SPEAKERS IN SECOND COMMITTEE UNDERSCORE NEED FOR INVESTMENT IN POOREST COUNTRIES AT A TIME OF DECLINING FOREIGN AID

Fifty-seventh General Assembly

Second Committee

26^th Meeting (PM)

SPEAKERS IN SECOND COMMITTEE UNDERSCORE NEED FOR INVESTMENT IN POOREST

COUNTRIES AT A TIME OF DECLINING FOREIGN AID

Foreign direct investment was vital for economic growth in the least developed countries (LDCs) at a time of declining official development assistance, Uganda’s representative told the Second Committee (Economic and Financial) this afternoon as it concluded its discussion of the Third United Nations Conference on LDCs.

He said that Uganda, as both an LDC and a landlocked developing country, was doubly disadvantaged by high import costs and remoteness from major export markets.  He urged the Office of the High Representative for Least Developed Countries, Landlocked Developing Countries and Small Island Developing States to continue helping LDCs to establish attractive conditions for foreign investment as well as to strengthen institutions and human resources.

Nepal’s representative noted that LDCs had never been major destinations for foreign direct investment and that even during the so-called investment boom of the 1990s, they had received only 0.5 per cent of global foreign investment flows.  Without improved human resources and functioning physical and legal infrastructures, they would not benefit much from foreign investment.  Development partners must also provide 0.15 to 0.2 per cent of gross national product in official development assistance, he added, urging the international community also to provide deeper debt relief.

Brazil's representative recalled that governments had agreed, under the Brussels Programme of Action, that a favourable international environment was vitally important in supporting developing countries.  The Millennium Development Goals would not be met without increased official development assistance, foreign direct investment, debt relief and access for developing-country exports to the markets of the developed world, she emphasized.  Commodities and agriculture were crucial to the economies of developing countries, providing employment, export earnings and government revenues, she added.

Zambia's representative, underscoring the need to enhance measures to create wealth and advance development, noted that given high unemployment and the lack of modern skills in LDCs, jump-starting growth by investing in high-tech enterprises would more likely restrict short-term development.  Innovative local entrepreneurship, on the other hand, could speed up economic growth, he said.  It was unfortunate that micro and small enterprises were not receiving as much support as they should, since they provided livelihoods for many people in LDCs, contributing to national wealth and social services.

In other business this afternoon, Venezuela’s representative, on behalf of the Group of 77 and China, introduced a draft resolution on integrated and coordinated implementation of and follow-up to the outcomes of major United Nations conferences and summits in the economic and social fields.

Also speaking in this afternoon's discussion were the representatives of Afghanistan, United States, Haiti (on behalf of the Caribbean Community), Mozambique, Sudan, Ethiopia, Madagascar, Suriname and Burundi.

The Committee will meet again at 10 a.m. on Thursday, 7 November to take up the question of training and research.

Background

The Second Committee (Economic and Financial) met this afternoon to conclude its consideration of the Third United Nations Conference on the Least Developed Countries (LDCs).  It was also expected to hear the introduction of a draft resolution on integrated and coordinated implementation of and follow-up to the outcomes of the major United Nations conferences and summits in the economic and social fields.

Introduction of Draft Resolution

VICENTE VALLENILLA (Venezuela), speaking on behalf of the Group of 77 and China, introduced the draft resolution (document A/C.2/57/L.28), saying that the Group of 77 would establish a working group to lay down the necessary modalities for implementing the outcomes of recent major conferences.  The working group would consider the operational work of individual countries as well as the United Nations system in coordinating activities to be carried out.

Statements

MARIA LUISA ESCOREL DE MORAES (Brazil) said his country had been involved in technical cooperation, debt alleviation and capacity-building, especially with Portuguese-speaking African nations, but also with other African, Asian, and Latin American and Caribbean countries. Brazil's successes in the fields of health, HIV/AIDS, education, agriculture and professional training had been replicated in those countries with encouraging results.  Brazil believed in the merits of South-South cooperation as a complement to North-South cooperation and invited developed countries as well as the United Nations to support South-South cooperation.

She recalled that governments had agreed in the Brussels Programme of Action on the importance of a favourable international environment that supported the efforts of developing countries.  The Millennium Development Goals were unlikely to be achieved without increased flows of official development assistance (ODA), foreign direct investment (FDI), debt relief and market access for the exports of developing countries.  Commodities and agriculture played a vital role in the economies of developing nations, providing employment, export earnings and government revenues.  Market access was a vital tool for promoting economic growth and development in the developing world.

ARIA SELJUKI (Afghanistan) called on the international community to extend all necessary support and cooperation, through voluntary contributions, to the Office of the High Representative so that it could effectively implement the Brussels Programme of Action.

Welcoming the upcoming International Ministerial Meeting on Transit Transport Cooperation, she stressed that landlocked developing countries were particularly disadvantaged due to high transit costs and their remoteness and isolation from world markets.  Lack of inward financial flows left them further marginalized, undermining poverty eradication and sustainable development efforts.

She expressed regret at the absence of any mention of the plight of war-stricken LDCs in the Cotonou Declaration, despite Afghanistan's efforts at the recent Ministerial Conference on LDCs to have such mention included.  She hoped it would be mentioned in the Secretary-General's report on LDCs

JANINE GUSTAFSON (United States) said that implementation of the Brussels Programme depended first and foremost on robust poverty reduction strategies.  The main focus of the Office of the High Representative should be to serve as an advocate for LDCs, landlocked developing countries (LLDCs) and small island developing States (SIDS), with the critical task of overseeing the mainstreaming of the Brussels Programme into the work of the United Nations system.  The Programme complemented other international development plans and its implementation should include national responsibility, good governance and aid effectiveness, stressing the role of trade, investment and the private sector in promoting development.

She recalled that this year’s session of the Economic and Social Council had requested the High Representative to consult with Member States on the appropriate format for a comprehensive report.  The United States was unsure whether it was in the best use of his Office to collect data when other United Nations agencies, as well as governmental and international organizations, were monitoring the progress of LDCs, LLDCs and SIDS.  It would be more effective to work with existing tools and data that monitored progress, including international development indicators and the publications of multilateral development banks containing economic and social indicators.

PIERRE-RICHARD CAJUSTE (Haiti), speaking on behalf of the Caribbean Community (CARICOM), said that the LDCS were marked by weakened institutions, failing infrastructure and crippling diseases like HIV/AIDS.  They continued to trail behind other nations in terms of integration into the world economy.  In the last decade, world trade had grown by 6.5 per cent annually, but the share of LDCs had been halved and despite their efforts to liberalize their economies, they had yet to reap the trade and economic benefits promised by industrialized countries.  Saying he was encouraged by the Doha Declaration’s recognition of the special needs and concerns of the LDCs, he stressed the importance of offering them more favourable trade, monetary and financial terms.

While CARICOM welcomed the creation of the Office of the High Representative, it called on him to help the extreme poor through sustainable human development in LDCs.  He also expressed regret at the lack thus far of a moratorium on their debt-servicing obligations and the decline in donor contributions to LDC programmes.

MWELWA MUSAMBACHIME (Zambia) said the Brussels Conference had recognized the need to enhance measures to create wealth in order to further the development of LDCs.  High unemployment and the lack of modern skills meant that jump-starting growth in those countries by investing in high-tech enterprises would likely restrict development in the short-term.  However, innovative local entrepreneurship could still speed up economic growth and although most local enterprises were small-scale, their large number could contribute to enhanced economic growth and poverty reduction.

Micro and small enterprises in LDCs provided livelihoods for many people, he continued, but their benefits went beyond their owners and employees.  In aggregate, they contributed to the country's wealth and its national social services.  Unfortunately, such enterprises were not receiving as much support as they should.

In formulating its Poverty Reduction Strategy Paper 2002-2004, the Zambian Government had realized that micro, small and medium enterprises were the basic link between manufacturing and poverty reduction.  Hence, the paper included a mix of business, technical skills and institutional support, paying special attention to small-holder agricultural entrepreneurs.  Most people in Zambia earned their living from small-scale agriculture, and their contribution to food production was high.  Sustainable production in agriculture was also envisaged to increase incomes in the sector and improve national food security.

CARLOS DOS SANTOS (Mozambique) said the Office of the High Representative played a key role in ensuring high visibility and advocacy of LDCs' concerns and in coordinating global action.  The United Nations Conference on Trade and Development (UNCTAD) should continue to play a fundamental role in implementing the Brussels Programme, both upstream and downstream through research and policy analysis, technical assistance and capacity-building. 

He noted with regret that both the Office of the High Representative and UNCTAD were ill-equipped to cope with their challenging mandates.  The staffing arrangements for the Office of the High Representative had proven ineffective and had failed to meet expectations.  However, he reiterated Mozambique’s position that all United Nations activities should be funded by the regular budget, even if that meant increasing it

TAPAS ADHIKARI (Nepal), stressing that the need to help LDCs get back on their feet had never been so urgent, said that with the recession having bottomed out and the terrorists in retreat, the international community must implement the Brussels Programme with single-minded resolve.  It was morally indefensible that more than 600 million people in LDCs had to suffer so much hunger, disease, illiteracy and exclusion.  One-quarter of them were undernourished and more than 50 per cent of the women illiterate.

Many of those people had no access to safe drinking water or education, and HIV/AIDS and other contagious diseases deciminated entire populations.  To make matters worse, conflicts had proliferated in the poorest countries, partly because old wounds had erupted anew and also because poverty provided a fertile breeding ground for conflicts.  That instability derailed reforms, weakened economies and tore away at the very social fabric of the affected nations.

Development partners must provide 0.15 to 0.2 per cent of gross national product in ODA, he stressed.  They must also provide deeper debt relief by speeding up the execution of the Highly Indebted Poor Countries (HIPC) initiative and expanding it to cover all LDCs.  It was frustrating that only 26 eligible nations had received relief under that initiative.  In addition, developed partners must open up their markets, providing duty-free and quota-free access to LDCs.

The high external debt burden had continued to gobble up much of the foreign exchange earnings of poor States, impeding their economic performance, he continued.  LDCs had never been major FDI destinations and even during the so-called investment boom of the 1990s, the 49 countries in that category had received only 0.5 per cent of global FDI flows.  They would not benefit much from FDI until their human resources were sufficiently advanced and basic physical and legal infrastructures developed and functioning.

ELFATIH MOHAMED AHMED ERWA (Sudan) applauded the High Representative’s untiring efforts with the United Nations, international financial institutions and regional organizations to mobilize resources for the implementation of the Brussels Programme despite working with a limited staff and budget.  Sudan hoped this Office would be more adequately staffed and funded to ensure smooth functioning.

Noting that the number of poor people living on less than $1 per day would reach 420 million by 2015 if current trends continued, he said that the majority of the poorest of the poor lived in LDCs, making the Millennium goal of halving extreme poverty by 2015 an utmost priority.  He called upon Member States to increase ODA, find radical solutions to the external debt crisis, provide preferential market access for LDC exports and contribute generously to United Nations initiatives for LDC programmes.

AZANAW ABREHA (Ethiopia) said that LDCs and development partners alike were committed to making the Programme of Action a success and welcomed development partners’ decision to give preferential market access to exports from LDCs and to reduce or eliminate external debt under the HIPC initiative.  He also applauded the recent Group of Eight's decision to contribute $1 billion to close the HIPC budget shortfall, and urged all official and commercial creditors who had not done so to contribute fully to the HIPC initiative. 

Despite those advances, however, the dramatic fall in and volatility of international commodity prices was destabilizing LDCs whose economies depended heavily on commodity exports, making economic growth through global integration difficult or impossible, he said.  That trend compromised resource inflows to LDCs and aggravated the equilibrium of low incomes, domestic savings and investment.  It was no surprise that LDCs lagged behind other nations in terms of progress towards halving extreme poverty by 2015.

DEPHALINNEE RAHANTABOLOLO (Madagascar) said that all action to implement the Brussels Programme must begin at the national level.  Noting that Madagascar depended on agriculture, and that half of its population was under 18 years old, she said that one of its main priorities was to reduce the number of people suffering from undernourishment.  Rural women had been the subject of particular attention under that priority, and the results were encouraging.

She said that her country was also improving its road infrastructure to link food-producing areas and preserve perishable commodities.  Agriculture was of particular importance, since it was the engine of rapid and sustainable development.  Madagascar also placed special emphasis on youth and was working to increase school attendance by improving curriculums and rebuilding schools destroyed by hurricanes.

MURIEL HELD (Suriname) said the international community must pay special attention to Africa, since most countries there were LDCs. The debt burden on those countries must be reduced for the achievement of the Millennium goals.  If more attention was not paid to other developing countries, they could soon join the LDC list, she added.

She said Suriname had developed like some other Caribbean and Latin American nations struggling to overcome military coups and civil wars, while combating drugs and crime.  Until 1980, it had been classified as more or less developed.

Now, more than 60 per cent of its families were living below the poverty line and more than 40 per cent of household earnings were spent on food.

She stressed that if the list of LDCs would grow, it would make it more difficult for developing countries and the international community to achieve the Millenium goals.  She urged international financial organizations like the Bretton Woods institutions to facilitate the doubling of ODA.  In addition, multinational corporations should be encouraged to invest in developing countries and not necessarily wait until all was in perfect order.

MARC NTETURUYE (Burundi) said the Office of the High Representative should draw particular attention to African LDCs, and work closely with the New Partnership for Africa's Development (NEPAD) and the Economic Commission for Africa (ECA) to ensure consistency in African development goals and projects.  He also supported the proposal to create a special trust fund for the implementation of the Brussels Programme and urged Member States to contribute to it.

In order to improve the lot of the extremely poor, he said, the Office of the High Representative should focus on alternative debt reduction or debt elimination solutions.  External debt was spreading poverty and economic stagnation in LDCs and the HIPC initiative was not a sustainable solution.  ODA must be doubled if LDCs were to meet the Millennium goals of poverty reduction, sustainable development and stemming the spread of HIV/AIDS and malaria.  Rich nations should scrap their hands-off approach to nations mired in conflict and provide them with the same economic assistance offered to countries emerging from conflict.

FRANCIS MUMBEY-WAFULA (Uganda) said FDI was vital for economic growth in LDCs, especially at a time when ODA was continuously dropping.  He urged the Office of the High Representative to continue mobilizing international support to assist LDCs in establishing a favourable environment for FDI and strengthening institutional and human resources capability.  He also encouraged that Office to mainstream implementation of the Brussels Programme into the work programme of the United Nations system and other relevant multilateral organizations.  It should focus on monitoring the implementation of decisions adopted by United Nations bodies with the aim of increasing assistance extended to LDCs.

Uganda was not only an LDC, but also a landlocked country, he continued.  It was doubly disadvantaged because of its remoteness from major export markets, high import costs for manufacturing and high costs of trade transactions.  High transport costs eroded the competitive edge of landlocked developing countries in Africa, many of which spent more than 40 per cent of their export earnings for transport services.  Without addressing that issue, it would not be possible to integrate landlocked African countries into the international trading system and the world economy.

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