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Round table 4: Panellists stress need for ‘determined structural change’ to spark inclusive development in agriculture-dependent countries

Doha, Qatar, (24 April 2012)

Determined structural change at the national level and a proactive stance towards global challenges were needed to “kick-start” inclusive development in predominantly agricultural countries, officials and experts said this morning as the Thirteenth Ministerial Meeting of the United Nations Conference on Trade and Development (UNCTAD XIII) held its final round table in Doha, Qatar.
The round table, on “Addressing persistent and emerging development challenges as related to their implications for trade and development and interrelated issues in the areas of finance, technology, investment and sustainable development”, discussed an “integrated approach to structural transformation of the economy of developing countries”, the session’s subtheme.
“UNCTAD has consistently argued that achieving inclusive and sustainable development in developing countries requires structural change and the development of productive capacities,” said Taffere Tesfachew, Spokesperson for the Meeting and moderator of the event.  He was introducing the UNCTAD concept paper for the round table (document TD/458), which maintains that deliberate Government action, and more specifically industrial policy, was required to promote industries and induce structural change.
That approach had not always induced structural transformation in the past, he pointed out, particularly when organized around a top-down process supporting entrepreneurs without challenging them to perform, and without due concern for other socio-economic policy goals.  A new approach was therefore required, guided by better consultation between the State and the private sector, effective disciplinary mechanisms for underperforming firms and sectors, greater emphasis on education and skills development and credible monitoring and evaluation.  It was also clear that without a vibrant export sector, structural transformation was likely to be choked.
Speakers in today’s discussion focused on factors critical to structural transformation, including agriculture and food security, domestic resource mobilization, transition to green economy and infrastructure development.
“The process of development is a process of continuing structural transformation,” UNCTAD Secretary-General Supachai Panitchpakdi said as he opened the round table.  Capital could help start the process by introducing higher-level agricultural production in purely agricultural economies so that value-added activities and technology could create more jobs.  As skills and infrastructure developed, countries began to industrialize more, starting with labour-intensive production and moving towards less labour-intensive and more capital-intensive production and services, as skills and infrastructure developed further.
He warned, however, that the process could be hindered by global challenges, including widespread food insecurity and lack of access to energy, climate change, desertification and inequality in technology and wealth.  Such challenges could not be managed by the market alone, he emphasized.  State involvement was critical, as was domestic mobilization of resources, which would allow developing countries truly to control the development process and leave them less vulnerable to the recession affecting many donor countries.  In using all resources, the State must become more development-oriented, he stressed.  Even in countries with rapidly growing income, such as India, investment in infrastructure was still lagging, and in poorer countries it was frequently minimal.  It must be a higher priority, he maintained.
Participants discussed the need for changes in both national structures and the international environment for progress to take place.  Tetteh Hormeku-Ajei of the Third World Network Africa said necessary transformation could not take place in Africa without proper infrastructure, technology and, importantly, the policies that would build human capacity and link those sectors to other areas of the economy.  Such elements would not be provided by free trade alone, he cautioned.  Trade liberalization and Trade-Related Aspects of Intellectual Property Rights (TRIPs) agreements had “virtually destroyed the ability of our economies to compete”, he said.

The other panellists were Dorcas Makgato-Malesu, Minister for Trade and Industry of Botswana; José Antonio Urquizo Maggia, Minister for Production of Peru; Bambang Susantono, Vice-Minister for Transportation of Indonesia; Juan Manuel Gómez Robledo, Vice-Minister for Multilateral Affairs and Human Rights in the Ministry of Foreign Affairs of Mexico and representative of the G-20 Sherpa, Mexico; and Abebe Shimeles, Development Research Department of the African Development Bank Group of Tunisia.

Ms. MAKGATO-MALESU highlighted several key challenges facing developing countries, including persistent poverty, food insecurity, high external debt, high unemployment and weak productive capacities.  On agriculture, she said that subsidies in the developed world made it impossible for developing countries to compete in trade.  Botswana had created a comprehensive agricultural programme focusing on young farmers, drawing investment and support and improving productive and management capacities.  However, there was a low rate of investment in technology across the developing world, and keeping highly trained people in the country was a challenge.
Overdependence on external technical expertise and resources rendered developing countries vulnerable, she continued, adding that “we need to be able to stand up and say ‘this is what we need’”.  Countries must determine their own priorities and support should follow, not the other way around, she emphasized.  On international trade, the “ever-changing ballgame” concerning trade made it difficult for developing countries to succeed, she noted, stressing that the rules should be clarified before countries entered into trade partnerships and then remain consistent.  In addition, development partners should scale up “aid-for-trade” programmes as well as delivery, she said, noting that a large number of commitments made had not yet been fulfilled.
Mr. URQUIZO MAGGIA said Peru’s gross domestic product (GDP) had been growing at a rate of more than 6 per cent over the last 10 years.  While challenges remained, the country was beginning to integrate into the world economy and developing many of its sectors, including science and technology.  With some 10 million poor people, Peru aimed to close the poverty gap by diversifying production and exports as well as improving both food security and the environment.  There had been little industrial development in trade and service provision, he said, adding that the country was therefore working to build production and improve its value added.  Peru encouraged businesses to adopt a market orientation and was working to institutionalize science and technology.
Among other strategies being undertaken, Peru was attempting to promote small and medium-sized enterprises while seeking to ensure that industries complemented each other, he continued.  It was also seeking better market opportunities and working to develop stronger free-trade instruments.  Two funds were operating to support science and technology, and industrial parks as well as innovation hubs were being set up.  Peru had set sustainability as a major goal — “to rationally use our natural resources” — as well as the promotion of agro-business and improvements in the lives of its producers.
Mr. SUSANTONO said Indonesia’s middle class was growing and its GDP was rising.  The country was emerging in the global market and moving from the “primary economy” — agriculture and fisheries — to a “secondary economy”.  Its “New Economic Master Plan” was working to foster development through six economic corridors, and relied heavily on connectivity, both intra-island and global.  The economic growth, coupled with the growing middle class, had resulted in new consumption patters, namely increased spending power.
Indonesia's recent growth had also led to several major challenges, including urban transport problems and alarming pollution levels.  In response, the country had put in place a national environmental plan and had implemented programmes in supporting environmentally friendly transport.  It was also using new and emerging mobile technology to help people navigate traffic issues.
Mr. GÓMEZ ROBLEDO said the topics covered today were priorities for the work of the Group of 20 (G-20).  More broadly, the G-20 would continue to promote financial inclusion, sustainable development and green growth.  It had also taken up new themes such as “food security and development” and “green economy and structural reform”.  The group was becoming an open and inclusive forum that had expanded to include some 30 countries.  The Mexican presidency invited representatives of other nations or regional groupings to address specific issues dealing with Africa and the Asia-Pacific region, among others.
The G-20 was not seeking to transplant other more traditional intergovernmental forums, he emphasized.  It merely sought to add impetus to global efforts to tackle challenges affecting the peoples of all countries.  Mexico’s priorities for its presidency included, among others, promoting access to innovation and scientific research for the most vulnerable countries, especially helping them prepare for the “post-petrol” era; strengthening the financial system and fostering financial inclusion to promote economic growth; and promoting sustainable development, green growth and the fight against climate change.  However, the G-20 had no “magic bullets”, he cautioned, adding that under the Mexican presidency, it would continue to seek points of convergence with all nations and work with them to launch a new road map to help jumpstart global growth.
Mr. SHIMELES, focusing on the situation in Africa, said its growth continued to outpace the international average.  Among other positive notes, the continent’s young people and middle class were rising, and within the next decade, it was expected to have the largest able workforce on the planet.  Africa was also beginning to put its vast natural resources to work for its own people.  Yet, all that good news should be taken with a “grain of caution”, as many African countries still struggled with food insecurity, instability and lagging employment, he said.  While some of the countries facing the greatest challenges were dealing with political instability or corruption, others, particularly agriculture-based nations, were hampered by a lack of access to new technology, farming equipment and adequate infrastructure.
He went on to say that while more young Africans were pursuing higher education, greater efforts were needed to ensure that a larger percentage of them went into fields associated with science and technology.  Africa would also have to work harder to provide an enabling environment that would attract the right investors and creative development partners.  As for the work of the African Development Group, he said the institution had funnelled 60 per cent of its resources towards financing infrastructure rehabilitation throughout the continent.  It also sought to promote technological innovation.  Above all, the Bank and its financing partners had made green growth a major priority by scaling up continent-wide initiatives to help Governments implement climate-resilient growth strategies.
Mr. HORMEKU-AJEI said that, taking into account all the previous presenters’ comments, it was important to acknowledge that Africa as a whole remained too dependent on too few exports and too few income-generating sectors.  That challenge was exacerbated by weak infrastructure and lagging access to technology in particular.  Africa needed a complete transformation of its manufacturing and agricultural sectors, he said.  However, such wholesale change could not take place without proper infrastructure, technology and, importantly, policies that could build human capacity and link those sectors to other areas of the economy.
He went on to say that trade liberalization and TRIPs agreements had “virtually destroyed the ability of our economies to compete”.  No one should look to the completion of the long-stalled Doha Development Round to provide any relief, he cautioned.  Indeed, if and when those talks concluded, the recommendations currently on the table would almost certainly leave Africa and the rest of the developing world worse off than it was today.  “And if you think that’s bad, just look at what the European Union has in store with the [economic partnership agreements].”
Moreover, while stakeholders continued to call on the developed world to stand by their long-promised development commitments, including official development assistance (ODA), those very countries were steadily working to undo each and every obligation to which they had committed.  With all those realities in mind, any discussion about structural transformation in developing countries must acknowledge that even the things that those countries could do themselves were not supported by the G-20, WTO or other agencies and development partners.  Furthermore, UNCTAD — the one organization that had always pressed for inclusive development and improved trade access and regulations for the developing world — was now under attack by the very countries which had made the sustainable development agenda so difficult to achieve.  Perhaps the only way out of the “quagmire” was to defend and expand UNCTAD’s mandate, he suggested.
When the floor was opened for comments and questions, several speakers from the developing world noted that their Governments were stymied by the sheer number and complexity of the “goals” that must be reached — their countries had to log rapid growth while protecting the environment, or diversify their economies without access to technological innovation.  One speaker suggested that developing countries should perhaps focus on development rather than growth.  Indeed, many poor countries had achieved growth rates but failed to produce decent jobs.  How could such issues be reconciled?
Mr. GÓMEZ ROBLEDO responded by emphasizing that industrialization was not incompatible with attempts to diversify economies.  Developing countries could, for instance, build the capacity of their private sectors to fill some of the gaps that continued to hamper their efforts to achieve green growth.
Ms. MAKGATO-MALESU added: “We have to value the very real assets we have.”
Mr. SHIMELES acknowledged that such issues were indeed “very complex”, but stressed that policymaking bodies should create an environment that would promote meaningful structural transformation.
The Meeting will reconvene tomorrow to conclude its thirteenth session.

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