ASEAN) and counterpart regions of Northeast and South Asia, will be furthered through a new Asia-Pacific Peace Service Alliance. The alliance is comprised of youth leaders, foundations, civil society entities, multilateral partners and U.N. agencies. Together, their initiatives illustrate the potential of youth and multi-stakeholder coalitions to scale impacts to meet SDG development targets through youth service and social media campaigns, and partnerships with multilateral agencies, nongovernmental organizations, corporations and research institutes.

The “Asia-Pacific Forum on Youth Volunteerism to Promote Participation in Development and Peace” at UN ESCAP featured a new joint partnership of the U.S. Peace Corps and the Korea International Cooperation Agency (KOICA) as well as USAID support for the ASEAN Youth Volunteering Program. With key leadership from ASEAN youth entitles, sponsor FK Norway, Youth Corps Singapore and Peace Corps’ innovative program in Thailand, the forum also furthered President Obama’s goal of Americans serving “side by side” with other nations’ volunteers. The multi-stakeholder Asia-Pacific alliance will be powered by creative youth action and a broad array of private and public partners from Thailand, Malaysia, Myanmar, Indonesia, Singapore, the Philippines, Australia, Korea, China, Mongolia, Japan, India, Nepal, Pakistan, the U.S. and other nations.

During the event, Dr. Shamshad Akhtar, ESCAP executive secretary, pointed out that “tapping youth potential is critical to shape our shared destiny, as they are a source of new ideas, talent and inspiration. For ESCAP and the United Nations, a dynamic youth agenda is vital to ensure the success of post-2015 sustainable development.”

Dr. Surin Pitsuwan, former ASEAN secretary-general, called for a new Asia-wide multilateralism engaging youth and civil society.  In his remarks, he drew from his experience in mobilizing Asian relief and recovery efforts after Cyclone Nargis devastated the delta region of Myanmar in May 2008. Surin, honorary Alliance chairman and this year’s recipient of the Harris Wofford Global Citizenship Award, also noted the necessity of a “spiritual evolution” to a common sense of well-being to redress the “present course of possible extinction” caused by global conflicts and climate challenges. He summoned Asia-Pacific youth, representing 60 percent of the world’s young population, to “be the change you want to see” and to “commit our youth to a useful cause for humanity.”

The potential for similar upscaled service efforts in Africa, weaving regional integration and youth volunteering impact, has been assessed in Brookings research and policy recommendations being implemented in the Common Market of Eastern and Southern Africa (COMESA). Recommendations, many of which COMESA and ASEAN are undertaking, include enabling youth entrepreneurship and service contributions to livelihoods in regional economic integration schemes, and commissioning third-party support for impact evidence research.

A good example of successful voluntary service contributions from which regional economic communities like ASEAN can learn a lot is the current Omnimed pilot research intervention in Uganda. In eastern Ugandan villages, 1,200 village health workers supported by volunteer medical doctors, Uganda’s Health Ministry, Peace Corps volunteers and Global Peace Women are addressing lifesaving maternal and child health outcomes furthering UNICEF’s campaign on “integrated health” addressing malaria, diarrheal disease and indoor cooking pollution. The effort has included construction of 15 secure water sources and 1,200 clean cook stoves along with randomized controlled trials.

Last week, the young leaders from more than 40 nations produced a “Bangkok Statement” outlining their policy guidance and practical steps to guide volunteering work plans for the new Asia-Pacific alliance. Youth service initiatives undertaken in “collective impact” clusters will focus on the environment (including clean water and solar villages), health service, entrepreneurship, youth roles in disaster preparedness and positive peace. The forum was co-convened by ESCAP, UNESCO, the Global Peace Foundation and the Global Young Leaders Academy.

       

       

       

       

       

       

       

In this podcast, congressional expert Sarah Binder explains why the Senate filibuster is a historical mistake. She talks about her research on Congress’s relationship with the Federal Reserve and addresses whether Congress is more polarized today than it has been in the past. Binder, a senior fellow in Governance Studies, is also a professor of political science at George Washington University and contributor to the Monkey Cage blog.

 

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Show notes:

• The Federal Reserve: Balancing Multiple Mandates (testimony by Alice Rivlin)
• Boom! What the Senate Will Be Like When the Nuclear Dust Settles
• Beyond the Horse Race to Lead the Fed
• Droning on: Thoughts on the Rand Paul “Talking Filibuster”
• Advice and Dissent: The Struggle to Shape the Federal Judiciary
• The History of the Filibuster

* In the image, Senator Henry Clay speaks about the Compromise of 1850 in the Old Senate Chamber. Daniel Webster is seated to the left of Clay and John C. Calhoun to the left of the Speaker's chair. (engraving by Robert Whitechurch, ca. 1880, Library of Congress)

       

       

       

       

       

       

      

Editors’ Note: We need to do better with the long-term instruments of counterterrorism, write Raymond Odierno and Michael O’Hanlon. That includes efforts within our own societies to promote social cohesion. This article originally appeared on USA Today.

In the aftermath of the Brussels tragedy, many good ideas are being floated to improve defenses against terrorists who are poised to strike. Belgium needs more resources for police work, including staking out suspects. Europe needs terrorist watch lists that are better automated and integrated. Police forces and national intelligence agencies need to work together more effectively, readjusting the point at which traditional police work ends and counterterrorism raids begin. We need to use technology such as closed-circuit TV, as well as simpler but time-tested methods like bomb-smelling dogs, more effectively in unhardened public places like subway stops and the external lobbies of airports.

The above are immediate and short-term measures. They are crucial. They are also insufficient. We need to continue to go after Islamic State's finances, too, leading a worldwide effort to restrict its sources of revenue and ability to store and move funds around. Beyond these actions, we need to do better with the long-term instruments of counterterrorism. These include the use of social media and other counter-messaging against the so-called caliphate. But they also include efforts within our own societies and especially those in Europe to promote social cohesion. Within many countries the inability to develop programs encouraging assimilation of immigrants, and of the home-born disaffected, has led to substantial pockets of disenfranchised citizens, a large majority being Muslim.

At least on issues concerning Muslim-majority communities, the United States can help point the way. We are fortunate, largely to the credit of our nation's Muslims who join our society in full and pursue the American dream, to have relatively few problems with Islamist extremism. Of course, there are exceptions, but on the whole, Muslim-American communities are our single greatest domestic allies in the struggle against extremism at home. They help provide information on would-be terrorists in their midst; they do not typically shelter, aid or condone the thinking of such extremists. Most of all, acting as loyal citizens, they provide role models and hopeful visions to their young, reducing the odds that the 20-somethings who seem to wind up the main culprits in most attacks abroad will feel the same urge within the United States. Because our own terror watch lists have gotten better since 9/11, and because of the hard work of border and immigration agencies, we are also often able to limit the movements of suspected terrorists to the United States from abroad.

None of this is to sound complacent. More than 70 individuals were arrested on American soil last year on suspicion of interest in supporting Islamic State or otherwise conducting extremist activity, and we suffered the San Bernardino tragedy.

Beyond matters of culture and assimilation, specific programs here contribute as well. In Montgomery County, Maryland, a coalition of faith leaders, school officials and law enforcement officers collaborate to try to identify and help would-be radicals before they turn to dangerous ways. In Ohio, fire departments try to reach into difficult neighborhoods and recruit workers. They recognize that their role in society can be less polarizing to some disaffected than would, say, certain types of police outreach, but that by extending the presence of the government into places where it is not always welcome, they can tamp down the temptations of some to turn to violence.

Many places in Britain are doing the same thing. Britain is a sort of bridge to Europe on this issue, like on many others—not having the apparent problems of say Molenbeek, the enclave in Brussels from which recent attackers have originated, but also having more concentrations of recent immigrants from the Middle East than does the United States. Aware of this situation, British authorities also try to extend the state's connections with shaky neighborhoods in ways that seek to engender trust in the state and better community rapport. Sometimes this can rely on police, who in the United Kingdom are usually unarmed. However, at other times, less traditional instruments, or less potentially imposing symbols of state authority, can be better. Again, fire departments come to mind, as do work programs that foster a sense of community involvement and cohesion (while also providing a paycheck). Sometimes armies can help, depending on their roles and reputations in given societies. Any of these can improve the government's image in key neighborhoods, while also helping create the kinds of communications between community leaders and authorities that produce intelligence leads when things start to go off the tracks.

U.S. presidential candidates are not talking much about these kinds of issues. But efforts to build social cohesion are not at odds with what some of them are advocating in response to Brussels. Greater police presence in jurisdictions like Molenbeek, intelligence surges and reforms, and also stronger actions against Islamic State in the Middle East and beyond are needed, to be sure. But such measures are not, in themselves, adequate.

Building social cohesion is difficult, of course, and often the strides forward are slow to come and hard to measure. It usually must happen at the city level. It is usually manpower-intensive work. It is always painstaking. Sometimes, of course, it simply fails. But without a reinvigorated emphasis on building social cohesion, in which cities and other jurisdictions learn from each other and share best practices to tie their communities more strongly together, we will not succeed in this crucial challenge of our times.

      

Event Information

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Having emerged from the largest municipal bankruptcy in American history, Detroit is now on surer financial footing and experiencing an economic resurgence. Due much in part to an unprecedented collaboration among philanthropy, business, and government, Detroit is benefiting from private and public sector investments downtown and across its neighborhoods. Today, there are revived neighborhoods, new businesses, a downtown innovation district, the M-1 RAIL transit corridor, and a spirit of creativity and entrepreneurialism.

On Tuesday, April 26, the Metropolitan Policy Program at the Brookings Institution hosted an event about Detroit’s rebound. Brookings Vice President of Metropolitan Policy Amy Liu opened the program and introduced Kresge Foundation President Rip Rapson, who presented findings from The Detroit Reinvestment Index, forthcoming research on what national business leaders think about the city. Rapson then moderated a panel of experts who discussed accomplishments to date and the work yet to come in furthering Detroit’s revitalization.

Join the conversation on Twitter at #DetroitResurgence

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Photos

Amy Liu opens the program

Rip Rapson gives remarks

Sandy Baruah, President and Chief Executive Officer, Detroit Regional Chamber; Stephen Henderson, Editorial Page Editor, The Detroit Free Press; Quintin E. Primo III, Co-Founder, Chairman and Chief Executive Officer, Capri Investment Group, LLC ; Jennifer Vey, Fellow & Co-Director, Robert and Anne Bass Initiative on Innovation and Placemaking, The Brookings Institution

Video

• Welcome and Presentation
• Panel

Audio

• How philanthropy, business, and government sparked Detroit’s resurgence

      

Stephen was still a teenager on the north side of St. Louis when his dad, a police officer, was killed during a robbery in their neighborhood. Despite the trauma, Stephen later joined the police force to continue his dad’s legacy and commitment to safe and inclusive neighborhoods. But even before the fatal shooting of Michael Brown in Ferguson in 2014, Stephen (not his real name) yearned to right local wrongs through broader approaches. “The darkest forces weren’t necessarily the ones getting arrested,” he observed. “So I retired from the police force after 22 years, essentially to chase after a different type of perpetrator.” Wanting to focus on policies at multiple levels of government that “were causing the disparities that fueled increasing crime and violence in St. Louis,” Stephen pivoted to civil rights enforcement, tracking policy violations and innovations at a government agency in the St. Louis region.

I met Stephen in February while in St. Louis for a conference his agency organized on HUD’s recently strengthened Affirmatively Furthering Fair Housing (AFFH ) rule, which increases local accountability in promoting residential integration. He wasn’t a speaker at the event, but hearing his story reinforced the importance of combating the deeply entrenched and often invisible causes of segregation.

Recent events and new academic research, including landmark findings by Raj Chetty and colleagues testifying to the benefits of low-poverty neighborhoods for low-income kids, the updated AFFH rule, and the Supreme Court’s disparate impact decision upholding other tools to fight segregation have brought renewed attention to these challenges. Meanwhile, underlying these developments, poverty has failed to decline since the recession and, as recent Brookings research shows, has become more concentrated in neighborhoods of extreme poverty.

How can regional leaders and practitioners respond to these challenges? I was in St. Louis to discuss one part of the solution—advancing more mixed-income neighborhoods. In the Chicago region, our housing and community development-focused firm, BRicK Partners, is collaborating with the Chicago Metropolitan Agency for Planning (CMAP), the Illinois Housing Development Authority (IHDA), and 10 metropolitan Chicago public housing authorities, with support and leadership from HUD, to develop and operate the Regional Housing Initiative (RHI)

RHI is a small, systemic, and potentially scalable “work around” of a very specific set of programs and policies that contribute inadvertently to regional inequities. A flexible and regional pool of resources working across the many traditional public housing authority (PHA) and municipal jurisdictions in the Chicago region, RHI increases quality rental housing in neighborhoods with good jobs, schools, and transit access and provides more housing options to households on Housing Choice Voucher (HCV) waiting lists. Recognizing that the federal formulas allocating HCVs to each individual PHA are not responsive to population, employment, or poverty trends, RHI partners convert and pool a small portion of their HCVs to provide place-based operating subsidies in support of development activity that advances local and regional priorities. RHI supports both opportunity areas with strong markets and quality amenities as well as revitalization areas where public and private sector partners are planning and investing toward that end. In both cases, the bulk of RHI investments are in the suburbs, where the PHAs are smaller and the rental stock more limited. 

RHI has committed over 550 RHI subsidies to nearly 40 mixed-income and supportive housing developments across Chicagoland, supporting more than 2,200 total apartments, over half of which are in opportunity areas. The pooling and transferring of subsidies has allowed RHI to support proposals that local jurisdictions wouldn’t be able to undertake otherwise.

Although a number of innovative programs around the country provide assistance to households moving to opportunity areas, RHI is unique its focus on increasing the supply of housing in opportunity areas regionwide. Its approach is consistent with lessons learned from Brookings’ work on Confronting Suburban Poverty in America: With CMAP as a strong quarterback, RHI has addressed the shortage of rental housing in the suburbs by working across jurisdictions, developing shared priorities, metrics and selection criteria, and by working with IHDA and other stakeholders to leverage greater private sector investment.

This recipe for success is now being deployed in communities beyond Chicago. Baltimore is preparing to advertise for its first round of developer applicants under the leadership of the Baltimore Metropolitan Council, with regionwide PHAs, the State Housing Finance Agency, and a regional housing counselor lined up as supportive partners. In St. Louis, the regional planning and housing finance organizations both attended the February conference where I met Stephen, signaling the potential for greater collaboration for both these entities and the PHAs.

Like many housing advocates and professionals, my colleagues and I at BRicK Partners derive a lot of satisfaction from supporting communities like Baltimore and St. Louis and individuals like Stephen and his peers with replicable best practices. Given today’s political realities, we don’t expect major changes in the federal formulas and statutes behind some of the regional inequities, but “work arounds” such as RHI can still scale up. Nationwide, just a small percentage of HCVs have been converted for such flexible supply-side solutions, but there is reason to be hopeful that this will change. The Regional Mobility Demonstration proposed in the 2017 budget as well as federal public housing voucher legislation passed by the House of Representatives earlier this year are signs that there is real momentum to advance regional strategies that increase access to opportunity for low income residents and families. 

      

Ranking U.S. metro areas, or counties, or even countries, by some fixed metric is a straightforward and often useful way to start a deeper dive into a larger body of research. For example, the top 10 counties by share of taxpayers claiming EITC, or the top 10 metro areas by change in prosperity. But what if the phenomenon being measured is more complex, has interacting characteristics that make a top 10 list less useful?

In new research, Brookings Senior Fellow Alan Berube, along with his colleagues at the Metropolitan Policy Program, and John Irons of the Rockefeller Foundation, ask “What makes an economy inclusive?” Inclusive economies, they say, “expand opportunities for more broadly shared prosperity, especially for those facing the greatest barriers to advancing their well-being.” A new Rockefeller Foundation framework identifies five characteristics of inclusive economies: equity, participation, stability, sustainability, and growth.

A typical ranking approach would list the top 10 inclusive economies (or the bottom 10) based on some score derived from data. It turns out, however, that understanding the “trends and relationships that might reveal the ‘big picture’ of what makes an economy inclusive” doesn’t lend itself to typical ranking techniques, and instead requires looking at relationships among the characteristics to ascertain that “big picture.”

Take, for example, equity, defined as: “More opportunities are available to enable upward mobility for more people.” For this analysis, Brookings researchers used 16 discrete indicators—such as the Gini coefficient, median income of less-educated workers as a share of overall median income, and transportation costs as a share of income—to come up with an equity score for each of the 100 largest U.S. metro areas. (Likewise, each of the other four inclusive economy indicators are composites of many discrete indicators, for a total of about 100 across the five.) Looking at equity alone, the top 10 metro areas are:

1. Allentown, PA-NJ
2. Harrisburg, PA
3. Ogden, UT
4. Scranton, PA
5. Des Moines, IA
6. Salt Lake City, UT
7. Wichita, KS
8. Grand Rapids, MI
9. Pittsburgh, PA
10. Worcester, MA-CT

Top 10 lists can also be fashioned for the other four dimensions in the inclusive economies research, each showing a different mix of U.S. metro areas. For example, the top three metro areas in the growth characteristic are San Jose, CA; Houston, TX; and Austin, TX. For participation: Madison, WI; Harrisburg, PA; and Des Moines. Stability: Madison; Minneapolis, MN-WI; and Provo, UT. And, sustainability: Seattle; Boston; and Portland, OR-WA. In fact, 30 different metropolitan areas are present in the combination of the five inclusive top 10 lists, spanning the country from Oxnard, to Omaha, to Raleigh. The individual top 10 lists for each inclusive economy characteristic look like this:

Because these rankings each impart useful and distinctive information about metro economies, Brookings researchers next combined the data into an overall ranking of the 100 metro areas “based on their average rankings on individual indicators for each of the five inclusive economy characteristics.” Instead of generating a ranking from 1 to 100, the analysis produces a grid-like chart that shows how metro areas fare not only in terms of inclusiveness (top to bottom), but also along a left-to-right spectrum that demonstrates the trade-offs between growth and equity. Here’s a sample from the chart (visit and study the chart here; note that wealth is depicted but by itself is not part of the inclusive economy score):

One thing that stands out when considering this colorful chart against the disaggregated top 10 lists is how unrelated they seem to be. San Jose sits at the upper right position of the chart, suggesting that it ranks as one of the most inclusive metro economies, and yet it ranks only 51st on equity. By contrast, Allentown, PA—on the left of the second row—ranked first in equity, but lower on other measures. However, taken as a whole, both Allentown and San Jose are in the top 20 metro areas overall for inclusiveness. Detroit sits along the bottom row of the inclusiveness chart. Among the five characteristics, it posts its highest rank in growth (37th overall), with much lower ranks in the other categories, even though it ranks 29th for wealth. Las Vegas, NV, is one of the least wealthy metro areas (91st), but ranks 19th in terms of equity.

Berube and Irons point to what they call “a few important insights” about the chart and these data:

• Judged across all five characteristics, the “most” and “least” inclusive metro economies are geographically and economically diverse.
• More equitable metropolitan economies also exhibit higher levels of participation and stability. 
• Growth and equity vary independently across metropolitan areas. 
• Metro areas with similar performance across the five characteristics may not possess the same capacity to improve their performance.

For more detailed discussion, and the complete inclusive economies chart, see “Measuring ‘inclusive economies’ in metropolitan America,’ by John Irons and Alan Berube.

See also “A metro map of inclusive economies,” showing metro areas that are similar to others in these outcomes.

Finally, download detailed information on the composition of the 100 indicators used to measure the five inclusive economies indicators.

       

Arne Duncan, former U.S. secretary of education during the Obama administration and now a nonresident senior fellow with the Brown Center on Education Policy, discusses the crisis of youth violence in Chicago and solutions that strengthen schools and encourage more opportunities for those who are marginalized to make a living in the legal economy.

“The best thing we can do is create hope, opportunity and jobs particularly on the South and West side for young and black men who have been disenfranchised, who have been on the streets. If we can give them some chances to earn a living in a legal economy not selling drugs and not on street corners, I think we have a chance to do something pretty significant here,” Duncan says. “My fundamental belief is that the police cannot solve this on their own we have to create opportunities for young people in communities who have been marginalized for far too long.”

Also in this episode, Bruce Katz, the Centennial Scholar, who discusses how European cities are addressing the refugee crisis in a new segment from our Refugee Series.

Thanks to audio engineer and producer Zack Kulzer, with editing help from Mark Hoelscher, plus thanks to Carisa Nietsche, Bill Finan, Jessica Pavone, Eric Abalahin, Rebecca Viser, and our intern Sara Abdel-Rahim.

Subscribe to the Brookings Cafeteria on iTunes, listen in all the usual places, and send feedback email to BCP@Brookings.edu 

       

SUMMARY

The financial crisis that has been wreaking havoc in markets in the U.S. and across the world since August 2007 had its origins in an asset price bubble that interacted with new kinds of financial innovations that masked risk; with companies that failed to follow their own risk management procedures; and with regulators and supervisors that failed to restrain excessive risk taking.

A bubble formed in the housing markets as home prices across the country increased each year from the mid 1990s to 2006, moving out of line with fundamentals like household income. Like traditional asset price bubbles, expectations of future price increases developed and were a significant factor in inflating house prices. As individuals witnessed rising prices in their neighborhood and across the country, they began to expect those prices to continue to rise, even in the late years of the bubble when it had nearly peaked.

The rapid rise of lending to subprime borrowers helped inflate the housing price bubble. Before 2000, subprime lending was virtually non-existent, but thereafter it took off exponentially. The sustained rise in house prices, along with new financial innovations, suddenly made subprime borrowers — previously shut out of the mortgage markets — attractive customers for mortgage lenders. Lenders devised innovative Adjustable Rate Mortgages (ARMs) — with low "teaser rates," no down-payments, and some even allowing the borrower to postpone some of the interest due each month and add it to the principal of the loan — which were predicated on the expectation that home prices would continue to rise.

But innovation in mortgage design alone would not have enabled so many subprime borrowers to access credit without other innovations in the so-called process of "securitizing" mortgages — or the pooling of mortgages into packages and then selling securities backed by those packages to investors who receive pro rata payments of principal and interest by the borrowers. The two main government-sponsored enterprises devoted to mortgage lending, Fannie Mae and Freddie Mac, developed this financing technique in the 1970s, adding their guarantees to these "mortgage-backed securities" (MBS) to ensure their marketability. For roughly three decades, Fannie and Freddie confined their guarantees to "prime" borrowers who took out "conforming" loans, or loans with a principal below a certain dollar threshold and to borrowers with a credit score above a certain limit. Along the way, the private sector developed MBS backed by non-conforming loans that had other means of "credit enhancement," but this market stayed relatively small until the late 1990s. In this fashion, Wall Street investors effectively financed homebuyers on Main Street. Banks, thrifts, and a new industry of mortgage brokers originated the loans but did not keep them, which was the "old" way of financing home ownership.

Over the past decade, private sector commercial and investment banks developed new ways of securitizing subprime mortgages: by packaging them into "Collateralized Debt Obligations" (sometimes with other asset-backed securities), and then dividing the cash flows into different "tranches" to appeal to different classes of investors with different tolerances for risk. By ordering the rights to the cash flows, the developers of CDOs (and subsequently other securities built on this model), were able to convince the credit rating agencies to assign their highest ratings to the securities in the highest tranche, or risk class. In some cases, so-called "monoline" bond insurers (which had previously concentrated on insuring municipal bonds) sold protection insurance to CDO investors that would pay off in the event that loans went into default. In other cases, especially more recently, insurance companies, investment banks and other parties did the near equivalent by selling "credit default swaps" (CDS), which were similar to monocline insurance in principle but different in risk, as CDS sellers put up very little capital to back their transactions.

These new innovations enabled Wall Street to do for subprime mortgages what it had already done for conforming mortgages, and they facilitated the boom in subprime lending that occurred after 2000. By channeling funds of institutional investors to support the origination of subprime mortgages, many households previously unable to qualify for mortgage credit became eligible for loans. This new group of eligible borrowers increased housing demand and helped inflate home prices.

These new financial innovations thrived in an environment of easy monetary policy by the Federal Reserve and poor regulatory oversight. With interest rates so low and with regulators turning a blind eye, financial institutions borrowed more and more money (i.e. increased their leverage) to finance their purchases of mortgage-related securities. Banks created off-balance sheet affiliated entities such as Structured Investment Vehicles (SIVs) to purchase mortgage-related assets that were not subject to regulatory capital requirements Financial institutions also turned to short-term "collateralized borrowing" like repurchase agreements, so much so that by 2006 investment banks were on average rolling over a quarter of their balance sheet every night. During the years of rising asset prices, this short-term debt could be rolled over like clockwork. This tenuous situation shut down once panic hit in 2007, however, as sudden uncertainty over asset prices caused lenders to abruptly refuse to rollover their debts, and over-leveraged banks found themselves exposed to falling asset prices with very little capital.

While ex post we can certainly say that the system-wide increase in borrowed money was irresponsible and bound for catastrophe, it is not shocking that consumers, would-be homeowners, and profit-maximizing banks will borrow more money when asset prices are rising; indeed, it is quite intuitive. What is especially shocking, though, is how institutions along each link of the securitization chain failed so grossly to perform adequate risk assessment on the mortgage-related assets they held and traded. From the mortgage originator, to the loan servicer, to the mortgage-backed security issuer, to the CDO issuer, to the CDS protection seller, to the credit rating agencies, and to the holders of all those securities, at no point did any institution stop the party or question the little-understood computer risk models, or the blatantly unsustainable deterioration of the loan terms of the underlying mortgages.

A key point in understanding this system-wide failure of risk assessment is that each link of the securitization chain is plagued by asymmetric information – that is, one party has better information than the other. In such cases, one side is usually careful in doing business with the other and makes every effort to accurately assess the risk of the other side with the information it is given. However, this sort of due diligence that is to be expected from markets with asymmetric information was essentially absent in recent years of mortgage securitization. Computer models took the place of human judgment, as originators did not adequately assess the risk of borrowers, mortgage services did not adequately assess the risk of the terms of mortgage loans they serviced, MBS issuers did not adequately assess the risk of the securities they sold, and so on.

The lack of due diligence on all fronts was partly due to the incentives in the securitization model itself. With the ability to immediately pass off the risk of an asset to someone else, institutions had little financial incentive to worry about the actual risk of the assets in question. But what about the MBS, CDO, and CDS holders who did ultimately hold the risk? The buyers of these instruments had every incentive to understand the risk of the underlying assets. What explains their failure to do so?

One part of the reason is that these investors — like everyone else — were caught up in a bubble mentality that enveloped the entire system. Others saw the large profits from subprime-mortgage related assets and wanted to get in on the action. In addition, the sheer complexity and opacity of the securitized financial system meant that many people simply did not have the information or capacity to make their own judgment on the securities they held, instead relying on rating agencies and complex but flawed computer models. In other words, poor incentives, the bubble in home prices, and lack of transparency erased the frictions inherent in markets with asymmetric information (and since the crisis hit in 2007, the extreme opposite has been the case, with asymmetric information problems having effectively frozen credit markets). In the pages that follow, we tell this story more fully.

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EXECUTIVE SUMMARY

Despite a long-standing policy debate, insurance remains the only major financial industry not to be regulated at the federal level, a tradition dating from the 19th century. However, recent financial turmoil has fundamentally changed the terms of this important discussion.

Many contend that as opposed to as many 51 separate regulators, a single federal insurance regulator would: allow insurers to pass substantial savings on to their consumers; preempt market distorting state regulation of rates; attract the expert talent needed to supervise the increasingly complex industry products; improve competition between insurers and non-insurance financial institutions for insurance-like products; better position insurers to compete globally and; make national policy with respect to insurer solvency.
 
However, state insurance regulators and some smaller insurers and insurance agents favor the current system, arguing that: they alone have the interest, expertise, and accessibility to consumers to handle best consumer complaints; insurance rates must be subject to oversight if not outright control to protect consumers; and state regulators have moved aggressively in recent years to improve their solvency regulation.

After weighing these arguments, I conclude in this essay that insurers and agents operating in multiple states should have the option to operate under a more streamlined regulatory system, and in particular to choose between being chartered and thus regulated by individual state regulators, or by a new federal insurance regulator. Congress has considered but not yet enacted legislation establishing this “optional federal charter” system, analogous (although not identical) to the regulatory system that has long governed the U.S. banking industry.

Further, the recent financial crisis and associated bailout of AIG make it is clear that, in addition to the optional federal charter, the government should require federal solvency and consumer protection regulation of the largest insurers that are deemed to be “systemically important financial institutions.” Clearly, if the federal government is potentially needed as a source of debt or equity funds for certain insurers, there is a strong case for having the federal authorities actively oversee the financial safety and soundness of at least those firms that may benefit from federal, and thus national taxpayer, assistance.

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INTRODUCTION

The Obama administration needs to focus on executing its existing financial rescue plans, keep the TARP focused on the banking sector, and create a contingency plan should the banking system destabilize again.

Crystal balls are dangerous, especially when it comes to economic predictions, which is why it is important for the administration to chart a path forward. Public policy must remain focused on the very real possibility that the apparent easing in the economy’s decline may be followed by little or no growth for several quarters and there could possibly be another negative turn. One of the risks is that the United States is very connected to the rest of the world, most of which is in severe recession. The global economy could be a significant drag on U.S. growth.

Cautious optimism should be the order of the day. We fear that the recent reactions of the financial markets and of some analysts carry too much of the optimism without recognizing enough of the uncertainty. There remains a lot of uncertainty and policymakers should not rest on their laurels or turn to other policies, even if they look more exciting. It is vital to follow through on the current financial rescue plans and to have well-conceived contingency plans in case there is another dip down.

We propose three recommendations for the financial rescue plans:

• Focus on execution of existing programs. The Administration has created programs to deal with each of the key elements necessary to solve the financial crisis. All of them have significant steps remaining and some of them have not even started yet, such as the programs to deal with toxic assets. As has been demonstrated multiple times now since October 2008, these are complex programs that require a great deal of attention. It is time to execute rather than to create still more efforts.
• Resist the temptation to allocate money from the TARP to other uses—it is essential to maintain a reserve of Congressionally-authorized funds in case they are needed for the banks. It would be difficult to overemphasize the remaining uncertainties about bank solvency as they navigate what will remain a rough year or more. The banks could easily need another $300 billion of equity capital and might need still more. It is essential that the administration have the ammunition readily available.
• Third, make sure there is a contingency plan to deal with a major setback for the banking system. The plan needs broad support within the administration and among regulators and, ideally, from key congressional leaders. We probably won’t need it, but there is too high a chance that we will require it for us to remain without one. The country cannot afford even the appearance of the ad hoc and changing nature of the responses that were evident last fall.

We also give the administration a thumbs-up for their bank recapitalization as well as the TALF program, while they are much more skeptical of the Treasury’s approaches to toxic assets. The authors also believe it is time to focus on the truly mind-blowing budget deficits given the danger that markets will not be able to absorb the amount of government borrowing needed without triggering a rise in U.S. interest rates and perhaps an unstable decline in the value of the dollar, nor do they believe there should be a another fiscal stimulus except under extreme circumstances.

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There are a number of causes of the financial crisis that has devastated the U.S. economy and spread globally. Weakness in financial sector regulation was one of the causes and the proliferation of different regulators is, in turn, a cause of the regulatory failure. There is a bewildering, alphabet soup variety of regulators and supervisors for banks and other financial institutions that failed in their task of preventing the crisis and, at the same time, created an excessive regulatory burden on the industry because of overlapping and duplicative functions.

We can do better. This paper makes the case for a single micro prudential regulator, that is to say, one federal agency that has responsibility for the supervision and regulation of all federally chartered banks and all major non-bank financial institutions. There would still be state-chartered financial institutions covered by state regulators, but the federal regulator would share regulatory authority with the states.

The Objectives Approach to Regulation

The Blueprint for financial reform prepared by the Paulson Treasury proposed a system of objectives-based regulation, an approach that had been previously suggested and that is the basis for regulation in Australia. The White Paper prepared by the Geithner Treasury did not use the same terminology, but it is clear from the structure of the paper that their approach is essentially an objectives-based one, as they lay out the different elements of regulatory reform that should be covered. I support the objectives approach to regulation.

There should be three major objectives of regulation, as follows.

• To make sure that there is micro-prudential supervisions, so that customers and taxpayers are protected against excessive risk taking that may cause a single institution to fail.

• To make sure that whole financial sector retains its balance and does not become unstable. That means someone has to warn about the build up of risk across several institutions and perhaps take regulatory actions to restrain lending used to purchase assets whose prices are creating a speculative bubble.

• To regulate the conduct of business. That means to watch out for the interests of consumers and investors, whether they are small shareholders in public companies or households deciding whether to take out a mortgage or use a credit card.

In applying this approach, it is vital for both the economy and the financial sector that the Federal Reserve has independence as it makes monetary policy. Experience in the United States and around the world supports the view that an independent central bank results in better macroeconomic performance and restrains inflationary expectations. An independent Fed setting monetary policy is essential.

An advantage of objectives-based regulation is that it forces us to consider what are the “must haves” of financial regulation—those things absolutely necessary to reduce the chances of another crisis. Additionally we can see the “must not haves”—the regulations that would have negative effects. It is much more important to make sure that the job gets done right, that there are no gaps in regulation that could contribute to another crisis and that there not be over-regulation that could stifle innovation and slow economic growth, than it is that the boxes of the regulatory system be arranged in a particular way. In turn, this means that the issue of regulatory consolidation is important but only to the extent that it makes it easier or harder to achieve the three major objectives of regulation efficiently and effectively.

For objectives-based regulation to work, it is essential to harness the power of the market as a way to enhance stability. It will never be possible to have enough smart regulators in place that can outwit private sector participants who really want to get around regulations because they inhibit profit opportunities or because of the burdens imposed. A good regulatory environment is structured so that people who take risks stand to lose their own money if their bets do not work out. The crisis we are going through was caused by both market and regulatory failures and the market failures were often the result of a lack of transparency (“asymmetric information” in the jargon of economics). Those who invested money and lost it often did not realize the risks they were taking. To the extent that policymakers can enhance transparency, they can make market forces work better and help achieve the goal of greater stability.

Having a single micro prudential regulator would help greatly in meeting the objectives of regulation, a point that will be taken up in more detail below. It is not a new idea. In 1993-94, the Clinton and Riegle proposals for financial regulation said that a single micro prudential regulator would provide the best protection for the economy and for the industry. In the Blueprint developed by the Paulson Treasury, it was proposed that there be a single micro prudential regulator. 

Read the full paper » (pdf)

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One of global society’s foremost structural changes underway is its rapid aggregate shift from farmbased to city-based economies. More than half of humanity now lives in urban areas, and more than two-thirds of the world’s economies have a majority of their population living in urban settings. Much of the gradual movement from rural to urban areas is driven by long-term forces of economic progress. But one corresponding downside is that city-based societies become increasingly disconnected—certainly physically, and likely psychologically—from the practicalities of rural livelihoods, especially agriculture, the crucial economic sector that provides food to fuel humanity.

The nature of agriculture is especially important when considering the tantalizingly imminent prospect of eliminating extreme poverty within a generation. The majority of the world’s extremely poor people still live in rural areas, where farming is likely to play a central role in boosting average incomes. Agriculture is similarly important when considering environmental challenges like protecting biodiversity and tackling climate change. For example, agriculture and shifts in land use are responsible for roughly a quarter of greenhouse gas emissions.

As a single word, the concept of “agriculture” encompasses a remarkably diverse set of circumstances. It can be defined very simply, as at dictionary.com, as “the science or occupation of cultivating land and rearing crops and livestock.” But underneath that definition lies a vast array of landscape ecologies and climates in which different types of plant and animal species can grow. Focusing solely on crop species, each plant grows within a particular set of respective conditions. Some plants provide food—such as grains, fruits, or vegetables—that people or livestock can consume directly for metabolic energy. Other plants provide stimulants or medication that humans consume—such as coffee or Artemisia—but have no caloric value. Still others provide physical materials—like cotton or rubber—that provide valuable inputs to physical manufacturing.

One of the primary reasons why agriculture’s diversity is so important to understand is that it defines the possibilities, and limits, for the diffusion of relevant technologies. Some crops, like wheat, grow only in temperate areas, so relevant advances in breeding or plant productivity might be relatively easy to diffuse across similar agro-ecological environments but will not naturally transfer to tropical environments, where most of the world’s poor reside. Conversely, for example, rice originates in lowland tropical areas and it has historically been relatively easy to adopt farming technologies from one rice-growing region to another. But, again, its diffusion is limited by geography and climate. Meanwhile maize can grow in both temperate and tropical areas, but its unique germinating properties render it difficult to transfer seed technologies across geographies.

Given the centrality of agriculture in many crucial global challenges, including the internationally agreed Sustainable Development Goals recently established for 2030, it is worth unpacking the topic empirically to describe what the term actually means today. This short paper does so with a focus on developing country crops, answering five basic questions: 

1. What types of crops does each country grow? 

2. Which cereals are most prominent in each country? 

3. Which non-cereal crops are most prominent in each country? 

4. How common are “cash crops” in each country? 

5. How has area harvested been changing recently? 

Readers should note that the following assessments of crop prominence are measured by area harvested, and therefore do not capture each crop’s underlying level of productivity or overarching importance within an economy. For example, a local cereal crop might be worth only $200 per ton of output in a country, but average yields might vary across a spectrum from around 1 to 6 tons per hectare (or even higher). Meanwhile, an export-oriented cash crop like coffee might be worth $2,000 per ton, with potential yields ranging from roughly half a ton to 3 or more tons per hectare. Thus the extent of area harvested forms only one of many variables required for a thorough understanding of local agricultural systems. 

The underlying analysis for this paper was originally conducted for a related book chapter on “Agriculture’s role in ending extreme poverty” (McArthur, 2015). That chapter addresses similar questions for a subset of 61 countries still estimated to be struggling with extreme poverty challenges as of 2011. Here we present data for a broader set of 140 developing countries. All tables are also available online for download.

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At a time of decelerating regional growth in sub-Saharan Africa, South Africa—one of the continent’s leading economies—is facing the brunt of concurrent external and domestic growth shocks. During a Brookings event on April 14, 2016 moderated by Africa Growth Initiative Director Amadou Sy, South African minister of finance, the Honorable Pravin Gordhan, provided cause for encouragement, as he highlighted strategies that South Africa is implementing to reverse slowing growth trends, boost social cohesion, and springboard inclusive, sustainable development.

Throughout the event, Minister Gordhan emphasized that South Africa is refocusing its efforts on implementing homegrown policies to mitigate the effects of global and domestic shocks: “Our approach is not to keep pointing outside our borders and say, ‘That’s where the problem is.’ We've got our own challenges and difficulties, and potential and opportunities. And it's important to focus on those, and rally South Africans behind that set of initiatives so that we could go wherever we can in terms improving the situation.”

He began by explaining the major growth problems facing South Africa, including first-level structural challenges—consistent electricity supply and labor relations—as well as deeper structural challenges, for instance, reforming the oligopolistic sectors of its economy. To address these issues, he expanded on what collaborative, multi-stakeholder efforts would be necessary. Watch:

Contending with infrastructure needs—particularly energy and logistical, but also social, such as water and sanitation, health care, and educational facilities—will play a significant role in overcoming these aforementioned challenges. Minister Gordhan explained how the government aims to fill existing infrastructure gaps through innovative financing mechanisms. Watch:

Later in the event, Sy pressed Minister Gordhan on plans for implementation for the country’s ambitious goals. As an example, Minister Gordhan underlined “Operation Phakisa,” a results-driven approach to fast-track the implementation of initiatives to achieve development objectives. The government intends to use this methodology to address a number of social priorities, including unlocking the potential of South Africa’s coastlines and oceans. Watch:

Urbanization in South Africa and sub-Saharan Africa as a whole is widespread and increasing, creating a demand for governments to both maintain their infrastructure as well as harness their energy and human capacity. Cities, especially those in South Africa’s Gauteng Province (Johannesburg, Pretoria, and Ekurhuleni), will continue to be crucial engines of economic development if municipal governance systems effectively manage the region’s expected rapid urbanization in the years to come. Minister Gordhan discusses some of the lessons learned from the Gauteng city region. Watch:

In sum, referring to the confluence of adverse global conditions and internal problems currently affecting South Africa, Minister Gordhan stated, “Whenever you are in the middle of a storm it looks like the worst thing possible—but storms don’t last forever.” He did not doubt the ability of the South African people to weather and emerge stronger from the storm, offering: “Ultimately South Africans are hopeful, are optimistic and resilient.”

You can watch the full event here. 

Video

• Pravin Gordhan notes the major growth challenges in South Africa
• Pravin Gordhan on addressing South Africa’s infrastructure gaps
• Pravin Gordhan on implementation of South Africa's development objectives
• Pravin Gordhan on the vital role of cities in economic development in South Africa