Maintaining growth in testing times: consider impact of economic trends on development

Twelfth United Nations Conference on Trade and Development to take place in Accra, Ghana, 20-25 April
Heads of state, ministers, economists to discuss better translation of globalization gains into poverty reduction; nurturing and expanding South-South trade; commodities boom; regional integration; foreign investment for development, debt management; technology; growing impact of creative economy; importance of small firms and entrepreneurship for development.
Geneva, 29 February 2008 - The danger that financial turmoil and an economic slowdown in industrialized countries will derail promising economic growth in the developing world is likely to be at the heart of debate when senior government officials, economists, and development experts gather in Accra, Ghana, in April for the twelfth United Nations Conference on Trade and Development.
UNCTAD XII, to be held 20-25 April, has as its principal theme "addressing the opportunities and challenges of globalization for development." Some
4,000 representatives of UNCTAD's 193 member States − including several Heads of State − and participants from other international bodies, non-governmental organizations, business, and academia are expected.
At the conference, member governments will negotiate and adopt a text assessing the international climate for economic development and defining UNCTAD's work programme for the next four years. Member countries began the process of preparing the UNCTAD XII text in November, and further intense negotiations are expected in Accra. UNCTAD's quadrennial ministerial meetingsi started when the organization was created in 1964. "UNCTAD's mandate is more important than ever in today's context of deepening interdependence," says Supachai Panitchpakdi, UNCTAD Secretary-General.
The conference comes as global uncertainties threaten the most promising economic growth in the developing world in 30 years. During the past half decade, developing countries have averaged economic growth of 5% or more, and the international landscape has tilted with the emergence of economic heavyweights outside the industrialized west, including China, India, and Brazil. The world economic outlook hinges strongly on whether these nations and the developing countries they increasingly trade with have enough momentum to become less vulnerable to downturns in North America and Western Europe.
A related problem to be scrutinized in Accra is the seeming paradox that despite high growth in Asia, Latin America, and Africa, only limited reductions in poverty have been achieved, especially in the world's 49 least developed countries (LDCs). Globalization that does not bring broadly higher living standards − especially during a halcyon period of economic growth has governments and international economists concerned about what will be necessary to tackle the deep poverty in which hundreds of millions continue to live. It also raises questions about the world’s ability to achieve the United Nations Millennium Development Goals, which include halving extreme poverty by 2015.
The conference's high-level discussion on 21 April will accordingly be devoted to Africa ("Trade and development for Africa's prosperity: action and direction"), where most LDCs are located. The session will be chaired by United Nations Secretary-General Ban Ki-moon and moderated by UNCTAD Secretary-General Supachai Panitchpakdi, and will reflect the importance attached to ensuring that African countries benefit more from globalization. Key concerns include an inability among many African nations to create enough jobs, particularly well-paid and productive ones, and a continuing dependency on agriculture and extractive industries.
As recent events in financial markets have shown, countries and economies are more and more interlinked, underlining the need for the kind of global dialogue and debate to be fostered by the conference. Participants will seek to identify policies and strategies that enhance the benefits, and reduce the risks, of globalization for developing countries, all the more necessary given the current economic situation. To this end, in addition to the high-level session, main debate and negotiations, a number of other events will focus on timely themes and trends. These include a series of ministerial roundtables.
The commodities boom and its development importance, for example, will be reviewed at a roundtable on 23 April titled "The changing face of commodities in the 21st Century." Experts will discuss whether burgeoning demand from China and other emerging economies can be expected to keep prices for oil, gas, minerals, metals, and basic agricultural produce at high levels. And they will debate whether income from commodity exports is potentially enough to spur broad development and poverty reduction in the world's poorer nations. UNCTAD's price index for non-fuel commodities recently reached its highest level (in current dollars) since 1960, and commodity dependence in Africa and elsewhere remains intensive: Some 85 developing countries rely on commodities for more than half their export earnings, and for 70 of them, more than half of their exports consist of three or fewer commodities.
The dynamic South
The significance of rapidly expanding South-South trade will be discussed at a 23 April roundtable titled "Emergence of a new South and South-South trade as a vehicle for regional and interregional integration for development." South-South merchandise trade jumped from US$577 billion in 1995 to over $2 trillion in 2006. By 2006, such commercial exchanges between developing countries accounted for 17% of world trade and 46% of developing countries' total merchandise trade.
The type of trade also is significant: manufacturing represented almost half of South-South flows, while for the commodity sector, including fuels, interregional trade among countries of the South has expanded, and developing countries, especially in Asia, have become a vital export market for Africa. Participants in the roundtable are likely to debate whether South-South trade is now so strong and self-reinforcing that it could help sustain global growth in the face of a slowdown in developed countries.
In tandem with trade, South-South foreign direct investment (FDI) has been rising, and transnational corporations (TNCs) based in developing countries have achieved heretofore unseen scale and influence, including through the acquisition of the divisions of well-established global brands. Whether and how FDI from these new sources and from traditional western TNCs can actually lead to broad-based poverty reduction will be discussed at a 22 April roundtable, "Creating an institutional environment conducive to increased foreign investment and sustainable development."
Bringing more countries on board
How poor nations can accomplish greater, more broad-based economic growth is also the topic of a 24 April roundtable on "Harnessing knowledge and technology for development." The debate, based on UNCTAD's Least Developed Countries Report 2007, will centre on the idea that developing countries not only need to import and master up-to-date technology but also to develop it themselves and use it to create innovative products that can be manufactured efficiently and sold around the world. Meeting participants are likely to discuss the significant "spillover" benefits that can result from cross-border flows of knowledge and to review the potential costs of recent trends in which knowledge is increasingly privatized and commercialized.
A roundtable on "Globalization, development and poverty reduction: their social and gender dimensions" (22 April) will consider how increased trade and economic growth affect such matters as income equality and women's roles in society and in national economies. Wide gaps in income have persisted between and within countries even as developing country exports have accelerated in recent years. Participants in the roundtable can be expected to discuss how globalization's benefits can be spread more evenly.
The risk of new debt crises will be weighed at a roundtable on "Debt management solutions supporting trade and development" (24 April). Although external debt in the developing world has declined modestly in recent years − driven in part by climbing trade and commodity prices and international debt-relief programmes − numerous countries still have substantial debt burdens and may be vulnerable to shifts in the global economic picture.
A roundtable on "Developing productive capacities in least developed countries" (24 April) will focus on the continuing difficulties of LDCs in shifting their economies away from dependence on exports of primary commodities − such as crude oil, and metal ores − and simple manufactures to more sophisticated and varied products that promise the creation of greater numbers of jobs at higher rates of pay. Economies based on higher "value added" also are historically less vulnerable to shocks and downturns.