Terry Sanford Distinguished Lecture by Administrator Rajiv Shah at Duke University

Thursday, September 12, 2013
Development Innovation Economy

[As prepared]

Thank you, Dean Brownell, for that generous introduction and continued partnership. The Sanford School of Public Policy is a superb example of world-class education coupled with policy engagement. I hope to have the chance someday soon to hear your bluegrass band play.

I know President Brodhead could not be here today, but I want to recognize his critical leadership. With new programs like DukeEngage and Bass Connections, he has empowered his students to tackle the toughest challenges around the world.

Just today, I heard that almost half of Duke students study abroad every year. That’s extraordinary.

There are important members of my policy and science and technology teams with me here today.  Paul Weisenfeld, Tony Pipa, Alex Deghan, Michele Schimpp, and Ticora Jones. They are outstanding leaders—I encourage you to reach out to them.

I am honored to deliver a lecture named for one of our nation’s greatest public servants. With the heart of a teacher and the experience of a soldier, President Sanford challenged his students to transform the world around them.

Through the generations, Duke University has answered that call. From unlocking the secrets of the human genome to uncovering new leads in the search for an AIDS vaccine, Duke researchers and scholars have set their sights on some of the most pressing challenges of our time.

This thirst for translating knowledge into opportunity has shaped our nation’s economy—the most technologically advanced, the most innovative, and—still today—the most dynamic in history.

The race to the skies helped build a constellation of satellites that put the power of global positioning data in the palm of our hands. The invention of the computer chip and ARPANET helped create a flourishing valley of entrepreneurs with the desire to change the world and the confidence to actually do it.

And the discovery of a new seed sparked a Green Revolution, saving millions from starvation and transforming farms from India to North Carolina.

With stumbles and new starts, the growth of this innovation economy remains the defining feature of American economic strength and job growth.

But today, our innovation economy must adapt to an extraordinary new trend that is quietly and powerfully reshaping the world in which we live.

All around us, the middle class is changing.

For centuries, less than 1 percent of the world’s population enjoyed the privileges that come with a little extra money in your pocket to spend on school for your children or improvements to your home.

By 1990, it numbered 1.8 billion people, the vast majority of whom lived in North America, Europe, and Japan.

But over the last two decades, growth in emerging economies has turned billons of people into producers and consumers—creating both opportunities and real challenges, including real and painful disruptions for many American families.

By 2025, the global middle class is expected to more than double—growing to 4.2 billion people—80 percent of whom will live in nations often associated today with their battles with poverty and instability, including Nigeria, Tunisia, Colombia, and Cambodia.

For the first time in world history, the number of people in the middle class will exceed the number of people still struggling to meet their basic needs.

As this center of gravity shifts, it will have as great an impact on the futures of Fortune 500 companies as it will on the careers of Duke students.

As business school graduates, you’ll be seeking footholds in cities we haven’t even heard of today—but are fast becoming consumption capitals, like Medan in Indonesia or Huambo in Angola.

As medical school graduates, you’ll be considering how community clinics can provide advanced care to patients at a fraction of the cost of today’s American-style hospitals.  

And as public policy graduates, you’ll be analyzing the experiences of developing countries that have risen for what they can teach us about spurring job growth.

In fact, it’s been estimated that annual consumption in emerging markets will reach $30 trillion annually over the next 15 years—an opportunity American companies are already seizing.

Just this Tuesday, Apple released two new iPhones, one of which is a low-cost model targeted at markets abroad. And Citibank is building mobile money platforms to bring in hundreds of millions of new customers from rural Haiti to the Philippines.

If you consider that every billion dollars in U.S. exports supports roughly 5,000 American jobs today, estimated export growth to sub-Saharan Africa alone over the next five years could help deliver up to 48,000 to 60,000 new American jobs.

But I don’t need to tell you any of this.

You work and study in one of the most productive and enterprising innovation hubs in the world—the Research Triangle Park.

For the last 40 years, this Park has grown by an average of six new companies and 1,800 new jobs a year, with each one doubling—or tripling—its direct economic impact.

And I believe that if you committed what you do best— exploring new ideas and creating new businesses — to the task of global development, we will not only advance human progress but lay the foundation for success in the global market of the future.

I see it happening every day, and the results are inspiring.

Across the country, a small but powerful part of our economy is dedicated to bringing American innovation to global development.

It includes innovation hub engineers like Duke’s Professor Bob Malkin who teaches Design for the Developing World and Silicone Valley’s Krista Donaldson who leads Design Revolution, a start-up that’s already built a low-cost blue LED light to treat jaundice at rural clinics; university students like Jennifer Shen and Nina Brooks — two students I met today who are bringing the skills they learned in Duke’s classrooms out into the field in Tanzania and India; and executives like Ajay Banga, the CEO at MasterCard, who is helping extend opportunity to millions with services that let you pay school fees or collect your salary right on your mobile phone.

Two weeks ago, in fact, I had a chance to meet some of these new faces of American innovation in development.

At a factory in Providence, Rhode Island, called Edesia, 50 employees—including former refugees from Liberia and Burma—were making a high-energy peanut paste to feed starving children from Somalia to Syria.

What’s remarkable is that this factory and its jobs didn’t exist 10 years ago.

They are the result of a decade of research that USAID helped support to dramatically improve the science of resuscitating severely malnourished children.

The Mayor of Providence and the entire Rhode Island delegation joined me on the visit to the factory floor—which sources most of its ingredients from the United States and plans to double their operations.

Edesia is not an outlier.

Today, we’re working with companies in Georgia, California, New Jersey, and Texas to develop the next generation of scientifically advanced, life-saving products—creating jobs at home while continuing our nation’s proud history as the world’s humanitarian leader.

Or consider the field of energy innovation. Today, we work with non-profits like We Care Solar and start-ups like Mera Gao Power that were developed by American students to help ensure that power shortages never disrupt a child’s chance to learn in Africa or a surgeon’s chance to save a life in India.

Although they are small, these companies and organizations do not sit on the sidelines of the American economy.  They help define it.

Not only do small businesses account for almost two-thirds of all new job creation; they also contribute disproportionately to innovation — generating 13 times as many patents as large companies. Last year, The New York Times reported that without start-ups, the United States would have had an annual net increase in jobs only seven times in the last 36 years.

And for a start-up, there’s nowhere better to make your home than an intensely competitive and collaborative innovation hub, like RTP.

Today, hundreds of these hubs pepper the country—from California to Boston to North Carolina—offering inventors and entrepreneurs exciting opportunities to serve at the intersection of social good and business.

If you are not yet focused on the challenges of the world’s most vulnerable people, we hope you will be. Because your commitment will not only deliver for our economy, but speak to our national character.

Our students will have the science, technology, engineering, and math skills they need to compete.

Our businesses will have an established presence in the markets of the future.

Our communities will be more globally-minded and better connected to the world as it will be.

And our kids will be inspired by the moral contributions they will make to humanity.

Now, the truth is that development institutions haven’t always been well positioned to help you connect to challenges in the farthest corners of the globe.

So we did something a little bit unusual in Washington: we changed.

In the last three years, we’ve rebuilt our policy and budget capabilities, adopted a rigorous approach to evaluation and transparency, hired more than 1,100 new staff, and made tough choices about where our work will have the greatest impact.

Over the past five years, President Obama has launched three major global development initiatives to focus our efforts and rally the world behind ambitious, but achievable goals: eradicating widespread hunger, ending preventable child and maternal death, and bringing electricity to impoverished communities around the world.

But in order for America to lead the achievement of these goals, we need you.

We need you to focus on the 300,000 mothers who die in childbirth and seven million children who die before the age of 5—almost all of them in remote and rural settings.

The United States remains the world’s most generous leader in global health, and President Obama has consistently committed more than a billion a year to deliver dramatic results.

But we need to do more—especially in saving lives within the first 48 hours of birth.

So we partnered with an organization called Changamka, which is Swahili for “Cheer up.” They’ve developed prepaid smart cards that women can top-up with their mobile phones and use to pay for prenatal check-ups and prescriptions.

This afternoon, I had a chance to meet the organization’s founding director, Zack Oloo, who is one of this year’s SEAD innovators.

SEAD—or the Social Entrepreneurship Accelerator at Duke—was launched to tackle this core problem in global health. Today, it is part of a network of seven USAID development innovation laboratories that we founded last year on college campuses.

Duke University beat out more than 400 other world-class institutions for a spot in our Higher Education Solutions Network precisely because of your extraordinary commitment to this mission.

We need you to focus on the nearly 860 million people who go to bed hungry every night.

When President Obama took office, the world was mired in the midst of a food, fuel, and financial crisis that brought millions of people back to the brink of poverty.

As one of the first foreign policy acts of his presidency, President Obama launched a major global effort to end hunger through business and science. In the last year, we helped 7 million farmers transform their fields and reached 12 million children with nutrition programs.

But we need to do more.

We know that temperatures will grow warmer, rains more erratic, and droughts more regular and vicious in precisely the settings most vulnerable to climate change.

In order to help set these communities on a path from dependency to resilience, we need new solutions to the combined challenges of extreme poverty and extreme climate. That means not only working with long-standing research partners like Kansas State and Virginia Tech to develop new drought-tolerant seeds, but also harnessing the private sector to scale them.

I know John Buley is here with his Social Enterprise class tonight.

Before he became a professor at the Fuqua School, John was a senior leader at J.P. Morgan, where he spearheaded a complex and groundbreaking effort with our Agency to invest $25 million in 20 game-changing agriculture businesses across East Africa.

Today, one of those businesses, Nuac Farm reaches 5,000 smallholder farmers with the highest quality seeds around.

And we need you to focus on the 600 million people across Africa who lack access to electricity—crippling the ability of businesses to grow.

Recognizing that this challenge is the single greatest barrier to growth on the African continent, President Obama launched Power Africa to double energy production on the continent.

We’re going to work with some big partners—from GE to Standard Charter—to develop some big power projects and that’s important, but we also know with certainty that a formal electricity grid is never going to reach many millions who live in rural villages.

We need your help to invent solar-powered or wind-powered mini-grids that offer children a light to read by after the sun goes down.

Through our Development Innovation Ventures Fund, we’re investing in a team of young graduates who started a company called Egg-Energy to provide families with rechargeable batteries that they can rent to power their homes for five nights at a time.

In Tanzania, where 90 percent of people lack access to electricity—but 80 percent live within 5 kilometers of the power grid—this could help a generation of children grow up with light.

That’s the purpose of the Development Innovation Ventures Fund—to support entrepreneurs who have a great idea and need the resources to test it. If they can prove through rigorous evaluation that their idea works, we can also help them bring their solutions to scale.

And we are not going to stop there.

Earlier this year, in the State of the Union address, President Obama called upon us to lead the world in ending extreme poverty in the next two decades. It was an extraordinary moment, as the President set forth a vision for one of the greatest contributions to human progress in history.

Now, I know what you are thinking. I know you are skeptical. I know you think it is just rhetoric.

But consider this: In the last 20 years alone, human ingenuity and entrepreneurship around the world have reduced child mortality rates by 42 percent and poverty rates by 48 percent—lifting over 600 million people above the dollar-and-a-quarter poverty line.

In fact, hardly anyone noticed in 2005 when—for the first time in human history—poverty rates began falling in every region of the world, including Africa.

By further accelerating these trends, we can lift one billion people from the most gut-wrenching, dehumanizing conditions of extreme poverty, and we can do this within the next two decades.

But we can’t do it alone.

The only way we’ll get there—the only way—is by mobilizing the energy and ingenuity of a new generation of students, inventors, and entrepreneurs to deliver results on a greater scale than ever before.

No one knows this better than Aaron Williams, the former director of the Peace Corps, who is here tonight. A hero to many—including me—Aaron has done more than anyone to sustain our nation’s legacy of service and compassion abroad.

In many ways, by setting America’s innovators at the forefront of the mission to end extreme poverty, we are building the Peace Corps of our future.

Over a hundred years ago, a German mathematician named David Hilbert gave a speech in Paris where he presented a list of the 23 most important unsolved math problems of his time.

It galvanized the world of science—setting mathematicians from Zurich to Princeton on the trail of elusive solutions.

“Who among us would not be happy to lift the veil behind which is hidden the future?” Hilbert asked.

Since then, mathematicians around the world have kept a list of unsolved problems to ponder from time to time. In 2008, DARPA—the Pentagon’s advanced research agency—announced 23 new problems that it hoped would catalyze major breakthroughs.

Now, I know we’re not all mathematicians.

But we do have our own set of challenges to solve, and maybe—like mathematicians—we should have them scrawled on our whiteboards or tacked up to our walls.

And we should think about them every day.

How can we bring off-grid light to millions who lack electricity?

How can we teach a child to read who may never set foot inside of classroom?

How can we ensure that a mother can give birth safely without a doctor by her side?

These are questions that many leaders ask themselves far too late in life, but institutions like SEAD are actively studying today. And answers to these questions cannot simply be new gadgets.

The development landscape is littered with great ideas that have failed to really change lives. Without considering manufacturing, or pricing, or distribution, or adoption—without robust business plans—then they’re not going to succeed.

The truth is that we work in a field that is begging not only for your compassion and humanity, but also your critical eye and analytical judgment.

Continue to choose work at the intersection of service and entrepreneurship. Build businesses to serve the urban poor not just in Detroit, but also Delhi. Invent tools for poll-workers to monitor elections not only in Kabul, but also Miami. Design mobile applications to monitor extractive industries not only in Canada, but also the Congo.

As you do, you’ll be creating jobs for communities at home even as you expand opportunities abroad.

And we will be there to help bridge the ingenuity of your innovations with a pathway out of poverty for millions of people around the world.

Thank you.

Duke University, Durham, North Carolina