Mr. Chairman, Excellencies,
I would like to begin by expressing my appreciation for the opportunity to address this round table, which has been organized as part of the preparatory process for the Third United Nations Conference on the Least Developed Countries, to be held in Brussels in May of this year. It is also a special honour for me to be here in Lisbon and to participate in the first WIPO meeting at which Portuguese is an official language. The fact that the meeting is taking place in Portugal is also a reflection of the historical link and the solidarity and commitment of the Government and people of Portugal with Africa and, in general, with the most vulnerable economies of the international community.
My presence here today is a sign of the excellent working relations UNCTAD enjoys with our sister organization, WIPO. It gives me the opportunity to share with you some views on the preparatory process and the challenges facing the international community as regards the forthcoming LDC Conference. And it allows me to make some personal reflections on the main theme of this round table, namely, Innovation, Knowledge Society, Intellectual Property and the LDCs.
The LDC Conference: the challenges
Let me start with some observations on the forthcoming LDC Conference.
The Third United Nations Conference on the Least Developed Countries will be the first major international conference after the historic Millennium Assembly in New York, where Heads of State and Government made a meaningful commitment to eradicate poverty. The Millennium Assembly consolidated the strong international consensus that has emerged in recent years to make poverty reduction the centre of national development policies and international development cooperation. Tackling global poverty involves action in many areas, but it is in the LDCs, whose total population is over 600 million, that the task is likely to prove especially arduous. At the present moment, global poverty is concentrated within large low-income countries, notably China and India. But if their economies continue to grow as rapidly as they have in the recent past, the map of global poverty will change. Most LDCs grew much more slowly than other low-income countries in the 1990s. Many also lag behind other low-income countries in terms of their human development indicators. There is thus a strong possibility that the LDCs will be left behind as pockets of persistent poverty in the world economy.
Assessments of the progress made in the 20 years following the first United Nations Conference on the LDCs unfortunately do not give reason for optimism. Contrary to earlier expectations, many LDCs have experienced regression in their economic development, in some cases cancelling out even the small progress achieved in the immediate post-independence period. The number of countries in the LDC group has in fact increased rather than decreased, as once hoped. Only one country, Botswana, has been able to graduate from LDC status. This dismal record has disheartened many LDCs, and there is a very real danger of these countries losing total confidence in the international economic system.
New approaches are needed in order to rebuild confidence and trust in the partnership forged at the last Conference and to attain results that go beyond a general agreement on yet another Global Programme of Action. To this end, we are working to devise a new programme with concrete and credible solutions, one in which the question of appropriate national and international policies to reduce poverty and enhance the integration of LDCs into the global economic system must be given special attention. For LDCs, there is no such thing as a good poverty reduction strategy in an unfriendly international economic environment.
The evidence suggests that poverty reduction strategies in LDCs must take into account two important factors. The first is their limited supply capacity, poor infrastructure and low level of skills. The challenge is how to enhance their supply capacity and ensure that their export bases not only grow and diversify to include higher-value products, but also achieve sustainable development. This will require specific international support measures, including the granting of bound duty-free and quota-free access for all LDC exports. More generally, an enormous capacity-building effort has to be initiated to provide LDCs with the institutional and educational tools needed to evaluate the impact of trade policies and to put in place the corresponding measures to attend to social demands.
The second factor is the low rates of domestic saving and lack of capital in the LDCs. It is imperative that more external resources be made available by reversing the declining trend in ODA and taking effective measures for debt relief. Most LDCs are dependent on a narrow range of commodity exports for their income, which makes them vulnerable to external shocks emanating from either natural causes or fluctuations in the world economy.
Seizing the opportunity which the Third United Nations Conference on the Least Developed Countries presents to both the LDCs and their development partners will involve major challenges. We all agree that we want to facilitate a progressive transition in which aid dependence diminishes, LDCs build up productive capacities and international competitiveness, and their economic growth increasingly relies on domestic resource mobilization and private capital inflows, particularly FDI. The problem is twofold: First, we need to draw a roadmap based on both national and international policies which can guide us away from the current unacceptable state of affairs and towards our desired destination. Secondly, we must identify results-oriented actions which can be taken now, to set us on track and speed us on our way.
The roadmap must strike a delicate balance between comprehensiveness, which is essential given the multidimensionality of many LDC problems, and focus, which is essential for concentrated and concerted action that makes a difference. The roadmap must also balance the divergent priorities of different stakeholders without succumbing to that ever-present danger of all intergovernmental processes -- agreement around the lowest common denominator. The roadmap must encompass the diverse circumstances of different LDCs, but must not collapse into abstraction. It should establish a long-term framework of policy expectations, yet remain sufficiently flexible to accommodate the effects of unforeseen events which will inevitably occur over the next 10 years. In short, the roadmap must be results-oriented rather than simply declaratory. It must be like a treasure map spelling out exactly what is buried under the "x".
Innovation, knowledge society and intellectual property rights
This brings me to the main theme of this round table -innovation, knowledge society and IPRs. Allow me to add some personal reflections on this critical component of economic and social development.
In the second half of the last century, and particularly over the last two decades, scientific advances and technological innovations have wrought fundamental social and economic transformations in many societies. New technologies, particularly in the areas of information and communications, have paved the way for what is now known as the information society or knowledge society. The technologies have had an enormous impact on production, education, enterprise management, delivery of services, cultural values, organization of labour, management of the environment and society as a whole. We are living in a world where information has become vital for our development and where access to it is becoming easier.
But technological knowledge is not a universal panacea, nor is it autonomous in relation to the other conditions prevailing in a given society. It is difficult to access and difficult to adapt; markets for it are often missing or imperfect; and it depends on a broad array of "social capabilities" that are sometimes lacking.
Neither is it independent of the macroeconomic context. New knowledge is always embodied in new machines and human skills. Its diffusion and absorption require new investment, often on a large scale and almost certainly including a sizeable public component. Entrepreneurial effort alone will not bring wider socio-economic gains.
However, in an increasingly globalized economy, the acquisition of new knowledge and the development of knowledge-based societies are not choices, but necessities. They are also a sine qua non for competitiveness in the international economy, for building a strong domestic economy, and for achieving sustainable development. The implication, in particular for low- income and technologically less developed countries, such as the LDCs, is that they can no longer expect to base their development strategy on their comparative labour cost advantage. The ability to learn and innovate and to successfully acquire and adapt technologies is critical for their integration and participation in the international trading system.
Although the rise of the knowledge-based economy has to date been most visible in advanced industrial economies, it represents new opportunities and poses new challenges for all developing countries, particularly the LDCs. However, the reliance of most LDCs on basic commodities or simple manufactures for their export earnings means that their integration into the global economy still depends on more traditional ingredients of competitive success (such as low cost and increased investment in capital goods) and that this dependence will continue for a considerable time. This does not mean that these countries should be uninvolved and ill-prepared to meet the challenges and opportunities posed by the emergence of a knowledge-based economy.
As a matter of fact, the emergence of a global knowledge-based economy should, in principle, be good news. As the ratio between power and price of information equipment continues to rise, and the cost of transferring information across borders keeps dropping, there are unprecedented opportunities for catching up. At the same time, the portability, flexibility and affordability of such technologies allow smaller players to become competitors worldwide.
Responding effectively to these challenges will, as with past technological revolutions, require new attitudes and mindsets. Strengthening the resource base through education, R&D and training will be essential, and differential treatment will prove indispensable for both users and potential producers of new technologies in developing countries. In their absence, the LDCs will remain mere workshops where incomes are determined by value added from a cheap labour force in the assembly of high-tech products, and the countries will face an ever-widening technological gap.
The truth of the matter is that there are no quick technological fixes to the development challenge, nor can knowledge-based development be pursued in isolation from the "old" issues of the traditional economy. Investment remains a key to growth in the digital age, just as it was in the heyday of the railroad. Because investing in phone lines, satellites or computers involves the new technology through the import of capital goods and licensing arrangements, technological catching-up requires increased foreign exchange earnings to pay for the needed imports.
Together with the expanding role of knowledge in underpinning competitive processes, the past decade has witnessed a more liberal global trading environment. Because intellectual property rights are intimately associated with the creation and protection of knowledge, these trends also relate to the increasing importance of IPRs in today´s global economy
Although science and technology indicators show a very low degree of patenting and innovation in LDCs, which is hardly surprising given their heavy reliance on resource-based activities, there are untapped opportunities for these countries in various service industries: for example, in the audio-visual sector, where exports could be built up very quickly and could offer even better opportunities than more traditional manufacturing activities. Music is the fastest-growing segment of the audio-visual sector and an important untapped export sector for many countries. Some LDCs might also be able to exploit niches in the fast-developing biotechnology industries. Intellectual property is critical for the development of sectors such as the protection of indigenous knowledge, folklore and culture, as well as for protecting their access to genetic resources.
However, a serious concern has arisen in recent years over the tendency to overprotect intellectual property rights. As Jeffrey Sachs so forcefully put it in a recent article: "rich countries should exercise restraint in the use of property rights. Rich countries are unilaterally asserting rights of private ownership over human and plant genetic sequences, or basic computer codes, or chemical compounds long in use in herbal medicines. These approaches are of dubious legitimacy and will worsen global inequalities. A better balance needs to be struck between incentives for innovation on the one hand, and the interests of the poorest, on the other."
In looking ahead to the new century, the main challenge for the international community, and in particular for policy makers, scientists, the business community and civil society in developing countries, is how to create the capacity to acquire and generate knowledge in all its forms and how to apply that knowledge to sustainable development.
While globalization has opened up opportunities, it has also generated new risks of exclusion and marginalization across and within societies. Exclusion from accessing knowledge is one of the critical factors limiting the capacity of societies to learn, adjust and integrate effectively into the world economic system. This does not imply that inventors and innovators should not be adequately rewarded. To the contrary, appropriate reward for innovation is vital for the generation of knowledge and should be part and parcel of the continuing quest for social and economic balance between producers and users of technical knowledge within the intellectual property system.