Regular readers of this blog know that Tom Barnett, Senior Managing Director at Enterra Solutions®, has recently released a book entitled Great Powers: America and the World After Bush, which can be purchased through Amazon.com. Drawing from that book, Tom recently published an article in Defense News [“Private Sector Must Lead Exit Strategy,” 15 February 2009]. In the article, Tom mentions Enterra Solutions and features its Development-in-a-Box™ offering. Tom writes:
“America’s military, faced with a future of small wars and lengthy postconflict nation-building efforts, desperately seeks to understand the logical boundaries between where its work should end and that of the private sector should begin. Marine Corps Gen. James Mattis likes to say that ‘Jobs! Jobs! Jobs!’ are your primary counterinsurgency tool, and he’s right. But what constitutes the fastest route to that goal? Historically, America’s foreign aid approach has been to get economic activity brewing inside a country and then link it up to the global economy – a deliberately slow catch-up strategy that aims for a downstream connect-up. But what if it makes more sense to reverse that sequence? Once baseline security is achieved, why not focus on connecting to the global economy first to attract foreign investment, and then let that money drive the internal development process? Why not let the global economy tell that virgin market what it should sell, instead of having that country guess on its own?”
The approach Tom is recommending builds on the work of Harvard’s Michael Porter, a renowned business consultant, who has demonstrated how nation-states have become and remained competitive because they were able to identify and leverage highly differentiated “competitive clusters.” It makes no sense for an emerging market country to try to compete in an area where it has no natural competitive advantage. Tom continues by discussing how Development-in-a-Box™ fits into to this philosophical approach.
“Since 2007, my small company, Enterra Solutions, has performed development work in Kurdish Iraq. We don’t focus on getting old businesses up and running. Instead, we try to generate the network connectivity required for Kurds to conduct business transactions with the outside world – e.g., transportation, telecoms, banking, business and investment exchanges, and utilities. This pioneering work is a proof of concept for something we call Development-in-a-Box. Once templated here, we plan to sell such upgrades as a repeatable solution throughout developing regions, partnering with some of the world’s largest system integrators, utility providers, dealer-brokers, logistical firms and the like. An analogy: Imagine that I, the United States, am a developer of a housing subdivision called the global economy. You, a developing country, want to build a home in my subdivision and I want you in there as well. So what do I provide you with to make that happen? I give you a slew of connectivity, prepackaged and preapproved to global standards.”
Tom was obviously pressed for space in the article so let’s fill out his analogy. When a builder constructs a home in an established neighborhood, he cannot select the kind of power grid, sewer or water systems with which to connect. He must conform to the standards already in place. When the homeowner moves in, he or she doesn’t create a new telephone or cable system, but connects to systems already in place. As a result, when the owner moves in he or she is ready to become a fully functioning member of the community. Tom continues:
“Development-in-a-Box is thus globalization connectivity with the rules baked in. It’s no good to raise an economy or a working population to international standards unless you supply the basic connectivity necessary to act on those global standards. Otherwise, all you trigger is a brain drain. But it’s equally useless to provide the connectivity without the accompanying global standards or rules, because that just means you’re trying to link low-trust environments with higher-trust ones without realistically accounting for the differences. For example, many sub-Saharan economies do not adhere to the International Standards Organization’s best-practices regimes, such as the ISO 9000 series governing production and manufacturing industries.”
Anyone who doubted the importance of trust in keeping the global economy progressing should have had those doubts wiped away during the current financial crisis. Greedy lenders who broke the trust of investors by approving “liar loans” created a housing bubble. Greedy financial services companies that packaged toxic loans and sold them as collateral broke the trust of other investors and exacerbated the crisis. As a result, credit (which relies on trust) evaporated and the economy tanked. The problem may have started in the developed world, but it affected the developing world as well. Eventually, the economy will recover and when it does emerging market countries need to be ready to take advantage of that recovery. That is where Development-in-a-Box plays a role.
“Development-in-a-Box is a starter kit for moving an economy toward such accreditation, allowing governments to outsource the creation of civilian infrastructure. With a resource-rich region like Kurdistan, an immediate goal is to create a closed loop of funding whereby the local economy leverages its natural resources as direct payment for the development of infrastructure designed to diversify the economy, thereby narrowing opportunities for corruption and waste. Here’s how these pieces fit together in an emerging market following some conflict or disaster: The country has stabilized and its expatriate citizens begin returning or start investing in the country. Buildings start to go up, other infrastructure investments begin to emerge, but key economic pieces are missing. Some low-price consumer products begin to appear, such as fast food and toiletries. Mobile phone service was one of the first utilities to gain purchase in the new economy, but it wasn’t accompanied by a high-speed, broadband network that is essential for economic trade. The country wants to take the next step, but there is no reason that it has to reinvent the wheel. Ditto for a national banking system to process these transactions and handle foreign direct investment. Furthermore, local businesses with no history of connecting with the global economy must ensure their products meet world standards. They need to market their products and support customers. To meet their needs, business support offices and business-to-business exchanges can be created to meet local requirements, but using accepted standards and practices. Job training and mentoring programs can be similarly established.”
As regular readers of this blog are aware, Enterra Solutions first gained traction in the Kurdistan region of Iraq through the Pentagon’s Business Transformation Agency. Tom concludes his article by pointing out, however, that Development-in-a-Box is not properly a defense program but a commercial one. Development-in-a-Box is not a way of extending military presence, but a path for extracting it.
“Development-in-a-Box is not a model of extending the Pentagon’s nation-building responsibilities, but of curtailing them by accelerating the integration of a post-intervention economy into the global economic grid. America has spent the last two decades buying a big-war force and running its small-wars troops ragged. Our No. 1 goal in any operation must be to leave the place more connected than we found it, because that’s what reduces the possibility of a return date. If we truly want to keep America’s big-war forces strong and at the ready, we must get better at terminating these interventions. Bottom line: Local job creation is the only exit strategy in a long war against violent extremism. Yes, the Pentagon has perfected drive-by regime change, but to master the reconstruction process, America’s private sector must take the lead in delivering such connect-up services as a solution.”
If you want to read a more detailed account of how the world can be made a safer and more prosperous place, buy the book.
