NOBEL LAUREATE HIGHLIGHTS TWO FACES OF GLOBALIZATION IN BRIEFING TO SECOND COMMITTEE
NOBEL LAUREATE HIGHLIGHTS TWO FACES OF GLOBALIZATION IN BRIEFING TO SECOND COMMITTEE
Fifty-seventh General Assembly
6th Meeting (AM)
NOBEL LAUREATE HIGHLIGHTS TWO FACES OF GLOBALIZATION
IN BRIEFING TO SECOND COMMITTEE
The past year had shown how the positive and negative sides of globalization could affect the entire world, especially poorer countries, Nobel Laureate Joseph Stiglitz told the Second Committee (Economic and Financial) this morning.
On the positive side, globalization had brought ideas about democracy, human rights and debt forgiveness, said Mr. Stiglitz, a professor of economics and finance at New York’s Columbia University. It had also reduced the knowledge gap and spurred economic growth in those countries that were able to take advantage of global markets.
He said that the global conferences at Johannesburg and Monterrey had shown that issues of economic policy and finance should be open to all members of society, rather than being left to finance ministers and bankers. Another major achievement had been the increase in foreign assistance to developing countries, indicating a recognition that aid was an effective tool to stimulate growth and reduce poverty. Many statistical studies that had questioned the effectiveness of aid in the past had been analysing cold war aid, he noted, when it was aimed more at buying friends than helping nations to develop.
Over the past year, nations had also discussed problems of international trade and recognized the imbalances of past agreements, he said. In the Uruguay Round, for example, developed countries had forced developing nations to open up their markets and reduce subsidies, but failed to do likewise for developing countries.
The down side of globalization was that it had brought instability and poverty to much of the world, and many had failed to reap its benefits, he said. While that had occurred due to bad management, lessons could be learned from past mistakes so that globalization in the future could enhance living standards around the world. Those lessons included the need for absolute transparency in financial institutions, including previously exempt off-shore banking centres. Argentina’s experiences, as well as those of the Russian Federation and Brazil, had taught that financial crises were a permanent problem of modern life, he said. Every emerging market had had at least one crisis and many were moving towards their second. The world had also recognized that the bail-out strategy did not work and was striving to find an alternative. One possibility was a standstill in debt repayments in order to reactivate economies.
A final lesson involved Enron and other corporate scandals in the United States, he said. In those instances, misleading information about prices had led to inappropriate investments, which had contributed in turn to the economic slowdown in the United States and around the world.
Following the briefing, Committee Chairman Marco Suazo (Honduras) noted that many were in agreement about the malfunctioning of the international financial system. Mr. Stiglitz’s observation that globalization had been badly managed may be taken up during the course of the Committee’s work.
During the ensuing discussion, speakers noted that Argentina was hampered with huge payments to the International Monetary Fund (IMF), which could be put to better use in social programmes. Mr. Stiglitz noted that money going from Argentina to Washington should be flowing in the other direction, since the prime idea was to reactivate the country’s economy.
He proposed an international trade policy that actively helped countries in economic downturns like Argentina’s, asking why the world did not temporarily take down its trade barriers and open up its markets to that country’s products, which would help reactivate its economy.
Other speakers noted that the views of Mr. Stiglitz on globalization echoed those that had long been held by developing countries. The Monterrey Conference had made several commitments regarding the channelling of funds for development, but even more important was the hope for reform in the workings of the international financial system.
Still other speakers commented on the need for transparency regarding the net flow of funds from developed to developing countries, as well as the illicit transfer of funds from developing countries to developed countries.
Also this morning, the Committee continued its general debate, with statements by the representatives of the Philippines, Jordan, Kyrgyzstan, Latvia, Israel, Belarus, Bahrain, Uruguay and Colombia.
The Committee will meet again at 3 p.m. to conclude its general debate.
Following the briefing and the ensuing discussion, the Committee took up the concluding segment of its general debate.
ENRIQUE MANALO (Philippines) said that capacity-building and implementation of commitments set forth at Monterrey and Johannesburg should be the priorities for the Committee’s work. In addition to adequately funding the Heavily Indebted Poor Countries (HIPC) debt initiative, the international community must focus on debt relief for all developing countries, including the complex debt structures of middle-income economies. Debt relief was a good investment for the international financial community, leading to sustained growth, poverty reduction, a more stable global economy, and greater peace and security.
Liberalized market access, however, would only be meaningful if developing countries could expand their export capacity, he said. Foreign direct investment (FDI) and official development assistance (ODA) must supplement available domestic resources in developing countries.
He said the World Trade Organization (WTO) must be more responsive to the needs and priorities of developing countries. The Philippines called for the full and fair implementation of the Uruguay Round, particularly those provisions relating to developing countries. There should be a more formal relationship between the United Nations and the WTO, which should increase technical assistance to developing countries and ensure that they had full and fair access to its dispute settlement mechanisms.
WALID AL-HADID (Jordan) said that the World Summit had shown the importance of partnerships and cooperation between governments and the private sector in meeting the challenges of sustainable development. Economic and trade liberalization was a key driving force behind the achievement of development goals.
He said his country had adopted significant economic liberalization and free-market policies in the last several years. For example, it had forged regional free-trade links with its Arab neighbours, implemented a free-trade pact with the United States and set up an economic free zone for investments in the Akara region.
Jordan had also liberalized foreign currency mechanisms in 1999 and had launched a sweeping privatization programme for major industries, he said. Preliminary studies showed that privatization had led to an increase in the gross domestic product (GDP) contribution of many Jordanian companies. Moreover, the United States had recently named Jordan as an information technology leader in the Arab region.
KAMIL BAIALINOV (Kyrgyzstan) said that many States faced major developmental challenges, such as expanding their export bases, improving foreign trade and attracting FDI. It was difficult to overestimate the value of development assistance from multilateral institutions and the opportunity for diversification of exports.
He recalled that at Monterrey and Johannesburg, government leaders had stressed the close link between success in resolving those issues and socio-economic and geographic problems specific to certain countries. For example, reference had been made to the large group of countries covered by mountains, which included both developing and developed nations. He hoped the upcoming global summit on mountains would make a significant contribution to sustainable development in those countries.
GINTS JEGERMANIS (Latvia), noting that international trade was a means for advancing those Millennium Goals relating to economic development, he said it should act as an important engine for development. The new round of multilateral negotiations should be directed at increasing trade benefits for developing countries and Latvia had taken practical steps to support the entry of those countries into multilateral trade organizations. The country had recently signed a Memorandum of Understanding to change Latvia's status from recipient to donor.
He said that over the past few years, the United Nations had come up with goals in the priority areas of sustainable development, economic growth, poverty and education. The recent summits at Monterrey and Johannesburg had significantly contributed to that agenda. An important approach coming out of those conferences was that of integrated and holistic development. Latvia was confident that the Second Committee would find ways to implement that approach.
AMOS NADAI (Israel), stressing his country's commitment to the sustainable development objectives outlined at the Johannesburg Summit, said it had taken several steps to implement them. Israel had begun a sustainable freshwater management policy designed to reduce water demand and create new water supply sources; partnered with civic groups for biodiversity protection, including the protection of rare and historically significant species; begun exploring the potential of solar energy; and developed programmes to combat desertification.
He said his country had begun to share its knowledge and experience with many countries. In the near future, Israel expected, in cooperation with the United Nations Development Programme (UNDP), to establish an Israeli regional coordinator at that agency's Costa Rica-based Bureau for Development Policy, Drylands Development Centre for Latin America and the Caribbean. Experts would consult governments on the elimination of desertification, desert reclamation, biodiversity protection, poverty reduction in drylands, and water resource management, among other topics.
Citing New Partnership for Africa’s Development (NEPAD) as an outstanding example of how regional cooperation could lead to development, he said his country would continue to use the initiative to build friendly relations with Africa. In addition to bilateral aid and training programmes, Israel actively supported such international initiatives as the World Bank’s International Development Assistance (IDA) programme and the HIPC debt relief programme.
ALEG IVANOU (Belarus) said successful implementation of the United Nations sustainable development goals required capacity-building, innovative sources of development financing and stronger institutional frameworks. Belarus had already incorporated many of these into its social and economic development policies, and planned gradually to ease restrictions on financial and commercial markets, create greater private-sector incentives, and be more aggressive in combating corruption.
He stressed the need for equitable integration of all countries into the world economy, saying that if the international community implemented the agreements already set forth in multilateral trade talks, countries in need could
obtain an estimated $130 billion annually. That was more than double the amount envisaged in the Millennium Declaration’s goals for 2015.
ABDULRAHMAN AL-SULAITI (Bahrain) said that the positive aspects of economic globalization included the opportunities created by greater access to markets, the sharing of knowledge and technology, and financial cooperation. However, there was a downside to globalization, including its ability to marginalize many peoples, particularly those in developing countries. The international community must put a human face on globalization, he stressed.
He said his country was deeply committed to the goals of sustainable development and to environmental protection. Bahrain had included those goals in its national charter. Besides signing, acceding to and ratifying most international conventions on environmental protection, Bahrain had instituted national policies for environmental preservation and clean-up.
FELIPE PAOLILLO (Uruguay) said there could be no sustainable development without open and transparent trade. He underscored the importance of creating freer market access and a firm timetable for eliminating such protectionist measures as agricultural and textile subsidies. Agricultural subsidies in developed nations, which amounted to $1 billion daily, impeded poor nations’ ability to profit from agro-industry.
Agricultural products and textiles were Uruguay’s main exports, he said, pointing out that the drop in international prices for those products, coupled with agricultural subsidies in developed nations and regional financial woes had pushed his country into a deep economic crisis.
He noted that in its World Economic Outlook released last week, the International Monetary Fund (IMF) had estimated a 0.6 per cent decrease in the gross domestic product of Latin America and the Caribbean for 2002, as well as a drop in the region’s net foreign capital flows for the third consecutive year.
ALFONSO VALDIVIESO (Colombia) noted that the 2002 report of the Economic Commission for Latin America and the Caribbean (ECLAC) had warned that despite great efforts in the past several years to open up their economies, many developing countries were not well-prepared for international competition. Globalization promoted greater movements of capital, goods and services, but also caused increased restrictions on trade and labour.
He said that the Latin American countries had met many requirements set out under the Washington Consensus, such as eliminating protectionist measures and privatizing industry, yet data showed that the results were precarious. Net capital inflows would drop from $45 billion in 2001 to $30 billion in 2002, according to the IMF, he added.
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