Document sets background for 21-26 April UNCTAD XIII summit in Doha; urges shift from finance-led globalization to development-centred globalization
Geneva, 7 February 2012 - "A true break" with the prevailing thinking behind the global economic system over the past 30 years and a shift to a reformed system of "development-centred globalization" that allows more stable and inclusive economic progress is needed as the world recovers from recession, the Secretary-General of UNCTAD says in a report to the Organization´s upcoming quadrennial conference.
The report, officially released today and entitled Development-led globalization: Towards sustainable and inclusive development paths , contends that "neither muddling through nor a return to business as usual will get things back on track". It urges decisive international and national steps to establish a "global new deal."
The report is a substantive contribution to the UNCTAD XIII quadrennial conference to be held in Doha, Qatar, from 21 to 26 April. The theme of the conference is "Development-centred globalization". The session will be attended by Heads of State, other high-level government officials, and representatives of civil society, the business community and academia. At the Conference, the organization´s 194 member States will discuss the current state of the world economy and the challenges it poses for development, as well as policy solutions. They will also set UNCTAD´s work programme for the next four years. Official negotiations on the outcome text of UNCTAD XIII began Friday.
"Finance needs to get back to the business of providing security for people´s savings and mobilizing resources for productive investment," Secretary-General Supachai Panitchpakdi writes. "Reforms are also needed to replace unruly and procyclical capital flows with predictable and long-term development finance, to regain stability in currency markets and to support expansionary macroeconomic adjustments. Surveillance and regulation will need to be strengthened at all levels."
The Secretary-General and UNCTAD economists have contended for several years that the current global economic and financial system, even during boom periods, has not yielded benefits for all, and that income inequality has been rising and financial imbalances have been accumulating. These have led to a global economy that is prone to booms and busts.
"The term finance-driven globalization characterizes the dominant pattern of international economic relations during the past three decades," the report says. "This is intended to convey the idea that financial deregulation, concerted moves to open up the capital account and rapidly rising international capital flows have been the main forces shaping global economic integration. . . . Financial markets and institutions have become the masters rather than the servants of the real economy, distorting trade and investment, heightening levels of inequality, and posing a systemic threat to economic stability."
The Secretary-General contends that instead, "Financial and other resources should be channelled towards the right kinds of productive activities. Industrial development remains a priority for many developing countries…but a wider sectoral approach, including a focus on the primary sector in many least developed countries, is needed to ensure that measures to diversify economic activity are consistent with job creation, the security of food and energy supplies, and effective responses to the climate challenge".
An era of more active involvement is needed, he adds, that will "allow governments - particularly, but not only in developing countries - to correct market failures, promote collaboration among enterprises in areas of long-term investment, manage integration with the global economy and ensure that the rewards from doing so are evenly shared".
"This time around," Mr. Supachai writes in the preface to the report, "rebalancing will need a global new deal that can ´lift all boats´ in developed and developing countries alike. It is a basic truth that people everywhere want the same thing: a decent job, a secure home, a safe environment, a better future for their children and a government that listens to and responds to their concerns. UNCTAD has consistently suggested a battery of policy measures and institutional reforms at the national and international level to support rising living standards in developing countries, build their resilience to external shocks and help them pursue a balanced integration with the global economy."