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Unity means strength
The developing world is better placed economically than at any time since the 1970s, according to the United Nations Conference of Trade and Development (UNCTAD). Regional alliances could improve the outlook even more.
The developing world is better placed economically than at any time since the 1970s, according to the United Nations Conference of Trade and Development (UNCTAD). Regional alliances could improve the outlook even more.
Per-capita GDP across Africa, Asia and Latin America increased by a dynamic 30 % in the past four years. In the seven richest industrialised countries (G7), the respective figures grew by only 10 %. According to UNCTAD’s Trade and Development Report 2007 (TDR), Africa and Latin America registered real per-capita growth for the first time in two decades. East and South Asia stayed on their steep economic growth path, and, as the TDR elaborates, per-capita income has doubled there since the beginning of the 1990s.
Nevertheless, there is still a yawning gap between rich and poor countries. Average income in developed countries is 18 times higher than in developing countries. In 1980, the ratio was 23:1. This slight narrowing of the gap is due entirely to Asian developments. According to UNCTAD, the gulf between the rich countries and the other developing regions has actually widened.
A potential threat to developing countries
The developing countries have improved their world-market performance in recent years. Their export revenues more than doubled since 1998, while those of the G7 grew by only 50 %. Moreover, UNCTAD reports that the developing world’s share in global trade has risen from 29 % to 37 % since the mid-1990s. However, the TDR sees a potential threat to this good performance in the mounting volatility of global foreign-exchange markets. Exchange rates – and thus the relative competitive position of national economies – are increasingly manipulated by both government action and speculative capital movements, which are orchestrated by institutional investors such as hedge funds. Because exchange-rate interventions ultimately affect trade as much as import duties or export subsidies do, UNCTAD calls for an international code of conduct and a mechanism for controlling exchange-rate policies. Any step in that direction, however, would need approval by the developed countries – and UNCTAD sees no prospect of that happening at present.
The TDR therefore advises poor countries to step up regional cooperation – both on the financial front and in trade and industry. To further boost presently growing volumes of intraregional trade in many developing parts of the world, UNCTAD recommends improving physical infrastructure (roads, ports, communications) and simplifying trade-relevant processes such as customs clearance. Especially many African countries are better connected, via air and sea links, to advanced nations in far-away continents than to their immediate neighbours. UNCTAD states: “Rather than focusing exclusively on the legal aspects of trade policies in regional cooperation, additional efforts to tackle these other aspects of intraregional economic relations may be as important as, if not more than, further trade liberalisation.”
However, UNCTAD views with skepticism the increase in free trade agreements (FTAs) between developed and developing countries. The number of such FTAs has nearly doubled in the last seven years, from 86 to 159. The report admits that weaker partners can benefit from such agreements, as exemplified by the growth of Mexican exports to the US under the North American Free Trade Agreement (NAFTA). However, the authors warn that such benefits are not guaranteed, whereas FTAs invariably result in governments’ loss of policy space. Evidently thinking of the Economic Partnership Agreements (EPA) the EU wants to conclude with the ACP countries (Asia, Caribbean, Pacific) by the end of the year, UNCTAD’s economists complain that bilateral agreements have presented an impediment to regional integration in poor parts of the world, and that they are used by rich countries to achieve goals for which they did not find consensus in the multilateral arena: “It is therefore in the interest of developing countries that the multilateral trade negotiations advance, but with a stronger development dimension built into international trade rules.” (ell)
Link: »» http://www.unctad.org
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D+C, 2007/10, Monitor, Page 359
