Q&A: Jim Winkler on trade, creating jobs and more
January 21, 2020
Creative Associates International recently named Jim Winkler, Ph.D., as Vice President and Senior Director of its Economic Growth Division, where he will oversee and lead a growing portfolio of programs in Latin America, Africa and Asia.
In this Q&A, Winkler shares his insights on economic growth and development.
You have specialized in promoting trade throughout your career. How do you view the next generation of trade?
Winkler: I have focused on trade most of my career because it is critical to economic growth. Every country must be able to increase market size and demand through trade. A country’s trade competitiveness supports sustainable, productive jobs and delivers competitive goods and services that could not be achieved without trade. In addition to trade, investment is key for a country to build globally competitive industries. That’s why trade and investment are often linked and integrated into development programming for the U.S. Agency for International Development and other donors.
In every country where I have worked, trade has been a crucial dimension of the economic strategy to expand economic opportunity and growth. In small countries, such as Croatia, Taiwan, Rwanda, Singapore and Bulgaria; countries engaged in conflict, transition and instability, such as the Palestinian Territories, El Salvador, Mozambique, and Ukraine; and larger countries such as Vietnam, South Africa, Kenya, and Thailand, trade has been crucial to creating jobs, economic opportunity, and prosperity.
What is your view of the U.S. Trade and Investment Hubs in Africa?
Winkler: Africa is increasingly more attractive to U.S. business because of a burgeoning middle class, as well as having the world’s fastest growing population. Africa’s biggest attraction is no longer simply natural resources. Consumer-related industries are estimated to grow by $400 billion in 2020. However, U.S. companies are not familiar with doing business in Africa, which is a complex market with 54 countries and more than 2,000 dialects. Many firms perceive the region as very risky. Prosper Africa will coordinate all U.S. government agencies and services to optimally support U.S. business in trade and investment.
The U.S. Trade and Investment Hubs in Africa are the platforms for working in coordination with U.S. agencies to support transactions and development. USAID depends on the regional hubs based in Abuja, Nigeria; Pretoria, South Africa; Nairobi, Kenya, and a new hub in North Africa to provide grants and technical assistance to support U.S. trade and investment into Africa.
The Creative–implemented hub in Abuja is playing a critical role in facilitating partnerships with U.S. and African companies and catalyzing trade and investment transactions as part of Prosper Africa. At the same time, the Hub will support improvements in the business environments in West Africa to encourage trade and investment.
How do trade initiatives mix with or complement traditional development activities?
Winkler: Trade requires countries and companies to develop the capabilities to comply with international rules and business practices that are often unknown and unfamiliar in lesser developed countries without a tradition of formal trade.
Historically, many African countries engage in informal trade across borders. Unfortunately, this may also include criminal and illicit activity. The rule of law, transparency, labor and environmental laws are foundational principles for any country that wants to be a global trading partner. Policymakers and business leaders need to become familiar with international trade policy, export markets and buyer and consumer requirements in the U.S. and other countries.
They need to develop education systems and curricula that prepare students with the skills and education suited for the global economy, industry requirements and economic trends as their economies and societies modernize. This means that a country’s development policy must be dynamic and anticipate the future to prepare its citizens for emerging opportunities and challenges.
Vietnam is a great example of a country that transformed its economic and legal institutions to integrate into the global economy. Since 1994, I have worked in Vietnam and have been amazed by its transformation from an impoverished country in the late 1990s to one of the most successful economies for poverty reduction and international trade today. Vietnam had to create 1.6 million new jobs every year for its fast-growing population as the country shifted from subsistence rural agriculture to higher value manufacturing and urbanization. USAID and other donors assisted Vietnam to transform its legal system, policies, institutions and practices to join the U.S.-Vietnam Bilateral Trade Agreement in 2001 and the World Trade Organization in 2007 to become a global trade partner of the U.S. and other countries.
Countries like Vietnam were wise to adopt international conventions on intellectual property, transparency, labor and environmental practices, and rules of origin, among others, to compete in global markets. These changes do not happen overnight. A country’s aspiration to grow the economy through international trade requires a comprehensive framework for transformative change and development in every aspect of economy and society from education to infrastructure to regulation of the market economy.
Winkler: The world has shrunk through information technology and social media. It is also becoming increasingly interdependent. Consumers in developed economies are imposing social and political requirements on global companies to respect human, labor and environmental rights and become positive actors for global change. This means that development initiatives can leverage trade and partnerships with United States and other international companies as a positive force for change inside poor countries.
We also need to recognize the political and social backlash against global trade and globalization in recent years. Today, there is greater emphasis on creating two-way trade that benefits both poor countries and developed countries.
The international trade system is under pressure with the United States’ recent relative disengagement from the WTO and a desire for more benefits for U.S. workers and the U.S. economy. An emphasis has shifted from aid to trade. This is not a bad change; in fact, it raises the opportunity for more strategic thinking and action in development to address poverty and equity issues on all sides.
Under Prosper Africa, success is being measured in trade and investment transactions —in terms of export sales and jobs created, as well as private equity and debt investment. This transactional, enterprise-led development approach requires development practitioners to engage immediately with private investors and businesses to achieve results. It is equally important to ensure that we are doing good development work by leveraging markets and market actors and not delivering services directly as implementing partners, thereby crowding out the private sector.
The market systems approach aims to address market failures and bottlenecks and enable markets as the best mechanism for sustainable, scalable and replicable solutions to increase trade, reduce poverty and support countries to become independent of foreign aid and achieve self-reliance.
What are the top challenges the African continent will continue to face, and how do you see the importance of regional integration to respond to some of the challenges?
Winkler: Among the top challenges facing the continent continue to be the mismatch between demographic trends and job creation. With rapid population growth and urbanization, leaders in Africa should design and implement policies to encourage job creation and maintain service delivery. Effective strategies are needed to invest in sectors primed to grow and create jobs, prepare young people for the jobs of the future, and improve the quality of living in Africa’s rapidly growing cities.
Fifty-four countries recently signed the African Continental Free Trade Agreement, which could be an investment, economic diversification and job creation blueprint that will shape the future of Africa. Policies to encourage innovation and integration can also propel the continent into new frontiers of business and human development.
For Africa to realize the full potential of regional integration, countries will have to put in place policies that encourage and protect innovation with a sharper focus on domestic innovation. This is an important component of export diversification for which Africa is primed due to its young, dynamic and increasingly educated population.
The private sector has become a major focus for USAID and other donors. What’s behind this renewed focus and what is your experience in private sector development and private sector engagement?
Winkler: I think donors have increasingly recognized that their budgets and resources are very small compared to private capital flows. Donors can achieve greater success by leveraging and partnering with the private sector to achieve development goals. Companies are recognizing that they can achieve best returns on their investment by taking a long-term role in supporting the development of emerging markets that have both great business opportunities and challenges. A market economy and economic prosperity depends on a vibrant, diversified private sector of companies of all sizes to generate innovation, employment, and growth.
Donors and implementing partners need to secure partnerships with companies that have the capital, market expertise and knowledge for innovative solutions. In my experience, private companies are eager to partner with donor-funded projects provided implementers can demonstrate innovation and value addition.
The money culture—the desire to increase profits, efficiency and growth—exists in every country I have worked in. Granted, some companies and business owners are more entrepreneurial than others in difficult economic environments, so it’s important to identify the movers and innovators that we can partner with through risk-sharing and co-financing schemes to jointly test out practical solutions.
For example, digital solutions can enable agribusinesses to deliver agricultural inputs such as hybrid seed and fertilizer and extension services to millions of small farmers and ensure traceability of food safety and environmental standards required in the U.S. and Europe by regulators and buyers of food, apparel and other consumer products.
Technological innovations developed among USAID and its development partners with private firms and investors have resulted in remarkable breakthroughs in reaching remote areas and serving low–income households with health, education, housing, consumer services and goods. Similarly, partnering with U.S., multinational and local companies can expand and integrate supply chains and increase efficiency in business development services, financing and technological solutions for small farmers and small and medium businesses.
What is the role of women and their economic growth and development?
Winkler: Data show that countries with greater participation of women in key socio-economic indicators—such as education, health and voting—achieve greater prosperity. In short, women are half of the population and are too often subjugated and under-valued in social, economic and political terms in many countries we work in.
In some industries, such as apparel and light manufacturing, which are early stage industries that generate large employment in poor countries shifting out of subsistence agriculture into industrialization, women are the largest number of workers and they bring greater benefits home to their families than men in comparable jobs.
In my experience, women are superb entrepreneurs and workers, and they often contribute disproportionately more to the well-being of their families and communities. They face obstacles in entrepreneurship because of age-old biases. For example, women legally cannot own land and other assets in many countries. Recognizing and overcoming these obstacles, such as financing for women entrepreneurs, can unleash their entrepreneurial and professional talents that contribute to their individual, family, community and national prosperity.