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Potential benefits from trade swamp aid and debt burden
A study by the Tinbergen Institute at the University of Rotterdam estimates that developing countries would gain $155 billion a year from further trade liberalization. (See www.tinbergen.nl) That is over three times the $43 billion they get annually in overseas aid. OECD agricultural subsidies in dollar terms are two-thirds of Africa's total GDP. NGOs estimate that the total debt burden of developing countries is $410 billion and that it costs US$ 25 billion a year to service that debt. Eliminating trade barriers, especially in trade in agriculture, and clothing and textiles,
are key objectives for the WTO. They would reduce dependence of developing countries on aid, promote growth and remove debt asan economic problem.
Poor nations also need to remove barriers to prosper
Poor nations can benefit by reducing their trade barriers, even without reduction by rich nations, is the message in a recent article in The Economist by Jagdish Bhagwati from Columbia University. Bhagwati remarks that "even if the doors to the markets of rich countries were fully open to imports, exports from poor countries would have to get past their own doors", finding that, too often, protection creates biases against exports that hinder economic performance. The article also suggests a strategy for change, while criticising past efforts, which were based on granting trade preferences, as doing little for poor countries.
The article dispels common misconceptions, including: that poor countries face trade barriers higher than their own; that poor countries have been forced to reduce trade barriers while rich countries have not; and that it is hypocritical to ask poor countries to reduce their trade barriers when rich countries have their own. The article evidences average tariff rates of 13 per cent in poor countries, compared with only 3 per cent in rich countries. In addition, it shows that 'peak' tariffs are estimated to apply to only one-third of developing countries' exports. Moreover, that trade barriers of the poor countries against one another are more significant restraints on their own development than those imposed by the rich countries. The full article is available from The Economist Website. (Go to: www.economist.com)
WSSD prepcom reaffirms Rio Principles
The current draft paper for the upcoming World Summit on Sustainable Development (WSSD) basically reaffirms the principles outlined in the Rio Declaration with few substantial new agreements. It contains ambitious objectives for the eradication of poverty, changing unsustainable patterns of consumption and production, and protecting and managing the resource base, and outlines the steps that have already been taken towards meeting these objectives. In this regard, the paper reaffirms commitments in the Monterrey Consensus and implements outcomes of the Doha Ministerial Conference. The paper also contains important new initiatives for building sustainable development at the national level, including information-sharing, capacity-building and partnerships between developed and developing countries, together with resource transfers (such as financing and technology).
The conditions for sustainable development highlighted in the paper include sound environmental, social and economic policies at the domestic level, as well as democratic institutions responsive to the people, the rule of law, anti-corruption measures, gender equality and enabling an environment for investment. In addition, the need for international co-operation, particularly in the areas of finance, technology transfer, debt and trade, and full and effective participation of developing countries in global decision-making.
The Fourth Summit Preparatory Committee for the World Summit on Sustainable Development was held from 27 May to 7 June 2002 in Bali, Indonesia. More information is available from the Summit Website. Go to: http://www.johannesburgsummit.org
The Revised Chairman's paper is also available from the Summit Website at www.johannesburgsummit.org
International Conference on Financing for Development reiterates that economic fundamentals are a necessary precondition for development
The International Conference on Financing for Development was held 18 to 22 March 2002 in Monterrey, Mexico. A central theme to emerge from the conference was the reiteration of the importance of economic conditions for development---such as sound macroeconomic policies and institutions---and as a necessary precondition for the mobilisation of domestic and international financial resources. In this respect the conference also noted the contribution that foreign direct investment makes in financing sustained economic growth in the long-term.
As a complement to other sources of finance, the conference also called for an increase in official development assistance (ODA) to address the current shortfalls in finances available to meet development objectives, including targets for poverty reduction and improvements in living standards contained in the Millennium Declaration (see www.un.org). Equal importantly, the conference also considered the effectiveness of assistance. A number of areas were highlighted for improvement including amongst other things the need for greater flexibility in the design and delivery of assistance, enhanced absorptive capacity and financial management of recipient countries and improved targeting of the poor.
However, it is difficult to determine if, and when, the absorptive capacity of countries will be great enough to allow an effective doubling or tripling of ODA to occur (as implied in the Millennium Declaration) without significant decreases in the effectiveness of assistance. This has important implications for the type and level of assistance provided to countries which should form part of current discussions surrounding raising levels of official development assistance.
For a discussion of issues regarding aid effectiveness see the IMF staff paper Challenges in Expanding Development Assistance by Peter Heller and Sanjeev Gupta released in March 2002 (available at www.imf.org) and also the report 'Development assistance---what works? World Bank reviews progress over the last 50 years'---immediately below on this page.
The main themes addressed at the conference were:
Confronting the challenges of Financing for Development: A Global Response
Mobilizing domestic financial resources
Mobilizing international resources for development: FDI and other private flows
International trade as an engine for development
Increasing international financial and technical cooperation
External debt
Addressing systemic issues
Staying engaged
For the full text of the Monterrey Consensus go to: www.un.org
Development assistance---what works?
World Bank reviews progress over the last 50 years
In recent review of effect of 50 years of development assistance, the World Bank has found that there have been significant reductions in poverty and improvements in well-being in developing countries, and that development assistance can be an important catalyst for development.
While many would not dispute the findings of improvements in living standards in many developing countries, there is a currently debate over the extent to which improvements can be attributed to development assistance. World Bank assistance may arguably be more effective than other forms of assistance such as Bilateral flows, which are often driven by political agendas, however, the subjective nature of project evaluations and the vast array of projects, organizations and countries involved in development assistance mean that this is a debate which will not easily be resolved.
However, much can be taken from the more general findings of the report that there are a number of conditions in recipient countries necessary for the effectiveness of large-scale financial aid, including reasonably good policies, institutions, governance and commitment to further reform. This finding has important implications for the type and level of assistance provided to countries and should form part of current discussions surrounding raising levels of official development assistance.
The report, The Role and Effectiveness of Development Assistance: Lessons from World Bank Experience, was released by the World Bank in March 2002. For details of the report go to www.worldbank.org.
The report highlighted several improvements in the standard of living in developing countries:
Over the past 40 years, life expectancy at birth in developing countries has increased by 20 years---about as much as was achieved in all human history prior to the middle of the 20th Century;
Over the past 30 years, adult literacy in the developing world has been cut nearly in half, from 47 per cent to 25 per cent;
Over the past 20 years, the number of people living on less than $1 a day has fallen by 200 million, even as the world's population grew by 1.6 billion; and
Driving much of this progress has been an acceleration of growth rates in the developing world---more than doubling the income of the average person living in developing countries over the past 35 years.
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#6 Refugees? War? What about a trade issue?
Joining any old issue to their protests against the WTO shows that the protesters simply don't care [Click here]
#5 WTO Sydney - the real issues: Agriculture
Action in the Doha WTO negotiations can radically raise standards in developing countries by allowing them benefits of open markets [Click here]
#4 The environment debate in the WTO coercion or co-operation?
How the WTO deals with the environment is the most controversial issue in the Doha negotiations [Click here]
#3 WTO - Bali, Nike and what matters
Why do two or three thousand people want to protest violently against the WTO in Sydney next week? [Click here]
#2 Sydney WTO - Backgrounder
Most complaints about the WTO are baseless. In our view the facts speak for themselves [Click here]
#1 Why the WTO Matters to Developing Countries
The WTO matters to developing countries; it is time to refute the myths that it does not [Click here]
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Support the WTO Sydney Ministerial Conference on 14 and 15 November 2002 in Sydney Australia
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