Fifty-eighth General Assembly
Ministerial Round Table 2
RESOURCE MOBILIZATION, AGRICULTURAL SUBSIDIES, MARKET ACCESS,
AMONG ISSUES RAISED IN DEVELOPMENT FINANCING ROUND TABLE
Recognizing that development would not be engendered by a single event, the participants in the second of eight ministerial round tables, held within the context of the High-level Dialogue on Financing for Development, centred their discussion on the need to view the follow-up to the Monterrey Consensus as a sustained, long-term process.
The discussion, whose theme was “The regional dimensions of the implementation of the results of the International Conference on Financing for Development”, and which was chaired by Samuel Zbogar, Secretary of State of Slovenia, and K. Y. Amoako, Executive-Secretary of the Economic Commission for Africa, was heavily influenced by the setback experienced at Cancun. Speakers focused on the need to redress the international trading system, particularly regarding agricultural subsidies; to increase official development assistance and foreign direct investment; to mobilize internal resources in developing countries; and to foster regional trade infrastructures.
Although awareness had been raised worldwide, following Cancun, on the problems posed by the retention of agricultural subsidies in developed countries, concrete progress on the issue had yet to be made. As the representative of Uganda pointed out, the assistance extended to developing countries by industrialized States was offset by the inequalities that dominated their access to world markets.
Jeffrey Katz of the World Bank reiterated that paradox in drawing attention to the inconsistency in the amount spent on agricultural subsidies compared to official development assistance (ODA), leading to a lack of coherence in the development debate.
The time had come, declared the representative of the Dominican Republic for developed countries, to finally meet the commitments they had undertaken, vis-à-vis allocating 0.7 per cent of their gross national product (GNP) to ODA, and for developing countries to develop climates of good governance that promoted private investment. That point was taken up by the rest of the participants, who agreed that increased ODA flows, unhampered by excessive conditionalities, were needed to fund growth and development in developing countries.
Additionally, there was general agreement on the need to increase external investment in developing countries, particularly regarding infrastructural capacity-building.
One pertinent example was elaborated by Uganda’s representative, who explained that his country, a producer of pineapples, lacked the infrastructure to transport the raw product to world markets in a sufficiently rapid manner. Foreign direct investment was needed to promote the processing of pineapples in his country.
At the same time, there was also a need to mobilize the internal resources of developing countries for their own development, said Tom Palley of the Open Society Institute. External financing alone tended to lead to foreign currency-denominated debt and had proved volatile and likely to exit unpredictably. Moreover, at the end of the day, the quantity of investment available was small in comparison to the needs of developing countries.
Underlining that point was Hani Findakly, Vice-Chairman of the Clinton Group, who said developing countries had much to learn from the small business experience of the United States. Small businesses did not require large amounts of start-up capital and negotiation. They diversified risk and led to increased sense of ownership. Moreover, there was no shortage of capital worldwide for that type of venture. It was as available to the local markets of developing countries as to those of industrialized countries.
Among the other issues touched upon during the discussion were the need for intra-regional development of trade and infrastructure, and the need for further debt relief. The Heavily Indebted Poor Countries (HIPC) Debt Initiative, admitted Mr. Katz, had made good progress in reducing claims on scarce resources for debt payments. However, there remained issues of post-completion point sustainability. Moreover, there were debt problems in non-HIPC States that needed to be addressed as well.
Also, Wahu Kaara, Director of the Kenya Debt Relief Network, said that it was essential to coordinate efforts to help developing countries regain the wealth that had been stolen from them. Similarly, Mr. Palley acknowledged the spectre of the “natural resource curse”, and said much more must be done to develop stringent guidelines that prevented purloined resources from being stashed in other countries. Those guidelines must also cover the operations of financial markets.
The World Bank, said Mr. Palley, was well placed to play an important role in developing such guidelines, given its leverage as an investor in and lender to developing countries. Alternately, the United Nations was uniquely situated to coordinate the development and monitor respect of such guidelines, given its experience regarding money-laundering and the financing of terrorism.
In addition, Ms. Kaara emphasized the need for all peoples to participate in their own development. In the current system, the invisible hand of finance capital continued to move across the world, determining its shape with international trade agreements that hindered already-agreed aspects of economic and social development, whose protection had been secured within the United Nations framework.
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