Globalization now significantly helping developing countries, notes Reportof Secretary-General to UNCTAD XII conference, but positive trends are fragileand increasing wealth hasn´t yet led to poverty reduction in all countries
Current encouraging global economic progress must be carefully managed so that several threats that could derail the current 5-6% annual growth rates in developing countries do not materialize -- and so that the benefits are more thoroughly extended to the world´s poorest people and the poorest nations, urges a new report by the Secretary-General of the United Nations Conference on Trade and Development.
The report, intended by Secretary-General Supachai Panitchpakdi to frame discussion at next spring´s UNCTAD XII conference in Accra, Ghana, stresses the importance of sustaining -- through careful international and government management -- a near-priceless situation in which trade is booming not only between industrialized and developing countries but also between developing countries themselves (so-called South-South trade), and in which demand is strong for farm produce, which is what many of the world´s poorest nations have to offer world markets.
Developing countries as a group have increased their real income by 71% over the past decade, and currently only two of the world´s 132 developing countries are experiencing falling incomes. Exports of developing countries as a group have nearly tripled over the past decade. And South-South trade tripled -- from US$577 billion to $1.7 trillion -- between 1995 and 2005.
UNCTAD XII, which will take place from 20-25 April 2008, will be the latest of the quadrennial conferences by which the organization responds to world trends and sets its priorities for the next four years.
The Report of the Secretary-General of UNCTAD to UNCTAD XII calls for, among other things, capitalizing on the rapid rise of new economic players during this "second generation" of globalization. China, India, Brazil, and South Africa, among others, are emerging engines for economic growth that particularly affects nations previously left out of globalization. These include some least developed countries (LDCs) and a number of countries in sub-Saharan Africa.
But not all. Globalization must not only be sustained but somehow spread to the poorest and the most vulnerable, Mr. Supachai urges in the report. "Certain countries, and certain segments of the population within countries, are being left out of the current growth bonanza and are often adversely affected by its consequences. The performance of non-oil-exporting developing countries, for example, is significantly worse than that of developing countries as a whole. In addition, many countries, especially the least developed countries and lower- and middle-income developing and transition countries, have not been able to translate growth effectively into poverty reduction and broader human development."
Mr. Supachai further notes, "Progress towards the Millennium Development Goals (MDGs) continues to lag far behind, despite accelerated growth." Among these goals, agreed upon at the global Millennium Summit in 2000, is the target of halving by 2015 the number of people living in extreme poverty.
If there was ever an opportunity to make world economic progress all-inclusive, the report says, it is now. That is because a boom is under way in demand for commodities, including agricultural commodities, which are what many poor countries and farmers are now able to export. "(P)ast experience suggests that much of the improvement in commodity prices could be reversed," the report warns. It says it is thus vital to use the "current windfall" to help such countries expand and diversify their economies so that the progress can be sustained and so that income and jobs can be spread more widely through their populations.
Other risks to the current positive picture, the report says, are global current-account imbalances, including the large current account deficit of the United States and the surpluses of several developed and developing economies. "If the unwinding of these imbalances is not orderly, much of the current growth momentum may be lost." The report recommends a strengthened multilateral financial system, including crisis-prevention and solution mechanisms, to protect the world economy from rapid and disruptive shifts resulting from the eventual resolution of global account imbalances.
The report cautions against the potential impact of rising energy prices and notes with concern "emerging signs that the rise of the South is prompting protectionist reactions in developed economies." Increased protectionism, including "an increase in the use of non-tariff measures," the report warns, "goes against the liberalization paradigm that fuelled the current wave of globalization and threatens to harm the propitious environment."
The report´s emphasis on the importance of managing the current largely positive global economic situation reflects the experience of the 1990s, when it became clear that simply reducing government involvement in economic matters and lowering trade barriers did not result in broad-based growth in the developing world. "The initial euphoria about the potential of the trading system. . . gave way to a more sober assessment, as it became clearer that the performance of developing countries and transition economies that had undertaken reforms according to the ´openness paradigm´ rarely met expectations," the report notes. Responses have included the current Doha Round of World Trade Organization negotiations, often referred to as the "development round"; greater attention to addressing the supply constraints and the productive shortcomings of developing countries through the "Aid for Trade" initiative; and an understanding that there is no "one-size-fits-all" formula for development, the report notes.
The report warns that "The current broad-based economic expansion is subject to risks, which should be avoided through careful economic management."
