A series of meetings to prepare the upcoming MDG+10 Summit in New York has begun. A Special high-level event of UN Economic and Social Council (ECOSOC) with the Bretton Woods institutions, the World Trade Organization (WTO) and the UN Conference on Trade and Development (UNCTAD), took place on 18-19 March 2010. Luxembourg’s Ambassador Jean Feyder, currently president of the Trade and Development Board used the occasion to present UNCTAD’s perspective. WDEV documents his statement.
The world is facing multiple, serious crises: a financial and economic crisis coupled with a social crisis, a food crisis and an environmental crisis. It is important that from these, the international community be able to draw all the necessary lessons and formulate responses also based on what the history of economic and social development can teach us.
It is from this perspective that UNCTAD is preparing its contribution to two major events – the Summit on the Millennium Development Goals, which will take place in September 2010 in New York, and the Fourth United Nations Conference on Least Developed Countries, which will be held in Istanbul in 2011. Important work is under way, and we will present the first conclusions to the Executive Session of the Trade and Development Board next June.
To this end, several preparatory meetings have already been held in the past few months: on developing countries’ debt, which was very well attended; on South–South and triangular cooperation for agricultural development and food security in developing countries; on the main challenges facing the least developed countries (LDCs); and finally, on the financing of productive capacity.
* An active role of the state
We believe that several of the ideas that emerged from these meetings are important for the upcoming conferences. A key message that comes out of these discussions relates to the role of the State in development. At UNCTAD, we believe that public policies should not limit themselves to countering the consequences of economic crises, as is currently the case in developed countries; the State should also play an active role in the development of underdeveloped countries. It should promote the formation of fixed capital, the emergence of economic networks and the development of productive capacity. Industrial policies can support private businesses by channelling investment towards economically promising and socially desirable activities, as has been done in successful development experiences, for example in several Asian countries. The external financing and debt reduction that poor countries need should not be subject to conditions that restrict the capacity of States to promote development. The State must respect the basic rules of good governance: participation, justice, decency, responsibility, transparency and efficiency.
* Developing productive capacities
Another key idea of these discussions is that we must focus on developing productive capacities. The United Nations strategy for achieving the Millennium Development Goals must recognize the importance of increasing productive capacity in developing countries, and the need to link that with creation of the maximum possible number of jobs. The development of the productive system and of employment creates income for people and for the State. Without such development, social advances that could be made in education, health and poverty indexes would not be sustainable; we would be treating the symptoms rather than the root causes of poverty.
This effort to develop productive capacity must include industry, but also agriculture which has been neglected in the past few years. Let us not forget that three quarters of the poorest people in the world and three quarters of those suffering from hunger and malnutrition – who now number over one billion – are in rural areas: smallholders, landless farmers, rural workers. The deficit in food crops is deepening and reaching worrying proportions. There is a need to boost food-producing agriculture and to ensure that producers are paid decent prices to pull them out of poverty and away from the trap of rural exodus. It is necessary, therefore, to focus the attention on small farms, which have a large potential for growth, and which, in this sector, are the most capable of responding to the challenges of climate change. It is this type of agriculture that has a decisive role to play in food security and in reaching the first Millennium Development Goal. Here again, the experiences of Asian countries deserve our attention.
* A favourable macroeconomic and trade environment
The development of productive capacity requires financing and a favourable macroeconomic and trade environment. Developed countries should honour their commitments regarding public development assistance, which is vital for the poorest countries to be able to import the capital goods necessary for the construction of new productive capacity. While the entry of productive financial capital should be promoted, developing countries must, above all, be able to mobilize their internal resources and channel them into productive investment. This does not automatically follow from market liberalization. Here again, governments have an important role to play. Of course, they cannot take the place of the private sector in its investment decisions, but they can considerably influence these decisions. Through their macroeconomic and revenue policies, governments can provide companies with a prospect of stable growth in demand; through their investments in physical and social infrastructure, governments can provide the necessary conditions for private investment; finally, government policies can make investment financing less expensive and more accessible, either by encouraging private financial institutions to grant investment credits at a reduced rate, or directly, through public financial institutions.
The financial crisis revealed the existence of large amounts of capital searching for often speculative gains in an artificial and uncontrolled financial universe, which is completely disconnected from the real economy and lacking financing, not to mention global consumer demand, which is huge but cannot be met. The challenge for the international community is to create the framework and the mechanisms capable of contributing to restarting a world economy that is more socially conscious and fairer, by channelling this capital towards this economy and this demand.
Productive capacity, often fragile to begin with, cannot develop if, from the start, it must face international competition. That would nip this capacity in the bud, especially in the poorest countries. We must, therefore, give them a higher level of special and differential treatment, and we must protect budding capacity. We also note that regional integration and South–South trade are increasingly significant. To the extent that regional integration expands internal markets and enables economies of scale and specialization, it promotes real investment, the creation of new local productive capacity and the development of regional production networks, which reinforce South–South trade.
The enormous dangers posed by global warming call into question essential elements of our way of growth and consumption. The answer to this global problem must be based on international cooperation and on simultaneous respect for the environment and for the right to development. These two requirements are not at all contradictory, if developing countries are included in the elaboration of low-carbon-emission goods and services and in the development of new “green” technologies.
* No conditionalities that curb development
I will finish with a few thoughts on the tragedy of Haiti. It is clear that this country needs assistance, on a much greater scale than the usual measures, such as the reduction or elimination of its external debt. Haiti should also be granted favourable trade conditions, so that it can access the markets of developed countries under good conditions, but also so that it can develop its local productive capacity, particularly in agriculture and industry. Of course this country needs international financial aid, but this aid should not come with conditionalities that will curb its development. The Marshall Plan, probably the most successful case of external aid in modern history, for all parties involved, did not pose any conditions that limited public policy space. In the reconstruction of Haiti and elsewhere, we must also learn from development experiences that were successful on the basis of pragmatic public policies and very far from what has been called the “Washington Consensus”.
I began this presentation by speaking of the history of social and economic development. I mentioned the successful experiences of several Asian countries. I have just noted the Marshall Plan, and I could also cite the economic policies that industrialized countries have followed successfully for several centuries. Will we have the wisdom to be inspired by these experiences and this history to better define our development strategies and objectives and to build a better common future?
Statement by Ambassador Jean Feyder, President of the Trade and Development Board, at the Special High-level Meeting of the Economic and Social Council with the Bretton Woods institutions, the World Trade Organization and the United Nations Conference on Trade and Development, 18–19 March 2010, New York.
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