Statement by Mr. José Antonio Ocampo, Under-Secretary-General for Economic and Social Affairs to the Second Committee
New York, 2 October 2006

Let me begin by congratulating you, Madame Chairperson and the other members of the bureau of the Second Committee, on your election to this important body. The Committee has, for the first time, the privilege of being chaired by a woman and thereby has become yet another example of how to advance one of the key objectives of UN: that women exercise leadership in important positions. The experience that you and your colleagues will bring to this bureau inspires great confidence in the Committee’s work during this session.

Your programme of work covers a wide range of critical issues on the UN’s development agenda. You will address, for instance, the overarching goal of poverty eradication, especially by convening the International Forum on the Eradication of Poverty whose motto is “Keep the Promise: Make it Happen”. You will continue discussing the related issue of micro-credit. And, in the coming weeks, you will devote attention to sustainable development issues.

You will also decide on the Government of Qatar’s offer to host a follow-up international conference on financing for development, bearing in mind related events also being scheduled. The Monterrey Consensus has defined a new approach to development cooperation as a partnership between developing and developed countries and accelerated actions in many areas, from the decisions on increasing ODA and debt relief adopted last year to the recent discussions on increasing voice and participation of developing countries in international economic decision making. It is thus crucial that the follow-up to Monterrey be given careful attention.

In short, your agenda of work is long, and varied, and I cannot do justice to it in these opening remarks. Therefore, I will focus on a few major topics, namely, the global economic situation and prospects, the Least Developed Countries, international migration, and the follow-up to the 2005 World Summit.

According to our latest assessment of the world economic outlook, the world economy is expected to grow robustly in 2006, at a rate of 3.6 per cent (estimated at market exchange rates), which is about the same as in 2005. Some deceleration in global growth is likely in 2007, during which we currently forecast 3.0 per cent growth. Yet, a number of downside risks could reduce that projection even further. I draw your attention to three.

First, the decline of the housing market, which is already evident in some countries, is a real threat in a number of countries, especially in the United States, and could have strong ripple effects in the near future. Because the earlier appreciation of house prices has occurred in some economies with large external deficits, particularly the US, a sharp fall in housing prices in this economy could trigger a disorderly adjustment of global imbalances.

Second, the outlook for oil prices and its possible impact on global growth remains uncertain. Thus far, much of the increase in oil prices has been due to a stronger-than-expected growth in the global demand for oil, coinciding with a tight capacity for oil production and refining, and exacerbated by natural disasters and geopolitical concerns. In the short run, and despite the recent fall in prices, worries about supply shocks are likely to dominate market movements. However, unlike the two previous periods of high oil prices during the 1970s and the 1980s, today higher oil prices have thus far not resulted in any major recessionary effects on the world economy. The fact that the rise in oil prices has been demand-driven is related to its small impact on world economic activity. In contrast, if a supply disruption were to happen, the implications for the world economy would be greater than what we have seen so far. It is therefore crucial to increase investments to safeguard the world economy against any disruption in oil supply. Meanwhile, the substantially heightened recent volatility in oil prices, as well as in the prices of a number of other primary commodities, should be a vivid reminder for many commodity-exporting developing countries that their economic growth remains vulnerable to the vicissitudes of commodity prices.

Third, and perhaps most important, widening global imbalances and, particularly, the external deficit of the US, continue to pose a major risk. Paradoxically, the mirror image of the deteriorating US deficit has been, in many developing countries, the strengthening of the external sector and reduced debt ratios. However, the longer and the deeper the imbalances are allowed to develop, the higher the risk of a sudden and sharp disorderly adjustment, including a US recession and a large devaluation of the US dollar. Such an adjustment would have significant depressing effects on the world economy as a whole, with an asymmetrically large impact on developing countries.

To maintain solid, broad-based, and stable world economic growth, the international community should urgently pursue more pro-active policies to redress global imbalances. We have also made a call from the United Nations to involve in such coordination efforts a much broader range of countries than do the current limited membership forums, such as the G-8. We welcome therefore the initiatives taken by the IMF in this area, through its multilateral surveillance activities. Such coordinated global adjustment requires, as we well know, measures that will stimulate savings in the deficit countries and greater domestic demand in the surplus countries.

Against this background, the Second Committee will discuss the issue of globalization. Despite the scale and pace of the current process of globalization, further progress in global economic integration should not be taken for granted. An important challenge for policymakers is to ensure that the benefits of global economic integration are widely shared.

This year’s World Economic and Social Survey focused on income inequalities among countries. The Survey shows that, over the past quarter century, the world has witnessed a process of “dual divergence”: an increasing income gap between developed and developing countries, paralleled by growth divergence among developing countries. The report yielded major findings about the role that the international environment and domestic policies play in explaining that divergence.

At the domestic level, the Survey examines the role played by countries’ patterns of specialization, their limited capacities to smooth business cycles through counter-cyclical macroeconomic capacities, and their institutional reforms. In the latter area, it underscores that institutional reforms encompass more than creating markets and guaranteeing property rights. They should also include creating the regulatory and institutional framework that markets require to function, providing necessary public goods, and guaranteeing the fairness of rules. Furthermore, the Survey shows that “big bangs” in institutional reform may, in fact, generate more harm than good, whereas gradual institutional change can have a great positive impact on growth if perceived as initiating further credible reform.

But global economic conditions also matter. The Survey underscores in this regard the fact that success and failure in achieving sustained economic growth are concentrated in time and space. This means that the growth of individual developing countries depends not only on domestic economic policies—the focus of debates in recent decades—but also on regional and global economic environments. During the so-called golden age of 1950-1973, most developing regions experienced rapid economic growth. In contrast, the final two decades of the twentieth century brought a worrisomely large number of “growth collapses”, with only a few developing economies able to sustain fast growth. Thanks to favourable global economic conditions, most developing countries have experienced strong growth over the past three years, but the lesson of the past trends is that such favourable performance should not be taken for granted.

The suspension of trade talks on the Doha Development Round represents, in this sense, one of this year’s major setbacks. The fact that development was placed at the centre of current trade negotiations was, of course, a major advance. I thus hope that, as some encouraging signs suggest, negotiations can be resumed in the near future, ensuring in any case the Round’s development promise.

A related challenge is reducing the growing “technology gap” that hinders the capacity of many countries to fully benefit from the global economy. We have prepared a report on this issue that I hope would encourage a deep discussion in the Committee on the fuller use of science and technology to achieve the internationally agreed development goals. The report highlights the need for countries actively to develop innovation systems and a sound scientific base for them, including the associated investment in both human talent and infrastructure. At the international level, it emphasizes that global rules governing intellectual property rights need to be flexible in order to guarantee adequate transfer of technology to developing countries. Let me also mention the positive role to be played by the renewed Commission on Science and Technology for Development and the well-defined intergovernmental follow-up process to the World Summit on the Information Society agreed to by ECOSOC this past summer, as well as the launch of the new Global Alliance for ICT and Development (GAID).

Those most adversely affected by trends in global disparities are the Least Developed Countries (LDCs). Last month’s High-Level Meeting on LDCs reviewed the economic performance of these countries, as a group, since the 2001 Brussels Conference. The Meeting stressed that, despite high levels of growth since 2001, the group still faces the key challenge of ensuring that economic growth contributes to poverty reduction. It has sent a strong message that we all must now marshal sufficient political will to see that the agreed actions are taken by all, as quickly and widely as possible. In particular, LDCs should continue to improve governance, including by building human and institutional capacities, and to give greater attention to gender equality, agriculture, infrastructure, and HIV/AIDS. And development partners, including other developing countries, should continue to increase their support to LDCs in the areas of ODA, debt reduction, and market access.

International migration is a dimension of globalization that has, so far, received less attention in global debates than other issues, such as trade or private capital flows. Last month, for the first time ever, the General Assembly conducted a High-level Dialogue on International Migration and Development. This event proved that international migration can be debated constructively in the United Nations, and served to dispel some of the many myths about international migration. It recognized that international migration is a growing phenomenon and a key component of globalization, with the potential to contribute positively to development or, in the words of the Secretary-General, to “create triple wins: for migrants, for their countries of origin, and for the societies that receive them”.

Participants in the Dialogue underscored that respect for human rights was the necessary foundation for the beneficial effects of migration to be realized. They called for the explicit incorporation of international migration into the global development agenda and for integrating migration issues into national development strategies. They expressed concern about the effects of the brain drain and about current levels of irregular migration, and vowed to reinforce the fight against trafficking in persons. And they agreed that strengthened international dialogue and cooperation on migration could bring benefits for all. In this regard, there was broad support for the Secretary-General’s proposal to establish an informal, voluntary, and consultative Forum open to all Member States that would permit them to get together to discuss the best ideas and strategies to address migration issues. The Government of Belgium offered to host the first meeting of this Forum in 2007.

All these issues point up the need, more than ever, for effective and robust multilateralism, policy coherence, and partnerships.

To these ends, the outcomes of the UN conferences and summits have provided us with a comprehensive framework for multilateral cooperation for development, a framework that we have come to call the “UN Development Agenda”. The Agenda is founded on a set of well defined goals and objectives: the eight Millennium Development Goals, with the overarching aim of cutting extreme poverty in half by 2015, plus other essential goals, such as decent and productive employment and social inclusion.

In the follow-up to the 2005 World Summit, the overarching goal for the entire UN development system is to gear itself towards implementation of this UN Development Agenda. World leaders placed ECOSOC at the centre of efforts to monitor and advance implementation of the Agenda, in a unified and coherent way.

The adoption of the resolution on the follow-up to the development outcome of the Summit is an important step. The resolution is aimed at ensuring and promoting effective implementation of the outcomes of the major United Nations conferences and summits in the economic, social, and related fields, including the 2005 World Summit. It has the potential to serve as another instrument for ensuring that the UN plays a fundamental role in promoting and facilitating international cooperation for development. This Committee has a pivotal role in the resolution’s follow-up, particularly its provision to enhance the role of the General Assembly meeting dedicated to reviewing implementation of the development section of the 2005 Summit outcome.

We hope that the consultations on ECOSOC will be completed soon and also lead to the adoption of a resolution on ECOSOC reform. These two resolutions together will serve as guideposts in our efforts to accelerate implementation. In this process, key new functions given to ECOSOC—the Annual Ministerial Reviews and the biennial Development Cooperation Forum—must get off to good starts and enable ECOSOC to serve as the bridge between policy-making and implementation.

Our capacity to come together and work in synchrony is an important condition for putting the Summit Outcome into effect. We should organize the work of the UN bodies involved so as to maximize their individual contributions to effective implementation of the development goals. In light of all the issues on this Committee’s agenda and on the agenda of the Third Committee, how will ECOSOC’s newly enhanced role work in practice? Traditionally, we have looked at the issues in separate silos. In response to the Summit Outcome, should we not find ways to bring them together for a much more coherent consideration? The recurrence of certain topics in various intergovernmental fora illustrates their importance and urgency. Yet shouldn’t we feel compelled to ensure some clear division of labour among these bodies, in order to attain maximum value-added as well as the ability to approach issues from a unique perspective?

In this regard, we are, of course, anticipating the report of the High-level Panel, which will initiate further discussion of ways to increase system-wide coherence in the work of the United Nations in these areas. On the basis of your deliberations on the Panel’s recommendations, we must make the UN a better tool for development work at the country, regional, and global levels.

Ultimately, the value of all UN-system entities’ efforts will be judged by how effectively we, together, implement the conference goals and commitments. Yet, we can only facilitate and support implementation. The realization of the UN Development Agenda must be driven by the sustained political will of each member country of the United Nations.

The task of scaling-up the efforts for implementing the UN Development Agenda has never been more crucial. If we want to meet the MDGs by 2015 and realize the UN Development Agenda fully, we have to pursue these goals in an energetic and integrated manner. The World Summit has provided us with new instruments, but we must work collectively and intensively to make this approach a reality.

I look forward to the deliberations of this Committee. I hope that, at the end of this process, we are definitively closer to bridging the gap between performance and promises made to help lift billions of people out of poverty and deprivation.