For the second time in five years, Harvard is radically reorganizing how it studies economic development in the Third World, as administrators consider rebuilding from scratch the Center for International Development (CID).

CID would have a smaller budget, a greater focus on faculty-led research and closer oversight of spending than it did under its founding director Jeffrey D. Sachs ’76, says Hariri Professor of International Political Economy Dani Rodrik.

The proposal is the product of a steering committee, chaired by Rodrik, appointed last spring to chart a direction for the center in the wake of Sachs’ decision to leave for Columbia University’s Earth Institute.

Given the history of CID and the consequences of its director’s July departure, their task has involved more than just a little tinkering.

“We’re trying to put CID back on track,” Rodrik says, “but we’ll have to essentially start from scratch.”

It is not often that Harvard admits error and starts from square one. More remarkable are the players involved and the extent to which the proposed solution echoes previous efforts.

Sachs was the big name, the internationally and popularly recognized face of development studies and the center. His departure was publicly greeted as a major loss.

University President Lawrence H. Summers, who must ultimately decide the fate of CID, has emphasized development studies as an important priority for the University’s future.

He’s being presented with a plan, however, that is in many ways a return to the past.

In its academic focus, the plan tries to return to what Rodrik says he and other faculty believed was the center’s original intent. Financially, the plan grows out of concerns on the part of the central administration not to repeat the ways of the last four years.

But Sachs says the center he founded was blossoming and warns that it may now be heading toward irrelevancy.

Refocusing on Research

CID was founded in 1998, as a center affiliated with the Kennedy School of Government, at a time when Sachs was chair of then-troubled Harvard Institute of International Development (HIID). HIID was beset with controversy over the alleged wrongdoing of two of its affiliates working on its Russia project—a case that is the subject of an ongoing lawsuit by the U.S. government.

While HIID provided consulting services to the developing world, CID was intended to be the research arm of the University’s efforts at development studies.

Soon, in fact, it was the University’s only arm. In 2000, HIID was dissolved and much of its endowment transferred to CID. A committee reporting to then-Provost Harvey V. Fineberg ’67 said the University should concentrate its efforts on academic research rather than consulting.

Now two years later, the CID Steering Committee offers a similar warning.

“The main point is that CID really ought to be a research center that serves the needs of Harvard faculty and Harvard students,” Rodrik says. “We should not be in the business of providing technical assistance or policy advice and consulting.”

CID will be willing to provide support for practical research in the developing world, but only in cases where there are clear academic or instructional benefits to be gained, Rodrik says.

Such a change will mean turning back the clock.

“Over time CID took on more of the attributes of HIID than I or [the committee] thought desirable,” Rodrik says. “We’re concentrated on going back to CID’s root in that sense.”

Rodrik and others on the committee describe how Sachs put a strong intellectual stamp on the center. The jet-setting Sachs brought Harvard’s development center prestige and media attention—he appeared with U2 singer Bono to advocate debt relief and advised the U.N. secretary general on poverty reduction.

But it also distracted CID from what was supposed to be its core mission, Rodrik says.

“Jeff was very keen on having an impact on policy and being very close to policymakers and affecting what they did,” Rodrik says. “This had the effect of involving CID in technical assistance capacities.”

“There was a lot of activism under Sachs,” agrees Professor of Tropical Medicine Andrew Spielmann, a member of Rodrik’s committee.

And because Sachs was “such a forceful person,” Rodrik says, other faculty members and researchers were driven away from CID.

The outlook of Sachs’ CID is reflected in the grants the center sought. Much of CID’s funding was sponsored research—grants paying for advisory activities. And on nearly all of those, Sachs was the principle investigator.

The new CID will be scaled down significantly, with a budget a fraction the size of the old CID and supported by grants aimed at encouraging teaching and research.

While it won’t seek to be a primary source of funds for faculty doing development research, it will try to catalyze and provide support for such work. It will be the type of center that provides the know-how for Harvard professors looking to do survey research in the developing world, Rodrik explains.

It will encourage students to study the Third World’s problems. And practical advising will now be a much smaller part of the picture.

Sachs, meanwhile, disputes that there was any drift during from the center’s original mission under his tenure. The difference is a philosophical one, he explains.

CID had three “pillars”—research, teaching and outreach—Sachs says. While research was the main focus of the center, it also depended on the other two.

“CID was and in my strong view should be in the activity of advising governments, multilateral agencies and other official institutions on economic development...and other related problems,” Sachs writes in an e-mail.

Should CID abandon this philosophy, Sachs says, “I would certainly invite students interested in the interface of research and advising, outreach [and] fieldwork to consider the activities of the Earth Institute at Columbia University.”

But Rodrik says that starting from scratch without Sachs isn’t such a bad thing.

“Sometime being an institution without a charismatic leader can be helpful,” Rodrik says.

Figuring the Finances

While it might be desirable to start over, financial realities give CID no choice.

The state of the center’s long-term financial prospects at the time of Sachs’ departure is a heavily debated topic. But how the center stands now is a fact.

CID is projected to run a $2 million deficit this fiscal year.

Much of that deficit—more than $1 million—comes from termination costs associated with Sachs’ departure. Only four of the 23 projects active at CID a year ago remain.

Sachs took several projects with him to Columbia, and offered to continue work on several that remained at Harvard. According to both Sachs and Rodrik, he was told Harvard wasn’t interested in such an arrangement.

This year the center is decapitalizing—spending the principle of its endowment—to cover the shortfall. But without any significant streams of income remaining, the center needs help to rebuild and continue.

While the steering committee’s plan is addressed to Joseph S. Nye, dean of the Kennedy School of Government, it is aimed at the University’s central administration, from which CID hopes to obtain a new lease on life.

At Harvard, where a system of financial autonomy prevails, CID must petition the president and provost for such an unusual bail out. According to Rodrik, the committee’s plan seeks temporary seed money to get CID back on its feet.

If Summers is satisfied with the plan’s academic direction, Rodrik says, the central administration would cover CID’s budget for a number of years, until new streams of funds could begin and the endowment could be increased by substantial fundraising.

But Summers isn’t just worried about the plan’s vision, associates say.

Special Assistant to the Provost Richard B. Pagett, who served as a transitional executive director of CID this summer, says a number of basic preconditions underlay the steering committee’s charge.

“Summers wanted a financial management plan in place that would mean the center wouldn’t be on the permanent dole, along with a real executive director to keep the center from overspending,” Pagett says.

On its face, the plan and Summers’ expectation once again seem a throwback. When CID was founded, it was given seed money by the provost’s office for its first four years. According to both Pagett and Sachs, there was an expectation that fundraising would increase the center’s endowment and give CID a more solid foundation.

The question of whether CID followed this plan is one answered with bitter acrimony.

According to Pagett it did not. According to Sachs it did.

Pagett says that as CID entered last fiscal year, the final for which provost funds had been allotted, Sachs informed the president and provost’s office that CID was almost certainly going to run a deficit, and it needed an infusion of $500,000.

No new funding from the provost was on its way and according to Pagett two large gifts supporting CID had been spent.

“There was virtually no new gift income coming in,” he says.

It was against this backdrop, Pagett says, that Sachs asked Summers for new funds for the following five years.

And according to Pagett, the request

“did not include a plan that the center would be self-sufficient at the end of the five years”—thus extending CID’s stay on “the dole.”

Summers and Sachs were still negotiating, both have said, when Sachs decided to leave for Columbia.

Summers has declined to comment further on these negotiations.

Sachs says he did everything that was expected of him, and that the center’s long term finances were healthy at the time of his departure.

“I was assured from the start of University support, in outright financial support and in the commitment to work to secure a substantial endowment. CID budgeted accordingly,” Sachs says. “CID was not running out of money. That’s simply ridiculous.”

While Sachs would not elaborate with details, he wrote that Pagett’s account of the finances was “wholly inaccurate.”

“He simply does not know or does not understand or chooses to ignore the commitments of the Kennedy School, and the explicit arrangements with the University,” Sachs says.

Pagett says it was Sachs who didn’t understand the Kennedy School’s commitment. Sachs, Pagett says, expected the Kennedy School to take the lead while the Kennedy School expected Sachs to play a substantial role.

While Nye won’t comment on CID’s finances, he writes in an e-mail that the Kennedy School was fulfilling its end of the agreement.

Rodrik says that in formulating their report, his committee was concerned with program and mission, not finances. But the committee’s recommendations do address the problems Pagett and others cite with the center’s finances.

The report proposes a faculty oversight committee with financial monitoring as one of its prime duties.

“We need a better governance structure, to make sure CID is operating within its resources,” Rodrik says.

Looking Forward

The obstacles facing CID are significant and disagreements over the past linger. But those involved in planning for the center’s future are optimistic.

Rodrik says he hopes the plan is approved and a search for a new director begins quickly.

Nye says he agrees with the report and plans on discussing it with Summers and Provost Steven E. Hyman.

All want the work of reconstructing CID to begin in earnest.

At the same time, Rodrik cautions, CID is not and will not be the sole face of development studies at Harvard. Across the University, work on the Third World has continued during CID’s hibernation.

Rodrik says development studies at Harvard will remain among the strongest in the nation with or without CID’s support.

—Staff writer David H. Gellis can be reached at gellis@fas.harvard.edu.