Ambitious development accords must be translated into action
environment and effective multilateralism to achieve prosperity for all
On paper, 2015 was a good year for multilateralism, with consensus being reached in several areas. Above all, United Nations member states agreed in September on the 2030 Agenda for Sustainable Development. This successor to the Millennium Development Goals (MDGs) constitutes an ambitious universal vision for transforming the world to offer dignity, prosperity and a better planet for all, closely aligned to UNCTAD’s long-standing vision.
The first universal agreement on climate change was struck at December’s climate-change meeting (COP21) in Paris. At the Third International Conference on Financing for Development (FFD) in July, the Addis Ababa Action Agenda was agreed upon: it sets out a framework on how to fill the finance gaps in development.
As we move to translate these decisions into actions, we need an equally ambitious and coherent policy framework to provide the required conducive economic environment. Multilateral cooperation is now required more than ever.
However, at a time when effective global partnerships are needed more than ever, members of multilateral institutions that once shared priorities and visions for development seem to be drifting apart.
Take for example the World Trade Organization’s (WTO) Doha Development Agenda. Its stated ambition on development has not met optimistic expectations. Some hurdles were overcome at the WTO Ministerial Conference in December. But the organization is still at risk of becoming a mere repository of rules and appellate bodies.
Plurilateral and regional arrangements can of course also boost development objectives. But their norm setting is noninclusive. It tends to exclude countries and regions that need a fair and open trading system most, such as least developed countries and other vulnerable economies.
At the Group of 20 (G20) Seoul Summit in 2010, leaders added development issues to their traditional finance agenda. Unfortunately, little has been achieved, though China’s G20 presidency in 2016 might help to address this. China’s desired emphasis on transforming growth patterns; improving the voice of developing countries in global trade and financial governance; expanding global trade and investment; and promoting inclusive and interconnected development is closely connected to the UN’s Global Goals. The G20 partners must seize this opportunity to update their visions on how to fulfil the ambitious new development agenda.
In addition to institutional challenges, the current state of the global economy is inconsistent with the enabling environment required to ensure inclusive prosperity. For example, increased smart aid for infrastructure, at the heart of the Global Goals, is a crucial element of the investment effort needed for implementation of the Global Goals. While promises of such assistance abounded at the Addis Ababa summit, little has been forthcoming since. European donors shifted attention and resources to migration pressures, potentially at the expense of a sustainable long-term financing framework for global development.
World trade is presently on track for its slowest decade of growth since the Second World War. Part of the global trade slowdown can be viewed as reflecting the success of trade as an enabler of development. As an important part of their growth strategies, trade integration – including participation in global value chains –has helped developing countries upgrade production structures and many now produce and export some of the goods and services they once imported. The related employment and income opportunities have played crucial roles in reducing poverty as set out in the MDGs.
Additional reasons for the sluggishness of world trade give less reason for optimism. The sharp decline in commodity prices has reduced export and fiscal revenue, particularly in the poorest countries. What is more, indicators pointing towards a secular slowdown in growth in developed countries further darken export prospects for developing economies. some countries have have tried to substitute export-driven growth by aiming to boost domestic consumption, production structures for many developing countries are not ready for this. Instead, trade deficits and declining income opportunities have given rise to increased debt for households and enterprises alike.
The fact that private debt rapidly translates into public debt points to the urgency in attaining firmer discipline in debt financing. This may have prompted the UN General Assembly to adopt a resolution on Basic Principles for Debt Restructuring Processes in September 2015. This coincided with the publication of UNCTAD’s ‘Roadmap and Guide on Sovereign Debt Workouts’, which provides a detailed step-by-step guide to sovereign debt workout procedures. These tools can help us implement the Global Goals and advance the FFD process.
Ongoing innovation and technology developments are likely to have mixed impacts on inclusive prosperity. For instance, robotics will probably boost sluggish productivity in developed countries but with attendant adverse effects on employment and equality. Technology probably also erodes developing countries’ traditional labour-cost advantages and accelerates the relocation of production to developed countries.
This raises important issues about employment, income opportunities and inequality, the building of productive capacity to transform economies and the counterforces that may be required for technology to help achieve the Global Goals. Promises of pro-poor innovation in middle-income countries deserve further exploration. We must also ensure that green growth contributes to inclusive and sustainable development: employing climate-friendly technology can provide a leapfrog effect for developing countries.
All of these issues are related and only a comprehensive perspective can provide the coherent approach required to rekindle the struggling global economy. Only by working together can we maximize the positive effects and prevent adverse spillover from degenerating into a perfect storm. UNCTAD’s niche of addressing trade, finance, technology, investment and sustainable development in an integrated manner can bring important value added. We look forward to engaging in a dialogue on all development issues. To help integrate them in a holistic manner across sectors and dimensions of sustainable development, we look to our quadrennial conference in Nairobi this July for affirming a strong global partnership and offering a coherent policy framework for achieving prosperity for all.