SHORTFALL IN DEVELOPMENT AID, DEBT RELIEF THWARTING ECONOMIC GROWTH IN DEVELOPING WORLD, DELEGATES TELL SECOND COMMITTEE

Fifty-eighth General Assembly

Second Committee

11^th Meeting (PM)

SHORTFALL IN DEVELOPMENT AID, DEBT RELIEF THWARTING ECONOMIC GROWTH

IN DEVELOPING WORLD, DELEGATES TELL SECOND COMMITTEE

Huge Subsidies to Producers in Developed Countries Also to Blame, Speakers Say

The current shortfall in official development assistance (ODA) and debt relief, coupled with subsidies for producers in developed nations, were thwarting economic growth in the developing world, speakers said this afternoon as the Second Committee (Economic and Financial) continued its consideration of sustainable development and international economic cooperation.

Morocco’s representative, speaking on behalf of the “Group of 77” developing countries and China, noted that economic growth in developing countries had passed into an idle phase.  Heavy debt burdens continued to prevent the developing world from using their resources for development, particularly in health and education.  Moreover, developing countries continued to grapple with insufficient market access for their export commodities in the developed nations, where their competitors enjoyed huge subsidies.  Such practices distorted the market and went against the spirit and letter of the principle of free trade.

Lebanon’s representative echoed that view, that saying such practices kept the developing world in poverty and unable to achieve the Millennium Development Goals.  Protecting the interests of certain groups in the developed countries did not necessarily require such trade-distorting measures, he said, adding also that the current low levels of ODA and the net transfer of financial resources had called into question the developing world’s ability to sustain debt. 

Similarly, the Director of the Development Policy and Planning Office, in the Department of Economic and Social Affairs said that national governments, the private sector, civil society and others –- particularly in light of the collapse of the recent World Trade Organization (WTO) talks at Cancun -- must work even harder to ensure that commitments made at recent major global conferences were fully and promptly implemented to compensate for the new millennium’s lacklustre beginning.

The second Committee will meet again at 10:00 a.m. tomorrow, Thursday, 16 October to begin its consideration of environment and sustainable development.

Background

The Second Committee (Economic and Financial) met this afternoon to continue it consideration of sustainable development and international economic cooperation.

Before the Committee was a report of the Secretary-General on progress towards and challenges and constraints to the achievement of the major development goals and objectives adopted by the United Nations during the past decade (document A/58/327).  It summarizes global economic performance, highlighting the marked slowdown of growth in international trade and its negative impact on developing countries.

The report notes that economic growth in developing countries has become increasingly dependent on international trade, as shown by the increased ratio of trade to gross domestic product (GDP) those countries’ share of world trade, which was 30 per cent in 2000.  Noting that world trade grew just 2 per cent in 2002 and should expand an estimated 4 per cent in 2003, the report states that trade growth should continue to lag without a substantial reduction in geopolitical uncertainties, progress in multilateral trade negotiations, and solid recoveries in major economies, where excess capacity restrains investment.

However, some progress has been noted in developing countries’ access to external debt relief and ODA, as well as private financial flows, workers’ remittances and net transfer of resources.  As of April, donor nations had submitted $2.4 billion of the $2.6 billion pledged to the Heavily Indebted Poor Countries (HIPCs) initiative, although countries being weaned off the HIPC programme would need new non-debt-creating financial flows in order to grow their economies.

After falling for years, the report notes, ODA rose to $57 billion in 2002, a 4.8 per cent expansion in real terms, thanks in part to resource mobilization efforts of the 2002 International Conference on Financing for Development.  Still, another $50 billion annually was needed to meet the Millennium Development Goals and for Member States to fulfil their pledges of earmarking 0.7 per cent of gross national income for ODA.

Noting that net foreign direct investment (FDI) in developing countries, their largest source of external resources, dropped in 2002, the report stresses that developing nations must continue to implement policies to attract FDI.  Remittances from workers living abroad reached $80 billion in 2002, up from $60 billion in 1998, but the net transfer of resources to developing countries hit an all-time low of negative $192.5 billion.

The report also identifies opportunities that technological advances have made in attaining food security and giving developing countries access to information and communication technologies.  Biotechnology applications in food and agriculture could potentially increase productivity and reduce production costs, benefiting both producers and consumers, and could also significantly reduce pervasive poverty and hunger.  Creating policy, regulatory and institutional infrastructures nationally and internationally was critical to ensuring universal and affordable access to information communication technologies.  While the digital divide is narrowing, gaps still exist between developing and developed countries in services and quality.

In addition, the report focuses on the challenges of fighting the global HIV/AIDS pandemic, providing social safety nets for the increasing number of older persons, reducing youth unemployment, and diverting military expenditures to healthcare, food technology, education and infrastructure projects.

Introduction of Report

IAN KINNIBURGH, Director of the Development Policy and Planning Office, introduced the report by the Secretary-General on progress towards the major development goals and objectives adopted by the United Nations during the past decade (document A/58/327), and challenges and constraints to their achievement.  In contrast to the recent discouraging economic performance in developing countries, he said, the first years of the new millennium witnessed progress in global cooperation for development.

He added that the Millennium Declaration, the Doha Development Agenda and the Monterrey Consensus and the Johannesburg Plan of Implementation were pioneering global partnerships for development.  In light of the collapse of the recent WTO ministerial talks in Cancun, national governments, the private sector, civil society and others must work even harder to ensure that commitments made were fully and promptly implemented to compensate for the new millennium’s lacklustre beginning. 

Statements

MOULAY LAHCEN ABOUTAHIR (Morocco), speaking on behalf of the Group of 77 and China, noted that economic growth in developing countries had passed into an idle phase, giving a negative impression of economic performance.  The current international environment did not favour developing countries, which had insufficient access to global markets to acquire the resources needed for development.  Promises made at the 2001 ministerial conference of the WTO at Doha had not been implemented.  Besides market access, developing countries also had problems selling their commodities, due to the subsidies that developed countries paid their producers, especially in agriculture, which distorted the market and went against the spirit and letter of the free trade principle.

The most pressing concern of developing countries was debt, he said.  It prevented them from using their resources for development, particularly in the health and education sectors.  Development assistance had stagnated and the developed countries were reluctant to live up to their commitments in that respect.

MAJDI RAMADAN (Lebanon) stressed that economic growth in the developing world relied increasingly on trade and specifically commodity exports.  There was no need to resort to trade-distorting measures and subsidies to protect the interests of certain groups in the developed countries.  Such distortions kept the developing world entrenched in poverty and unable to achieve the millennium targets. 

He welcomed the increase in ODA to $57 billion in 2002, but regretted that the net transfer of resources to developing countries had fallen to a record low in 2002.  For every $1 in ODA invested in developing countries, $5 went back to developed countries.  Uncertainty over achieving debt sustainability, was due mainly to low levels of ODA and the net transfer of financial resources to the developing world.  Many changes were needed in the global trading and financial systems to achieve the Millennium Development Goals.

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