Press conference on unctad world investment report

 

The Millennium Goals could still be achieved by 2015, if countries followed through on commitments already made, correspondents were told this afternoon by Jeffrey Sachs, Special Adviser to the Secretary-General on the Millennium Development Goals.

He was speaking at the Headquarters launch of the 2004 World Investment Report with Georg Kell, Executive Head of the Global Compact.  This year’s theme in the annual publication by the United Nations Conference on Trade and Development (UNCTAD) is “The Shift Towards Services”.  The Global Compact is a United Nations initiative among corporations for social responsibility.

“We don’t need a single new promise, just follow through”, Mr. Sachs continued.  Commitments made at the Millennium Summit and at Monterrey provided the framework for foreign direct investment (FDI) to make a rapid impact.  Many countries had been forging partnerships and were ready to make great strides.  Obstacles, however, kept the commitments from being fulfilled.  In African countries, for example, foreign investors entered into partnerships, but were unwilling to help poor countries meet the basic infrastructural requirements.  When the power did not work or the ports were inoperable because of bad roads, poor countries were told to fix the problem before the agreement went forward.

“Rich countries have to help the poor countries get over the threshold to the markets”, he said, estimating that poor countries needed two to three years of assistance to bring them into the mainstream for FDI.  As it was, they continued to be bypassed in the necessities of market-driven investors.

He said the UNCTAD report was the pre-eminent study on investment trends and this year’s figures starkly showed poor countries being bypassed, while promises made by rich countries remained unfulfilled.  Globalization was often cited as a factor in leaving the poor behind, but that view was inaccurate.  “What we need is a globalization that reaches the poorest countries.”

For example, he said, foreign investment in Africa continued to be in the high-value areas of commodities such as oil, gold and diamonds.  Foreign investments in manufacturing and services were not being made because the infrastructure for development in those areas was lacking.  Rich countries must double their development assistance over the next year, as the five-year review of the Millennium goals approached.  The year 2005 would be crucial for determining whether the 2015 Goals would be achieved.

Reviewing the report, Mr. Kell said the FDI figures for 2003 were telling.  While they showed investment declining for the third year in a row to $560 billion, the forecasts for 2004 indicated that the decline had bottomed out.  The 2003 decline was prompted by a fall in FDI to developed countries by 25 per cent over the previous year and by a dramatic fall in flows to the United States by 53 per cent in that same time.  Also, for the first time, companies from the developing world were coming into the FDI mainstream.  Investment from the developing world accounted for 10 per cent of global FDI in 2003, or 6 per cent of the global flow.

Asked to respond to President Bush’s speech to the General Assembly yesterday regarding development assistance, fighting poverty and non official private assistance, Mr. Sachs said the United Nations had seen no action to back up any of the commitments the United States had made at the Millennium Summit or Monterrey.  Not a single cent had been delivered of the amount, very publicly promised, to the March 2002 Millennium Challenge Fund.

In response to further questions about the United States and foreign investment or aid, he said the amount that the United States had promised was very small compared to the country’s $10 trillion economy and the enormity of the needs in the poorest countries.  The United States was the smallest donor, in per capita foreign assistance, and the private sector made a miniscule difference, perhaps a .04 per cent increase in the amount given on the scale of poor nations’ needs.

He said the United States had once suggested that remittances should count as foreign aid and that money earned by foreigners in the United States and sent to families back home should count as part of United States foreign aid.  That was the equivalent of claiming that the corporate profits made by United States companies overseas should count as foreign aid to the United States by those countries.

All in all, he said, the European countries were much more committed to foreign development, in terms of money and policy, than the United States, which spent $450 billion annually on defence and $15 billion on development aid.  So while the words and intentions of the United States were good, the world could see its lack of follow-through and that only widened the gap between rich and poor.

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