CHALLENGES OF INTEGRATING MARGINALIZED PEOPLE AND COUNTRIES IN GLOBAL ECONOMY DISCUSSED AT UNCTAD IX
Press Release
TAD/1821
CHALLENGES OF INTEGRATING MARGINALIZED PEOPLE AND COUNTRIES IN GLOBAL ECONOMY DISCUSSED AT UNCTAD IX
19960429 Heads of State and Agencies Participate In Two Round Tables of Conference High-Level Segment(Received from a UN Information Officer.)
MIDRAND, South Africa, 27 April -- The plight of "the excluded 2 billion" and the challenge of integrating marginalized people and countries in the global economy were discussed this afternoon at the high-level segment of the ninth session of the United Nations Conference on Trade and Development (UNCTAD IX). Discussions were held in two round tables, one of heads of States and the other of heads of agencies and ministers.
Summarizing the discussions this afternoon, Secretary-General Boutros Boutros-Ghali said there was a real apprehension that globalization without international control might create more disequilibrium within and among Member States, leading to insecurity and frustration of the poor. Certain guidelines ought to be adopted by the multilateral system, including paying attention to the social and political dimensions of globalization. The importance of moral values had not been given enough attention during the discussions. The consensus was that the logic of competition had to be balanced by the logic of solidarity, that the international community needed to resolve the contradiction between efficiency and equity. "For me, these are moral values", he said, adding that those values were the key to the solution of the problems created by globalization and liberalization.
Taking part in the heads of State round table were King Hussein of Jordan, President Nelson Mandela of South Africa, President Jose Maria Figueres of Costa Rica, President Benjamin Mkapa of the United Republic of Tanzania, and President Jean-Pascal Delamuraz of Switzerland. The Moderator was Kitty Pilgrim, of Cable News Network (CNN).
The Secretary-General was the Moderator of the round table of heads of agencies and ministers. Taking part were the Managing Director of the International Monetary Fund (IMF), Michel Camdessus; the Secretary-General of UNCTAD, Rubens Ricupero; the Director-General of the World Trade Organization (WTO), Renato Ruggiero; the Managing Director of the World Bank, Sven
Sandström; and the Administrator of the United Nations Development Programme (UNDP), James Gustave Speth.
Also taking part were the Minister for Foreign Affairs of Costa Rica, Fernando Naranjo; the Minister for Industry and Trade of Jordan, Ali Abu Al-Ragheb; the Minister for Trade and Industry of Ghana, Dan Abodakpi; the Commerce Minister of Morocco, Mohamed El Alami; and the Minister for Development Cooperation of Norway, Kari Nordheim-Larsen.
As it began its work this morning, UNCTAD IX elected the Minister of Trade and Industry of South Africa, Alec Erwin, as its President.
The Conference will meet again on Tuesday, 30 April, to begin a four-day general debate. Four ministerial round tables will be held during that period, focusing on major topics before UNCTAD IX, including the benefits and dangers of globalization, international trade as an instrument for development, enterprise development, and the future work of UNCTAD.
UNCTAD IX High-Level Segment
The high-level segment of UNCTAD IX held two round tables this afternoon, one of heads of States and the other of heads of agencies, focusing on the following theme: "The excluded 2 billion: Integrating people in the global economy".
Round Table of Heads of State
At the round table of heads of state, the Moderator, KITTY PILGRIM, of Cable News Network (CNN), observed that, since UNCTAD VIII, the world economy had changed in many ways. The market economy had established itself as the "unrivalled model" followed by almost every country. "Everywhere the State has rolled back from the position it used to occupy in the economy, and privatization is putting more decision power in the hands of investors." The Uruguay Round was concluded successfully and a more stable and open framework for international trade had been put in place. Governments had accepted the principle that free trade would generate growth in the medium and long term. Economic globalization had gained enormous momentum.
However, 2 billion people, about a third of the world's population, currently lived in absolute poverty, were unemployed or lived on precarious informal sector jobs, she continued. That was not a problem of developing countries only. "For all these people, globalization and liberalization do not mean anything, or anything positive. They are deprived of opportunities to improve their lives working, enterprising and trading."
Conventional wisdom was that, with time, a more efficient economy based on free markets and open trade would generate growth and employment which
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should improve the lives of the excluded, she said. But that trickle-down effect would take time to reach those in the hardest situations. "In many places what people -- which in more and more countries means voters -- see in the short term are privatization processes that often entail massive lay-offs, cuts in funds for social services and jobs under the menace of foreign competition." That put strong pressure on reformist governments. Solutions had to be found to deal with the social costs of transition and "to make people see that there is a place for them in the global economy that is taking shape".
The purpose of the round table was to set the tone for UNCTAD IX as "a conference that will focus on how to minimize the risk of exclusion of people and marginalization of countries from a liberalized and globalized world economy", she said. She then introduced the participants.
Turning to President Mandela, Ms. Pilgrim said that under his leadership South Africa had astonished the world by putting a swift end to one of the worst cases of political exclusion in history. However, South Africa remained a dual society, and economic exclusion affected the country dramatically. An overarching theme of his Government's policies was to redress the imbalances in the living standards of South Africans. She sought his views on how to make compatible that search for a greater fairness in the economy compatible with the need to keep the basic economic magnitudes -- such as public sector spending and inflation -- in line in order to maintain the country's standing among international investors.
President MANDELA said his country was committed to addressing the need of the country's poor, and that could not be achieved overnight. However, in dealing with the needs of the poor, the security of the whole country was being addressed. Growth without development was meaningless and that was something his country would avoid.
Ms. PILGRIM asked King Hussein whether he believed that if the peace process was successfully completed in the Middle East, economic integration processes, such as those which were taking place in some of the fastest developing regions of the world, would be possible.
King HUSSEIN said the problem in the Middle East for so many years had been the uncertainty brought by war. However, "we have turned a corner" towards building a future for the region. Hopes were high, and there had been a change in attitude. But time was required to meet all the needs of the people in that region. There was a need to move towards regional integration and there had been several initiatives in that regard. The support of the international community was required towards that end, and democracy was essential.
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Ms. PILGRIM asked President Delamuraz whether he felt the orthodox, market-based policies that developed countries encourage in developing countries were compatible with the needs of the millions of people who still remained at the margins of the international economy.
President DELAMURAZ said some essential conditions must be met. All countries must be inspired by the leadership of their governments to work with the courage required in any effort towards change. Patience was also required, as change could not occur overnight. There must be a public and a private dimension of development aid. He called on investors not to wait for changes to be completed before deciding to invest in countries. Solidarity was required between developed and developing countries.
Ms. PILGRIM asked President Figueres how he evaluated the impact of structural adjustment programmes and other liberalization and market-oriented reform processes on the integration of Latin American economies in the world economy. "Are these countries better prepared now to maximize the benefits and minimize the risks generated by liberalization and globalization?" she asked.
President FIGUERES replied that it was possible to be moderately optimistic in Latin America. The region had seen important changes recently, including in the area of human rights and also in the transition to States in which the rule of law prevailed. In the economic area, the macroeconomic balances were being respected and better structures for market forces were being found. Trade blocs had been created, including the North American Free Trade Agreement (NAFTA), which were leading towards a convergence of decisions and a unified regional market. Internal savings had been increased. Capital flows were beginning to return to Latin America. All those factors had created additional wealth. However, the distribution of such wealth was an area in which major reforms were required.
Ms. PILGRIM asked President Mkapa whether he thought that so-called "orthodox" economic policies were enough to ensure that Africa would not be marginalized from the emerging global economy.
President MKAPA said the real question was the political sustainability of those policies. Privatization, for instance, involved economic cuts. Most of the trade of least developed countries was in commodities. Internal reform measures could bring uncertainties. Those countries' dependence on commodities was a very serious problem. Leaving changes to the private sector entirely was not a positive prospect, while official development assistance (ODA) was declining. The very serious debt burden was hampering the capacity of the least developed countries competing in the international market. He called for measures to stop further marginalization of the marginalized.
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Ms. PILGRIM then posed another question to President Mandela. She said that at the time of the struggle against the apartheid regime, the world had watched moving images of the South African townships, where political organizations and all kinds of grass-roots associations were so active in sustaining the struggle for liberation. The fight for equal political rights was now over, she added, asking in what manner the township people and their organizations could participate in the building of the economy of the new South Africa.
President MANDELA responded that measures had been taken to improve the quality of life of the people of South Africa. His Government had inherited an enormous public debt and a state of insecurity and instability in the country. Many businesses had left to invest abroad. Measures taken since his inauguration included efforts to guarantee clean water to people and a programme of housing that involved not only shelter, but also the creation of jobs. It would take some years for the Government to be able to actually deliver, and, in the meantime, the private sector was being requested to provide for those needs. Non-governmental organizations should be partners in providing for the well-being of South Africans. Despite the immense difficulties inherited, the concerns of the people were being addressed.
Ms. PILGRIM then asked King Hussein what action he was undertaking and what others were necessary to let the poor perceive the economic opportunities that a definitive, negotiated peace would open for them.
King HUSSEIN said poverty and deprivation were directly related to violence. However, hopes were great in terms of the future. The question of a heavy debt burden in any country made it impossible for it to seize the opportunities that peace could provide. Now with stability, it would be possible to turn to the private sector and to privatization programmes, making governments less cumbersome. Jordan had concentrated on the human dimension of its people for many years. With peace, it would be easier to achieve the complementarity between the two sectors.
Ms. PILGRIM then said, "Now, let's take a look at the situation in a rich, advanced society like Switzerland, considered by many as a model of social stability". In developed countries, the increase in competition brought by freer trade and globalization of the economy was raising concerns over employment and the need to change long-established social models. She asked President Delamuraz what factors should determine the balance between the needs of competition in global markets and the requirements of social cohesion.
President DELAMURAZ said globalization was a predominant feature of the global economy today and affected everyone in the world. All countries must be aware of that reality. Globalization was a hope for development if the international community would be able to back it up with rules, with civilized
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factors, with human values. Globalization, on the other hand, could be disastrous to several countries if it was allowed to develop without any planning, and if the principle of the survival of the fittest was allowed to be applied as the rule. Thus, there were major risks for the economies of the world and the future of mankind. Rules must be respected by all partners. Labour matters must be tackled as vital issues related to globalization.
Ms. PILGRIM asked President Figueres what role non-governmental actors could play to help create conditions to enable the weaker entrepreneurs, such as those in the informal sectors and the micro- and small enterprises, to integrate in the economy.
President FIGUERES said today's transformations included increased participation of civil societies to solve the problems faced by countries. There was a need to break with many stereotypes of the past and to be pragmatic for civil society to participate more fully in solving a country's problems. For market forces to be able to work, they needed an input from society. However, the poor provided no input and continued to be excluded. Governments must be flexible and less bureaucratic. Those governing must think beyond the end of their terms of office. There was also a need to combat corruption and to accept opposition. Further, investments should be directed towards the basic needs of people instead of armaments. In Copenhagen, at the World Summit for Social Development, there had been several private planes of heads of States. It seemed that there was always money to modernize the private planes of those governing and never money to build schools.
Ms. PILGRIM asked President Mkapa to comment further on the problem of corruption.
President MKAPA started by noting that he had come to South Africa on South Africa Airways. He then said there were two levels of corruption. One was petty corruption, which was very great. Increasing salaries could be one way to combat it. The second involved corruption at the higher level, in government and the civil service, and included providing favours. His Government was seriously tackling both levels of corruption. A commission of inquiry was investigating the issue of bribes among others. He added that for the least developed countries to do better, they needed more development assistance.
Ms. PILGRIM then asked all participants, "What do you expect from international organizations and from UNCTAD in particular"?
President MANDELA said one feature of the current world order was integration among countries, including in the areas of trade and technology. That was positive, but it also involved major problems to developing countries which did not have the clout of developed countries to dictate to others what
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they should do. That emphasized the need for UNCTAD, which had a special role in promoting development, especially in disadvantaged countries which had lived for many years under colonialism, which undermined education.
King HUSSEIN said a spirit of togetherness and of helping each other should prevail. "Those who were ahead of us" should help developing countries to create a better world for their people. It was not today that was important, but tomorrow, when today's leaders would be judged by history.
President DELAMURAZ said he did not expect miracles from international organizations. The responsibilities of those organizations were linked to the responsibilities of governments. The UNCTAD should be marked by a deep ethical approach. It needed to be able to bring together forces which could go against it. There was a need to bring more non-governmental forces into its work. There must be coordination with the Bretton Woods institutions and cooperation with the private sector. The UNCTAD must be pragmatic.
President FIGUERES said UNCTAD should focus on trade as an instrument for development. It should help to change the paradigm of development towards a more holistic approach focusing on social and environmental issues. It should be a think-tank type of forum, tackling such questions as what countries should do following the implementation of structural adjustment programmes.
President MKAPA said UNCTAD could articulate the plight of the developing countries and how it could be relieved. It had been created to deal with trade from a development perspective with due regard to the universality of its membership. Without economic development, trade would not be forthcoming from the least developed countries, and there was a need for the WTO to articulate rules in that regard, taking into account the special needs of those countries.
Ms. PILGRIM said the round table had been a success and augured well for the Conference.
Round Table of Heads of Agencies
Heads of agencies taking part in their round table were the Managing Director of the IMF, Michel Camdessus; the Secretary-General of UNCTAD, Rubens Ricupero; the Director-General of the WTO, Renato Ruggiero; the Managing Director of the World Bank, Sven Sandström; and the Administrator of the UNDP, James Gustave Speth.
Secretary-General BOUTROS BOUTROS-GHALI, who moderated the round table of the heads of agencies, introduced the first questioner, the Minister for Foreign Affairs of Costa Rica, Fernando Naranjo.
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Mr. NARANJO said the well-being of mankind was the ultimate purpose of economic policies. What measures did the IMF have after the implementation of structural adjustment programmes that did not benefit all human beings? he asked the Managing Director of the IMF, Mr. Camdessus.
Mr. CAMDESSUS replied that the IMF had tried to advance with the World Bank a common initiative to address the plight of the highly indebted poor countries. The more difficult question was why so many developing countries were succeeding, while others failed. The successful countries knew that domestic and foreign resources must be used effectively and that prices of exchange rates must be in line with market fundamentals. They understood the need for key structural reforms in all the productive sectors of the economy, as well as the need to formulate policy within a medium-term plan. They had also understood that protectionism was a no-win game.
Continuing, he said the successful developing countries had discovered that when governments concentrated on doing a few things well, such as ensuring law and order, providing reliable public services and providing an independent and professional judiciary, confidence in them improved dramatically. It had been said that the most important minister in a country was the minister for justice. The successful countries also knew that reform was irreversible. They sought regional integration in terms compatible with requirements of the WTO. Domestic consensus for reform must be forged from within. When the required elements were in place, a country became more resilient, and the world responded with a far larger pool of resources and stronger support.
Could that success be duplicated around the world? he asked. It could, if piecemeal approaches were replaced with a sustained commitment to reform and good governance. It was not an easy process and required new thinking with changes in the legal system and many other institutions. It was encouraging to see that more and more countries were establishing the preconditions for structural adjustment. That was the way to promote better living conditions for the people of the world.
Mr. NARANJO said there was no lack of will in the developing countries. What they had now was political anxiety. While further efforts had to be made in the field of human resource and investments, there should also be greater effort in the direction of international solidarity so that countries could help each other.
ALI ABU AL-RAGHEB, Minister for Trade and Industry of Jordan, said there had been an increased reliance worldwide on the market system mechanisms and on the private sector as a way to improve efficiency. Equity, on the other hand, had not improved in the same degree. What practical way was there to improve the situation? he asked the Secretary-General of UNCTAD, Mr. Ricupero.
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Mr. RICUPERO said the poor were the worst affected by inflation and hyper-inflation. Efficiency and markets were indispensable, but they were not enough. There was insecurity about the future and fear of globalization because people felt that the future was uncertain and that they could lose their jobs or have lower pay and a reduction of benefits. The marginalized countries felt they could become more marginalized. There was also a fear of injustice, that the benefits were not being equally distributed and that the weakest had to pay the highest price. Globalization eliminated protection, making competition the name of the game. Some countries were much better able than others to compete. Competition needed rules and arbiters, such as international organizations like the IMF and the WTO.
There was also a need for rules that enabled people to compete, he said. That did not mean frustrating the market, but to provide opportunities of market access, training, official aid and a number of other necessary elements. The successful developing countries provided new markets for the developed countries. The world needed to be unafraid of the future and competition.
Mr. ABU AL-RAGHEB said that, in their efforts to promote efficiency, developing countries had neglected to promote equity. He called on the strong to help the weak, and the rich to help the poor. Multilateral institutions should include ways and means to help the macroeconomic programmes of countries.
DAN ABODAKPI, Minister for Trade of Ghana, asked the Director General of the WTO, Mr. Ruggiero, what the main consequences of liberalized trade were on employment creation worldwide.
Mr. RUGGIERO said one of the main problems of liberalization and globalization was a difference in interpretation. One view was that the industrialized world was losing jobs because of low wages in the developing countries. There was no threat to the industrialized world from the liberalization of economies. In the United States, 8.5 million new jobs with salaries that were higher than the normal had been created. The industrialized world could not claim that it had suffered from competition with the developing world.
The other view was that globalization encouraged marginalization, he said. However, marginalization had been reduced by trade liberalization and trade with developing countries. There were fewer marginalized countries than before.
Regarding the problem of equity, he said the special initiative of the United Nations for Africa must be welcomed as a new vision. The world was just at the beginning of the liberalization process, and it was too early to make a judgement. Greater market access called for zero tariff for all the
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least developed countries. If zero duty was granted to them, it would enhance their prospect of direct foreign investment. There was a new effort for cooperation in technical assistance which was important for better governance and economic management.
Regionalism was important, he said. All the regional problems in Africa and the developing world had to be seen with flexibility and as a transition to multilateralism. While sustaining and helping regionalism in Africa, it must be ensured that all the preferential areas would move towards free trade.
Mr. ABODAKPI said management of the pains of transition for the least developed countries was the core problem. Just getting the economic fundamentals right did not resolve all the problems that they faced today. African Ministers had considered the creation of a fund for management so that they could address what mechanisms could be put in place to deal with the problem of management. If a solution were not found, the least developed countries might be driven to the margins of despair. The matter of restrictive trade practices needed to be addressed.
He said the management of the environment should not be the basis for punishing developing countries.
MOHAMED EL ALAMI, Minister for Trade of Morocco, said the World Bank argued that growth and global integration required a new development strategy that emphasized scientific and economic management, investment in people and strengthening of governance frameworks. Were the requirements of economic austerity compatible with the political need of governments in reforming developing countries and how did the World Bank meet political needs in its approach to development? he asked the Bank Managing Director, Mr. Sandström.
Mr. SANDSTRÖM said that a good economic policy was not an austere one. It supported and released the energies of the population at large. Some countries, in exercising fiscal restraint, had either hurt or not supported the social sectors of societies. The lesson learned was about the need to strengthen the voice of the poor, to support them and to support growth. Lessons of experience were important to those left behind or excluded from the new global economy. It was important to help them, but it should be noted that one size did not fit all. Experience from East Asian and other countries showed fundamental lessons that were relevant to all: the need to invest in human resources; and the need for sound governance, law and order and fair rules, and sound domestic policies, healthy domestic prices and a strong private sector. There was growing evidence that it could be done and a growing experience of how to do it.
Mr. EL ALAMI said that a large number of countries faced major challenges. There was no miraculous solution because the solution lay in coordinated action, which should be demonstrated at all levels of decision- making. Any strategy must be flexible and placed in the global context of consistency in trade and finance.
KARI NORDHEIM-LARSEN, Minister for Development Cooperation of Norway, said that earlier this year, the Secretary-General had launched the International Year for the Eradication of Poverty. What were the concrete elements of the United Nations campaign to eradicate mass poverty? What
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lessons could be learned from experience in that area? she asked UNDP Administrator, Mr. Speth.
Mr. SPETH said that half the people in southern Africa would be living in absolute poverty by the year 2000. The relative figures of poverty were shocking. Between 1960 and 1990, the gap between the richest 20 per cent and the poorest 20 per cent had doubled. In the same period, the percentage of total world output of the Organization of Economic Cooperation and Development (OECD) countries increased, from 68 per cent to 72 per cent, despite the growth in Asia.
It was also a myth that the forces of the private sector in an increasingly globalized economy would suffice to replace the need for development cooperation, he said. If countries would just adopt trade and investment friendly policies and make other structural adjustments, they could enjoy the ride to greater prosperity, according to the myth. But those approaches were not the full answer for much of the developing world. There was no correlation between direct foreign investment and need. Almost all direct foreign investment went to 20 countries and just 6 per cent of that to Africa.
He called for a large increase in development cooperation and development assistance. There must be a radically reformed development cooperation that saw that economies existed for people and not people for economies; cooperation that benefited the poor more than the rich; cooperation not just with government, but with private and civil society; cooperation that recognized that the policy was just as important as the economy, that sought growth with equity, employment and environment and that did not give more to the high military spenders than it did to the low spenders. The United Nations system was organized around five basic thrusts -- basic social services for all; jobs for all; sustaining the natural resource base; advancement and empowerment of women; and the overarching issue of the "enabling environment", he said. It was here that the issue of governance came to the fore. The UNDP had the responsibility for integrating all that into concerted support for country-led and country-devised anti-poverty plans. He stressed the importance of UNCTAD's role in the provision of an enabling environment. It must describe how to make trade work for the poor, how to make direct foreign investment correlate with need, not greed, and how the burdens of structural adjustment could be made to fall on the rich not on the poor, and how to ensure that growth benefited the poor more than the rich.
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Ms. LARSEN said there was a focus on the social sector but so far, few donors or developing countries had been able to make additional allocations to that sector. The world figures were not what one would expect, given all the focus on the issue in speeches. The need of the world from the United Nations was obvious, but the willingness to pay was not. A way must be found out of the financial crisis. The ambitious initiative by the Secretary-General to eradicate mass poverty should be possible to attain. The money needed to provide primary education and health services was less than a small proportion of military expenditures. There would be enough resources to reach that goal if there was political will.
Summary by Secretary-General
Secretary-General BOUTROS-GHALI, summarizing the discussions in the two round tables, said there was agreement that globalization and unification of markets were a new and irreversible reality. There was a real apprehension that globalization without international control might create more disequilibrium within and among Member States, creating a level of insecurity and frustration among the poor within Member States and among poor Member States.
Certain guidelines ought to be adopted by the multilateral system, he continued. The guidelines should include coordination and protection; paying attention to the social and political dimensions of globalization, obtaining the participation of new and non-governmental actors, including trade unions. The international community must also encourage regionalism among the developing countries, knowing that it would be a transition. There was a need for a strong international organization or a strong multilateral system, but that depended not on the system as such but on the political will of Member States.
Not enough attention had been given to moral values during the discussions, he said. It had been said that the logic of competition had to be balanced by the logic of solidarity; "we have put this in the way of the contradiction between efficiency and equity". "For me, these are moral values." Thus, moral values were in a way the key to the solution of the problems created by globalization and liberalization, and the problems of tomorrow.
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