Sixty-second General Assembly

Second Committee

Interactive Dialogue (AM)

NEW ECONOMIC DEVELOPMENT MODELS CAN HELP OVERCOME OCCASIONAL VOLATILITY,

SAY SPEAKERS IN SECOND COMMITTEE INTERACTIVE DIALOGUE

 

Heads of United Nations Regional Commissions Address

‘Aid for Trade’, South-South Cooperation, Public-Private Partnerships

Lessons learned from countries that had successfully positioned themselves in international markets, and the establishment of new economic development policies and models were among the tools needed to bolster the sustained growth and stability that would enable developing countries to ride through occasional economic volatility, several speakers said this morning during an interactive dialogue conducted by the Second Committee (Economic and Financial).

Moderating the interactive dialogue with Executive Secretaries of Regional Commissions, Kirsti Lintonen ( Finland), Second Committee Chairperson, pointed out the timeliness of the event in light of that body’s upcoming consideration of macroeconomic issues and the General Assembly’s High-Level Dialogue on Financing for Development.  The Regional Commissions had mandates and strong legacies of substantive and analytical work on macroeconomic issues, including financing for development.  As the regional arms of the United Nations, they acted as important building blocks for strengthening development cooperation and promoting regional cooperation.

Abdoulie Janneh, Executive Secretary of the Economic Commission for Africa (ECA), discussed “The potential of Aid for Trade to accelerate growth and development in Africa”, stressing the need for urgent solutions such as adequate financing for development, fair trade and good partnerships in seeking to attain the Millennium Development Goals.  Africa faced formidable challenges in international trade, including poor market access, high tariffs and tariff peaks on agricultural goods and textiles, non-tariff barriers, international price distortions caused by export subsidies, weak supply capacity, poor port and transport infrastructure, limited research and development resources and institutional constraints.

He went on to say that the Aid for Trade Initiative enabled Africa to address trade-policy constraints, build supply-side capacity and set up infrastructure to gain access to markets and meet the costs of adjusting to trade reforms.  ECA was strongly involved in trade issues through its support of African trade negotiators and the African Trade Policy Centre was focusing on the best technical means to overcome challenges.  The Commission was a member of the Aid for Trade board, alongside the African Development Bank and World Trade Organization (WTO), and they had jointly organized a successful review earlier this month.  Furthermore, ECA was preparing the participation of African countries in next month’s Global Review.

Responding to delegates’ concerns about ensuring the success of the Aid for Trade Initiative and its relevance in light of the stalled Doha Development Round, he said it was important that the Global Review succeed and the Initiative become a meaningful vehicle by realizing its potential.  The stalled Doha negotiations should not constrain the Initiative, and while putting it together had initially been difficult, it had facilitated good progress.

As to cooperation with other regional actors, he said the United Nations Deputy Secretary-General would be in Addis Ababa on 5 November to chair the regional mechanism established by the General Assembly to ensure coherent support for the New Economic Partnership for Africa’s Development (NEPAD).  ECA had a trade cluster, co-chaired by the United Nations Industrial Development Organization (UNIDO) and the African Union, to support regional initiatives.  Concerning climate change, the Commission was designing, with the African Union and the African Development Bank, a climate information programme and a joint secretariat to enhance coordination. 

Bader Al-Dafa, Executive Secretary of the Economic and Social Commission for Western Asia (ESCWA), discussed “Promoting South-South cooperation and public-private partnership for development”, saying South-South cooperation could play a critical role in helping countries meet their development goals.  It was growing in importance due to rising trade and development assistance among countries in the South and was a positive complement to North-South trade.  Arab regional cooperation was historically rooted, with multilateral and bilateral development banks contributing more than $80 billion in development assistance over the last 30 years.  But challenges remained, including low intra-Arab investment, few regional preferential trade and investment agreements -- of which there were only eight in comparison with 39 in Latin America -- political instability and corruption.

He said there was good potential for South-South cooperation in trade and foreign direct investment, infrastructure development, information and communication technology, water management, energy, tourism, and agricultural and rural development.  Public-private partnerships were an important component, as was private-sector investment in education, science and technology, and other areas.  ESCWA was working to enhance interregional cooperation and capital markets integration and to implement foreign direct investment database projects.  The Commission was also supporting an Arab information and communication technology initiative on “broadband for development”, the Arab Integrated Water Resources Management Network, the creation of the Arab Water Utility Association and Arab Water Council, and the development of a regional Integrated Transportation System.

In response to delegates’ queries about the best way to capitalize on and promote South-South cooperation, he said the Arab region had strong public-private sector cooperation initiatives.  A few Arab countries were discussing ways to increase South-South capital flows, which should bear fruit next year as some countries were reforming their investment regulations.  The price of oil had jumped from about $40 or $50 to $80, which had led to an accumulation of wealth in some oil-producing Arab countries.  On the creation of the United Nations Arab Language Centre, discussions had been held with two countries on its future seat, and one had agreed in principle to finance the centre.

Noeleen Heyzer, Executive Secretary of the Economic and Social Commission for Asia and the Pacific (ESCAP), discussed “Managing financial market volatility for Asia-Pacific growth and development”, highlighting the region’s burning issue:  how to maximize short-term capital flows and minimize negative effects.  Short-term capital flows had experienced historic highs and increased volatility, but speculative increases in capital flows, excessive investor appetite for risk and a booming yen “carry trade”, totalling $331 billion in 2007, had cumulatively raised the risk of sudden and large capital-flow reversals.  The lessons learned from the 1997 Asian economic crisis included the social costs of volatility, as frequent economic shocks weakened social protection systems and triggered greater poverty, unemployment and inequality.

Looking forward, she highlighted three priorities that would act as a guide to managing large and volatile capital flows:  boosting domestic demand as a buffer against external shocks, deepening financial markets to benefit from capital flows, and strengthening regional cooperation to reduce the impact of financial volatility.  In addition, the development of a social protection framework would build broad-based social resilience and inclusive growth, invest in women and target the most vulnerable and lesser-skilled citizens.

Addressing questions about the role of ESCAP and non-United Nations

entities, she said the Commission operated differently since the Asian financial crises, with heightened investments in regional efforts like the Association of Southeast Asian Nations (ASEAN).  ESCAP played a role in disaster prevention, provided regional support and technical capacity-building, besides partnering with regional entities in coordinating economic development.  Landlocked, least developed, small-island developing countries and others with special needs had ESCAP’s special attention, as they made up 34 of the Asia-Pacific region’s 62 countries.  Regarding social protection, the employment-based protection system that had been adequate for so long was no longer acceptable given the widespread consequences of agricultural and other crises.  New models had to be examined, public-private partnerships forged and ways found to use domestic capital wisely in economic and social development.

Marek Belka, Executive Secretary of the Economic Commission for Europe (ECE), discussed “Private sector external finance -– is it too much or too little?” focusing on transition countries and noting that fast-developing economies had used more capital to exploit investment opportunities.  For that and other reasons, increasing the availability of external private financial resources had become a key component of the Monterrey Consensus.  Trends showed that capital was flowing “uphill” from developing/emerging markets to advanced economies and those inflows were associated with growth.  Eastern, Central and South-Eastern Europe had received significant net capital inflows and unprecedented gross capital inflows, allowing higher growth in national income and consumption.  But capital inflows in Eastern Europe should be examined to determine whether those economies were repeating the mistakes of past debt crises or whether their experiences were really a development model of the successful use of external finance.

He said there was a need for policies that would maintain stability in areas including domestic savings, credit growth and fiscal restraint.  Europe had been able to use external borrowing to promote growth, but that had increased risks and required the implementation of complementary policies.  Some of the resulting vulnerabilities must be addressed, and it was to be hoped that Europe had devised a development model that would take advantage of external finance, and from which the rest of the world could benefit.

Responding to a question about the Russian Federation’s role as an emerging economy in the Commission, he said that country was different from others due to its great store of natural resources.  Private capital flows into the Russian Federation were growing, and outflows were taking the form of productive investment.  On steps that might stimulate the growth of small and medium-sized businesses, ECE focused on the region’s eastern countries by addressing intellectual property rights, assisting those countries’ companies to market their technologies and helping with financing for development by sharing best practices and formulating guidelines for business associations.

He said the Commission focused mainly on vulnerable areas, including the Caucusus, Central Asia, Eastern Europe and South-Eastern Europe, through trade facilitation, transport infrastructure links and sustainable development.  A pan-European conference on forests, to be held on 5 November, would focus on forestry protection.  Belarus was an important partner in helping countries with renewable energy projects and energy saving technologies, and ECE, with Israel’s help, had launched publication guidelines for public-private partnerships.  In addition, the Lisbon Agenda aimed to revitalize job creation in the European Union, preserve its unique social cohesion and cohesively achieve sustainable development.

Ernesto Ottone, Deputy Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), discussed “The role of public/private partnerships in long-term strategies to foster economic growth”, reporting mixed experiences in the region.  The Commission viewed the current growth phase with cautious optimism as the robust pace of economic activity, and more public spending, had helped to lower unemployment and improved job quality.  However, the region faced structural problems, including inequitable income distribution.  The current reform process, which had begun 20 years ago, had progressed by bolstering external trade and increasing foreign direct investment, but many countries had a long way to travel on a path of rapid and sustained growth due, in part, to international competition, market failure and the inefficiency of public policies at the microeconomic and mesoeconomic levels.  Programmes for promoting exports, attracting foreign direct investment or encouraging innovation failed to take systematic approaches and lacked a coherent forward-looking strategy.

Breaking with the conventional wisdom of the 1990s, he said, what the region needed was for each government in the region to act as a catalyst for the development of institutions capable of building a consensus around a national vision of each country’s place in the world economy.  ECLAC had embarked on a series of research projects, with support from the Republic of Korea, Chile, the Ibero-American Secretariat and the Fundación Carolina, to help the region meet challenges posed by the development of those strategies.  The research focused on the small and medium-sized economies of Australia, Canada, Czech Republic, Finland, Ireland, Malaysia, New Zealand, Republic of Korea and Spain, which had positioned themselves successfully in the international arena.  The research emphasized the analysis of development strategies and studying public-private sector collaboration, with the goal of finding, not a “one-size-fits-all” model, but generic “principles” that may be applied to the development and implementation of public-private partnerships and strategies.

In response to questions and comments about public-private partnership, he said they required a strong legislative framework to create a climate of certainty and ensure lasting partnerships.  Regarding social cohesion, the region had never had a universal social protection system like the one in Europe, but ECLAC was preparing a document on the creation of social cohesion and protection systems throughout the region.  Concerning the role of the information society, it was important for the region’s growth and well-being and El Salvador would soon host a meeting on information and technology development.

As for the failure of Latin America to fulfil its potential for intraregional cooperation, the region’s poor transport infrastructure and links was an obstacle, he said.  Public-private partnerships could play a fundamental role in creating strong transport connections given the amount of resources required.  Indeed, Latin America had huge wealth inequalities, but for the first time in 30 years, income disparity was shrinking and eight countries had seen a small reduction in the wealth distribution gap.  It was important to sustain that momentum through effective public policy.  There were best practices in the region’s public-private partnerships, such as those in Mexico’s strong industrial areas, but they lacked a systematic public policy and a strategic approach to sustaining them.  Corporate social responsibility was important, as the success of public-private partnerships depended on strong public institutions and institutional stability, which was lacking in the region.

Participating in the interactive dialogue were the representatives of Portugal (on behalf of the European Union), Egypt, Namibia, Russian Federation, Libya, Japan, Syria, Thailand, Solomon Islands, China, Indonesia, Malaysia, Belarus, Israel, Venezuela, El Salvador, Brazil and Mexico.

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For information media • not an official record