Making Globalisation Work for LDCs
Ministerial Conference of the Least Developed Countries
9 July 2007
Mr. Deputy Prime Minister
Ladies and gentlemen
Let me join the Chairman in welcoming you to the Ministerial Conference of the Least Developed Countries “Making Globalisation Work for LDCs and also express my deep appreciation to the Government and the people of Turkey, as well as the city of Istanbul, for their warm hospitality.
Holding this conference in Istanbul, one of the earliest cosmopolitan cities of the world, is truly symbolic. Located on the crossroads of commercial, economic, political and cultural routes, this city has for centuries been bridging the East with the West, and the South with the North, promoting dialogue and understanding among nations. It served as an inspiration for poets and artists, scholars and musicians, merchants and politicians. It can similarly serve as an inspiration and provide useful historical lessons for this Conference, which seeks to address the all important question of the full and beneficial integration into the world economy of the 800 million citizens of the LDCs who are not benefiting from globalisation.
As a concept, globalisation means a more interdependent world, where the events in one corner echo in others. It also means a more integrated world with shared values, interests, concerns, responsibilities and greater degree of solidarity among its peoples. Paradoxically, as some countries get more integrated and prosperous, others get more marginalised and isolated. Worse, those privileged enough to be within the high walls of the global village tend to forget about those left outside.
This is the sad reality for the Least Developed Countries. While globalisation has, over the last 30 years, expanded trade, increased economic output and creating unparalleled wealth in global terms, the Least Developed Countries have failed to reap its benefits. Accounting for 12 percent of the world’s population, they receive less than two percent of Foreign Direct Investment flows. Furthermore, this minute amount of FDI is highly concentrated in oil and mineral rich LDCs. The share of LDCs in world merchandise exports dropped from 3 percent to 0.7 percent between the 1950s and the present decade. Similarly, between the 1970s and the 1990s, their share in agricultural exports dropped from 3.3 percent to 1.5 percent. In the last 30 years, the number of people in extreme poverty in Africa, home to 34 of the 50 LDCs, has doubled. These setbacks are the more striking when one considers the international initiatives that have been undertaken to increase access of LDCs to international markets, promote economic growth and reduce poverty.
Globalisation has failed to benefit the LDCs for many reasons. Internally, the LDCs continue to face daunting structural constrains inherited from the colonial past. Extreme poverty, insufficient financial resources, inadequate physical and social infrastructure, lack of skilled human resources and weak institutional capacities, not to mention the challenge of HIV/AIDS, malaria and tuberculosis, inhibit their growth and jeopardise their sustainable development.
Externally, globalisation has been largely driven by the industrial economies’ need for market and investment opportunities abroad, engendered by the modern technological revolution. As a result, the rules and structures of global governance that have emerged to manage this process do not reflect the special needs and economic interests of the LDCs, late-comers to the process of globalisation. Neither the Uruguay Round, which was signed in 1994, nor the wavering Doha Round, which had been billed as a development round, has so far succeeded in addressing the special needs of the Least Developed Countries. While the “Development Package” agreed at the WTO Ministerial Conference in Hong Kong in December 2005 was a positive step, it fell far short of the target of duty-free and quota-free market access for all the products from all LDCs set by the Brussels Programme of Action. Even without considering the non-tariff barriers, there are genuine concerns that the loopholes in the Doha “Development Package” could be exploited by the industrial countries to keep out products in which LDCs are competitive. The lack of any significant progress in elimination of agricultural subsidies in the industrial countries and in the liberalisation of the international labour market, which would produce quick gains to the LDCs, are clear indications of just how much the global economic regime remains skewed against the LDCs.
If the force of globalisation continues on the path of the last 30 years, it will completely sweep away the LDCs. It is therefore the moral and political imperative of the international community to ensure that the LDCs not only benefit from the opportunities created by a more integrated world economy, but that they also play their rightful role in shaping its nature. Globalisation should address, not accentuate the world’s challenges. We are not short of ideas on what needs to be done to achieve this goal. Neither is the world short of the resources and technology needed to make globalisation beneficial to all. In the Brussels Programme, the LDCs and their development partners have agreed on goals and targets and identified polices and measures in pursuit of those goals. What is lacking is the political action to translate these commitments into reality.
In this connection, I commend the actions announced this morning by the Government of Turkey to enhance its support to the development efforts of the Least Developed Countries. I encourage the Government of Turkey and other development partners to continue taking tangible actions in support of the LDCs.
Making globalisation work for LDCs calls for meeting global commitments on development aid, debt relief, trade and trade related capacity building and reforming the multilateral trading and financial systems by placing at their centre the needs of the poorest nations. This should be a major economic and political undertaking for governments, multilateral institutions, the private sector and civic institutions if we want to achieve a truly global community.