INCREASED ATTENTION TO ECONOMIES IN TRANSITION SHOULD NOT AFFECT ASSISTANCE TO DEVELOPING COUNTRIES, ARMENIA TELLS SECOND COMMITTEE

28 October 1996

Press Release
GA/EF/2735

INCREASED ATTENTION TO ECONOMIES IN TRANSITION SHOULD NOT AFFECT ASSISTANCE TO DEVELOPING COUNTRIES, ARMENIA TELLS SECOND COMMITTEE

19961028 Sustainable Development, Economic Cooperation Taken Up; Policy Coordination, Agricultural Trade Protectionism among Issues Addressed

Attention should be given to the needs of countries with economies in transition, without affecting assistance to developing countries, the Second Committee (Economic and Financial) was told this morning by the representative of Armenia.

Speaking as the Committee began consideration of sustainable development and international economic cooperation issues, he said the integration of countries with economies in transition into the world economy and involvement in multilateral institutions would have a positive impact.

The representative of Poland also stressed that countries with economies in transition still needed help from the international community in their efforts to achieve efficient open-market economies and balanced sustainable development.

The representative of Ireland (on behalf of the European Union and associated States) said improved access to European markets for eastern and central European countries provided by various association agreements with the Union had expanded trade in those countries. He also acknowledged the useful cooperation in the harmonization of standards and norms between the Economic Commission for Europe (ECE) and the Union to ensure that the two organizations did not become barriers to trade.

Economic policy coordination at the global level was essential to promote macroeconomic stability, said the representative of Costa Rica, speaking on behalf of the "Group of 77" developing countries and China. Such coordination should involve developed and developing countries in decision- making processes, keeping in mind the increasing contribution of developing countries to the world economy.

The representative of Bolivia, speaking on behalf of the Rio Group of countries, expressed concern at the emergence of protectionism, particularly

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in agricultural and textile trade. Trade protectionism was denying the countries of the Group access to markets in developed countries, under the guise of questions relating to environmental and labour practices, he said.

The representative of China expressed dissatisfaction with the implementation of the Declaration on International Economic Cooperation and the International Development Strategy in the 1990s. The developed countries should demonstrate political will by carrying out commitments in such areas as resources, debt and trade and technology, he said.

Stressing the importance of good governance for development, the representative of the United States said governments should fight corruption and bribery through appropriate regulation. He called for the adoption of the United Nations declaration against corruption and bribery.

Also this morning, the Committee was told by the Director of the Communications Division, United Nations Educational, Scientific and Cultural Organization (UNESCO), Alain Modoux, that the sixth inter-agency round table organized last September in Harare, Zimbabwe, had focused on communication for development at the grass roots and community level.

The Secretary-General's report on Communication for development programmes in the United Nations system (document A/51/314) was introduced by the Chief, Policy Coordination and Inter-Agency Affairs Branch, Department for Policy Coordination and Sustainable Development, Sarbuland Khan.

The Officer-in-Charge of the Macroeconomic and Social Policy Analysis Division, Department of Economic and Social Information and Policy Analysis, Anatoli Smyshlyaev, introduced the Secretary-General's report on implementation and follow up to major consensus agreements on development (document A/51/270). The Executive Secretary of the Economic Commission for Europe (ECE), Yves Berthelot, introduced the Secretary-General's report on integration of the economies in transition into the world economy (document A/51/285).

Statements were also made by the representative of the Russian Federation, Ghana and Georgia.

Also this morning the Committee concluded discussion of industrial development cooperation and sustainable agricultural development and heard statements from the representatives of the Republic of Korea and Ukraine.

The Committee will meet again at 3 p.m. today to continue its deliberations.

Committee Work Programme

The Second Committee (Economic and Financial) met this morning to conclude its debate on industrial development cooperation and food and sustainable agricultural development. It was also scheduled to begin consideration of sustainable development and international economic cooperation. For the new item, it has before it two reports of the Secretary- General -- implementation and follow up to major consensus agreements on development (document A/51/270) and integration of the economies in transition into the world economy (document A/51/285). (For background of industrial development cooperation and sustainable agricultural development see Press Release GA/EF/2734 of 25 October.)

The report on implementation and follow up to major consensus agreements on development (document A/51/270) discusses the implementation of the Declaration on International Economic Cooperation, in Particular the Revitalization of Economic Growth and Development of the Developing Countries and the International Development Strategy for the Fourth United Nations Development Decade adopted by the General Assembly in resolutions S-18/3 of 1 May 1990 and 45/199 of 21 December 1990, respectively.

The report states that the first half of the 1990s has been characterized by a number of "idiosyncratic trends", the most important being increased globalization and liberalization of the world economy. Other characteristics have been the continuation of relatively high real interest rates in industrialized countries; a resurgence of faith in the efficacy of market; and the emergence of a new orthodoxy as to what constitutes an effective development policy. In the light of the disparate experiences of developing countries in the first half of the development decade, it has become clear, according to the report, that there can be no universal policy panacea. The efforts being undertaken by developing and by developed countries and the international community on their behalf must be appraised. The five-year period under review is too short to see final results, while mid-decade was too early for a definitive evaluation.

The report states that the General Assembly may wish to combine future review and appraisal of the Declaration and the Strategy with the follow-up to the task of the Assembly's working group on An Agenda for Development. In addition, the Assembly may also wish to undertake forward-looking reviews of selected new and emerging trends and issues that might need to be taken into account in national and international development strategies.

The report notes that exogenous factors have both helped and hindered development efforts. Furthermore, initial conditions differed among countries and, in addition, policies pursued by developing countries have differed dramatically. Development strategies have thus differed greatly and their eventual outcomes are far from predictable. One certainty is that success or

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failure cannot be expressed by one magic number, such as gross national product per capita, the report adds.

It concludes that it has increasingly become evident that -- to be successful in the longer run -- policies need to focus not just on growth, but on improving the lot of the population at large.

The report on integration of the economies in transition into the world economy (document A/51/285) provides information on the overall setting of the transition and integration processes, and cooperation at the regional and global levels. With regard to technical cooperation involving the economies in transition and developing countries, the report focuses on the work of the two regional commissions, the Economic Commission for Europe (ECE) and the Economic and Social Commission for Asia and the Pacific (ESCAP), that widely provide assistance for the transition process. The report notes that the integration process has proved considerably more difficult than had initially been expected. In the past two years, however, their economic performance has been increasingly positive, although considerable differences remain between them.

The governments of the countries in transition have made considerable progress in establishing new market institutions and in integrating their economies into the global economy, according to the report. More than half of the trade of eastern Europe and the Russian Federation is now carried out with the developed market economies, and the European Union has become the main trading partner for all countries in transition. The increasing integration of these countries into international financial markets has been reflected in improving credit ratings, record borrowing in 1995 and more favourable terms. International links have been further strengthened by foreign investment, which reached an all-time high in 1995. Many economies in transition, however, remain dependent on official development assistance.

The report observes that many of the essential foundations of a market economy are now in place in many of the economies in transition. Despite the growth of the private sector, privatization of large State-owned enterprises has proceeded slowly. Another major obstacle to the reform process is the weakness of the banks and other financial institutions. The ECE, which has 26 members with economies in transition, is promoting diversification of assistance to those countries. The ESCAP, with nine countries in transition in its membership, is also trying to solve problems faced by the disadvantaged among them. The primary objective of the ECE and ESCAP technical cooperation activities is to promote the self-reliance of the recipient countries in managing the transition process.

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Statements on Industrial Development

RAE KWON CHUNG (Republic of Korea) said international cooperation had a role to play in furthering industrialization, although that process was increasingly driven by the market and the private sector. For the least developed countries, where the market and the private sector were still weak, the public sector needed to play an active role in providing basic essential infrastructure and the institutional and human resource development needed for the market and the private sector to operate efficiently. International cooperation should focus on those countries and economic sectors where the lack of basic infrastructure was most acute. Small- and medium-sized enterprises suffering from low productivity and limited access to the market deserved support.

It was critical that international cooperation should focus on maintaining a stable world cereal stock, he said. Sustainable agriculture should not be regarded as simply an issue of producing sufficient food. It should also be an integral part of the development process for all developing countries where agriculture was still the backbone of their economy.

VOLODYMYR RESHETNYAK (Ukraine) stressed the important role of the United Nations Industrial Development Organization (UNIDO) as a principal element of the United Nations system in industrial promotion of developing countries and those with economies in transition, and their inclusion in the development of international industrial cooperation. A new compact and flexible institutional structure, as well as effective management and new procedures, would substantially improve the quality of UNIDO's services. He commended UNIDO for the assistance given his country and stressed that Ukraine had significant experience in engineering sciences and high technology, which it was prepared to share with other countries.

Statements on International Economic Cooperation

SARBULAND KHAN, Chief, Policy Coordination and Inter-Agency Affairs Branch, Department for Policy Coordination and Sustainable Development, introduced the Secretary-General's report on Communication for development programmes in the United Nations system (document A/51/314). The report recommends that the system develop a common working definition of communication for development at the country level. It also recommends that the mechanism of informal round tables on communication for development should be used systematically with the full participation of the international financial institutions at the country level.

In addition, the report recommends that organizations of the United Nations system assist governments in carrying out careful analysis and assessment of the impact of new and appropriate technologies on development, with a view to developing sound application of such technologies and methods.

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Resources must be mobilized to build the capacity of communication for development programmes and should be an integral component of the mobilization of resources for development programmes in general, as well as humanitarian activities. Moreover, with respect to coordination at the headquarters level, inter-agency mechanisms established for the coordination of programmes and operational activities, as well as follow up to United Nations conferences, should incorporate the communication dimension of their efforts to coordinate the work of the United Nations system.

ANATOLI SMYSHLYAEV, Officer-in-Charge of the Macroeconomic and Social Policy Analysis Division, Department of Economic and Social Information and Policy Analysis, introduced the Secretary-General's report on implementation and follow up to major consensus agreements on development (document A/51/270).

YVES BERTHELOT, Executive Secretary of the ECE, introduced the Secretary-General's report on integration of the economies in transition into the world economy (document A/51/285).

PATRICIA CHAVEZ (Costa Rica), speaking on behalf of the "Group of 77" developing countries and China, said the inability of the international community to implement its commitments could explain the increased number of least developed countries and the unacceptable gap in the economic and social conditions between developed and developing countries. The Committee should examine how the issues raised and measures agreed to in the Declaration on International Economic Cooperation and the International Development Strategy could be implemented more effectively. The review and appraisal of the Declaration and the Strategy could be combined with the follow-up work on the major United Nations conferences and on An Agenda for Development.

She said the report on the Declaration and the Strategy did not mention the issue of national reports to be submitted by Member States on their economic performance and policy measures taken to implement the commitments agreed upon. The report lacked a clear analysis of the impact of the Declaration and the Strategy on the positive economic performance of developing countries in the first half of the 1990s.

She said economic policy coordination at the global level was essential to promote macroeconomic stability, in particular in the monetary and financial markets. The coordination should involve both developed and developing countries in decision-making processes. The increasing contribution of developing countries to the world economy justified their involvement in those processes.

JAMES O'CONNELL (Ireland), speaking on behalf of the European Union and the associated countries of Cyprus, Czech Republic, Lithuania, Poland, Romania, Slovakia, Slovenia, Iceland and Hungary, said in adopting the

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Declaration on International Economic Cooperation and the International Development Strategy in 1990, the General Assembly had deplored the uneven and often disappointing growth performances of the 1980s. It had stressed the need to renew growth and to accelerate development in developing countries through strengthened international cooperation. Since then, agreements reached at major United Nations conferences had helped to advance the issues concerned. In addition, work was being done in An Agenda for Development exercises, which the Union hoped would be concluded soon.

Last year there had been an improvement in the sharing of economic growth across regions of the world and that trend was expected to continue throughout 1996, he said. The rate of growth was expected to rise by some 50 per cent in developing countries and even the least developed countries were expected to see an increase in their overall rate of growth, although that would be from the low base of the 1980s.

The reasons for the economic improvements had been varied, he continued. Economic adjustments in many countries had begun to show results and many were benefiting from increased capital inflows, private investment and a rise in international commodity prices over the past two years. However, most African countries were still amongst the poorest in the world and complete solutions to the problems of poverty had not been found.

The economic recovery under way in central and eastern Europe followed the application of effective macroeconomic policies, structural change and institutional reform, he said. Progress in the newly independent countries further east had been less rapid, but inflation rates had fallen dramatically and the prospects for sustained economic growth in the future were good. Their credit ratings had improved and investment inflows had reached record levels in 1995.

Improved access to European markets for eastern and central European countries provided by various association agreements with the Union had expanded trade in those countries in recent years, he said. The Union acknowledged the useful cooperation in the harmonization of standards and norms between ECE and the Union to ensure that the two organizations did not become barriers to trade. He hoped that such cooperation would not only continue, but intensify.

GUSTAVO PEDRAZA (Bolivia), speaking on behalf of the Rio Group (Argentina, Brazil, Bolivia, Chile, Colombia, Costa Rica, Ecuador, El Salvador, Jamaica, Mexico, Paraguay, Uruguay and Venezuela), said they were carrying out reforms and that their economies had been showing growth, albeit slowly. Their external economic relationships had been marked by openness and they had participated actively in such multilateral trade negotiations as the Uruguay Round, which resulted in the creation of the World Trade Organization. He was concerned about the emergence of protectionism, particularly in

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agricultural and textile trade. Trade protectionism was denying the countries of the Group access to the markets of developed countries, under the guise of questions relating to environmental and labour practices. The economies of the Group were being modernized. They would shoulder their responsibilities and hoped for an environment conducive to trade.

WANG QUN (China) expressed agreement with the statement by Costa Rica on behalf of the Group of 77 and China. While some developing countries had achieved rapid economic growth by relying on their own efforts, and thus contributing to increased economic growth, most continued to face problems. The gap between the North and the South continued to widen. Africa had been increasingly marginalized and the impoverished population worldwide continued to rise by an average of 25 million every year. Moreover, the per capita gross domestic product (GDP) of Africa had dropped from what it had been in 1995.

The implementation of the Declaration and the Strategy had been far from satisfactory, he said. At the time of review, it must be realized that those were still relevant. Economic development, social development and environmental protection complemented each other. It was important that consensus be translated into action, for empty commitments far outnumbered results. Developed countries should change their short-sighted behaviour of seeking immediate benefits and should demonstrate political will by carrying out commitments in such key areas as resources, debt and trade and technolog

YURY N. ISAKOV (Russian Federation) said the country's grave economic crisis had passed its most acute stage, and priority was now being given to accelerating structural adjustment. That required, in turn, a more active investment policy. The Russian Government was taking vigorous measures to improve the investment climate by improving regulations and introducing incentives favourable for foreign investments, as well as concluding intergovernmental agreements on mutual protection and promotion of investments. There were already 33 such agreements. Russia continuously felt the pressure of overt and covert discriminatory restrictions on trade by some of its Western partners. His country deemed it necessary to include a provision, in a draft resolution on international trade and development, on easier access to exports from economies in transition to world markets.

He said Russia was seeking active participation in multilateral arrangements regulating world economic relations and membership in the World Trade Organization was a priority. He was also paying attention to the development of subregional, regional and interregional cooperation. His country had given priority to the consolidation of integration processes within the Commonwealth of Independent States (CIS). That, he added, did not imply the re-establishment of the Soviet Union.

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MESSIE Y. AMOAH (Ghana) said international cooperation in all fields must be strengthened to facilitate the implementation of the Declaration and the Strategy. The outcomes of the recent major United Nations conferences -- which aimed at achieving development for all within the larger context of peace and security -- must be fully implemented. Peace and international security could neither be achieved nor maintained in the absence of development. While most developing countries had been reforming their economies, the external environment had not been supportive. For example, the poorest countries had not been favoured with improved market access following the Uruguay Round agreements. Many developing countries were likely to suffer losses from, among others, the removal of the Generalized System of Trade Preferences (GSTP), the increase in disguised protectionist measures and the rise in world prices for some foodstufs, imported textiles and apparel.

DAVID APTSIAURI (Georgia) welcomed several positive trends in the development of international economic relations, such as the overall growth of world trade and of foreign investments and the further integration of various regions into the world economy, including the countries with economies in transition. He expressed deep gratitude to the World Bank, International Monetary Fund (IMF), European Bank for Reconstruction and Development, ECE, United Nations Development Programme (UNDP), United Nations Conference on Trade and Development (UNCTAD), United Nations Educational, Scientific and Cultural Organization (UNESCO), United Nations Children's Fund (UNICEF) and the Food and Agriculture Organization (FAO) for their contribution to the economic development of the countries in transition.

The energy crisis was Georgia's main problem, he said. The shortages in the energy supply had severely restricted the functioning of the industrial complex and agriculture. Moreover, the investment climate needed to be improved. Foreign debts burdened its progress and, as a result of the existing weak social protection system, the standard of living of most of the population remained one of the lowest for the eastern European and CIS region. He called for further support by the international community for the economies in transition.

ALAIN MODOUX, Director, Communications Division of UNESCO, said the sixth inter-agency round table had taken place in Harare, Zimbabwe, from 2 to 5 September. Its purpose had been to share information and concrete experiences, to form a solid base for inter-agency collaboration. Common strategies had been explored and mechanisms identified to improve interaction among agencies, funds and programmes of the United Nations system, governments and non-governmental organizations.

He said the round table had concentrated on communication for development at the grass roots and community levels. The round table had noted that effective use of communication for development depended on several factors, including: the formulation of national policies; national and local

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human capacity building and training in the use of communication and information technologies for development; establishment of national coordinating mechanisms; access to communication media; and research, evaluation and assessment.

Participants at the round table had recommended to national governments, specialized agencies and organizations within the United Nations system that communication for development be included in the United Nations system-wide special initiative on Africa. Moreover, greater effort must be made to apply low-cost broadcast technologies, improve rural radio and identify financing.

ANNA RADUCHOWSKA-BROCHWICZ (Poland) said future strategy should fully reflect the positive developments that had resulted in economic improvements in many countries. The international community should direct its assistance towards those countries in greatest need. Countries with economies in transition still needed help from the international community in their efforts to achieve efficient, open-market economies and balanced human sustainable development. She stressed that a more even spread of economic growth should not be allowed to conceal the other components of sustainable development, such as its social and environmental dimensions or gender perspective. Furthermore, only through the exchange of experience could countries benefit.

VICTOR MARRERO (United States) said he would focus on good governance, which was a condition required for development. The primary engine for development in today's world was the private sector. The key to economic growth, therefore, lay in encouraging and allowing investment in the private sector, and policies harmful to that must be avoided. Sound policies and currency convertibility, among other things, provided the proven recipe for sustainable development.

In addition, governments should fight corruption through appropriate regulation, he continued. That had been stressed by United States Vice-President Albert Gore in his address to the annual meeting of the IMF and the World Bank. Corruption and bribery undermined good government and was a major barrier to sound development. Apart from economic development, corruption and bribery also threatened social development and the protection of the environment. Bribes could degrade the environment, as regulators allowed the earth to be polluted. Moreover, bribery increased the cost of doing business. It was a non-tariff barrier. Governments, private business and non-governmental organizations should get together to fight corruption.

He stressed that the United Nations declaration against corruption and bribery should be adopted. In fact, good governance could be the meeting point of economic policy and politics. Indeed, good governance should be a part of development consensus.

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HAIK PAPIAN (Armenia) said that, while recognizing that each country was responsible for its own economic policies, the reactivation of economic growth and development in all countries required a coordinated effort by the international community. Particular attention should be given to the needs of countries with economies in transition, without affecting development assistance to developing countries. He strongly believed that the integration of those countries into the world economy and their involvement in multilateral institutions would have a substantial positive impact on the global economy.

He said his own country's strategy for fundamental economic reform involved macroeconomic stabilization, economic liberalization and privatization of State-owned assets. The country had achieved a fair degree of economic stability and an increase in real output, despite the blockade of transportation routes imposed by neighbouring Azerbaijan and the effects of the disastrous 1988 earthquake. His Government's central concern was to maintain and improve its achievements and the presence of United Nations specialized agencies and Bretton Woods institutions in Armenia enhanced the durability of its transition into the global economy.

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