HIGH-LEVEL DIALOGUE ON IMPACT OF GLOBALIZATION CONTINUES IN GENERAL ASSEMBLY
Press Release
GA/9438
HIGH-LEVEL DIALOGUE ON IMPACT OF GLOBALIZATION CONTINUES IN GENERAL ASSEMBLY
19980917 Developing Countries Stress Heavy Cost of Global Economic Integration, Recommend 'Safety Net' Measures for Countries with Economic DifficultiesSpeakers this afternoon gave specific accounts of the effects of globalization on their countries, as well as suggestions for how to better manage the globalization process in the future, as the General Assembly continued its high-level dialogue on the social and economic impact of globalization and interdependence.
"Financial integration in developing countries was a much more complicated process than trade liberalization", the representative of Bangladesh said, adding that financial turmoil was often due to hasty economic liberalization. He suggested that the Assembly consider certain steps as safety-net measures, such as: emergency food aid; balance of payment support to severely affected countries; an immediate increase in the level of official development assistance; and reduction of the debt burden and the immediate lifting of trade barriers on least developed countries.
The representative of Pakistan said the integration into global markets had exacted a very heavy cost, especially since there were no adequate "safety nets" for countries faced with economic difficulties. The accumulation of the side effects of globalization would lead to a new set of class divisions, he said. There would be divisions between those who prospered in the globalized economy and those who did not, between those who shared its values and those who would rather not, and between those who could diversify its risks and those who could not.
The representative of the Republic of Korea said the global economic crisis had taught many lessons. Recently, the emphasis on the market had overshadowed the importance of the State and its policies. While the role and function of the State was evolving, it still played an important role in shaping the development of society. Sound public policy was more crucial than ever in determining the economic capabilities and benefits that societies would reap in a globalized system.
General Assembly Plenary - 1a - Press Release GA/9438 5th Meeting (PM) 17 September 1998
While a truly global economy was presented as the most promising means of spreading the benefits of globalization and liberalization, it had not lowered the tide of ever-increasing poverty in the world, said the representative of Kenya. Developing countries, particularly the poorest and most heavily indebted ones, must be helped to exit from the rescheduling process.
The representative of Belarus said countries in his region had not managed to overcome the consequences of the financial crisis in South-East Asia, while a similar crisis was occurring in the financial market of the Russian Federation. That situation had destabilized the countries in the Commonwealth of Independent States, as their trade was substantially linked with the Russian Federation. Living standards had fallen dramatically, causing enormous social problems. From their point of view, the crisis had demonstrated, to some extent, the bureaucratic and indecisive actions of the Bretton Woods institutions in managing the problem.
The representative of Brazil said the recent drastic movements of short- term capital had exposed the vulnerability of emerging economies to predatory behaviour in financial markets and caused economic disruption and social unrest in many parts of the world. The traditional methods of international financial institutions needed to be revisited.
Also speaking in the debate were Senegal, Jamaica, Kazakhstan, China, Thailand, Algeria, Iran, Turkey, Maldives, Morocco, Viet Nam, Philippines, Russian Federation, Malaysia, Bolivia, Ukraine and the United Republic of Tanzania.
The Assembly will hear the remaining speakers at 5 p.m. Friday, 18 September. The Ministerial Round Table on "national responses to globalization" will be held tomorrow morning from 11 a.m. to 1 p.m.
General Assembly Plenary - 3 - Press Release GA/9438 5th Meeting (PM) 17 September 1998
Work Programme
The General Assembly met this afternoon to continue its high-level dialogue on the theme of the social and economic impact of globalization and interdependence and their policy implications.
Statements
ANWARUL KARIM CHOWDHURY (Bangladesh) said that, at one time, globalization and liberalization were presented as universal panaceas, of benefit to developed and developing countries alike. It was soon realized, however, that the costs were almost totally confined to the majority of developing countries. Those countries had been subject to a series of economic crises, ranging from debt to financial crisis, which indicated that, for most of them, the costs outweighed the benefits.
He said his major concern was that for most developing countries, the economic reform measures that led to greater global integration did not diminish the gap between rich and poor countries. "Financial integration in developing countries was a much more complicated process than trade liberalization", he said, noting that financial turmoil there was often due to hasty economic liberalization. The General Assembly must seriously reflect on that vital issue, as it considered financial development, and should emphasize the development of mature institutions, including legal provisions, regulatory mechanisms and development of supervisory capacities.
The weakest countries remained most vulnerable, he continued. They lacked the institutional capacity to cushion external shocks, which was magnified in the face of declining external assistance, failing official development assistance (ODA) and unbearable debt burden. The situation in developing countries had been further aggravated by declining commodity prices, which would have a damaging impact on the eradication of poverty. The resulting fall in income would seriously affect the ability of the governments of the least developed countries to provide for relief and rehabilitation needs in the event of a disaster.
It was important, therefore, to have emergency action programmes to shield the weakest economies from global economic turbulence, he said. The following should be considered by the General Assembly: safety-net measures, including emergency assistance, such as food aid; balance of payments support to severely affected countries; an immediate increase in the level of ODA; a reduction of the debt burden on least developed countries; compensatory measures for income reduction from primary commodity exports and reduction in remittances; and an immediate lifting of trade barriers affecting least developed countries.
IBRA DEGUENE KA (Senegal) said that economic and financial turbulence, as well as the risks of being marginalized in the process of globalization, were phenomena that deserved reflection and collective action in the international community, in order to arrive at a long-term solution.
Globalization carried with it opportunity and the risks of
General Assembly Plenary - 3 - Press Release GA/9438 5th Meeting (PM) 17 September 1998
marginalization and exclusion, which engulf the majority of developing countries. "Because we are living with globalization as a fact of life, we need to prepare ourselves to face up to the challenge", he said that included facing the essentials of globalization: the shift in the circulation of information; the ongoing liberalization of production factors; the efforts to deregulate economies; and, especially, the expansion of transnational corporations sustained by enormous private investments.
The adoption of the Marrakech Accords predicted a future era of prosperity born from the liberalization of trade and a multilateral commercial system based on transparency, accountability and the primacy of the rule of law, he said. Also, a series of international conferences throughout the decade indicated a common response to sustainable development. The real facts, however, prompted him to see globalization as a more critical phenomenon.
"For many developing countries, globalization was seen as a source of apprehension, a necessary evil", he continued, "as the opportunities were not shared by all". Many tariff and non-tariff barriers continued to hamper access to markets. Several countries had experienced a reduction of jobs and official development assistance (ODA). Foreign private investments were not a reliable way to stimulate economic growth.
By emphasizing the negative impact of globalization, he did not wish to ignore the benefits, he said. He was convinced that a national plan of action was necessary. Peace and political stability were certainly essential, but insufficient. At the same time, several additional aspects must be developed, such as a competent macro-economic policy, transparency, a guarantee of the rule of law, the simplification of administrative procedures and a modernized state infrastructure. In sum, a competitive spirit and a middle ground combining the State and the private sector must be forged. Africa needed a more humanistic approach and development through partnership.
AHMAD KAMAL (Pakistan) said that while financial integration had resulted in a dramatic increase in private investment flows, it had also compounded economic vulnerabilities. There had been undeniable positive effects from globalization and liberalization, manifested in the remarkable growth in trade and investment flows in recent years. A number of developing countries had achieved per capita incomes closer to those in the developed countries. There was, however, also a downside to globalization, he continued. First, recent increased trade and investment flows had bypassed the majority of developing countries. Second, the prosperity of those who
General Assembly Plenary - 4 - Press Release GA/9438 5th Meeting (PM) 17 September 1998
apparently benefited from that phenomenon had proven to be fragile. Third, globalization had been accompanied by an accentuation of income disparities among and within countries, with obvious negative implications for the welfare of large segments of populations. Fourth, market forces unleashed by globalization had not helped the developing countries in their efforts for integration into the world economy. Fifth, integration into global markets had exacted a very heavy cost, especially since there were no adequate "safety nets" for countries faced with economic difficulties.
The accumulation of the side effects of globalization would lead to new class divisions, he said. There would be divisions between those who prospered in the globalized economy and those who did not; between those who shared its values and those who would rather not; and between those who could diversify its risks and those who could not. The challenge was to include everyone in the process of managing globalization, while maximizing benefits for everyone and minimizing the negative impacts, particularly on developing countries.
Certain priority areas needed urgent attention, he said. First, the capacity of multilateral institutions should be strengthened to address the issues of trade, finance, and development in an integrated manner. Second, the institutions responsible for rule-making in the globalization process should be made more democratic and transparent. Third, a serious attempt must be made to address the perennial issues of debt, access to technology and development finance. Fourth, the rules regarding international trade must take into account the great disparity in the ability of developing and developed countries to compete in global markets.
LEE SEE YOUNG (Republic of Korea) said the Asian financial crisis was a reminder of the risks and dangers of globalization. It was true that many of the affected countries were once regarded as development success stories, and showed few outward signs of the economic disequilibrium until the recent crisis. There was now a necessity to re-examine the promises held out by financial liberalization and the adequacies of the international financial structure. Despite the sobering experience of the Asian crisis, global financial integration seemed an inevitable aspect for developing countries in their participation in the globalization process. The crisis "has taught us many lessons", he said. A certain number of preconditions were necessary for a country to withstand disruptions and to enjoy the benefits of capital markets. Those included a sound institutional framework, a well-regulated banking system and efficient capital markets. Moreover, a consensus was emerging with the view that the liberalization of capital markets should be approached in a prudent and orderly manner.
The need to strengthen the present international financial system was another lesson highlighted by the Asian crisis, he continued. More effective monitoring of international capital flows and the development of an efficient early-warning system should be given serious consideration. The Republic of
General Assembly Plenary - 5 - Press Release GA/9438 5th Meeting (PM) 17 September 1998
Korea, strongly affected by the current crisis, was a case in point of the benefits, opportunities and dangers of globalization. The crisis had compelled the Government to reform the structure of its economy. Those reforms included liberalizing financial markets, overhauling the prudential regulatory system, restructuring corporate governance and increasing the transparency of all sectors of the economy. To that effect, many drastic policy measures had already been introduced and were being implemented. The key philosophy long espoused by his President, Kim Dae Jung, was that democracy and free market principles were inseparable, he added.
He said one of the most beneficial aspects of globalization had been its contribution to the eradication of poverty in many developing countries through economic growth. Nevertheless, the question remained as to whether market-driven globalization had not left many people behind. The income gap between rich and poor within societies and between countries was widening. That trend begged not only a moral question, but also political and economic questions as to the viability of the globalization process. Governments needed to formulate policies that would permit broader segments of the their population to benefit from globalization. The economic crisis in his country had brought on severe social consequences, notably the sharp increase in unemployment. In implementing structural reform, his Government was making every effort to ensure fair burden sharing among all members of society.
Recently, the emphasis on the market had overshadowed the importance of the State and its policies, he went on. While the role and function of the State was evolving in an ever-changing international political and economic environment, it still played an important role in shaping the development of society. Sound public policy was more crucial than ever in determining the economic capabilities and benefits that societies would reap in a globalized system. Moreover, coherence and harmony between the market and the state were fundamental in coping with the challenges globalization represented. That implied that the State, while ensuring a fair, transparent and rule-based environment for efficiently functioning markets, must also be capable of providing prudent supervision over market excesses and protecting its population as a whole.
PATRICIA DURRANT (Jamaica) said no country had been exempt from the effects of globalization -- positive or negative. The phenomenon had presented some developing countries with opportunities to accelerate their rates of development and expand their options. Those opportunities related mainly to the lowering of barriers to world trade, increasing mobility of transnational corporations, decentralization of production processes and access to capital markets.
Other countries, however, had experienced deterioration and marginalization, she said. Countries of the Caribbean region recognized the importance of globalization, but were concerned about the growing trend towards protectionism. Market access was one of the most fundamental
General Assembly Plenary - 6 - Press Release GA/9438 5th Meeting (PM) 17 September 1998
components of international trade, and crucial for the development of small economies.
The effects of globalization went far beyond the economic implications, she said. Many developing countries had witnessed the perpetuation of poverty and degradation. Globalization should be socially responsible and have a human face. Despite economic difficulties, the world had more than enough resources to accelerate progress in human development for all, and to eradicate the worst forms of poverty.
She called for a strengthening of international cooperation in trade, market access and finance to encourage the wider dispersion of capital flows; investment in the development of human resources through education; the removal of inequalities of access to information and information technology; an examination of the architecture of international financial institutions in order to promote the monitoring of capital flows; and attempts to influence the "rules of the game", so that the playing field was less uneven, ensuring more equitable outcomes.
YERZHAN KAZYKHANOV (Kazakhstan) said globalization had an immense potential to improve people's lives, but it could also have a negative impact. The lack of regulation of financial markets at the global level, for example, had led to considerable socio-economic costs not only in Asia, but in many countries around the world. Despite the progress made during the Uruguay Round of multilateral trade negotiations, direct and indirect trade barriers still affected many goods that were important export items for developing countries. He called for further multilateral efforts under the auspices of the United Nations, along with increased technical assistance to developing countries.
During the seven years of his country's independence, its system of economic and social relations had totally changed, he said. Macroeconomic stabilization had had a positive effect on investment, and production had increased. The export-oriented industrial complex was treated as a priority. The country's main objective in the external economic sphere was to achieve rapid inclusion in world trade relations, entry into the world goods, services and capital markets, and utilization of the international division of labour. Situated at a crossroads in the Eurasian region, Kazakhstan was also working towards solving the problem of access to international trade routes.
An important role in creating favourable conditions for the socio- economic development of States was also played by regional economic organizations, he said. A programme of joint action had been adopted with the aim of establishing a single economic space in the territory of Kazakhstan, Kyrgyzstan and Uzbekistan. Kazakhstan was also a member of the region's Economic Cooperation Organization. It was also expanding areas of cooperation with the countries of the Commonwealth of Independent States. In the mutually
General Assembly Plenary - 7 - Press Release GA/9438 5th Meeting (PM) 17 September 1998
interdependent world, no problem could be approached from the standpoint of the interests of any one State.
NJUGUNA MAHUGU (Kenya) said that most developing countries, including his own, were still inadequately prepared to cope with the globalization process. While recognizing that a truly global economy was presented as the most promising means of spreading the benefits of globalization and liberalization, it had not lowered the tide of ever-increasing poverty in the world.
It was, therefore, important that a positive partnership be created geared towards the eradication of poverty in the developing countries, he said. Deliberate international cooperation efforts should be targeted to ensure that the benefits of globalization were shared equitably. Without such concerted efforts, marginalization of weak and poor developing countries would intensify.
He said that external indebtedness continued to be a major obstacle to the development of Africa and the least developed countries. His Government, therefore, attached great importance to the urgent need for implementation of effective, equitable, development-oriented and durable solutions to the external debt problems of developing countries, particularly the poorest and most heavily indebted ones.
QIN HUASUN (China), said the turbulent and unpredictable world economy had become the focus of the international community. The present dialogue at the United Nations was, therefore, timely and necessary. No country today could develop its own economy in isolation from the rest the world. Along with opportunities, however, economic globalization also brought severe challenges, particularly for a large number of developing countries. The financial crisis in some Asian countries had resulted in immeasurable economic and social damage.
The most important task now was to help those countries to recover, he continued. His country had been and would continue to make important contributions in that regard. For example, it had participated in the assistance programmes of international financial institutions for the countries hit by crisis. In addition, it had not devalued its currency and it had decided to maintain a relatively high rate of growth. Major developed countries with significant influence on the economies of the Asian countries should also take constructive policy measures to help rectify the crisis.
He said that similar tragedies could be avoided in the future only by reflecting deeply and formulating relevant counter-measures. In the process of integrating into the world economy, countries could not possibly follow one uniform model of reform. Only by proceeding from its own national priorities could a country enjoy sound economic growth, social stability and prosperity.
General Assembly Plenary - 8 - Press Release GA/9438 5th Meeting (PM) 17 September 1998
That fundamental principle should be understood and followed by the whole international community.
His country's own reform aimed at a market economy that had progressed in various fields, he continued. The new macro-control system was taking shape and the role of the market as the basis for resource allocation had been greatly strengthened. At the same time, caution should be exercised and new problems should be solved through constant deepening and improvement of reform. Economic globalization was interdependence in the real sense of the term. Since problems spread rapidly like contagion, a crisis in one spot could have repercussions in an entire region, which could then expand to engulf other countries and other regions. Developing countries were striving to join the process of economic globalization from a position of disadvantage, because inequality still existed in international economic relations, he said. In the meantime, the gap between developing and developed countries had shown no sign of diminishing. In formulating new rules, efforts should, therefore, be made to grant effective participation by the developing countries.
ASDA JAYANAMA (Thailand) drew a parallel between financial world over the past 14 months and a tango dance contest. The dancers were students of the dance hall manager and one dancer had fallen during the contest due to a combination of factors, including inexperience, a bad partner and bad dance hall conditions. The fall of that dancer had caused others to fall in domino fashion, because none wanted to help, due to all wanting to win the contest. The manager had given bad advice to his students and had tried to get the seven most influential owners of the dance hall to increase resources to take care of the problems, but the dance hall debacle worsened when they had refused.
In the financial parallel of the scenario, it was clear that the usual call from owners and floor managers for the dancers to admit their mistakes and improve their skills had not helped, he said. Nothing had changed in the last 14 months. The tango debacle demonstrated that globalization had presented opportunities for the strong and challenges for the weak on an unlevel playing field. Those able to effectively influence the course of events were still watching from the sidelines, while the faithful students of the dance floor manager waited for a new partner to ask them to dance. It was as if they were waiting for Godot.
ABDALLAH BAALI (Algeria) said economic interdependence between nations had become a reality and the complexity of problems in the world economy necessitated a global approach to international economic cooperation. Such an approach was more necessary now than ever before, as the world order was in the process of favouring globalization, but without those who had already been excluded. If the international community was not prudent, it would continue to exclude an even larger number of countries, including those that recently qualified as emerging markets.
General Assembly Plenary - 9 - Press Release GA/9438 5th Meeting (PM) 17 September 1998
He said the enormous economic and financial means of industrialized countries could be deployed to economies in distress, especially to the poorest countries, to help them rise above their underdevelopment. If the situation of developing countries was not quickly addressed, the international community risked transforming the East-West confrontation of yesterday into a new form of conflict.
Nevertheless, he said, a number of developing countries had courageously adopted economic and structural reforms, but at increased social and political costs. Those reforms, which had already started to produce positive macro- economic results, were often not accompanied by a favourable international environment. That limited true economic development in developing countries.
MOHAMMAD JAVAD ZARIF, Deputy Foreign Minister for Legal and International Affairs of Iran, said that everyone was cognizant of the fact that powerful transnational forces were at work reshaping the key features of world markets in capital, goods, services, labour and technology. Likewise, the twin processes of globalization and liberalization had expanded the mutual interdependence of societies, which had increased the potential for international interaction and cooperation. No doubt some benefited from that process, including some interests, groups and countries from the developing world. But, the bulk of the developing world, particularly the least developed, was receiving the shorter end of the bargain.
While the promise of potentialities had yet to materialize, at least for most developing societies, the negative consequences were already part of their socio-politico-economic landscape, he continued. The galloping pace of global integration in various fields had substantially increased the degree of vulnerability in many countries and regions and made the element of uncertainty a part of their everyday life.
The objective of economic cooperation was to ensure that the benefits of the ongoing process of globalization was spread to the maximum extent possible while simultaneously minimizing and harnessing its adverse consequences, he said. The immediate objective of the high-level dialogue was to promote honest and constructive discourse, and meaningful and genuine partnership at the global level. What was needed today, and urgently, was to revive the spirit of the United Nations Conference on Environment and Development (UNCED) and its much revered and often neglected "global partnership". The very solid foundations for such a partnership and international cooperation were already laid out in the Agenda for Development, whose ultimate objective was to help establish a more equitable international economic order.
The emphasis on the question of international cooperation and its paramount role in taming the unruly winds of globalization did not in any way intend to underestimate the ultimate responsibility that each and every society had to shoulder, he added. Also, political will was needed on the part of all since without it, the realization of global partnership would be
General Assembly Plenary - 10 - Press Release GA/9438 5th Meeting (PM) 17 September 1998
an illusion. Exercise of such a will by all actors, big and small, should not prove beyond reach in the generally propitious political atmosphere of the post-cold war era.
VOLKAN VURAL (Turkey) said the increasing spread of the social effects of economic phenomena, coupled with rapid advances in technology, had made the coordination of economic policies at the international level more significant than ever before. An international environment favourable for the continuation or resumption of growth and investment was necessary. Also, domestic policies encouraging conditions suitable for direct investment should aim at keeping inflation under control.
In the area of international financial flows, he said volatility must be limited, while assuring the efficient functioning of the system. Also, the regulations pertaining to the efficient functioning of market mechanisms at the international and national level must be harmonized. The current global financial troubles had demonstrated that national currencies should not be overvalued, unless as part of a purely short-term strategy aimed at combating inflation. In addition, a sound analysis of short-term foreign capital inflows was required and sufficient reserves should be kept. Furthermore, special attention should be given to the integration of the least developed countries into the multilateral trading system.
The means for strengthening various institutional mechanisms pertaining to information and communication technologies should be closely explored, he said. The rapid expansion and characteristics of electronic commerce was particularly relevant in that context. Policies should be formulated to prevent a significant part of the world's population from being excluded from the benefits of improved education and health information systems.
HUSSAIN SHIHAB (Maldives) said globalization had not had uniform effects. Low-income countries were disadvantaged by the process. Success in the global marketplace required export growth and diversification, as well as access to advanced production technology. Small States had small domestic markets and narrowly based economies, which were highly vulnerable to external shocks. Such vulnerability had been widely recognized, although the constraints were seen largely as a result of their least developed status, rather than their size.
He was concerned that the handicaps faced by such States were overlooked because of their least developed status, as was the case with the current criteria used for graduation from least developed country status. Premature graduation would be like imposing a penalty for success, he said. His country, with a long spell of political stability, was pursuing policies that would assist it in being integrated into the world economy, such as an emphasis on human resources development, good governance, economic diversification, trade liberalization and other public sector reforms, including strengthening measures to attract foreign investment. His country
General Assembly Plenary - 11 - Press Release GA/9438 5th Meeting (PM) 17 September 1998
was doing all it could -- certainly enough to deserve a supportive response in its efforts to overcome the weakness imposed by size.
ALYAKSANDR SYCHOU (Belarus) said both the positive and the substantially negative effects of globalization required constant attention and coordinated measures by the international community. Countries in his region had not managed to overcome the consequences of the financial crisis in South-East Asia. A similar crisis, which had affected the financial markets of the Russian Federation, had destabilized the social and economic situation of countries, especially those in the Commonwealth of Independent States, as their trade had been substantially linked with the Russian Federation. Consequently, their living standards had fallen dramatically, causing enormous social problems.
From their point of view, the crisis had, to some extent, demonstrated the bureaucratic and indecisive actions of the Bretton Woods institutions in managing the problem, he said. It had also shown the necessity for the establishment of a joint mechanism by the Bretton Woods institutions and governments to deal with similar crises in the future. Governments had a responsibility to take adequate preventive measures nationally and at the regional level.
He called for international support for vulnerable countries through stimulation and protection of investments, regulation of financial markets and involvement of all social groups in the economic life of their countries. The activities of the United Nations and other international organizations were a factor in that effort. Great hope had been placed in such institutions as the World Trade Organization (WTO), the United Nations Conference on Trade and Development (UNCTAD), the United Nations Development Programme (UNDP), and the United Nations Industrial Development Organization (UNIDO). The international community must work to ensure that all States benefitted from the blessings of globalization and liberalization.
CELSO AMORIM (Brazil) said the dramatic events of the past two years showed that globalization was not a painless process. Despite the recognition of the clear benefits of increased integration of global markets, there was an urgent need to address the systemic weaknesses that exacerbated inherent asymmetries. The challenge was to move away from a globalization of exclusion. The impetus to growth in the world economy must be based on the notions of equity and solidarity. The recent drastic movements of short-term capital had exposed the vulnerability of emerging economies to predatory behaviour in financial markets and had caused economic disruption and social unrest in many parts of the world.
The traditional methods of international financial institutions needed to be reviewed, he said. Domestic and fiscal monetary policies needed flexibility to adjust to crises. There must be an equitable sharing of the costs incurred in financial crises. The "bail-out" of creditors could not be
General Assembly Plenary - 12 - Press Release GA/9438 5th Meeting (PM) 17 September 1998
pursued at the expense of the most vulnerable segments of the population. Multilateral institutions must help in devising social safety nets. And the international response to systemic weaknesses in the prevention and management of financial crises needed to be based on a broad consensus that fully involved the participation of developing countries.
In Brazil, macroeconomic stabilization had been vigorously pursued through fiscal and monetary policies that had brought inflation to a 50-year low, he said. Substantial budget cuts were accompanied by structural reforms, and a broad privatization programme had opened up key industries to investment. For the first time, the 1998 Human Development Report ranked Brazil among the countries with a high human development index.
AHMED SNOUSSI (Morocco) said that the end of the cold war, together with financial and information liberalization, gave rise to an enthusiasm for an economic system founded primarily on private capital in the organization of production and consumption activities. National borders had become less opaque and countries, particularly those developing and in transition, had entered into a fierce competition to attract private capital and foreign investment. He noted that the amount of public aid going to development continued to decline, but not all countries were equally equipped to integrate without pain into the emerging world economy. A number of countries, in effect, were not able to adapt to the winds of change and liberty, because their structures were too rigid. Some had even collapsed.
Through the Marrakech Accords, world trade had become freer, which rendered market access more competitive, he continued. Reduction of costs had led not only to a reduction of jobs in some countries, but to social problems as well. In spite of that, certain countries had maintained a macroeconomic balance, reinforced the competitiveness of their enterprises and even serviced their external debt. Nevertheless, their future seemed unpredictable.
He warned that marginalization clouded the future prospects for many countries, unless the international community provided support. The future of economic multilateralism was linked to the ability to find solutions to problems that could be felt at the national level. He called for the adoption of a sort of international Marshall Plan, capable of lifting Africa out of its endemic crises.
NGO QUANG XUAN (Viet Nam), said globalization intensified the socialised character of the world economy and strengthened the interdependence between nations. Competition, however, also became more intense with globalization, and every nation must participate actively in the process in order not to be marginalised. Globalization facilitated economic growth and although there had been improvements in market access and trade liberalization in the world, developing countries, "due to their weak competitiveness", still had difficulties in gaining access to the market of developed countries.
General Assembly Plenary - 13 - Press Release GA/9438 5th Meeting (PM) 17 September 1998
Developing countries could avoid trade limits unilaterally imposed on them by developed countries, by using the Dispute Settlement Understanding (DSU) arrangement, he said. They could also improve their chances for a balanced account by increasing their export-oriented production. In order to steer their investment plans in the right direction, developing countries should learn from the recent financial and monetary crises in many parts of the world.
Focusing on the social impacts of globalisation, he said some areas of production would contract while others would expand. In the long run, the redistribution of human resources would resolve the negative impacts. Through its economic reforms, Viet Nam had integrated itself more thoroughly into the world and regional economy. The country was aware of both the great benefits and the challenges of the process of economic globalization. Viet Nam wished to strengthen economic relations and cooperation with all countries.
EMILIO R. ESPINOSA (Philippines) said the financial crisis in East Asia had wiped out the economic and social gains painstakingly achieved over the years. The crisis had affected everyone in those countries through the sharp depreciation of the exchange rate, financial sector collapse, corporate bankruptcy and, changes in rates of return on assets and monetary tightening. The International Labour Organization (ILO) had reported that beginning last October, unemployment had spiralled in those countries.
The crisis had even spread to other parts of the world and might lead the global economy into a deep recession, he said. The United Nations World Economic and Social Survey 1998 had already reported that, as a consequence of the crisis, the growth of output for 1998 was slowing down in both developed and developing countries, while the growth of world trade was also decelerating.
He said that countries must invest in the development of human resources and create the required physical infrastructure. They must raise productivity in the agricultural sector and use strategic industrial policy for the development of technological and managerial capabilities. Further, they must establish institutions designed to adequately regulate their financial markets.
NIKOLAI TCHOULKOV (Russian Federation) said the crisis in Asia was not just a regional one, but one which was becoming transcontinental. While some positive steps had been taken, globalization-related risks which posed a potential threat to the still immature economies of countries, had been clearly underestimated. The efforts of the international community to stabilize the institutions affected by the persistent socio-economic upheaval in Asia, for example, was a serious warning that more decisive action was required by the United Nations and the Bretton Woods institutions. That could include the possible joint elaboration of a crisis-remedying programme.
General Assembly Plenary - 14 - Press Release GA/9438 5th Meeting (PM) 17 September 1998
He said that the Russian Federation recognized and commended the contributions of the United Nations in reaching consensus on the pressing problems of the world economy, and in helping to integrate economies not yet sufficiently resistant to the impact of market forces. However, the United Nations could do more. For example, an international early warning system could be created. The Organization could also work more closely on the economic issues with the international financial institutions. Priority areas might include the monitoring of financial flows and of the economic policies of governments, as well as the strengthening of an international forecasting capability.
Indeed, the crisis was forcing the international community to take a fresh look at the dividends of interdependence in today's world, he said. Lack of control and unpredictability entailed very serious consequences. The international community and the world financial leaders must pull together.
HASNY AGAM (Malaysia) said the current discussion was timely in view of the financial and economic turmoil that had affected many countries in the last year. What was dismissed by some as merely a regional problem had become a global phenomenon. The economic gains made by the Southeast Asian economies over the last decade had been severely set back, and the Asian financial crisis had resulted in uncertainties, even in the major economies.
The crisis had been largely triggered by the boom-and-bust behaviour of short-term lenders and investors, he said. It had caused violent depreciation of currencies, highly volatile exchange rates and rapid increases in interest rates. Asset markets had plunged and banks had ceased lending. This had led to a severe contraction of the real economies of affected countries.
Malaysia found itself in its first recession in 13 years, he said. Austerity measures had been implemented, and they had simply made the problems worse. The Government of Malaysia had had little choice but to take drastic measures, so it had instituted strict foreign exchange controls. Those measures had not been taken to isolate the economy, but to insulate it. Further efforts to restore stability would require a concerted effort on the part of the international community.
A year had passed and proposals had been made, he said. Yet, no concrete measures had been forthcoming and there seemed to be little sense of urgency on the part of world financial leaders. The prospect of global economic crisis and a breakdown of the international financial system no longer seemed remote. Restricting international financial flows, at least temporarily, would allow governments to get economies back on track. The international community should not tolerate a situation where nations could be impoverished overnight.
General Assembly Plenary - 15 - Press Release GA/9438 5th Meeting (PM) 17 September 1998
JORDAN PANDO (Bolivia) said the four development decades in the United Nations system had called attention to the gap between the rich and poor, which had grown ever wider. Indeed, "we were manufacturing poverty". While economic and social development today was geared to sustainable and sustained development, the conditions were not present in every country to enable them to achieve that level of development.
An historical review of the world's economy revealed that the world had almost always lived with a mixed economy, he said. While the phenomenon of globalization was clearly a current reality, in its application it could only benefit the largest and most industrialized countries. For medium-sized and small countries, especially for marginalized ones, globalization could be detrimental. A further problem was the absence of means by which to measure the "informal economy" -- economic activity that was illegal or illicit. The establishment of such a measure could provide a true picture of the total, global economy.
He said his country was concerned that the United Nations Development Programme (UNDP) was no longer a financial development agency. Rather, it had become an agency to administer donations. That was very serious for small and less developed or marginalized countries, because donors financed what interested them, not necessarily what the less developed countries needed. The problem of development financing must be dealt with in a formal way.
The current economic situation had no panacea, he said. The current reality, however, served as a warning that, neither protectionism nor liberalization provided the answer to the problems in the world economy. Such unbalanced solutions must be remedied, while bearing in mind that partial solutions were not sufficient to solve the current problems.
OLEKSANDR BRODSKY, Deputy Chairman, National Agency for Development and European Integration of Ukraine, said the appearance of new independent States, such as Ukraine, had contributed greatly to globalization. However, Ukraine and other countries entering the economic system encountered such difficulties as tariff barriers, unfair trading practices and inadequate technology sharing. Ukraine also experienced domestic obstacles to liberal trade. A series of reforms had been initiated to improve coordination among the different sectors of the economy. Ukraine had recently experienced increased unemployment and a worsening of such problems as drug trafficking.
Domestic initiatives to liberalize the economy included the privatization of small and medium-sized enterprises, he said. Ukraine was actively moving towards integration into the European Union, which would aid its political stability, social harmony and successful economic development. Ukraine had also given fresh impetus to interaction at the regional level to strengthen cooperation between countries. That it had carried out such international measures attested to the reliability of Ukraine as an economic partner.
General Assembly Plenary - 16 - Press Release GA/9438 5th Meeting (PM) 17 September 1998
The goal of the international community should be to maintain the positive results achieved thus far by countries in transition, while stopping the negative trends affecting the poorest countries, he said. The reform process of the United Nations should reflect the needs of the global economy and the social and developmental ramifications of globalization.
DAUDI N. MWAKAWAGO (United Republic of Tanzania) said the roots of the process of globalization could be traced back to the late nineteenth century. Today, the process had taken a new shape. In all its forms, however, the driving force was the desire to maximize profits and to compete in a seemingly contracting market. Globalization had become inevitable because no country could live in isolation. Developed and developing countries had been "put into one basket", despite the inequalities in their level of development.
He said globalization could open new opportunities for developing countries to expand and diversify their economies. Since, however, it was a process associated with competition, it also meant "survival of the fittest" and excluded many developing countries, especially the least developed. Globalization and trade liberalization had contributed significantly to the growth of international trade and capital flows, which helped improve the international economic system. The conclusion of the Uruguay Round had helped increase market access for the products of developing countries. Nevertheless, trade liberalization remained uneven and faced major challenges that could undermine the multilateral trading system.
Developing countries, he noted, benefit nothing if many of the provisions of the Uruguay Round, especially those dealing with exports of particular importance to developing countries, were not implemented. The decline in the importance of primary commodities and the loss of market share put developing countries in a comparatively weak position. Therefore, only industrialized and developed countries were likely to benefit from integration with the world economy.
Due to low income resulting from poor export revenues, developing countries had become more dependent on foreign borrowing, which constituted a serious obstacle in terms of meeting obligations to their citizens, he continued. His country's total debt, for example, increased from $7.8 billion in 1996 to $7.9 billion in 1997. Despite a growth in its export earnings, the Government had been unable to service that debt, because the rate of growth of the external debt surpassed the growth of exports.
He commended the Government of the Netherlands for offering development assistance to developing countries and urged other developed countries to emulate that effort. The international community should develop a mechanism to monitor the various issues arising from growing interdependence. Such a mechanism should take into account the needs of developing countries, if they were to benefit from the process. Otherwise, "the gap between the rich North and the poor South would widen even further, to the detriment of international peace and security".
* *** *