Rt Hon Donnald McKinnon

at the International Conference on Financing for Development

Monterrey, Mexico
18th March 2002


This UN Conference on Financing for Development comes at a crucial time and offers great opportunities for global co-operation on fighting poverty and achieving sustainable development.

This conference can make the difference between a world where this glaring gap between the rich and the poor continues to increase and one where globalisation works for the benefit of the entire human community.

With the Commonwealth accounting for nearly a third of all developing countries and half the population of the developing world, our key policy makers have an important contribution to make to the decisions taken in Monterrey.

Globalisation is a double-edged sword. It has created unprecedented opportunities for economic growth and technological progress but it has also generated uncertainty and dislocation.

Globalisation has been blamed for increasing the gap between the rich and the poor. But globalisation, if well managed, can be part of the solution to world poverty.

Poor countries need more globalisation, not less. The more poor countries open their economies, the more likely they are to grow rich. During the 1990s, developing countries with open economies grew at an annual rate of 5% per capita, while those with closed economies grew at only 1.4%.

But if globalisation is to fulfil its promise, we must make sure that it works for the benefit of the many, not the few.

In other words, we must make globalisation more inclusive. We need to ensure that developing countries have the capacity to seize the opportunities created by the global trade system and lift themselves out of poverty. But for this to happen, everyone must play by the same rules.

International trade issues are notoriously complex. But some imbalances are obvious enough. Trade barriers on manufactured products have been repeatedly lowered, and now stand at an average of 4%, while barriers for agricultural exports-a key to most developing nations' economies-have remained at an appalling average of 40% worldwide.

In addition, industrialised countries continue to maintain high levels of export subsidies on agricultural products. In fact, the annual amount of subsidies that the European Union pays its farmers is enough to fly every cow in Europe first class around the world!

This is stupid. Rich countries must open their markets to exports from developing countries. They must level the playing field with poor countries.

In the same way that Europe and the US after the industrial revolution made efforts to transform the cruder form of capitalism into social democracy of today, we now political processes whereby we have a more inclusive form of globalisation which works for the benefit of all.

One way of helping developing countries integrate into the world economy is to assist them in attracting foreign investment. We should redouble our efforts to help reduce the cost and risk of investment in least developed, small and vulnerable economies.

A recent Commonwealth Secretariat report, "Lowering the threshold: changing private investors' perceptions by reducing the cost and risk of investment in least developed, small and vulnerable economies", argues that investment risk in these countries could be mitigated by an innovative system, which would allow domestic commercial banks to channel international aid and International Financial Institutions assistance towards local enterprises. This would provide them the early-stage funding they need to become viable and attract foreign investment.

The Commonwealth has also played a crucial role in promoting the interests of small states and contributed to greater international awareness of the particular vulnerabilities of these countries. We have been helping our smaller member states by providing experts who assist them in the process of international trade negotiations and ensure that they do not lose out.

The Commonwealth helps small states make their voice heard in international forums. That is why we set up a Small States Office to facilitate their representation at the United Nations in New York. I hope we can do the same at the WTO in Geneva.

We all know that in today's world, too few control too much and too many have too little. This has got to change. Fortunately, more and more people now understand that it is in the interest of developed countries to take the interests of developing countries seriously.

Our world is increasingly interconnected. We are all neighbours now. Your security is my security. Your poverty is my problem and my future can never be secure if I remain indifferent to your own future. By improving the lives of the worst off, we can improve the prospects of the world community as a whole.

This is why this meeting is so important. And this is why it is so important that it delivers.

It is critical that Monterrey is followed through and generates concrete outcomes. If we fail in the critical implementation phase, all the efforts we have invested in these discussions will have been in vain.

The general aim of this conference, as I understand it, is to build a global partnership for the eradication of poverty and the creation of wealth in developing countries.

But we can only achieve this by agreeing on clear implementation programmes and monitoring processes that allow us to assess progress on a regular basis.

Making sure that we all live up to our commitments will be the ultimate test of our success.

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