Statement
Statement by the Secretary-General of UNCTAD
Opening of the Committee of the Whole at UNCTAD XII
Accra, 21 April 2008
Mr. President,
Honourable Ministers,
Excellencies,
Ladies and Gentlemen,
It is a great pleasure for me to address this opening session of the Committee of the Whole. This forum is the heart of UNCTAD XII, and it is here that we must find consensus on the state of the world´s economy, its challenges and opportunities for development, and the appropriate policies to address them. The people of the world are looking to this conference to send an important signal and policy response to the emerging challenges and opportunities of globalization. Let us not disappoint them.
Ladies and Gentlemen,
We are convening here today in Accra, Ghana, after six months of long and arduous negotiations in Geneva. You have made impressive progress towards an outcome text, yet a number of important areas remain to be resolved. Time is of the essence. We must do everything within our means to reach full agreement on the text.
Indeed, it is hard to imagine a better place to build a collective response to the opportunities and challenges of globalization than Ghana, our generous host country. As you can see firsthand, here is a country that has been able to take advantage of many opportunities of globalization. Its trade has doubled in six years, amounting to about $10 billion in 2006. Ghana has also received increasing amounts of FDI, as a quick look around us at the surging construction under way here in the capital shows. This excellent performance is also benefiting the poorest: Ghana´s poverty rate fell to 28.5% in 2005, from about 52% in 1991. And the government is investing significantly in trade-related infrastructure, laying the foundations for future growth. Of course, there are still many challenges. But Ghana has shown that with the right policies, institutions, and favourable external conditions, globalization can be harnessed for development.
Unfortunately, however, many countries in the developing world can not boast similar levels of success. The most glaring example of globalization´s failure to deliver on its promises is Africa. Sub-Saharan Africa as a whole accounts for a mere 2% of world trade, and 0.8% of FDI, at a time when global flows now exceed $1.3 trillion. And that FDI share was even smaller until quite recently, when it rose as the result of greater investment in extractive industries. Given these figures, it is not surprising that Africa is lagging behind on the MDGs, and that its countries have the highest shares of poverty worldwide. If we are to address this development emergency and achieve the MDGs, we need to replicate success stories like Ghana in other developing countries. The Accra Accord can be a starting point for a renewed focus of the United Nations and the development community more broadly on making globalization deliver for the poorest.
Your strong resolve and commitment to this goal is needed all the more in the face of the global food crisis. As average food prices have risen sharply in the past few months, many people are being pushed into poverty, and from poverty to starvation. The images of food riots in at least 10 countries worldwide serve as a stark reminder of our failure so far to make globalization deliver for the poorest. Indeed, the current crisis threatens to undo seven years of progress in poverty reduction. We must not allow this to happen.
What is clearly needed in the short term is emergency aid to those most affected. For a sustainable solution, we must also begin to address some of the deeper root causes of the crisis. And many of these causes derive from the lack of productive capacity in agriculture in many of the poorest countries, which is in turn triggered by major distortions in the trading system. UNCTAD has highlighted the need to focus more assistance on supporting productive capacity in the agricultural sector. Africa, for example, was a net food exporter in 1988. In the 20 years since, however, many African LDCs have become net food importers. Years of agricultural protectionism in advanced markets, falling world prices, and neglect by investors and donors have brought about declining agricultural productivity in many developing countries, particularly the LDCs.
We must therefore start taking long-overdue measures to strengthen agricultural sectors in developing countries, so as to raise productivity, food supplies and incomes. This means, for example, a significant increase in aid to agriculture. UNCTAD´s LDC report this year shows that ODA spent on good governance in these countries between 2003 and 2005 exceeded $1.3 billion. In contrast, the amount directed at agricultural research was only $13 million. But intensive research and development is needed on technological solutions to help bring about a "green revolution" in developing countries.
Recent experience has shown that high prices of energy are intertwined with high food prices. High energy prices have made food production more expensive by raising the cost of transport and other inputs to agricultural production, such as fertilizers. Indeed, it has been estimated that the higher import costs of Africa developing countries due to higher oil prices are undoing any gains from debt relief. We must thus find sustainable solutions to the energy needs of poor countries without compromising their ability to feed their population.
Ladies and Gentlemen,
The timing of UNCTAD XII - coming as it does in a period of great economic uncertainty - adds to its significance. The sub-prime mortgage crisis in the US has created protracted turmoil in several advanced financial markets, leading to a credit crunch that is making a slowdown in some of the advanced economies almost inevitable - and this will ultimately affect growth in the South. UNCTAD has long argued the need for financial sector reforms at both the national and international levels, including the design of more appropriate international rules and regulations and more effective international financial institutions.
In the face of all these urgent issues, let us not forget the long-term challenge of climate change, which threatens to cast a further shadow over the development prospects of the South. Developing countries have contributed least to climate change, but paradoxically they are likely to be hit the hardest by its consequences. We have to identify measures that can effectively address climate change without becoming obstacles to development. Win-win solutions can be found, where carbon-neutral production is a source of comparative advantage for the South. We should also ensure that measures like the Clean Development Mechanism become a source of greater investment in marginalized regions.
All these challenges call for fresh thinking and fresh approaches. This conference can send a signal of resolve, and should mandate UNCTAD to mobilize its full intellectual and operational resources in addressing these issues.
Excellencies,
Ladies and Gentlemen,
Globalization does not only pose challenges. The recent expansion has transformed the world economy in a way that also offers unprecedented opportunities for growth and development. The emergence of the South as a new centre of gravity in the world economy is one such transformation.
Between 1996 and 2006 alone, the share of developing countries in world trade grew from 29% to 37%. Some of this is accounted for by greater exchange with the North: In the same period, exports from developed countries to the South increased by about 70%, while their imports from the South rose by a staggering 161%. However, the emergence of the South has also meant an increase in South-South trade, which has almost quadrupled over the past decade. Today, South-South trade accounts for over $2 trillion - 17% of world trade as a whole - and almost half of developing countries´ trade. This picture is stunningly different from that of just a decade ago, not to mention from the time of UNCTAD´s creation.
A similar picture is emerging in the world of investment and finance. UNCTAD data show that developing countries´ share of all inward foreign direct investment doubled between 1990 and 2006, from 18% to 36%. Perhaps even more surprising, their share of outward investment tripled, from 5% to 15%. Similarly, for the first time in decades, developing countries as a group have become exporters of capital, and have financed some of the current account deficits of developed countries.
We must now work to understand these changes and devise new development strategies that take full advantage of the new realities. For example, so far the rise in South-South trade has been a largely Asian phenomenon. A full 70% of all South-South trade is generated by East and South-East Asia. African developing economies today trade more with Asian developing countries than with each other. Yet the potential for fruitful exchanges remains significant. Just consider the emerging trade between transition economies and the South: Between 2000 and 2006, exports from developing countries to transition economies grew by 382%, while imports increased by 123%.
This increased trade and investment exchange multiplies the gains to be had from South-South cooperation, returning this subject to the forefront of the international agenda. Regional trade agreements among developing countries, for example, can undoubtedly increase trade flows, and recent UNCTAD research has shown that South-South trade agreements can provide greater potential for export upgrading and development than North-South agreements. In this context, I very much hope to see progress soon in the GSTP negotiations, as they can be an important tool in promoting interregional South-South trade.
The new direction of trade must also lead us to rethink existing institutional set-ups and to support targeted trade-related infrastructure, including trade finance institutions; trade infrastructure, such as roads and rail connections; and joint projects in the areas of R&D and public utilities, such as water. Regional cooperation in the area of finance should also be envisaged.
In addition, the new trend in South-South trade requires us to adjust our thinking about development and to design innovative policy responses. Strengthening economic cooperation among developing countries must be a key priority in this context.
More broadly, greater South-South trade strengthens the case for aid for trade. It is now widely acknowledged that there is a crucial lack of transport, telecommunications and energy infrastructure in the least developed countries, which significantly inhibits their capacity to trade and take advantage of the opportunities offered by globalization. The length of roads per square kilometre in the LDCs, for example, is about half that of other developing countries. Only 22% of the roads in LDCs are paved, while the figures for developing and developed countries are 43% and 88%, respectively. Currently, an estimated 20% of the LDCs´ population has access to electricity, and even that limited access is often highly unreliable.
The recent commodity boom is another opportunity driven by the second generation of globalization. The current price boom has yielded significant windfall profits for many of the 92 commodity-dependent economies. They must use these gains to invest in other, more sustainable sources of broad-based growth. Linkages should also be strengthened with the rest of the economy, and diversification encouraged.
In short, we are facing huge challenges, but also unprecedented opportunities today, and must seize the moment to address them all.
Ladies and Gentlemen,
UNCTAD stands ready to play its part in meeting these challenges. In this context I am delighted that you have chosen to make the strengthening of UNCTAD´s development role and impact a subtheme of this conference. I am personally committed to delivering results in this area, building on the recommendations of the Eminent Persons Panel I set up shortly after taking office. Given the magnitude of the task before us, your deliberations must allow this organization to fully exploit its potential in the new economic environment.
The newly formed CEB interagency cluster on trade and productive sectors will play an important role in improving coordination with other agencies and using their expertise to devise UN-wide responses.
Drawing on the three integrated pillars of its work - intergovernmental consensus-building, research and analysis, and technical cooperation - UNCTAD is in an exceptionally strong position to examine some of the multidimensional challenges now arising, such as fostering South-South cooperation and facing the trade and development implications of climate change and food security. Indeed, it is hard to imagine how UNCTAD can stay relevant to today´s debates, not to mention provide research that is "ahead of the curve", if it does not discuss these issues.
In order to play our full role in meeting these challenges, we need you to entrust us with a substantive work programme. In the face of the global food crisis, rising oil prices, financial turbulence, and a continuing development emergency, I am confident you will have the wisdom to reinforce the role of UNCTAD and send a strong message of resolve to the world.
Thank you very much.