Preview of a Review

The Harvard Institute for International Development (HIID) is a singular institution. "No other American university has anything like us," says Richard Pagett, A.M. '68, a 20-year veteran of HIID who currently serves as its acting director. The institute has a long-established mission of consultation with countries around the world on issues of economic, social, and political development. And it is huge. At times, HIID's budget has topped $40 million--more than that of some of Harvard's smaller faculties, like divinity and education. HIID's presence in Cambridge embraces more than 100 academic professionals and 50 administrative staff members; it employs 80 students part-time, and last year hired 19 faculty members as consultants. There are 30 overseas project directors based in 12 countries. HIID has an unrestricted endowment of $17 million, and this year's budget is $35 million.

Yet this international behemoth has recently been shaken by scandal and its financial fallout. In 1997, the U.S. Agency for International Development (USAID) charged that Nancy Zimmerman, a money manager married to professor of economics Andrei Shleifer, HIID's project director in Russia, had invested in Russian government bonds with her husband's knowledge, and used tax-funded Harvard resources and employees in making her investments, a violation of HIID and USAID policies (see "Harvard in Russia: Conflicts of Interest," July-August 1997, page 63). USAID also charged that Jonathan Hay, the institute's program director in Moscow, had violated the agency's conflict-of-interest regulations by investing in Russian government bonds. HIID lost the remaining $14 million of $57 million in government funds that underwrote the Russian effort. U.S. Attorney Donald Stern is currently investigating HIID's consulting work for the Russian government in the early 1990s.

Stone professor of international trade Jeffrey Sachs, the institute's director since 1995, had done extensive economic consulting with the Russian government, but was not implicated in the scandal. He resigned his HIID post in May and now directs the Kennedy School's newly formed Center for International Development, a more research-oriented complement to HIID's consulting focus. Sachs also cochairs, with Stanton professor of the First Amendment Fred Schauer, the Kennedy School's new master's-degree concentration in international development, whose first class of students matriculated this fall.

In July, after Sachs's departure, Pagett became HIID's acting director. Associate University provost Dennis Thompson calls this "a good time to go out and assess HIID and what should be done with it." Accordingly, in September, a special task force chaired by Thompson began meeting to review the status of HIID. The group, which also includes Burbank professor of political economy Dwight Perkins (HIID's former director), Dillon professor of international affairs Jorge Dom’nguez, and Abbe professor of economics Dale Jorgenson, will deliver its recommendations to University provost Harvey V. Fineberg by January 1.

The key question facing the task force is determining the international organization's proper status within the University. Currently it is an "allied institution," like Dumbarton Oaks or the University Art Museums. (An allied institution is a structural part of the University that reports to Harvard's central administration, rather than to a dean.) Conceivably, HIID could become an affiliated institution, like the teaching hospitals affiliated with Harvard Medical School. Such entities are legally and financially independent of the University, while maintaining close relationships with Harvard--taking a meaningful role, for example, in the teaching of Harvard students. HIID could also become smaller and merge with one of Harvard's faculties--the Kennedy School being the obvious candidate, or perhaps be spun off completely to be reborn as an independent consulting firm.

HIID might also remain an allied institution with a different form of governance. Over the years, HIID has in turn reported to a council of deans and the office of the provost. "We've never gotten the governance structure quite right," Thompson says. "With this many people scattered over 12 countries, overseeing HIID from the provost's office is unrealistic. You can't keep track of it." He goes on to note, "This isn't just a standard review--we have to make some sort of decision. Continuing HIID exactly as it is now is not a likely outcome. We'll be looking at quite radical changes, as well as more modest alternatives. Something will happen."

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