Isobel Coleman: The arc of history is, in fact, still bending toward greater freedom and prosperity

This speech was delivered by Isobel Coleman, deputy administrator of the United States Agency for International Development (USAID) at the annual Freedom and Prosperity dinner on February 26, 2024.

Thank you, Fred, for that introduction.

It’s a pleasure to be here with all of you tonight, and to be speaking with you from the Anderson House, the home of the Society of the Cincinnati, the organization founded in 1783 by George Washington and the officers of the continental army.

These were men–and I’ll highlight, to their detriment, only men–to whom the connections between freedom and prosperity were obvious, and worth fighting for. 

As Alexander Hamilton, the Society’s second president general, knew even then, when it comes to ensuring common prosperity, a government constructed from [quote] “reflection and choice” was far preferable to that of [quote] “accident and force.”

Fast forward to today and the lesson has held true on a global scale — which the 2023 Freedom and Prosperity Indexes compellingly convey.

Now, it’s no secret that democracy is under stress in many countries around the world. The Freedom and Prosperity Center’s own research bears this out, as does the analysis of Freedom House, V-Dem, and other credible research organizations in the field.

Organizing willing world leaders to do something about this alarming backsliding was the motivating impulse behind the two summits for democracy that President Biden convened in 2021 and again about a year ago. Picking up the torch, next month, South Korea will host a third summit for democracy in Seoul.

In line with the goals of the summit for democracy process, at USAID we’ve made strides over the past three years to elevate our support to pro-democracy and human rights actors as a core function of our development mission. In this regard, about a year ago, USAID Administrator Samantha Power published an essay in Foreign Affairs entitled, How Democracy Can Win that I would recommend to all as an encapsulation of our efforts. 

A main thrust of the piece was that for several decades now human rights and democracy proponents arguably have spent too much attention on advancing individual dignity largely, if not exclusively, through [in Samantha’s words] “the prism of political freedom, without being sufficiently attentive to the indignity of corruption, inequality, and a lack of economic opportunity.” 

That thesis in many respects brings me to my main points this evening:

First, that investments in what we at USAID call “democracy, human rights, and good governance,” or “DRG” for short, are also wise investments in economic prosperity and associated sectors like health and the environment.

Second, while the inverse doesn’t necessarily always hold true– history is replete with development programming that didn’t meaningfully contribute to democratic strengthening–we should be more conscientious when it comes to the potential effects on democracy of our efforts across all sectors of development. 

And third – the work of building lasting freedom while reducing poverty and driving inclusive growth has to be a partnership among all relevant facets of society, including governments, the private sector, NGOs and policy organizations like the Atlantic Council, philanthropies, and private donors. In other words, all of us.

The data are quite clear:

Not only are democracies much better at protecting individual rights than non-democratic systems, they’re also more likely to produce more prosperous communities.

To give one statistic, evidence shows that average GDP per capita growth has been higher in democracies than in autocracies going back to 1800. Researchers have also found that countries that democratized increased their GDP per capita by about twenty percent over autocracies in the twenty-five years following democratization.

And democracies, despite all their messiness, have also been shown to deliver better public goods and services to their citizens. Research has demonstrated that in aggregate, democracies do a better job than autocracies in providing goods like education, electricity, and healthcare. They also tend to spend more on social protection, and have more effective climate policies than do autocracies.

As a result, residents in democracies tend to experience better health outcomes in the form of longer life expectancy, lower infant mortality rates, and fewer deaths from non-communicable diseases.

This truly is a matter of life and death. To offer one statistic, researchers have estimated that in the health sector alone, an estimated $500 billion is lost to corruption every year.

On a recent trip abroad, I saw the impact with my own eyes while touring a medical clinic. Shelves that should have been packed with a range of medicines from prenatal vitamins to malaria drugs were bare – due, I was told, to fraud and governmental mismanagement. And people had died of preventable conditions as a result.

Historical examples abound of the positive and reinforcing relationship between growing freedom and growing prosperity, whether one wants to think of South Korea and Taiwan, or Chile, or post-Soviet Eastern Europe. 

Now, as probably isn’t lost on this room, in recent years it became fashionable to point to China as an outlier in regard to many of these trends. And not without some reason, given the remarkable economic growth and poverty reduction the country experienced in the period since Deng Xiaoping’s reforms.

Beijing has worked diligently to advance the narrative that autocracies can be more efficient at development than their democratic peers – a line Moscow has been eager to echo.  

The results speak for themselves. As the latest Freedom and Prosperity Indexes persuasively demonstrate, since the break-up of the Soviet Union, the paths of Russia and Belarus have diverged significantly from those of the Baltic states, and, more recently, Ukraine and Moldova, when it comes to freedom.  Divergence in prosperity has followed. To cite a noteworthy stat from the report: in 1995, Latvia and Russia differed by 2.5 points on the prosperity index. By 2022, this figure stood at almost fifteen points.

Time will tell, but the PRC could face similar challenges. After years of significant growth, the Chinese economy is currently struggling under a party-state willing to intervene in key sectors of the economy and curtail any form of dissent, seemingly no matter the economic cost.

Meanwhile, for all of the very real democratic backsliding around the world, elections in countries from Guatemala to Brazil to Poland have demonstrated countries’ ability to arrest a drift into illiberal governance. And democratic bright spots continue to emerge, as voters decide that they’re fed up with corruption and mismanagement.

A key focus of the Biden Administration, and particularly for us at USAID, has been to help these highly-motivated democracies deliver for their people, so that they can demonstrate a “democratic dividend.” We have, in fact, an entire initiative, which we call “Democracy Delivers,” built around this concept, to assist governments in building trust with their citizens, and enable reformers to make visible progress in improving lives.

This isn’t easy, and it also isn’t always fast – passing laws, writing regulations, tackling corruption, attracting investment, and so on all take time. But with outside attention and expertise, reforms like these can often be made faster or go deeper. So that’s where we put a lot of our effort.

Because we want to bet on societies that have manifested a clear desire through the ballot box to advance a reform agenda, and help them create a better enabling environment for investment. The goal is to jump-start a positive feedback loop of poverty reduction and inclusive growth on the one hand, and a sense among citizens of the benefits of rights-respecting democratic governance on the other.

A few examples are worth mentioning.

Take Moldova. President Maia Sandu has galvanized an ambitious reform agenda centered on growing the Moldovan public’s faith in its political and judicial systems, and ridding public institutions of corruption. Her efforts and those of other Moldovan reformers are paying dividends, as late last year the European Council agreed to formally open EU accession negotiations, signaling a European future for the nation.

Under our Democracy Delivers initiative, USAID is working closely with President Sandu’s government to set conditions for attracting private sector investment and other partnerships in key fields, including energy, e-commerce, cybersecurity, IT, tourism, and agriculture.

That means, among other things, we’re directing USAID assistance toward reducing business costs and enhancing transport, logistics, and customs processes to facilitate trade.  At the same time, we’re supporting the Moldovan judiciary to improve the quality of the services it provides to businesses and citizens alike. And it also means we’re actively working to bolster the Moldovan economy in ways beyond our programs; for instance, by connecting Moldova’s government with leading tech and multinational firms like Google, Visa, Stripe, and Palantir.

Tanzania is another good example. Upon taking office three years ago, President Samia Suluhu Hassan committed to opening civic and political space slammed shut by her autocratic predecessor.

Improvements in Tanzania’s democratic environment – such as the lifting of a ban on political party rallies and amendments to the Media Services Act – have underpinned more effective governance and increased confidence in the country’s trajectory. 

At USAID, we’re responding. We’ve expanded our democracy and governance programming, including, for instance, by investing to help women overcome barriers to civic and political leadership.

And as we’re putting wind in the sails of democratic reformers, we’re working with Tanzanian civil society, private sector and the government on initiatives that will raise living standards and save lives – reinforcing the virtuous circle of reform and growth, freedom and prosperity.

In December, the Millennium Challenge Corporation (MCC) responded to Tanzania’s renewed commitment to strengthening democratic governance by selecting it for a “threshold” program focusing on accelerating institutional reforms to reduce poverty and generate economic growth.

And at USAID, we’re partnering with the Tanzanian government and the Vodafone foundation on an incredible, lifesaving program with a great name – “m-mama.”

M-mama is an emergency referral and transport system that connects Tanzanian women and newborns in the country’s rural areas with emergency transportation to appropriate healthcare. As a maternal health initiative, it’s been a literal lifesaver. And at the same time, its underlying digital infrastructure is poised to unlock broader economic benefits, including through its electronic payments system.

Other countries have taken note, and at present, m-mama deployment is also underway in Kenya, Malawi, and Lesotho.

Finally, consider Guatemala. In August, the Guatemalan people stunned many around the world when, against the will of entrenched power, they rejected the politics of corruption. In choosing now-President Arévalo, the Guatemalan people voted for a better future, one rooted in rule of law rather than in self-dealing. 

Both before and after this change, the U.S. Government made clear that it stood with those Guatemalans calling for transparency and accountability. Over the past three years, we imposed economic sanctions and visa restrictions on nearly 400 individuals for engaging in corruption or undermining democracy. And during the period between last summer’s election and January’s inauguration, we ramped up this and other diplomatic work to make clear that the will of the Guatemalan people needed to be respected. 

While doing all of that, we were, and are, surging support to President Arévalo’s incoming administration, to help position it to best deliver tangible results for citizens and communities.

We’re launching new programs, such as a financial inclusion effort which supports the new Guatemalan administration’s priority of increasing rural employment and improving living conditions. Our project aims to help rural Guatemalans overcome common financial access constraints, and is just one in a series of large investments we’re making under our Feed the Future initiative and the Biden-Harris Administration’s Root Causes Strategy.

It’s early days with the Arévalo government in Guatemala, which faces no small number of challenges. To maximize the chances of success, the Guatemalan people need help from all of us. 

Which brings me back to where I started. The case for strengthening democracy as a means to build resilient, equitable, and inclusive economic growth is well-established. The data don’t lie. Predictability, transparency, and accountability are good for business.

Likewise, arbitrary state intervention and courts guided not by law, but by political whim, inject the uncertainty and risk that leaders in the private sector do their utmost to avoid. 

That’s why we at USAID have made a point of engaging closely with the business community. Because for as much as we can bring to the table financially, our resources pale in comparison to those of the private sector.  We must be working with business leaders as often as possible, spotting openings and opportunities, making mutually-beneficial connections between business and government, and jointly calling out democratic backsliding when it occurs. 

Because while it’s true that we’re in a moment of peril when it comes to democracy, when taking a longer view – the arc of history is, in fact, still bending toward greater freedom and prosperity. Pushing the future forward is going to take work. Nothing should be taken for granted, and we all need to chip in. But at USAID, we’re ready to work with like-minded partners – be they governments, businesses or civil society – to do our part in bending that arc of history in the right directions.  Thank you.