|Department of Public Information • News and Media Division • New York|
Conference on World Financial
and Economic Crisis
Round Table III (PM)
round table panellists stress need for multifaceted approach in designing
response to multidimensional global economic downturn
Experts Highlight Importance of Addressing Human Rights, Decent Jobs, Trade
As it wrestled to design a response to the multidimensional and unprecedented global economic downturn, a panel of United Nations and financial experts from several intergovernmental organizations stressed today that, in order to be successful, the world community would have to employ a multifaceted approach addressing employment, trade, investment and development.
Opening the third of four round tables being held as part of the three-day Conference on the World Financial and Economic Crisis and its Impact on Development, Co-Chair Diego Borja, Ecuador’s Minister for Coordination of Economic Policy, highlighted trade and development as two channels through which the economic contagion had passed from the developed world to the developing countries. Serious repercussions were already visible as declining trade pushed up unemployment and growing financing shortages prevented infrastructure expansion. Average per capita gross domestic product in the developing world was expected to drop precipitously from over 4 per cent to zero.
To tackle the theme of the discussion -- “Present and future impacts of the crisis on, inter alia, employment, trade, investment and development, including the achievement of the internationally agreed development goals and the Millennium Development Goals” -- he urged participants to envision the still-unseen impacts of the crisis, particularly as they might unfold across income groups and regions. It was also pertinent to ask whether the Millennium Development Goals, which read more than ever like a list of urgent development needs, would still be feasible and affordable. The question of how fiscal stimulus packages would allow for economic growth in the developing world was also critical.
In addition to Co-Chair Bert Koenders, Minister for Development of the Netherlands, the panel featured: Navanethem Pillay, United Nations High Commissioner for Human Rights; Sha Zukang, Under-Secretary-General for Economic and Social Affairs; Abdoulie Janneh, Executive Secretary of the Economic Commission for Africa (UNECA); Valentine Rugwabiza, Deputy Director-General of the World Trade Organization; Stephen Pursey, Director, Policy Integration Department, International Labour Organization (ILO); and François Houtart, Emeritus Professor, Catholic University of Louvain (Belgium) and founder of the Tricontinental Centre (New Louvain).
Ms. Pillay said the rapid deterioration of livelihoods among both rural and urban poor families was not only a crisis of development but one of human rights. Coupled with food and fuel price shocks, rising unemployment presented fundamental challenges to social welfare. Already at the margins of stable employment, women, children and migrant workers were losing jobs at higher rates, disproportionately jeopardizing their economic and social rights. In such a climate, they were forced to accept increasingly marginal and dangerous employment. Women often ate last and least, while girl children were the first to be withdrawn from school.
Underlining the value that a human rights perspective could bring to national and international responses by bringing to light discrimination based on gender, ethnicity and nationality, she said States that did not address the current crisis by levelling the playing field were unjust. A human rights approach envisaged the participation of the most affected people. It also enhanced accountability, transparency and responsibility within development mechanisms. As such, all development partners should promote human rights, equity and social inclusion while integrating human rights into their programmes. Moreover, the ongoing reflection on the causes of the economic crisis should be seen as an opportunity to rectify the system that had triggered the downturn.
Expanding on those triggers, Under-Secretary-General Sha said the crisis was the result of regulatory failure in developed countries as well as a breakdown in the international financial architecture. Regrettably, developing countries would continue to be battered by, among other things, high costs of borrowing, a sharp contraction in global trade, declining remittances and falling official development assistance. Average per capita growth was expected to dwindle to zero in the developing countries, with the sharpest contractions in sub-Saharan Africa and South Asia, where millions of people had already been pushed into poverty. Shrinking governmental fiscal capacity had reduced investment in infrastructure and eroded capacity for climate change mitigation and adaptation.
The only solution to that dire situation was to respond in a way that put the world on a more sustainable growth path, he said. A coherent approach was required, and immediate actions should include more stimulus plans designed to work for all. Unfortunately, more than 80 per cent of the current stimulus programmes were targeted at developed countries. An extra $500 billion would be needed for developing countries in 2009 and 2010. There was also a need for a temporary moratorium for countries in severe financial distress, to restore access to trade financing and to meet aid and other commitments. Limits to migration and restrictions on migrant workers should be avoided. Even if indications of a nascent recovery proved true, risk remained very high. “The challenges we face are real, they are serious and they are interconnected, and they will not be overcome in a short amount of time.”
Mr. Janneh, outlining the damage that the global recession had inflicted in Africa, said that any initial sense that its effects would be limited by the continent’s relative isolation had proved utterly false. Broad damage was now visible across multiple sectors, and economic growth rates were forecast to fall from 6 per cent to 2 per cent. Specifically, the crisis was negatively affecting African trade, with export levels having retreated significantly, particularly in such commodities as oil and diamonds. Unless improvements were seen soon, African countries would be tempted to adopt protectionist policies.
The crisis had changed the way in which the world thought about development, he said, adding that many experts, recognizing that developing countries needed counter-cyclical policies, had declared the Washington Consensus dead. For their part, African countries had taken steps to mitigate the crisis, while also maintaining their commitment to macroeconomic stability. Like all developing countries, however, they would continue to need the international community’s support. To that end, proposals made at the London Group of Twenty (G-20) meeting were promising, but the remaining challenge was implementing those commitments in such a way that they reached their intended beneficiaries.
Ms. Rugwabiza, expanding on the trade dimension, emphasized its predicament as a victim of the economic crisis. Forecasts put the contraction in trade at 10 per cent and suggested that the beginning of a recovery was not yet in sight. That would have severe consequences for developing countries, which depended on trade to a higher degree than did developed nations, and would continue to do so. Those circumstances clearly illustrated the interconnected nature of economies as well as the fact that globalization was much more advanced than previously thought. They also suggested a need for more regulation in the multilateral rules governing trade.
As the world community weighed possible ways for trade to reprise its role as a driver of economic growth, national stimulus plans could do some good, but they were not enough, she said, emphasizing that stability and confidence must also be re-injected into the global economy. One way to do that was by establishing relevant global trade rules and particularly by concluding the Doha Round of trade negotiations. That would require leadership, and the urgency was obvious: trade was falling for the first time in more than 65 years. Further financing would also be needed, and, while the G-20’s decision to inject billions into the global economy was a step in the right direction, other obligations must be met. That was especially true since those commitments were, in some cases, the only outlay for infrastructure development in developing countries.
Mr. Pursey, noting the acute social implications of prolonged distress in labour markets, highlighted the need to incorporate a decent work framework into recovery schemes. To that end, ILO had outlined five different scenarios for job growth depending on growth in output. They showed that while the possible scale and duration of global labour market distress could vary, job losses were certain -– making it essential to increase social protection.
He stressed that the creation of decent jobs should not just be a hopeful outcome, but an essential ingredient for global economic recovery. Using policies that had worked in the past and applying them to the current challenges, ILO was calling for a Global Jobs Pact that would accelerate employment creation, recover jobs and sustain enterprise. It would also invest in employment-intensive infrastructure, including green jobs; prepare women and men for the new skills that would be needed in a future, recovered world economy; and establish a floor for social protection.
Mr. Houtart said it was no coincidence that the economic crisis had converged with others, such as the food and fuel crises, noting that the uncontrolled development of capital had aggravated financial imbalances. The food prices shocks of 2008 suggested the dangers of commodifying foodstuffs, while the energy crisis had roots in speculative practices.
Just as a new set of rules had been created by the New Deal following the Great Depression, he said, so the Commission of Experts appointed by the President of the General Assembly had proposed measures to allow the financial and monetary system to function anew. But the question should be asked: would they would be applied with the same logic that had led to the present situation. Indeed, would they allow the extension of monocultures and lead to a familiar, albeit greener, automobile industry? Would a restored financial system be based again on unequal growth, or would it challenge the previous iteration’s main philosophy?
Suggesting that new paradigms were needed, he said the Conference was only one early step towards establishing them. Moreover, an effective global response to the crisis was not merely a matter of being against the market or anti-trade. In order to succeed, more reality and less dogma would be required. Indeed, free trade would be excellent if all countries were equal; it could best be described today as “sharks versus sardines”, he said, adding, “We not only need regulations, but alternatives. We need another definition of growth, of prosperity and of civilization.”
The ensuing discussion touched on questions ranging from how the flexibility of the current system could be harnessed to effect change, to how to increase financing for African countries -– possibly through some forms of insurance –- to thus allow them to participate in different world markets, how the credit squeeze affected microfinance, and how to address more effectively the consequences for women, among other questions.
Some speakers underlined the tension between the past success of market-oriented growth strategies and the current catastrophe, frequently attributing it to unbridled faith in the “wisdom” of free markets. Others warned that the United Nations still lacked the political will to break with an outdated and inequitable financial system and embrace one that fostered development.
Summing up the debate, Mr. Koenders said Wall Street might be rallying, but the world was still reeling. For the first time in many years, North and South had the opportunity to work together. While they might differ on certain parts of the draft Conference outcome document, it presented a menu of immediate and critical actions upon which a significant number of countries could agree. Moving forward, employment should be a key focus of the response. Clearly no one was happy with falling trade, and the process of opening markets remained “front and centre” in the ongoing response.
Also participating in the discussion were the representatives of Indonesia, Gabon, Ethiopia, Guatemala, Côte d’Ivoire, United States, India, China, Czech Republic (on behalf of the European Union), Italy, Benin and Turkey.
The Permanent Observer Mission of the Holy See also participated.
A representative of the International Organization for Migration also spoke, as did speakers representing civil society, women and non-governmental organizations.
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