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Sunday, 12 February 2012

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UNCTAD summit to focus on development-centred globalisation

Geneva - "A true break" with the prevailing thinking behind the global economic system over the past 30-years and a shift to a reformed system of "development-centred globalisation" that allows more stable and inclusive economic progress is needed as the world recovers from recession, the Secretary-General of UNCTAD says in a report to the Organization's upcoming quadrennial conference.

The report which was officially released and entitled Development-led globalisation: Towards sustainable and inclusive development paths, contends that "neither muddling through nor a return to business as usual will get things back on track".

It urges decisive international and national steps to establish a "global new deal."

The report is a substantive contribution to the UNCTAD XIII quadrennial conference to be held in Doha, Qatar, from April 21 to 26. The theme of the conference is "Development-centred globalisation". The session will be attended by Heads of State, other high-level government officials, and representatives of civil society, the business community and academia.

At the Conference, the organisation's 194 member States will discuss the current state of the world economy and the challenges it poses for development, as well as policy solutions. They will also set UNCTAD's work program for the next four years. Official negotiations on the outcome text of UNCTAD XIII began recently.

"Finance needs to get back to the business of providing security to people's savings and mobilising resources for productive investment," Secretary-General Supachai Panitchpakdi writes. "Reforms are also needed to replace unruly and procyclical capital flows with predictable and long-term development finance, to regain stability in currency markets and to support expansionary macroeconomic adjustments. Surveillance and regulation will need to be strengthened at all levels."

The Secretary-General and UNCTAD economists have contended for several years that the current global economic and financial system, even during boom periods, has not yielded benefits for all, and that income inequality has been rising and financial imbalances have been accumulating. These have led to a global economy that is prone to booms and busts.

"The term finance-driven globalisation characterises the dominant pattern of international economic relations during the past three decades," the report says. "This is intended to convey the idea that financial deregulation, concerted moves to open up the capital account and rapidly rising international capital flows have been the main forces shaping global economic integration.... Financial markets and institutions have become the masters rather than the servants of the real economy, distorting trade and investment, heightening levels of inequality, and posing a systemic threat to economic stability."

The Secretary-General contends that instead, "Financial and other resources should be channelled towards the right kinds of productive activities. Industrial development remains a priority for many developing countries...but a wider sectoral approach, including a focus on the primary sector in many least developed countries, is needed to ensure that measures to diversify economic activity are consistent with job creation, the security of food and energy supplies, and effective responses to climate challenge".

An era of more active involvement is needed, he adds, that will "allow governments - particularly, but not only in developing countries - to correct market failures, promote collaboration among enterprises in areas of long-term investment, manage integration with the global economy and ensure that the rewards from doing so are evenly shared".

 

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