PRESS CONFERENCE ON SOUTH ASIA HUMAN DEVELOPMENT REPORT

PRESS CONFERENCE ON SOUTH ASIA HUMAN DEVELOPMENT REPORT

Despite the promises of globalization, about half a billion people in South Asia suffered declines in income during the 1990s, according to a report -- Human Development in South Asia 2001 -- released at Headquarters today.

"As a result of globalization, income inequalities have widened in South Asia", said Khadija Haq, President of the Mahbub ul Haq Human Development Centre in Islamabad, Pakistan, which prepared the report.

The report notes that globalization has failed to push down poverty or boost human development in the region, which includes India, Pakistan, Bangladesh, Sri Lanka, Nepal, Maldives and Bhutan.  "The levels of human development, though improved since the 1960s, have started to stagnate or even decline", Ms. Haq said.

South Asia remains home to the largest number of poor people in the world -- some 515 million, the report states.  Over 40 per cent of the children did not reach the fifth grade in the 1990s, over one fifth of its people had no access to health care and the region faces rising cases of tuberculosis, malaria and HIV/AIDS.

Ms. Haq said South Asia had failed to benefit from globalization because international markets, plagued by so many distortions, did not yet provide a level playing field.  Also, it faced serious political struggles and intra-regional trade had remained low.

She added that global institutions had failed to act either efficiently or equitably.  The International Monetary Fund (IMF), the World Bank, and the World Trade Organization (WTO) were created as global institutions to maintain financial stability and promote development and trade.  "But, the impact of policies from those institutions falls disproportionately on poor people and poor nations", she said.

The report makes several recommendations to national governments in an effort to ensure that future globalization helps, rather than hinders, the countries of South Asia, she added.  First, the region must help its labour force compete globally by providing quality primary education to all children and higher levels of professional and technical training.  Poverty must be reduced and income more evenly spread.

Also, she said, regional economic cooperation already existing should be enhanced.  Trade among South Asian countries is less than 5 per cent of the region's total exports, compared to 22 per cent for Association of South-East Asian Nations (ASEAN) and 55 per cent under the North American Free Trade Agreement (NAFTA).  Further, South Asia must integrate itself more into the world market.  The region's average tariff rate fell to 20 per cent by the end of the last decade, still well above countries like Malaysia and the Republic of Korea, where the average tariff rates are 9 per cent or less.

Ms. Haq noted, however, that market integration should move ahead cautiously.  "South Asia needs to continue with labour-intensive low-technology exports as well as diversify into high technology goods and services."

"A principle message that emerges from this report is the need to undertake economic reforms with a human face, and that requires a rethinking of the whole process of globalization", Ms. Haq said.  Globally, the time had come to find new ways of reforming global institutions.  That could mean setting up a world central bank, an Economic Security Council or a global tax on financial transactions.

Asked which countries in South Asia had fared better than others during the 1990s, Ms. Haq replied that India had done well.  "India's average growth rate during the 1990s -- the period of intensive globablization -- was over 6 per cent."  She added that Bangladesh and Nepal had achieved modest growth, while Sri Lanka's rate has been volatile, although it ended the 1990s with a 6 per cent growth rate.  Sri Lanka would have achieved better growth rates, but for its ethnic problems.

The only country which failed to reach high growth rates -- a country which performed well during the entire 1980s -- was Pakistan, she said.  Pakistan's growth rate declined considerably during the 1990s, mainly due to political misgovernance.

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