Wednesday, April 25, 2012

UNCTAD and its future

The XIII meeting of the UNCTAD Conference is scheduled to be held in Doha in April 2012. The draft Presidential text found here for UNCTAD XIII is an interesting read. I am sure it will face considerable amendments before finalisation. Some paras are worth highlighting.
"A. Policy analysis 
16 (14). Globalization describes the growing interdependence of nations through increased cross-border trade, capital, technology and information flows. The lowering of economic, technical, geographic and cultural barriers has been a long-standing feature of human progress. How these elements are combined and their impact on development prospects have, however, changed over time. In recent years, the benefits, risks and challenges associated with globalization have been closely linked to the rapid expansion of international financial markets. 
18 (16). A key challenge in building a more development-centred globalization is to ensure finance is again put at the service of building the productive economy. Doing so will require the adoption of more innovative approaches to development strategy. Business as usual is not an option if the global economy is to be rebalanced in a manner that is timely, sustainable and fair. Innovative approaches must be tailored to local needs and circumstances, and ensure that policymakers have the space to discover what works effectively, given specific needs and circumstances.  
19 (17). New development strategies must be  inclusive and designed to meet human needs. People everywhere have similar needs and aspirations, including a decent occupation, a secure home, a safe environment, a better future for their children and a responsive government. Since these ends are closely interconnected, development strategies should adopt an integrated approach. The desired policy options are unlikely to emerge if financial markets are examined separately from trade or production, the workings of the macroeconomy from the behaviour of firms and households, or the economic from the social and environmental spheres.  
21 (19). At the domestic level, the role of the State remains key to establishing 
appropriate development partnerships that bring together the private and public sectors, small-, medium- and large-scale enterprises, lenders and borrowers, domestic and foreign producers, etc. To do so, States must forge a coherent developmental vision and build a strong compact across different social groups.  
22 (20). The twenty-first century developmental State should be a pragmatic and proactive player, enabling and complementing the private sector. But it also has an independent role correcting market failures and setting national priorities. Just as experience has shown that government-directed development policy without consideration of market forces can lead to inefficiency and misallocation of resources, so have we learnt in recent years that, if governments do not  provide an adequately regulated enabling environment, then those same forces can produce considerable economic and social costs and even threaten national sovereignty."
Commenting on the balance between domestic policy space and globalisation, it had this to say:
" 27 (25). Given that development is first and foremost a national project, developing countries recognize that they have the primary responsibility to raise the living standards and to increase the security of all their peoples. However, in an increasingly interconnected world, those efforts can be impaired or augmented, depending on the strength and purpose of international support and cooperation. Striking the right balance between international obligations and commitments and the provision of adequate policy space to pursue those goals is an ongoing challenge in a globalizing world. "
It further called for a development-oriented trading system thus:
" A development-oriented trading system, in which trade serves as a real engine of inclusive growth, requires an open, non-discriminatory, equitable and rules-based multilateral system. However, the effective and equitable integration of developing countries, least developed countries and countries with economies in transition into the multilateral trading system is yet to be achieved. Moreover, in turbulent economic times, trade protectionism remains a risk, and an immediate challenge is therefore to achieve a strengthened and sustained inclusive and resilient multilateral trading system."
On the role of the UNCTAD in relation to multilateral trade and developing countries, it had this to say:
"Enhance support to developing countries by monitoring international trade from a development perspective, and by addressing ways of more equitably integrating them into the global economy and the international trading system, given the need for a strong, predictable and equitable multilateral trading system"
The draft has a series of recommendations on the role UNCTAD should play in the efforts of developing and least developed countries to integrate into the global economy. 

On another note, a disturbing letter was simultaneously released referring to the efforts made by OECD countries to silence UNCTADs due to its "alternative" thinking on many issue of global development. The signatories to this letter included Harvard professor Dani Rodrik. The letter, inter alia, said:
" Developing countries in Geneva, again, are struggling to resist the strong pressure piled on them by OECD countries and to defend the organisation to which they had been “umbilically” tied.  They are not fully succeeding, in spite of the BRICS pledge of support manifested at its recent summit.  So the developed countries in Geneva have seized the occasion to stifle UNCTAD’s capacity to think outside the box.  This is neither a cost-saving measure nor an 
attempt to “eliminate duplication” as some would claim.  The budget for UNCTAD’s research work is peanuts and disparate views on economic policy are needed today more than ever as the world clamours for new economic thinking as a sustainable way out of the current crisis.  
No, it is rather – if you cannot kill the message, at least kill the messenger.
All of the undersigned have worked as senior officials for UNCTAD at one time or another.  Individually, we may not necessarily have agreed with what UNCTAD was saying on specific issues.  We have no vested interest in this matter except that we all fervently believe in the value of maintaining an independent research capability that serves to focus intergovernmental debates on how the workings of the global economy affect developing 
At time when pluralism is finally being meaningfully discussed in the election of the President of the World Bank, it is ironic that OECD countries are endeavouring to stifle freedom of speech within another multilateral organization."
Will keenly await the outcome of the UNCTAD XIII Conference to analyse its chief achievements in the context of this controversy regarding its future.

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