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John Harvard's Journal

Developmental Troubles

September-October 2002

When the Harvard Institute for International Development (HIID) was disbanded in 2000, it meant the disappearance of the University's largest entity devoted to international work (see "HIID, Dismantled," March-April 2000, page 77). Multiple torpedoes sank HIID, including structural problems, a 1997 scandal in Russia over conflict-of-interest charges, and financial deficits in its final two years.

Jeffery Sachs, by a globe in his office
Former HIID and CID director Jeffrey Sachs, who resigned his Harvard position this year to move to Columbia.
Photograph by Jon Chase / Harvard News Office

In 1999, HIID's director since 1995, Jeffrey Sachs, then Stone professor of international trade, resigned as HIID director to head the newly-created Center for International Development (CID). The CID emphasizes academic research, rather than consulting work, in developing countries. It is one of Harvard's interfaculty initiatives, a University-wide center under the provost's office that is managed by the Kennedy School of Government. The CID's seed money came from the HIID endowment, with authorized transfers of up to $13 million (half the value of the HIID endowment at the end of 1998).

But this March, Sachs abruptly resigned from Harvard to become director of Columbia University's Earth Institute, effective July 1. Now much of the international development work at Harvard reverts to problematic status, with the future of the CID uncertain and a great deal of red ink to clean up. The CID had a shortfall of a million dollars on its 2002 fiscal year budget of $6.4 million, and in fiscal 2003, its deficit is expected to be $2 million. By the end of the 2003 fiscal year, it will be necessary to decapitalize $3 million from the $5 million in unrestricted endowment money that HIID transferred to the CID.

Work at the CID is grinding to a halt. As of May, the Center had 18 active projects; Sachs was the principal investigator for 13 of them. Sachs planned to take six of these research projects (including three of the Center's five most generously funded studies) with him to Columbia, and leave seven at Harvard. But of those seven, three of the sponsors—including foundations, development banks, and nongovernmental organizations—withdrew their funding when they learned of Sachs's unexpected departure. In one case, the CID learned that the donor was pulling its funding only two days before the start of a new grant year. These disappearing donors are one major factor behind the deficit. Their exodus deepened a pre-existing problem: "There were already too many unfunded researchers there, doing things that donors didn't want to underwrite," says special assistant to the provost Richard Pagett.

Pagett has been charged with facilitating the transition process for research that is moving to Columbia, and assuring that staffing and administrative structures are in place to support those projects that remain at Harvard. With or without sponsorship, there are eight researchers still working in CID staff positions. By the end of this calendar year, nearly all of the center's remaining projects will have run their course.

At the outset, the Center's work actually began with several advantages in addition to the then-large endowment from HIID. Along with the $5 million in unrestricted endowment funds, the provost's office agreed to provide $500,000 per year (soon increased to $750,000) in general support for the first four years, while the CID set out to obtain grants and endowment funds of its own. In the first year Sachs raised $1 million in gift money, although the CID endowment remained unchanged. The gift money, and more, has been spent as up to 60 people worked on CID research, their salaries easily outpacing the center's revenue sources.

Last fall and winter Sachs negotiated with President Lawrence H. Summers for an increase in the University's support for CID to $2 million per year. Summers was willing to consider funding the center at some level, but wanted management changes, especially improved fiscal controls. The CID was to have an executive director installed who would report to both Sachs and Bonnie Newman, executive dean at the Kennedy School, as well as ongoing oversight of its operations by a faculty committee. The dialogue between Sachs and Summers was still in process when Sachs announced his resignation.

In May, after Sachs's resignation, Kennedy School dean Joseph Nye appointed a five-member faculty committee for CID, chaired by Dani Rodrick, Hariri professor of international political economy. Nye charged this committee with "full decision-making authority regarding the programs and policies of the Center." Committee member Merilee Grindle, Mason professor of international development, says that "our principal task is to ensure that there is effective faculty engagement in the CID and that its activities develop from faculty interests. We are very interested in getting faculty from across the University involved in the center. We hope it becomes the place at Harvard where important issues of international development are discussed." That is one possible outcome. Currently, more international development work is ongoing at the Belfer Center, the Center for Business and Government, and the Hauser Center (all at the Kennedy School) than at the CID.

Grindle notes that the faculty committee must be cautious about developing a new vision for the CID, since that task will be an important prerogative of its next director. So far, the provost's office has convened no search committee for a new director; getting a successor to Sachs on board could take a year or longer.