SECRETARY-GENERAL, IN ADDRESS TO WORLD ECONOMIC FORUM, STRESSES STRENGTHENED PARTNERSHIP BETWEEN UNITED NATIONS, PRIVATE SECTOR
Press Release
SG/SM/6153
SECRETARY-GENERAL, IN ADDRESS TO WORLD ECONOMIC FORUM, STRESSES STRENGTHENED PARTNERSHIP BETWEEN UNITED NATIONS, PRIVATE SECTOR
19970131 ADVANCE RELEASE Says Market Capitalism Threatened `from within Itself'; Will Succeed Only by Promoting Both Prosperity and JusticeFollowing is the address of Secretary-General Kofi Annan to the World Economic Forum in Davos, Switzerland, on 1 February 1997:
I am honoured and delighted to address you at such an early stage in my term as Secretary-General.
The close link between the private sector and the work of the United Nations is a vitally important one. Working together, our partnership has already achieved important global economic goals. We have promoted stability. We have encouraged economic and political transition. And we have established new levels of trade and economic development. Cooperation in all of these areas has never been greater, nor more successful.
Today, economic and political liberalization is being embraced by countries throughout the world. In Asia, Latin America and the Commonwealth of Independent States, governments have made the building of political institutions and the restructuring of economies urgent priorities. They are making room for the dynamism of the private sector. And in Africa, countries are working hard to strengthen institutions and to create more favourable conditions for private investment.
We can all be blinded by statistics, but one struck me recently as remarkable -- the private capital flows to developing countries have risen 35 times from $5 billion in the early 1970s to $176 billion today. And, at the same time, official development assistance flows are decreasing. Of course, official government spending remains vital to attaining the social, economic and environmental goals of the United Nations. But we at the United Nations welcome the growth in the role of the private sector. Today, the programmes, funds and specialized agencies that make up the United Nations family are working with Member States, as never before, to foster policies that encourage further growth of the private sector and the free market.
These initiatives reflect the realities of a changing world. First, there is the new universal understanding that market forces are essential for sustainable development. Second, the role of the State is changing in most of the developing world, from one that seeks to dominate economic life, to one which creates the conditions through which sustainable development is possible. Third, there is growing and compelling evidence that the poor can solve their own problems if only they are given fair access to financial and business development services.
If we are to ensure that these positive changes continue and are developed, it is essential that the partnership between the United Nations, governments, and the international corporate community be reinforced. Today, market capitalism has no major ideological rival. Its biggest threat is from within itself. If it cannot promote both prosperity and justice, it will not have succeeded.
In the post-cold-war era, peace and security can no longer be defined simply in terms of military might or the balance of terror. The world has changed. Lasting peace requires more than intervention of Blue Helmets on the ground. Effective peace-building demands a broader notion of human security. We cannot be secure amidst starvation. We cannot build peace without alleviating poverty. We cannot build freedom on foundations of injustice.
In today's world, the private sector is the dominant engine of growth; the principal creator of value and wealth; the source of the largest financial, technological, and managerial resources. If the private sector does not deliver economic and economic opportunity -- equitably and sustainably -- around the world, then peace will remain fragile and social justice a distant dream.
This is why I call today for a new partnership amongst governments, the private sector and the international community. I welcome the explosion in trade and capital flows linking people and markets in a new global economy. But the dramatic increase in world trade and the emergence of powerful new trading blocs have also served to add to the marginalization of the world's poorest nations. Will these blocs be competitive, complementary, or reciprocal in their efforts? It is vital, in my view, that decision-makers in the new global economy not forget the developing world, especially in forums in which developing countries are not represented.
We must bury the myth that development cooperation is no longer needed in light of private sector flows, trade opportunities, and other benefits of globalization. Eighty per cent of direct foreign investment in the developing world goes to only a dozen countries -- all middle-income countries with the exception of China. Just 5 per cent goes to Africa and 1 per cent to the 48 least developed countries. By contrast, United Nations assistance goes
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predominantly to low income countries, where it can pave the way for private sector development.
Globalization has given hope that human ingenuity and enterprise will take us forward in to a new golden age, but serious development challenges remain. Globalization in itself cannot be seen as a magical panacea. The benefits of globalization are not always apparent to the poor, the hungry and the illiterate. Over 60 per cent of the world's population must subsist on $2 or less per day. One hundred of the world's countries are worse off today than they were 15 years ago. And increasing disparities between the rich and poor within and between countries remain a serious threat to stability and to long-term economic growth. The United Nations and the private sector can and must work together to bring 60 per cent of the world's population into the market. That will bring prosperity to all.
Let us move beyond the traditional dogma of North and South. In every country of the North, there is a bit of the South; in every "South", there is a "North". Much of the dramatic growth in the world today is led by countries from the South. The South is the driving force of economic change and offers you, corporate leaders, unprecedented opportunities. Today, there is a clear and demonstrable link between profitability and raising living standards for the world's poorest people. Profitability and equity are not mutually exclusive goals. Quite the reverse.
We can do more, all of us, to address these issues greater urgency. For our part, the United Nations has established and is promoting a common platform for development action. Our job is to help create the conditions that make your job successful. Working together with Member States, the private sector, and other non-governmental organizations, our platform emphasizes social responsibility, interdependence and, above all, the common pursuit of practical and achievable development goals.
At the operational level, partnership is crucial. The United Nations has a vital role to play in supporting and preparing the ground for domestic and foreign private investment. Our detailed work in this area has included assistance for public administration reform, for economic restructuring, for privatization programmes and for essential infrastructure, as well as the strengthening of legal and regulatory frameworks. We set the international norms and standards that make progress possible.
The United Nations has played its part in creating special economic zones, removing trade barriers, supporting entrepreneurs, and in the development of small and medium-sized enterprises. In all of these areas, we have a proud record. The United Nations system has often been the principal, if not the sole, source of financial and technical support to over 100 States since the end of the Second World War. Our record is clear: we have made a difference by helping to build new societies, by acting to cease human misery,
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and by contributing to the peaceful transition from repressive to free and democratic societies.
But we can do more. Strengthening the partnership between the United Nations and the private sector will be one of the priorities of my term as Secretary-General. Without greater cooperation, the social and economic needs of the developing world cannot be met. Without greater cooperation, the benefits of foreign investment will not flow to those who need them most. Without greater cooperation, the United Nations cannot learn from, nor utilize fully, the skills, capital, and management expertise of the private sector.
We at the United Nations are committed to the long-term view. We are dedicated to reform, in order to build a more efficient and effective Organization, including building ever closer links with the private sector. We can only do this and create an effective organization you can be proud to do business with, by urgently addressing the United Nations' ongoing financial crisis. We need all Member States to meet their financial obligations to the Organization in full.
Today, the United Nations is ready to help you make the case for long- term investments, which are both good business and fundamental to securing the peace and security of our planet. For both the United Nations system and the private sector, our goal for the twenty-first century is nothing less than the creation of a true global economy, genuinely open to all of the world's peoples.
But this vision is not enough. It must go hand in hand with urgent practical programmes and projects to help unlock the vast human and economic potential of an underdeveloped world. As Secretary-General, I am committed to doing just that. I am open to your advice and I look forward to hearing from you.
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