COSTS OF GLOBALIZATION, FIGHT AGAINST POVERTY AMONG ISSUES ADDRESSED AS SECOND COMMITTEE DEBATE ON WORLD ECONOMIC SITUATION BEGINS

Press Release
GA/EF/2759

COSTS OF GLOBALIZATION, FIGHT AGAINST POVERTY AMONG ISSUES ADDRESSED AS SECOND COMMITTEE DEBATE ON WORLD ECONOMIC SITUATION BEGINS

USG for Economic and Social Affairs Says Development Cooperation Involves Emergence of Shared Values and Solidarity as Basis of Relations among Nations

Although the world economy continued to grow, poverty was deepening, the gap between rich and poor was widening and capital flows to developing countries were unpredictable, the representative of the United Republic of Tanzania told the Second Committee (Economic and Financial) this morning as it began its general debate on the world economic situation.

Speaking on behalf of the "Group of 77" developing countries and China, he said that those trends required renewed partnership and the fulfilment of international commitments to enable developing countries to benefit from globalization and liberalization. Long-term financial and technical support, transfer of technology, and improvements in the terms of trade were needed.

The fight against poverty at the national and international levels must remain the supreme objective of all the Committee's discussions, the representative of Luxembourg said. Speaking on behalf of the European Union and associated States, he added that the current downturn in the percentage of gross national product (GNP) allocated to official development assistance (ODA) was also a constant cause for concern. All countries should attack the cause of that downturn in a spirit of global partnership.

The representative of the United States stressed that globalization did have costs, but sound economic and social policies could mitigate those costs. Sound domestic economic and financial policies and a healthy domestic banking sector were important in mobilizing long-term capital and in avoiding financial instability.

Ghana's representative said the international economic and trading system had promoted further development in the stronger economies but had failed to strengthen the weakest economies. Liberalization jeopardized the exports of developing countries as the influx of cheap imports was driving small entrepreneurs out of business, thus reducing employment and their purchasing power.

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In an opening statement, the Chairman, Oscar de Rojas (Venezuela), said the Committee should not accept the idea that macroeconomic issues must be dealt with by specialized bodies, some of which did not have ties to the United Nations. The United Nations was the only forum in which those issues could be treated in a whole and universal way.

Also addressing the Committee, the Under-Secretary-General for Economic and Social Affairs, Nitin Desai, said development cooperation should involve the emergence of shared values and solidarity as a basis of relations among nations. Doubts about the sustainability of growth, the financial vulnerability of developing nations that were integrating into the world economy, unemployment and social strife were all manifestations of the inadequacies of development strategies that had been pursued in the past.

In addition this morning, the Committee elected by acclamation Adel Abdellatif (Egypt) as Vice-Chairman and adopted its revised programme of work for the session.

The representatives of Bangladesh, Namibia, Jordan, Myanmar, Russian Federation and Egypt also spoke.

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

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Second Committee Work Programme

The Second Committee (Economic and Financial) met this morning to begin its general debate on the world economic situation.

Statements

OSCAR DE ROJAS (Venezuela), Chairman of the Committee, said General Assembly resolution 50/227 -- on further measures for the restructuring and revitalization of the United Nations in the economic, social and related fields -- had laid down and reordered the work programme of the Second Committee so that it could function in a more systematic and practical way. This year, the Committee was faced with an interesting agenda, with potential which must be fully mined so that it could make concrete recommendations to benefit all countries.

Tackling development financing and external debt, as well as the availability of resources, were essential for implementing programmes for development, he said. Developing countries did not have adequate savings and resources to meet their own needs as far as capital was concerned, therefore, official development assistance (ODA) from developed countries was indispensable. How to finance development, and other core issues, including trade and technology, must continue to be the fundamental concerns in the work of the Committee.

The Committee could not accept the idea that macroeconomic issues must be dealt with by specialized bodies, some of which did not have ties to the United Nations, he said. The United Nations was the only forum in which those issues could be treated in a whole and universal way. The idea behind the United Nations was to build a better world, as one could conclude by reading the Charter. Social justice on an international level was the philosophical underpinning to the work of the United Nations that had been forgotten in the "new world order". The Committee should try to recover social justice as States strove to establish international cooperation. Such cooperation should be built upon a common interest among countries and consolidate new consensus to attain development goals.

Members of the Committee should stop and think of the possibility of lending a fresh political impulse to resume a productive North-South dialogue, which would neatly detail the tasks of reforming and revitalizing the United Nations, he said. There must also be efforts to cultivate closer cooperation between the United Nations and the international financial and trade institutions, particularly among those, the Bretton Woods institutions. The Committee must insist that political dialogue on major international economic issues begin in the United Nations, and that financial institutions make a contribution to that dialogue.

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He went on to say that matters regarding the United Nations Decade for the Eradication of Poverty required national measures as well as international cooperation to effectively implement instruments already agreed upon at recent conferences. It was a source of shame for the international community that the world had not overcome the grinding poverty and marginality that millions of people found themselves in. The international community must ensure that there was a minimum decent living standard for everyone who lived on this planet.

Regarding the environment and sustainable development, he said that while the Assembly's special session on review of implementation of Agenda 21 had not achieve all that many had hoped and desired, the international community must move forward and build and add to what had been agreed to, including in the areas of climate change, biodiversity and the fight against desertification. The world was growing smaller and more connected every day. While the world economy was experiencing significant growth, there was a lot to be alarmed about, including the ever widening gap between developed and developing countries and the deterioration of the environment.

NITIN DESAI, Under-Secretary-General for Economic and Social Affairs, said the backdrop for the work of the Committee was the state of the world economy, the process of United Nations reform and development issues. Prospects for the world economy could be viewed pessimistically or optimistically, depending on what was examined. The driving forces of the world economy were becoming more homogeneous, but the capacity of countries varied widely. With the recent turmoil in South-East Asia, there was a growing agreement that strong macroeconomic policies were essential for creating a conducive environment for establishing long-term capital flows. There was also a continued need for international debate on the nature and extent of government intervention in financial markets to reduce the vulnerability of some countries.

Development cooperation involved more than short-term management of the world economy, he said. It involved the emergence of shared values and solidarity as a basis of relations among nations. Doubts about the sustainability of growth, the financial vulnerability of developing nations that were integrating into the world economy, unemployment and social strife were all manifestations of the inadequacies of development strategies that had been pursued. Was there a greater role for international and public policy? he asked, adding that there was a new approach to development that had emerged from recent international conferences, "a third way", that sought to avoid the consequences of interventionism and laissez-faire.

He went on to say that among the policy issues that needed to be addressed in development cooperation was the financing of development. The "Agenda for Development" had focused on a wide range of concerns, including

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the composition of financial flows. Activities that required public resources spent through public entities could not be left up to private sources. The ODA was needed and private financial flows were not enough. Unfortunately, at the time that there was an agreed upon programme for development, ODA flows were declining.

Another issue in the area of development was globalization and policy coherence, he said. The recent 1997 Trade and Development Report of the United Nations Conference on Trade and Development (UNCTAD) had called attention to the growing gap between developed and developing countries, and the wage inequality of skilled and unskilled labour, among other issues. The point was that processes of globalization must be managed intelligently and in the interest of all segments of the world population. Coherence among countries and different areas of policy could only be constructed through dialogue.

There also a need for careful management of public policy and better coordination of national policies in dealing with markets, he said. The question remained how to enhance the influence of all countries in the matters of global markets. There needed to be a mechanism to enhance the influence of development policy processes on other decision-making forums, and enhanced United Nations-Bretton Woods institutions relations could provide a forum for high-level coordination.

There must be a consistent and constant commitment to sustainable development, he said. Despite disappointments about the pace of implementations of the commitments made at Rio, there was continued interest during the 19th special session on translating into action Agenda 21, the programme of action adopted by the United Nations Conference on Environment and Development (Rio de Janeiro, 1992). The special session had demonstrated a continuing strong political interest and commitment to sustainable development worldwide. The Third Conference of the Parties to the United Nations Framework Convention on Climate Change in Kyoto, Japan, in December, would be a crucial test of the resolve of governments on climate change. Developed countries were expected to agree on legally-binding targets for significant reduction of greenhouse gases on specific time-frames. In many ways Kyoto would be a test to the commitment of the international community to future generations and the sense of responsibility to cope with the consequences of its actions.

Another area that needed to be tackled in the area of development was the struggle against poverty, exclusion and unemployment, he said. The 1995 World Summit for Social Development was important in that it stressed an approach that emphasized structural factors and the importance of empowerment. Work to eradicate absolute poverty and providing jobs for all that want it, without discrimination, was something that had to be done at the national level. However, at the international level there must be programmes that

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offered advocacy, analysis and support for the formulation of national action plans. There also needed to be promotion for new approaches and exchanges of experience. Noting that those were just some of the issues the United Nations had addressed in the area of development, he called on the international community to work to develop a coherent partnership among the many global organizations dealing with development issues.

DAUDI N. MWAKAWAGO (United Republic of Tanzania) speaking on behalf of the "Group of 77" developing countries and China, said that although the world economy had continued to grow, poverty was deepening in developing countries, the gap between the rich and the poor was growing among and within nations and capital flows to developing countries continued to be unpredictable. Those uneven and adverse trends required renewed partnership and the fulfilment of international cooperation commitments to enable developing countries to effectively benefit from the twin processes of globalization and liberalization.

Stressing the need to honour commitments, he described as extremely disquieting the performance of developed countries in channelling financial resources to developing countries. The share of total official development assistance (ODA) in the gross national product (GNP) of the Development Assistance Committee (DAC) countries dropped sharply from 0.33 per cent in 1992 to 0.25 per cent in 1996, the lowest ratio recorded since the United Nations adopted in 1970 the overall target of 0.7 per cent of donor GNP for ODA. The aid to least developed countries had also dropped from 0.09 per cent in 1990 to 0.06 per cent in 1995 compared to the agreed target of 0.15 per cent by the year 2000. To accelerate the development process of developing countries, there was a need to reverse the declining trends in ODA flows.

Noting with concern the failure of the various debt relief measures to alleviate the debt burden of the developing countries, he called for an effective, equitable, development-oriented and durable solution to the external debt and debt-servicing problems of those countries.

He stressed the need for long-term financial and technical support, including transfer of technology from developed to developing countries, as well as for the improvement in trade relations between developed and developing countries. It was also necessary to ensure full and effective participation of the developing countries in the international economic decision-making processes. Only through an equitable, secure, non- discriminatory and predictable multilateral trading system could trade and development be enhanced in developing countries. The trade policy reforms being undertaken by developing countries could be frustrated unless developed countries took positive structural adjustment measures that could provide developing countries with greater export opportunities.

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Recognizing the importance of the United Nations as the central forum for dialogue and negotiations on the issues of international cooperation for development, he said the proposed reform of the Organization should strengthen and revitalize its ability to fulfil its role and functions in the field of development. The United Nations must carry out its mandated role in the economic and social areas, he concluded.

JEAN GRAFF (Luxembourg) speaking for the European Union and Bulgaria, Latvia, Lithuania, Poland, Czech Republic, Norway, Romania and Cyprus, said the positive world economic trend outlined at the last General Assembly session had continued, and while various regions of the world had enjoyed sustained economic growth, the benefits had not been evenly spread within regions or within many countries. The least developed countries, particularly in Africa, continued to suffer from problems of marginalization and vulnerability. The situation of such countries needed to be addressed by the world community, and steps must be taken to ensure that all countries and social strata enjoyed the benefits of globalization.

In that context, the European Union awaited the Secretary-General's report on the organization of a high-level debate on the economic and social impact of globalization and interdependence, he said. That debate would supplement the discussion on the question of fostering an enabling environment for development recently held by the Economic and Social Council.

The fight against poverty at the national and international levels must remain the supreme objective of all the Committee's discussions, he continued. Over one-fifth of the world's population -- the great majority of whom were women -- had to survive on less than $1 per day. The proclamation of the United Nations Decade for the Eradication of Poverty was a reminder that the matter must be tackled immediately.

He recalled that at the special session of the Assembly on implementation of Agenda 21, the European Union had outlined the priorities which it would pursue in the future to promote sustainable development, particularly in the area of sustainable management of water resources and energy. As in the past, the Union would continue to play an active role in future conferences of the parties to the conventions on desertification, climate change and biodiversity. It would work to ensure the adoption of substantial limits on greenhouse gas emissions by the Kyoto Conference in December. Recent events had underlined the importance of initiating discussions on early-warning systems, as proposed by the Union, in order to prevent ecological disasters.

As agreed at the Assembly's special session, official development aid remained a major source of external finance for the developing countries, especially the countries of Africa and the least developed countries, he said. The Union would do its utmost to honour its commitment to achieve the target

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agreed to by the United Nations of allocating 0.7 per cent of its GNP to ODA as soon as possible. The current downturn in the percentage of GNP allocated to ODA was a constant cause for concern. The Union was prepared to step up its efforts to reverse that trend in view of the need to reinforce the quality and value of such aid. All countries should attack the cause of that downturn in a spirit of global cooperation. In addition, strategies should be formulated to increase the aid given by donors to the assistance programmes to reinvigorate the commitments made at the Rio Environment and Development Conference.

VICTOR MARRERO (United States) said sustainable development, in addition to the restructuring and revitalization of the United Nations, should be the main concern of the Committee. Sustainable development must be discussed with its three interdependent and mutually reinforcing components of economic development, social development and environmental protection. Good governance -- government that was representative, transparent, accountable, just and appropriately restrained -- was a prerequisite for sustainable development.

Drawing attention to the Economic and Social Council's recent call for an enabling environment for development, he said governments should provide and guarantee that enabling environment but should not function as donors or recipients of development assistance. While development aid played an important catalytic role, it was the private sector which had been and continued to be the engine of growth.

Stressing that globalization did have costs, he said sound economic and social policies could mitigate those costs. Sound domestic economic and financial policies and a healthy domestic banking sector were important in mobilizing long-term capital and in avoiding financial instability. Private flows to developing countries were at record levels -- exceeding $250 billion in 1996 -- and developing countries continued to account for an increasing share in international debt, equity finance, and foreign direct investment. The number of developing countries with access to private international financing was large and growing, he stressed. The UNCTAD had an especially important role to play in assisting the least developed countries in enhancing their domestic policy frameworks to avoid marginalization from the globalized international economy, he added.

ABDUL HASANAT ABDULLAH (Bangladesh) said the growth rate in the developing countries was the highest in many years, and even the least developed countries grew last year and continued to grow this year, although at a slower pace. Yet the economic figures also showed that the gap between rich and poor countries was widening. Sustainable development should narrow and not widen the existing inequalities among countries. For the vast majority of developing countries, growth had not been fast enough to reduce the growing rift between the rich and the poor. The least developed countries were also marginalized from world trade because of both low market access and

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high supply side constraints. It had been estimated that the products from the least developed countries faced tariffs which were 30 per cent higher than the global average. Such restrictions were frustrating those countries' ability to develop.

It was a matter of great concern that aid budgets of most traditional donors had been shrinking in spite of their increased ability to extend assistance, he said. Bilateral aid fell to its lowest level in 1995 since the target of 0.7 per cent was set by the United Nations in 1970. The share of aid for the least developed countries also contracted significantly: by 1995 it was 0.06 per cent of the GNP of the DAC countries compared to 0.09 per cent in 1992. The outlook for an immediate recovery was uncertain. In addition to the decline in aid flow, the development attempts by many developing economies were seriously impeded by a persistence, or an increase, in debt overhang. Much of the export earnings of many of those countries were now siphoned back to the creditors. He called for the flexible implementation of the six-year performance period to a larger number of countries for receiving early relief. A delay in implementing that would only prolong those countries from attaining self-reliance.

JACK WILMOT (Ghana) said despite an encouraging global economic outlook this year, Africa continued to face important policy challenges, particularly in its efforts to enhance resource mobilization and allocation, strengthen savings and investment, and reduce increasing marginalization in the world economy.

He said many developing countries were not achieving enough growth to support employment generation, reduce poverty and strengthen their economies because their efforts were not supported by a conducive international economic environment. The international economic and trading system, while promoting further development in the stronger economies, was not geared towards strengthening of the weakest economies. Liberalization was jeopardizing the exports of the poor developing countries as cheap imports drive small entrepreneurs in those countries out of business, thus reducing employment and purchasing power.

MARTIN ANDJABA (Namibia) said his Government attached the utmost importance to the operational activities of the United Nations and their complementary impact on the development efforts of developing countries. Any reform in that area must broaden their scope and not be to the detriment of development objectives of the funds and programmes. The aim should be to make operational activities relevant to the needs of developing countries. Also, the vast diversity among developing countries, which ranged from rapidly growing economies to those still trapped in the web of poverty, should not be forgotten. Reform in that area should allow the Organization to focus on the core of that problem, which was the lack of resources.

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Namibia was concerned that the financial commitments made to the United Nations development system were declining gradually and becoming unpredictable, he said. The triennial policy review of United Nations operational activities for development, to be held next year, should enable the Committee to seriously revisit the issue so as to reverse that trend, which was damaging to the most disadvantaged countries and the most vulnerable sectors of their societies.

Africa's economic prosperity depended on the efforts of its countries to put in place an enabling environment for trade, investment and capital flows at a national and regional level, he said. It should be stressed, however, that in addition to those steps, the pro-growth policies being adopted on the continent should be met by external assistance, complemented by a conducive external environment. Only then could those countries become active participants and beneficiaries of the emerging global economy. His Government had addressed the problems of unemployment and poverty through a two-prong strategy: by investing in education, training and other social services; and by creating a favourable environment for the private sector. The private sector should be the engine of economic growth, but the State had an indispensable role to play in creating a conducive environment for development. Therefore, the emergence of a market economy did not erode the role of the State.

FARIS AMMARIN (Jordan) said the debt crisis and the flow of financial resources remained the major obstacles to efforts to enhance international cooperation for economic growth and development. The international community must move from controversies in the methodologies of declarations and political statements to action-oriented plans. There was a need for innovative plans and ideas to address core universal issues.

In pursuit of global partnership, he said the international community needed to seriously address the following issues: debt crisis of the developing countries; financing of development; international trade; follow-up of the major conferences and summits; the critical economic situation in Africa; and the situation in the Middle East, particularly the economic conditions of the Palestinian people.

U WIN AUNG (Myanmar) said the overall policy thrust in the proposed United Nations reforms should be to strengthen the Organization's capacity to address development issues and to respond effectively to the development needs of developing countries.

Concerning the search for a durable solution to the external debt problem of developing countries, he said all commitments, agreements and decisions of the major United Nations conferences and summits of the last decade must be timely implemented. Development and peace are indivisible and political conditionalities should not be attached to development.

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SERGEY V. LAVROV (Russian Federation) said the creation of an international environment conducive to a free access to markets, financial resources and modern technologies, alleviation of poverty, protection of the environment, implementation of economic reforms and the enhancement of the competitiveness of national enterprises was indispensable to full integration of the world economy.

He called for the implementation of the recommendations of the "Agenda for Development", which reflected a consensus on both policy measures and the institutional framework for further United Nations activities in the area of development. On the forthcoming Intergovernmental Forum on Forests, which was called by the Economic and Social Council, he said the Russian Federation attached special importance to it and would actively contribute to building consensus on the legal framework and instruments for ensuring a fair international regime of responsible forest use and sustainable forest management.

ADEL ABDELLATIF (Egypt) said that many United Nations conferences and activities had treated globalization as a fait accompli. Due attention had not been given to the negative consequences of globalization, which could erase the advantages for developing countries. It was important to see clearly that globalization was not free of risk and that those who did not participate in it were marginalized. The advantages of globalization differed by social groups and countries and also differed greatly by whether a country was in the North or in the South. The international community had not been fully aware of the risks of globalization and a new system which could not be borne by the countries of the South.

When the liberalization of economies was discussed, often people gave it certain characteristics, which led to the labelling of certain theories as taboo, he went on. There were many examples of that practice in the field of world trade. For example, the trade in textiles and agricultural products was still facing obstacles set up by industrial countries that wanted to protect their interests. His Government endorsed the statement expressed by George Soros in an article in the Atlantic Monthly, entitled "On the threat of capitalism". He wrote that the status quo was being preserved under the pretext of the survival of the fittest, which would become the rule on the national and international levels. It was necessary for the international community to give greater attention to current policy evolutions and not to leave free play to the hidden hand.

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