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Project Begun To Develop Code of Conduct
Ford Foundation Funds Work by UTD, George Mason Professors
RICHARDSON, Texas (Jan. 22, 2003) - The Ford Foundation has funded a two-year project to develop a code of conduct and mechanisms for increased accountability to address the growing problem of conflicts of interest and other potentially unethical practices among private economic consultants to governments around the world.
The foundation has provided an $180,000 grant to Dr. Lloyd "Jeff" Dumas, professor of economics and political economy at The University of Texas at Dallas (UTD), and Dr. Janine R. Wedel, an anthropologist and professor of public policy at George Mason University, for an initiative entitled "Building Accountability Into International Development Advising in an Age of Diffused Governance." The grant is believed to be the first ever from the Ford Foundation to a member of the UTD faculty, university officials said.
According to Dumas, the ultimate aim of the project is to reduce the number of incidents like those that occurred several years ago involving Harvard University experts who advised Russia on economic reform. In 2000, the U.S. Justice Department sued Harvard and the employees, claiming that they had used their positions, inside information and influence to advance their own personal business interests. That lawsuit is still in the courts.
"Over the past decade, countries in Eastern and Central Europe and the former Soviet Union have attempted to move from centrally planned economies to market-based systems like those in the West - a transition that had never been attempted on such a scale," Dumas said. "These post-Communist governments didn't know how to make that shift themselves, so they turned to advisors and consultants from the West. Unfortunately, many of those advisors had no idea how to make the transition, either."
"The situation was not wholly unlike the carpetbagger syndrome following the United States Civil War," he said.
Dumas placed much of the blame for failed attempts at economic reform on either bad advice or unethical behavior.
"One can't stop people from giving bad advice, but we can establish international standards and codes of conduct for economic advisors and consultants and create systems and mechanisms to monitor their performance," Dumas said.
Dumas sees potential for abuse with consultants who advise a number of organizations, governments and businesses at the same time, some of which may be working at cross purposes.
"At present, it can be so difficult to detect where an adviser's ambitions and loyalties lie that it is impossible to judge whether conflicting interests are interfering with the quality and reliability of the advice being given," he said.
One solution, Dumas said, might be to develop a database that lists all of an adviser's personal and professional interests, providing a full and open record of potential conflicts to those who might employ the adviser's services. Such a database, he suggested, might even include feedback, both good and bad, from an adviser's previous clients - something akin to a Better Business Bureau report on one of its members.
Dumas and Wedel argue that the potential for problems with the independent adviser-government relationship has been exacerbated by a trend toward increased delegation of authority by international and national organizations, creating "many more opportunities for such advisers to play multiple, sometimes conflicting, and ambiguous roles that have the effect of furthering their own - rather than developmental - goals."
Dumas said that Russia in particular has been the recipient of a great deal of dubious advice from consultants. Particularly egregious is the "shock therapy" approach to that country's economy, which he said has created severe economic problems and engendered hostility toward the United States. He contrasted that to what he called a much more "cautious, measured" move to a market economy in China, which has met with far greater success.
As part of their project, Dumas and Wedel plan to convene a workshop this spring, where a small group of invited representatives of international development organizations and specialists from developing countries and those undergoing economic transition will discuss issues related to economic advising. Later, the pair will summarize their findings and suggestions in a paper, which will be presented at various international development conferences.
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