Dr. Alejandro Toledo, former president of Peru, describes his vision as “democracy that delivers.”

“My colleagues and I who have taken the challenge of public life as a vocation and a life commitment,” Toledo says, “cannot but feel concerned about the great challenges faced by our continent where half its population lives between poverty and misery and where inequalities and social exclusion are at their highest.” Toledo has spent the past academic year in residence at the Center on Democracy, Development, and the Rule of Law, applying theoretical rigor to a bold new plan for Latin America and also making a sweeping call to action. At the same time, as Distinguished Visiting Payne Lecturer for the Freeman Spogli Institute, Toledo has shared his vision and his plans for the future with the Stanford community in a three-part special Payne Lecture Series, titled “Can the Poor Afford Democracy? A Presidential Perspective.”

Forty percent of Latin Americans — 230 million people — are trying to survive on less than $2 a day, and 110 million live on less than $1 a day, Toledo is quick to point out. He also notes that income levels do not reflect the “drama of poverty”— things like infant mortality, malnutrition, lack of access to health care and education, and ethnically based social exclusion. Impoverished populations see corruption, exclusion, and economic inequality, and they begin to associate these things with democracy and become impatient with it. Toledo is calling for leaders to have the courage to invest in human development through nutrition, education, and microfinance programs and to make decisions that may not have short-term political benefits. “This is a moment for more leadership and less politics,” he said in January.

With the Global Center for Development and Democracy, the non-governmental organization that he founded, Toledo is organizing a new, broad-sweeping initiative to construct a social agenda for democracy in Latin America for the next 20 years. This Social Agenda for Democracy Initiative will identify specific and measurable goals to demonstrate that democracy is capable of “delivering concrete results to the poor.” To do this, Toledo says, the group of former Latin American presidents, democratic leaders, experts, and exponents of civil society that he is organizing will need to map out an agenda for both stimulating economic growth and reducing inequality and exclusion. Their agenda will be supported by parallel and ongoing efforts to promote and strengthen democratic institutions including judicial systems, freedom of speech, human rights, and the independence of all branches of government.

Toledo’s working group met for the first time on November 26, 2007, at the National Endowment of Democracy in Washington, D.C. The core team is made up of 12 former presidents, including Presidents Vicente Fox (Mexico), Fernando H. Cardoso (Brazil), Carlos Mesa (Bolivia), Ricardo Lagos (Chile), Cesar Gaviria (Colombia), Jose Maria Aznar (Spain), Rodrigo Carazo (Costa Rica), and Ricardo Maduro (Honduras). The group met again in Lima, Peru, on April 25, a meeting that Toledo is particularly excited about. “Our meeting in Lima has special significance for the initiative,” Toledo explains. “First, because the Latin American, Caribbean, and European Union Summit between 60 heads of state was held this year in Lima, just one month later, and second, because the theme of this year’s summit is ‘Poverty, Inequality, and Exclusion.’”

Which is the task that lies before Toledo and his colleagues.

One of the main aims of the Social Agenda for Democracy Initiative is to develop a social matrix to measure progress on key indicators such as economic growth, health, education, employment and salaries, poverty and income distribution, and access to technology. Several working group members reported on May 14 to the Latin American, Caribbean, and European Union Summit on the Social Agenda for Democracy Initiative and their progress in constructing this social matrix — giving the bold plan of this already super-charged group additional visibility and opportunity for capacity building. The group will meet two more times in 2008: in Bolivia this July and again in September in Sao Paulo, Brazil.

For Toledo, the link between democracy and social change is palpable — he is both the product of and an advocate for the transformative powers of these two processes. Democratically elected in 2001, Toledo was Peru’s first president of indigenous descent, having grown up in an impoverished and remote Andean village. “For 500 years, someone with my ethnic background was never accepted to be a candidate,” Toledo said in May, in his final Payne lecture. “I was a political intruder in the establishment of politics in Latin America and in Peru.”

In his five-year term as president, Toledo achieved 6 percent average annual growth, increased foreign direct investment by 50 percent, balanced the budget, and brought 25 percent of the population above the poverty line. He also initiated a program called Juntos, or “Together,” a system of conditional, direct cash transfers to female heads of the poorest households. In return for obtaining pre- and post-natal checkups, vaccinating their children, and making sure their children went to school, the women received $30 per month to invest in their economic self-sufficiency. The short-term solution provided by Juntos was initially criticized by the IMF but has been so successful that it is now being evaluated as a policy option by both the IMF and the World Bank and has been continued by the current government.

In his first Payne lecture, held in January, Toledo interwove firsthand observations with quantitative research to support his argument that a reduction in poverty and inequality does not necessarily follow economic growth. While he has “cautious optimism” that Latin America is poised to “make a substantial jump and take a prominent place in the world economy in the next 15 to 20 years,” he said that only an ambitious social agenda to reduce poverty and inequality will stimulate economic growth, strengthen democratic institutions, and consolidate democratic governance in the region.

Having analyzed the relationship between democratic reform, economic growth, and poverty, inequality, and social exclusion in Latin America, Toledo focused his second Payne lecture, in April, on some of the political dynamics in Peru leading up to his election to president. His multimedia presentation included footage of the mass protests that followed Alberto Fujimori’s controversial re-election to a third term in 2000 amid allegations of electoral fraud. Fujimori ultimately agreed to schedule a new election the following year and stepped down as a candidate.

In his third and final Payne lecture, on May 14, Toledo answered the question that served as the organizing principle for the series: Can the poor afford democracy? Yes, he said — but more importantly, “Democracy cannot afford to neglect the poor.”

Like Toledo, former president of Mexico and Social Agenda for Democracy colleague Vicente Fox sees positive economic and social growth for Latin America. He accepted Toledo’s invitation to visit the Stanford community and on March 5 spoke with intensity about Latin America’s prospects for both social welfare and economic well-being in the coming century. Mexico, which Goldman Sachs recently projected to be the world’s fifth largest economy by 2040, was emblematic of this electrifying future, he said. On the one hand, there is great promise for economic growth, stability, and entrepreneurship; and with this great promise, he was careful to note, comes great responsibility for the reduction of poverty and inequality through a “package of powerful social policies.”

Looking ahead, Fox hoped that Latin American democracy would not to be taken for granted; “it has to be nourished, it has to be taken care of, it has to be promoted.” But his outlook for Latin America is that this is a time for its countries to consolidate democracies and freedoms, consolidate economies, and promote new leadership. After years of military dictatorships, corruption, inefficiency, and poor development, “People decided to go for change,” Fox said, “and change is a magic word. It moves people to action.”

The July/August issue of Health Affairs, the leading U.S.-based health policy journal, focuses on China and India. The special issue includes an article on China’s pharmaceutical policy by five contributors to Prescribing Cultures and Pharmaceutical Policy in the Asia-Pacific, a book forthcoming in 2009 from the Shorenstein Asia-Pacific Research Center series with Brookings Institution Press. Chapters on Korea and Japan by Soonman Kwon (Seoul National University) and Toshiaki Iizuka (Aoyama Gakuin University) also appear in Chinese translation in the journal Bijiao (Comparative Studies), along with an overview paper (“Pharmaceutical policy reforms to separate prescribing from dispensing in Japan and South Korea: Possible implications for China”) by Karen Eggleston, Asian Health Policy Program Director.

As Eggleston writes in the introduction to Prescribing Cultures, pharmaceuticals and their regulation play an increasingly important and often contentious role in the health care systems of the Asia Pacific.  For example, some economies such as China have extraordinarily high drug spending as a percentage of total health spending; India and a few others host thriving domestic pharmaceutical industries of global importance, while controversy surrounds patents, trade-related aspects of intellectual property (TRIPS), and pharmaceutical pricing within bilateral trade agreements (Australia-US, Republic of Korea-US); nations throughout the region struggle with appropriate regulation of drugs, from patents to evidence-based purchasing (e.g., Australia’s Pharmaceuticals Benefit Scheme) and direct-to-consumer advertising; deeply-rooted traditions of indigenous medicine are modernizing and integrating into broader health care systems; and policies to separate prescribing and dispensing re-write the professional roles of physicians and pharmacists, with modifications to accommodate cultural norms and strong economic interests. Effective prescribing and pharmaceutical use will be central to controlling infectious diseases, both old and emerging; protecting the global public good of antimicrobial effectiveness; and treating the growing burden of chronic disease in the Asia Pacific.

The forthcoming book will explore these issues in detail, through a multi-disciplinary lens. The first section of the book features chapters on pharmaceutical policy within seven selected health care systems of the Asia Pacific: South Korea, Japan, Thailand, Taiwan, Australia, India, and China. The second section focuses on the cross-cutting themes of prescribing cultures and access versus innovation. Taken as a whole, the contributions aim to provide an evidence base for policy while acknowledging the historical and cultural context that makes policies distinctive.

Clear evidence suggests the importance of health service provider payment incentives for achieving efficiency, equal access, and quality, including attention to primary, secondary, and tertiary prevention. “Pay for performance” may be on the cusp of significant expansion in Asia, and reform away from fee-for-service has been underway for several years in several economies. Yet despite the policy relevance, the evidence base for evaluating payment reforms in Asia is still very limited.

China in particular has been undertaking significant reforms to its health care system in both rural and urban areas. With the expansion of insurance coverage and need to resolve incentive problems like “supporting medical care through drug sales,” there is an urgent need for evaluating alternative ways of paying health service providers. Evidence from policy reforms in specific regions of China, as well as other economies of the Asia-Pacific, can provide valuable evidence to help inform policy decisions about how to align provider incentives with policy goals of quality care at reasonable cost.

To illuminate these questions, the Asia Health Policy Program and several collaborating institutions are planning to convene a conference on health care provider payment incentives on November 7-8, 2008 in Beijing. The conference will highlight and seek to distill “best-practice” lessons from rigorous and policy-relevant evaluations of recent reforms in China and elsewhere in the Asia Pacific.

The organizing committee – including health economists from Shorenstein APARC, Peking University, Tsinghua University, and Seoul National University – reviewed submissions in June 2008 and accepted sixteen. The conference papers cover payment issues in Korea, Japan, China, Taiwan, Thailand, Tajikistan, the Philippines, and the US, and the disciplines of economics, health services research/health policy, public health, medicine, and ethics. Topics include institutionalized informal payments; the impact of global budget policies on high-cost patients; public-private partnerships; public-sector physicians owning private pharmacies; evidence-informed case payment rates; payment and hospital quality; bonuses and physician satisfaction; physician prescription choice between brand-name and generic drugs; and differences in pharmaceutical utilization across insurance plans that pay providers differently (fee-for-service versus capitation).

Policymakers from China’s National Development and Reform Commission and Ministry of Health will also speak at the conference. Selected research papers will be published through the Shorenstein Asia-Pacific Research Center either in a special volume or in a special issue of an English-language health policy journal.

While in London, Senior Research Scholar Rafiq Dossani spent time discussing the reasons behind India's continued rise and his recent book India Arriving: How This Economic Powerhouse is Redefining Global Business with CNBC's Europe Tonight host Guy Johnson. You can watch the interview here CNBC - Europe Tonight

Small scale power generation technologies (distributed generation) have the potential to significantly contribute to solving the rural electricity access problem in the developing world. This paper presents results from case studies in Brazil (part of a larger three country study) and shows that differences in business models and the influence of institutions are important factors for understanding success and failure in rural electrification and the contribution rural electrification can play in rural development. 

In their column on National Review on June 24, 2008 called “10 Concerns about Barack Obama,” William Bennett and Seth Leibsohn, begin their list of attacks on Senator Obama by writing that “Barack Obama’s foreign policy is dangerous, naïve, and betrays a profound misreading of history.” In arguing against any engagement with Iran, William Bennett and Seth Leibsohn point out that “Ronald Reagan met with no Soviet leader during the entirely of his first term in office.”

This statement is factually correct. And there was most certainly a big debate within Reagan Administration about whether to talk with the leaders of the Evil Empire. However, Bennett and Leibsohn imply in their piece that this debate was only resolved after the Soviet Union met some preconditions to talks and changed internally, that is after, as they write, that Reagan “was assured Gorbachev was a different kind of leader – after Perestroika, not before.”

In fact, the debate about engaging the evil empire was resolved three years before Reagan met with Gorbachev. The debate and the resolution in favor of talking to the leaders of the evil empires is meticulously chronicled in George’s Shultz’s memoir, Turmoil and Triumph: Diplomacy , Power, and the Victory of the American Ideal (1993). Just the title of Chapter 25, "Realistic Reengagement with the Soviets," underscores how misleading the Bennett and Leibsohn rendition of history is.

When they first came to Washington, many foreign policy advisors within Reagan administration advocated the Bennett and Leibsohn position and did not want to have any contact with the Soviets, even though every American president since the recognition to the USSR in 1933 had met with their Soviet counterparts. When George Shultz became Secretary of State in 1982, he began to challenge this policy of disengagement, arguing that the United States needed to engage both the Soviet leaders but also Soviet society. As he writes in his memoirs about the start of the New Year in 1983, “I wanted to develop a strategy for a new start with the Soviet Union. I felt we had to try to turn the relationship around: away from confrontation and towards real problem solving.” (p. 159) Shultz is writing about his thinking two years before Gorbachev comes to power.

Shultz’s idea for a turn towards engagement met resistance in the Reagan administration. Again, from his memoirs: “I knew the president’s White House staff would oppose such engagement. There was lots of powerful opposition around town to any efforts to bridge the chasm separating Moscow and Washington.” After listing the opponents to direct negotiations, which included Secretary of Defense Caspar Weinberger and CIA head Bill Casey, Shultz affirmed that “I was determined not to hang back from engaging the Soviets because of fears that the ‘Soviet wins negotiations’.” (p. 159). Sound familiar? Instead the word, Iranians, for Soviets and you capture the essence of the debate today.

Shultz, as we all know, won this debate, convincing Reagan about the need to start talking directly to the Soviets (again well before Gorbachev came on to the scene). A subtitle of Chapter 12 of Shultz’s memoir is A President Ready to Engage. (p. 163). In early February 1983, Shultz even floats the idea of meeting directly with Soviet Ambassador Dobrynin for a private chat, to which Reagan responds, “Great”, and then adds “I don’t intend to engage in a detailed exchange with Dobrynin , but I do tell him that if Andropov is wiling to do business, so am I” (p. 164). (Remember Andropov died in 1983 and his successor, Chernenko, also did not serve long as the Soviet leader before dying in 1985. from 1983-1985, there was a real crisis of leadership inside the Soviet Union, a factor that contributed to the lack of direct talks at the highest levels). Speed forwarding again to today’s Iran debate, which presidential candidate sounds more like Reagan?

Shultz’s approach toward engaging the Soviets offers another profound lesson for today’s Iran debate. Shultz never let the negotiations focus just on arms control. That played o the Soviet’s strengths. Rather, he insisted on an expanded agenda that always included human rights and democracy. Again, from his memoirs, "We were determined not to allow the Soviets to focus our negotiations simply on matters of arms control. So we continuously adhered to a broad agenda: human rights, regional issues, arms control, and bilateral issues." (p.267). This same approach is needed for dealing with the Iranian regime today.

Finally, Shultz never saw negotiations or expanding contacts with Soviets and Americans as a concession to Moscow or a signal of legitimacy for the communist dictatorship. In the debate about opening consulates in both countries – a move that some hardliners at the time saw as a sign of weakness – Shultz firmly supported the idea as a change in the American national interest. As he quotes from a memorandum that he wrote in 1982, "I believe the next step on our part should be to propose the negotiation of a new U.S.-Soviet cultural agreement and the opening of U.S. and Soviet consulates in Kiev and New York...Both of these proposals will sound good to the Soviets, but are unambiguously in our interest when examined from a hard headed American viewpoint."(p. 275). Exactly the same could be said about Iran today.

Historical analogies can only go far. Many dimensions of U.S.-Iranians relations differ radically from Cold War relations between the U.S. and the Soviet Union. But when observers do roll them out, getting the facts right should be precondition to the substantive date about their relevance.

Much existing literature champions renewables implementation on India’s Sagar Island as an unqualified rural electrification success story.  Photovoltaic (PV) and wind systems put in place by the West Bengal Renewable Energy Development Agency (WBREDA) have clearly brought benefits to many of the island’s residents.

The highly-touted community management system governing the projects has been successful at instilling local pride and overcoming the traditionally thorny problem of tariff non-collection.  At the same time, an on-the-ground look at the Sagar Island experience identifies some deeper liabilities of the business model guiding the renewables projects.  Two of the ostensible strengths of the Sagar Island implementation – the harmonious tariff collection associated with community management and the resources, competence, and assertiveness of WBREDA itself – can at the same time be considered weaknesses limiting the scope, sustainability, and replicability of the projects. 

This working paper considers these questions through a case study of a typical Sagar Island facility, the Mritunjoynagar PV power plant.  It finds that Mritunjoynagar’s inability to recoup its full operating and maintenance costs by providing appropriate incentives for profit maximization limits the expansion of the project and threatens its long-term sustainability, or at least the relevance of its business model in the absence of a highly-visible champion like WBREDA to ensure continued support.  For WBREDA and other agencies to sustain and replicate similar projects—and their attendant benefits—throughout India, they must adjust their economic model, as WBREDA is beginning to implicitly acknowledge in exploring a franchise model for future efforts.