ECONOMIC AND SOCIAL COUNCIL CONTINUES DEBATE ON FOSTERING DEVELOPMENT IN FACE OF GLOBALIZATION
Press Release
ECOSOC/5709
ECONOMIC AND SOCIAL COUNCIL CONTINUES DEBATE ON FOSTERING DEVELOPMENT IN FACE OF GLOBALIZATION
19970707 Developing Countries Call for International Assistance to Face Changes In World Economy; National Responsibility for Development Stressed by Speakers(Reissued as received.)
GENEVA, 3 July (UN Information Service) -- The Economic and Social Council this afternoon continued its high-level discussion on "fostering an enabling environment for development", focusing on the effects of globalization on developing countries and the need to minimize the social costs of marginalization.
Participants in the debate agreed that globalization and liberalization, the dominant trends in the world economy, carried with them benefits and risks, although differences emerged on how to tackle the downsides of the new economic environment. For the representative of Jamaica, it was indisputable that recent developments presented opportunities that could accelerate the rate of development of developing countries. However, she added, the process had produced both winners and losers, and the number of losers was growing. Despite liberalization measures and deregulation, many developing countries had yet to see significant changes in the direction of foreign investment to improve the overall flow of resources to their countries, while bilateral aid had fallen, she said.
This view was echoed in the statement of the representative of Djibouti, who said despite strenuous efforts by least-developed countries, vitally needed resources and support were lacking or diminishing. He added that given the serious limitations such countries, including Djibouti, faced, that lack of support could consign them to obscurity and breakdown over time, not as a result of internal conflicts but through the onslaughts of globalization. He called for "urgent preventive measures", by way of resource flows tailored to the specific needs of those countries.
Other countries stressed the role of a revamped United Nations in helping developing countries meet the challenges of globalization and foster an enabling development environment. The representative of Sweden said the choice as regards economic and social change was no longer between a free and a non-free market, but rather whether to develop, temper and sustain that free
market and give it a social and human-oriented character; or whether to let that market to be captured by elites of various kinds to protect their particular interests. All countries had a national interest in a stronger international framework and the demanding new global agenda required a stronger United Nations, he added.
The representative of the United States, meanwhile, emphasized the responsibility of developing countries themselves in achieving development. He stressed good governance and "sound economic fundamentals" as the keys to weathering the volatility of private capital flows. Although official development assistance remained an essential ingredient for a number of developing countries, he said, it could not produce the sustained economic growth developing countries sought without social and political stability, prudent environmental practices and good governance.
The discussion was part of the high-level segment of the annual Council session. A number of Council members are being represented at the ministerial level. Also this afternoon, the representatives of El Salvador, Swaziland, Switzerland, Malaysia, Sweden, Croatia, Romania, Poland, Togo, Germany, Kuwait, Japan, Bangladesh, China, Canada, Brazil, United States, Djibouti, Australia, Botswana, Jamaica, Senegal, Uruguay and Iran took the floor.
The session was also addressed by the Director-General of the International Labour Organization and the Administrator of the United Nations Development Programme.
The Council will continue its debate in plenary session tomorrow, 4 July, starting at 11 a.m..
Statements
MICHEL HANSENNE, Director-General of the International Labour Organization (ILO), said the report presented by the Secretary-General on fostering an enabling environment raised the problem of ensuring coherence in international policies. For its part, the ILO had already strengthened its cooperation with the International Monetary Fund (IMF) and the World Bank. In the context of globalization it must be assured that trade freedom created prosperity for all countries, and for all people in those countries, first of all the workers. Thus, in his report to the International Labour Conference recently held at Geneva he had argued in favour of the adoption of a solemn declaration to reaffirm universal respect for the fundamental rights of workers on the part of all ILO members. Such a declaration did not aim in any way at holding members to obligations to which they had not agreed; it simply sought to renew their commitment towards certain essential principles inherent to the values defended by the ILO. In order to fully take advantage of globalization, there must be close coordination between social and economic policies.
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VICTOR MANUAL LAGOS PIZZATI, Vice Minister for Foreign Relations of El Salvador, said an internal peace achieved after 10 years of conflict along with economic and governmental measures, including establishment of a democratic system and macroeconomic stability, had led to a brighter outlook for the country; inflation had declined and the private sector had grown considerably; other reforms were under way to improve the country's ability to compete. However, obstacles remained, and a country that had made such progress after years of conflict, that had established democracy and respect for human rights, deserved greater international support; countries in post-conflict situations in fact deserved special attention; the United Nations and the Bretton Woods institutions must work together to create an appropriate international environment that would bolster such national efforts for development; it was hoped that El Salvador could be considered an economy that was full of potential.
TIMOTHY L.L. DLAMINI, Principal Secretary, Ministry of Foreign Affairs and Trade of Swaziland, said there was a need to address increased marginalization of most developing countries, especially in Africa. Developed countries were urged to provide technical assistance and to consider liberalization through a substantial reduction of tariffs and other barriers to trade; this would provide a solution to the debt problem and improve access for developing countries to world markets. But lack of political will to address such issues was having devastating consequences on developing countries. Developed nations were urged to desist, furthermore, from taking measures introducing conditionalities on international economic cooperation. Swaziland recently had developed an Investment Promotion Law and Investment Promotion Centre in an effort to spur slow economic growth; it was hoped that these steps would facilitate local and foreign investment in the country.
FRANZ BLANKART, State Secretary and Director General of the Federal Office for Foreign Economic Affairs of Switzerland, said globalization involved greater interdependence, making competition stronger and cooperation more desirable. But globalization had to respect fundamental social standards, in particular in relation to creating new jobs and improving their quality. Some countries which were less ready for change found themselves on the sidelines of globalization and this was not acceptable; an environment had to be created to allow the weakest countries to participate. At the same time, States needed to set up an adequate institutional framework, among other measures. And the poorest had to be guaranteed education and health care. Technical assistance measures to the developing countries had to be consistent and better coordinated. The integration of developing countries into the globalized world economy would be of benefit to everyone.
DATO' WONG SEE WAH, Deputy Minister of Finance of Malaysia, said Malaysia had been a major recipient of investment and capital flows, which had contributed to sustained economic growth. However, given the volatile nature of such flows, they had on some occasions caused problems for economic
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management -- excessive amounts led to rapid expansion in money aggregates, rising price pressures, asset price inflation, and deterioration in the external current account. As one of the most open economies, Malaysia was constantly faced with difficult policy choices arising from globalization of capital markets. Strengthened of international cooperation was strongly supported by Malaysia, along with closer regional cooperation and mutual support to deal with the risks arising from disruptive global events and market volatility; in addition, the major industrial countries of the world should work with developing countries to address adverse developments arising from shifts in investor sentiments. Many developing countries, meanwhile, continued to require assistance to carry out structural reforms and build the infrastructures needed to participate in the world economy.
MATS KARLSSON, State Secretary at the Ministry for Foreign Affairs of Sweden, said that to take advantage of the enormous opportunities provided by globalization, national capacity needed to be expanded and multilateralism renewed. The choice as regards economic and social change was no longer between a free and a non-free market. The real choice was whether to develop, temper and sustain that free market and give it a social and human-oriented character; or whether to let that market to be captured by elites of various kinds to protect their particular interests. All countries had a national interest in a stronger international framework. Much was at stake in particular in Africa. For the demanding new global agenda, a stronger United Nations was needed. If it was not modernized and made a framework of many forms of international cooperation, the future of multilateralism would be at stake. Reform was needed in the humanitarian field and in the financing and development activities. A cohesive United Nations, one that rose above its fragmented nature, was essential.
NENAD PORGES, Minister of Economy of Croatia, said that further investment, technology transfers, and opening up of markets was necessary by developed countries to help the world's poorer countries and nations with transition economies achieve sustained development. Croatia, despite an economy in transition and severe problems with war against its independence, had achieved significant changes in its economy and carried out extensive privatization, and its economic performance had improved in recent years, with gross domestic product (GDP) growing by 5 per cent in 1996. However, integration of Croatia into the world economy depended upon its reception into the various multilateral economic and financial organizations that managed the system, and that entry sometimes was based on factors that were not always strictly economic in nature. Accession into the World Trade Organization (WTO) and different regional organizations such as CEFTA and the European Union had become imperative for the country, and Croatia urged the elimination of all unnecessary obstacles to such membership and elimination of barriers to trade and capital flows.
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ALEXANDRU NICULESCU, Director of the Ministry of Foreign Affairs of Romania, said the rapid and broad changes generated by the processes of globalization and liberalization were transforming the world economy and the very nature of the international economic relations. Fostering an enabling environment for development was a rather complex and multifaced process which implied concerted efforts at the national and international levels to find long-term and viable solutions. Since each country had the primary responsibility for its own development, it was of utmost importance to ensure the participation of governments and of non-government actors, in particular the private sector and civil society. International cooperation could be instrumental in creating a favourable climate for promoting capital flows, investment and trade. This joint cooperative effort should be focused on the creation of conditions to better integrate developing and transition economies into the multilateral economic system. Increased interdependence among national economies would require strengthened international cooperation and harmonization in the area of macro-economic policies, environment, labour and health as well as in development cooperation policies.
MAREK GRELA, Under-Secretary of State of Poland, said international cooperation could not be confined to Governments alone; it must include a wide range of actors, but in any case the requirements for development were the same -- creation and maintenance of peaceful and stable international conditions, democratization of international relations, establishment of fair, transparent principles, and a level playing field for all. Poland had transformed its economy and its success was a good example of what had happened throughout central and eastern Europe. But financial barriers created enormous problems for various development efforts, and prevented developing countries in general and least-developed countries in particular from active participation in the global economy; international assistance to those countries was of critical importance and had to be continued, along with provision of technical and know-how facilities of advanced countries and international institutions such as the IMF and World Bank, along with United Nations institutions.
JAMES GUSTAVE SPETH, Administrator of the United Nations Development Programme (UNDP), said globalization presented a mixed picture, with big risks and benefits. Creating an enabling environment was important, but trade arrangements were still not sufficiently favourable to developing countries; management of international debt was not sufficiently oriented to promote development around the world; and there was a tendency for technology to divide rather than unify. UNDP was pleased to help build an enabling environment in areas of governance, strengthening rule of law, privatization and economic reforms. If ECOSOC was going to provide leadership in the United Nations on issues like trade and debt and international economic policy, it would have to restructure itself.
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KOFFI PANOU, Minister for Foreign Affairs and Cooperation of Togo, said global economic development on the surface was impressive, but the growth in fact was patchy and there was continued marginalization of many developing countries; Africa, despite some progress, continued to face severe difficulties in this regard, especially in the sub-Saharan region; countries had taken major and difficult steps, and sacrifices had been made by their populations; these measures had not produced the desired results; more help was required from the international community. Survival itself was threatened, as poverty levels were simply too severe. It was necessary to do more to reduce debt burdens in the region, to share advanced technology, to provide greater aid for development of infrastructures; for their part, the African countries concerned had to do more in terms of reform and economic self-discipline.
GERHARD HENZE (Germany) said the globalization process forced all countries to make painful structural adjustments, irrespective of their level of development. Success or failure depended largely on whether the countries concerned were prepared to create the adequate political, economic and social framework. However, for the least developed countries, overseas development assistance was still indispensable. But it should not be believed that development would come more or less automatically if official assistance flowed in sufficient quantities, since development was primarily the responsibility of the developing countries themselves. Overseas development assistance should be concentrated on improving the national environment in order to make these countries more competitive and enable them to be integrated into the global market economy. At the same time, the social costs of such policies could not be ignored. Regional cooperation was another way of fostering an enabling environment. And promoting an enabling environment for development was inseparable from promoting the rational use of natural resources.
ESAHAQ A. ABDULKARIM, Director of Economic Cooperation of Kuwait, said the world today faced structural changes and extremely rapid economic transformations. Kuwait had faced some negative economic circumstances as a result of the Iraqi invasion, which showed the importance of developing countries cooperating instead of invading each other. Globalization carried many promises and aimed at a better future, but the world had to stop and think of its negative consequences on developing countries and how to reduce those effects. Developing countries were unable to keep up and compete with the developed nations; since they had mutual interests, a situation should be created with no winners or losers.
MASAKI KONISHI (Japan) said it was pleasing to see that many least-developed countries, particularly those in sub-Saharan Africa, were striving to attain financial sustainability through fiscal and monetary measures, and were adopting growth- and market-oriented economic policies. There was a growing need for making development and macroeconomic policy more
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consistent, as conditions at the global and domestic levels such as fluctuations of interest and exchange rates tended to have greater impacts on developing countries; it also was important for them to put in place the necessary social infrastructure, improve monetary and legal systems, and strengthen human resource development and good governance. The United Nations had a comparative advantage in dealing with development in such a comprehensive manner, and first and foremost it should try to identify inconsistencies between policy in finance and trade on the one hand and development on the other, and find ways of minimizing their impact on developing economies. A wide range of policy tools should be used for development, and actors in the process should approach it in a spirit of partnership. Japan looked forward to further debt-relief measures for developing countries, and to further efforts by WTO and UNCTAD to integrate such countries into the world trade system.
ANWARUL KARIM CHOWDHURY (Bangladesh) said that the spread of globalization should not allow eclipse the phenomenon of marginalization. Each country was primarily responsible for its development, but sometimes that development depended on the external environment. Most developing countries, especially in Africa, continued to need help from the international community to carry out their policies. Despite vigorous development, least developed countries were not being given adequate support to fulfil their responsibilities. Their economic performance showed some modest improvement, but a reversal of their socio-economic deterioration was not in sight. The share of these least developed countries in overseas development assistance had declined and seriously undermined their development. International partners were urged to reverse this decline and fulfil their commitments made to least developed countries. It was important that the United Nations system, international institutions and funds and programmes became effectively involved in supporting these countries. Unless the 48 least developed countries joined the mainstream of globalization, all efforts to create a better world for all would remain unaccomplished.
WU JIANMIN (China) said emphasis should be placed on the world's developing -- and especially the least-developed -- countries. The external economic environment was becoming ever more important to the economic growth of such countries, and owing to their weak economic bases, they were more vulnerable to unfavourable changes in the external economic environment; many were weighed down by poverty, population pressure, heavy foreign debt, worsening trade terms, inadequate infrastructure, and environmental challenges. The international community, and especially the developed countries, must help, especially in contributing to a sound international economic environment; the trend of declining development assistance should be reversed as quickly as possible; the international community should take full account of the difficulties and needs of developing countries when formulating the "rules of the game"; developing countries should take an effective part in the decision-making process of world economic affairs; the stability of
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financial markets should be maintained to keep volatility from threatening the fragile situations in developing countries; and the UN should carry out its reform process with the intent of establishing a fair and equitable new international economic order.
DAVID KILGOUR, Secretary of State for Latin America and Africa of Canada, said each country had the primary responsibility for promoting its own development. The international community also had to collaborate in building an enabling environment through a supportive partnership to bring prosperity to all nations. Some countries had experienced robust growth while others required support in their efforts to integrate into the international economy. Fostering an enabling environment took a multi-tiered effort; promotion of a transparent rules-based multilateral trading system with universal membership was a pre-requisite for a level playing field. Efforts were required to ensure the participation of the least developed countries. Meanwhile, there had been some progress in the key issue of debt reduction. A focus on poverty reduction served to remove one of the primary sources of conflict and instability. The United Nations also had a specific role to play in fostering an enabling environment. Canada hoped that while it underwent its own reform process, the United Nations would strengthen its ability to implement its programmes.
CELSO L.N. AMORIM (Brazil) said excessive optimism about globalization had given place to a more sober approach that recognized both its opportunities and risks. Brazil was engaged in a series of efforts ranging from measures to consolidate macroeconomic stability to long-ranging reforms, such as reshaping the State and providing investments for basic services and infrastructure; it and other countries were seeking to find the means to integrate themselves into the global economy on a sustained and viable basis. But there were limits to what countries could achieve individually, and the role played by international cooperation was of great importance; there was an institutional deficit the field of policy coordination at the global level that had to be rectified, and developing countries had to be given greater ability to participate in policy formation. A well-constructed dialogue by ECOSOC with other actors, particularly the Bretton Woods institutions, would provide new inputs and some fresh air into what were now very restricted deliberations. Other necessary steps included reversing the downward trend in official development assistance.
VICTOR MARRERO (United States) said the discussion on an enabling environment had to address the fact that economic and social development and environmental protection were interdependent and mutually reinforcing components of sustainable development. The discussion also had to take into consideration that sustained economic growth, democracy, respect for human rights, transparent and accountable governance and the empowerment of women were all essential elements of sustainable development. A key challenge was assisting all developing countries in finding ways to attract resources in pursuit of their goal of sustainable development.
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Mr. Marrero said an enabling environment for development depended upon both international and domestic factors. For the domestic environment, the key to attracting and sustaining private capital flows and encouraging accumulation and mobilization of domestic savings was policies and practices of the economy. Research had shown that countries that demonstrated good governance and progressed in maintaining sound economic fundamentals were able to weather the volatility of private capital flows. The United States had been active with its partners in multilateral fora and in the area of governance. It was convinced that globalization and environmental protection could and had to go hand-in-hand. Although official development assistance remained an essential ingredient for a number of developing countries, it could not produce the sustained economic growth developing countries sought without social and political stability, prudent environmental practices and governance.
ROBLE OLHAYE (Djibouti) said the majority of developing countries were now pursuing macro-economic policies, market liberalization, and other reforms sought and recommended by the international community. Developed countries, the multilateral lending institutions, the United Nations, and international private capital were expected, in turn, to provide the resources to allow these developing countries to restructure their economies, strengthen their basic social services and infrastructure, and nurture fragile markets. Yet, despite strenuous efforts by least-developed countries, Djibouti among them, vitally needed resources and support were lacking or diminishing. Given their serious limitations, this lack of support could consign them to obscurity and breakdown over time, not as a result of internal conflicts but through the onslaughts of globalization. The need for urgent preventive measures, by way of resource flows tailored to the specific needs of these countries, could not be overemphasized. Such countries deserved not only encouragement, but consistent and credible backing; aid and direct investment should be increased, and debt burdens eased.
ALAN MARCH (Australia) said his country shared the important goal of sustainable development and within it, poverty eradication. Presentations this morning had focused on the national and international environments necessary to foster this. Australia was committed to the reform of the United Nations and the concerns about any single agency should not limit it. And yet, United Nations reform was only one part of the enabling environment for development. Other equally important considerations were appropriate national policy settings; improved orientation of United Nations activities to better attract private sector support, and efforts to broaden the donor base.
LEGWAILA J.M.J. LEGWAILA (Botswana) said it was clear that without management safeguards, globalization would create a serious disequilibrium and marginalization of many developing countries, especially in Africa. A concerted effort must be made to identify the special needs and circumstances of such developing economies; many had made serious attempts to satisfy the
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conditions for economic integration through economic and political reforms; many were undergoing structural adjustment; and in general the way was being paved for a more stable and accountable African economic environment. It was most unfortunate, however, that financial and capital flows had been slow in coming. Botswana had taken steps to establish a sound market economy and had shown budgetary discipline and a stable political environment; it had focused attention on improving accessibility; transparency; availability of utilities for communication, transport and services; and strengthen coordination among national authorities; it continued to seek technical assistance in manufacturing and industrial inputs and in human-resource development, trade promotion, and investment promotion.
PATRICIA DURRANT (Jamaica) said globalization had emerged as the dominant economic theme of the decade. It was indisputable that recent developments presented opportunities that could accelerate the rate of development of developing countries. However, the process had produced both winners and losers, and the number of losers was growing. Globalization was leaving many countries behind. The gap was widening between the nations that had been able to become competitive globally and those unable to do so. Despite liberalization measures and deregulation reforms, many developing countries had yet to see significant changes in the direction of foreign investment to improve the overall flow of resources to their countries. At the same time, bilateral aid had fallen. This inability to attract foreign direct investment meant the least developed countries depended heavily on official development assistance.
Another major impediment to reaping the benefits of globalization was the problem of debt and debt-servicing facing developing countries, she continued. Furthermore, although trade was the driving force for economic growth and a major contributor to development, less flexibility had been granted to exports from developing countries.
ABSA CLAUDE DIALLO (Senegal) said development of trade and foreign direct investment went hand in hand, and Africa, compared to other regions of the world, continued to experience a downward trend in investment rates -- private investment in particular. Countries there had made efforts to carry out and strengthen economic and political structures to enable them to play active roles in the global marketplace; they had democratized; they had acted to improve the environment for private enterprise; they had reformed their legal systems; Senegal, along with other countries, had signed an agreement on harmonization of business law, for example. It had taken many other appropriate steps to aid effective development. Senegal favoured steps to increase investment and facilitate trade on behalf of developing countries; additional help was needed, as the very steps taken by these countries to improve themselves often weakened them domestically, at least in the short term; there needed to be greater international commitment and teamwork on their behalf.
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MIGUEL BERTHET (Uruguay) said regionalism had become an important factor to create an international enabling environment. MERCOSUR, the South American economic grouping, had demonstrated that in concrete terms. MERCOSUR figures showed that its inter-regional trade was not based on artificial competitiveness. The organization had encourage dialogue with different trading partners, with the objective of encouraging the conclusion of trading agreements. Integration among MERCOSUR countries was a broad-ranging process which went beyond the commercial sphere to social development, protection of the environment and protection of democracy. It considered the WTO fundamental to implementing the General Agreement on Tariffs and Trade principles, which promoted increased trade flows and stimulated markets.
SIROUS NASSERI (Iran) said approaches to managing the global economy had, to date, been fragmented; an enabling environment, influenced by many far-reaching determining variables, could not be created in the absence of a forum for crucial cross-sectoral discussions. Some were attempting to preclude the question of development from the mandate of the UN, but in fact global development needed a conducive, rule-based, non-discriminatory international environment, and arrangements to achieve it should be democratic and representative of States or groups of States with various economic backgrounds. In fact, such an arrangement existed -- ECOSOC, in close association with UNCTAD, could serve as such a forum for macroeconomic policy and dialogue, as long as its role and authority were enhanced. Attempts at norm-setting and coordination could certainly help design a clearer picture of what lay on the economic horizon -- but that picture would only be realized when good decisions, requiring political will, were put into effect.
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