12 November 2003


NEW YORK, 11 November (UN Headquarters) -- Member States stressed the unequal benefits of globalization and the urgent need to implement commitments made at the 2002 Monterrey International Conference on Financing for Development, as the Second Committee (Economic and Financial) focused on those topics in two meetings today.

Pakistan’s representative noted that globalization had yielded benefits for only a small part of mankind -- the part that could do without them -- at the expense of the larger expanse of humanity that could not.  It had boosted economic growth, expanded global trade, increased investment flows and connected regions and peoples. But it had also increased the digital divide, widened income inequalities and concentrated economic power in the hands of a few.

Similarly, Morocco’s delegate, speaking on behalf of the “Group of 77” developing countries and China, highlighted the failure of trade liberalization to yield universal social and economic benefits, the unresolved debt burden, inadequate official development assistance (ODA), and the lack of international attention for commodity problems.  He also underscored the need to repair damage from recurrent financial crises in emerging economies, ease trading tensions and narrow income and technology gaps.

He added that fears about the effectiveness of global economic institutions had been growing, and the recent failure at the Cancun World Trade Organization (WTO) talks had done little to relieve them.  The international community must address asymmetries in international finance, trade, technology and investment patterns that were having a negative effect on development.

Other speakers noted that, while global trade and investment may have risen, the share of least developed countries (LDCs) in world exports had remained under 0.04 per cent.  In addition, trading sectors of particular interest to developing countries, such as textiles and agriculture, were being liberalized at a slower pace than those benefiting developed countries, such as information technology and telecommunications.

Anwarul Chowdhury, Under-Secretary-General and High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States, said globalization had left LDCs particularly vulnerable to external events, bearing the main brunt of the global economic downturn, despite wide-ranging efforts they had made to reform their domestic policies. Their best efforts to improve investment climates in their countries and attract larger flows of foreign direct investment were insufficient without support from their development partners.

Introducing his summary of the recent High-level Dialogue on Financing for Development, General Assembly President Julian Hunte (Saint Lucia) said participants had stressed the need for increased efforts to implement the Conference’s outcome, the Monterrey Consensus.  They called on States to submit progress reports on commitments to mobilize resources, increase ODA and private capital, create fair trading rules, reduce external debt and improve economic governance.

Speaking on behalf of the Rio Group, Peru’s representative urged the international community to draw developing countries into global decision-making, increase transparency in the international monetary and financial systems, and move resources towards development and democratic governance.  The international community must also combat asymmetric trade relations, implement strong social policies, and reform the international financial architecture into an authentic multilateral system.

Other speakers echoed the appeal for a fair and predictable multilateral trading system, calling on developed countries to open up their markets to exports from developing countries, eliminate customs tariffs and reduce agricultural subsidies.  States must also redouble their efforts to eliminate external debt and increase ODA, which had increased in real terms by a mere 5 per cent in 2002, compared to 2001, reaching no more than $57 billion.  That figure was far below the needs of developing countries, in general, and least developing countries, in particular.

Also speaking were the representatives of Italy (on behalf of the European Union), Malaysia, Russian Federation, Bahrain, San Marino, India, China, Saint Kitts and Nevis (on behalf of the Caribbean Community (CARICOM)), Suriname, Armenia, Iran, Thailand, Azerbaijan, Indonesia, United States, Norway and Mexico.

A representative of the Financing for Development Office of the Department of Economic and Social Affairs also spoke, as did a representative of the United Nations Industrial Development Organization (UNIDO).

The Committee will meet again at 10 a.m. on Wednesday, 12 November, to conclude its discussion of follow-up to the International Conference on Financing for Development.


The Second Committee (Economic and Financial) met this morning to continue its discussion of globalization and interdependence.  (For background information see Press Release GA/EF/3064.)  It was also expected to take up its item on follow-up to the International Conference on Financing for Development.

Before the Committee was a report of the Secretary-General on implementation of and follow-up to commitments and agreements made at the International Conference on Financing for Development (document A/58/216), which highlights progress in implementing commitments laid down in the 2002 Monterrey Consensus, focusing mainly on domestic and international financial resources, trade, aid and debt relief.

The report notes that most countries have begun to mobilize domestic financial resources for development, while insufficient political will or special interests have slowed down reforms in some.  In several countries, natural disasters, serious disease, social unrest, and armed conflict, especially in sub-Saharan Africa, have hampered efforts to focus on long-term concerns.  Also, the international community has offered less support than expected, and attention has focused on short-term policies or on coping with the uncertain global economic outlook.

Internationally, private capital flows -- inflows and outflows of foreign direct investment (FDI), portfolio investment and international commercial bank lending -- dropped significantly from 1997 to 2001, with only a small increase in 2002, the report says.  Foreign direct investment, the only positive net source of private foreign finance to developing countries for several years, declined sharply from $145 billion in 2001 to $110 billion in 2002.  In transition economies, FDI and foreign portfolio investment have remained positive and relatively stable, while banking and other private flows have been volatile.

Developing countries have benefited over the past decade from increased world trade, the report states, with their share of world exports exceeding 30 per cent in 2001. However, many countries have remained marginalized, with exports concentrated in products of low domestic value-added and technology content.  Several are also hindered by importing-country export barriers, volatile external trade earnings and external trade-related shocks.

Regarding aid, the report notes progress on three major fronts -- focusing aid to enhance its effectiveness, increased aid efficiency through greater harmonization and coherence, and overall aid volume.  As for external debt, it observes difficulties in reaching sustainable debt, especially in a world economy subject to economic shocks.  In addition, several countries are faring poorly in the Heavily Indebted Poor Countries (HIPC) Debt Initiative and debt for some is worsening due to low commodity prices and export receipts.

The report recommends that developing countries implement reforms to guard against volatility in financial and commodity markets, as well as episodes of slow growth or recession.  They should also strengthen supervision and regulation of their banking systems and integrate investment frameworks with national policies to ensure economic growth, tackle market and institutional weaknesses and enhance local capabilities.

In the area of trade, market access for developing country exports should be increased, agricultural subsidies reduced and export subsidies eliminated, the report states. The international community should also fully and promptly implement Monterrey commitments to increase aid flows and assist heavily indebted poor countries to achieve sustainable debt, using additional contributions by donors and creditors.

Noting that surveillance is the chief global mechanism for reviewing the macroeconomic polices of all International Monetary Fund (IMF) member countries, the report also recommends further tailoring of surveillance priorities to make them compatible with individual country needs and capacities.  International financial institutions should also develop loan facilities and credit lines to better address the range of balance-of-payment financing needs faced by countries in different economic circumstances.

Also before the Committee was a summary by the President of the Economic and Social Council of the special high-level meeting of the Council with the Bretton Woods institutions and the World Trade Organization (New York, 14 April 2003), which calls on Member States to step up monitoring of national and international implementation of the Monterrey Consensus, as well as efforts to ensure the timely completion of the Doha development round.  The summary (document A/58/77-E/2003/62) also underscores the need for enhanced debt sustainability on the part of low-income countries, new mechanisms for orderly debt workouts involving multi-stakeholder participation and a greater say for developing countries in the decision of international financial institutions.

In the report’s first addendum, a summary of the hearings and dialogue of the Economic and Social Council with members of civil society (New York, 20 March 2003) (document A/58/77/Add.1-E/2003/62/Add.1), the Council President makes note of its public hearings and dialogues with representatives of non-governmental organizations on the financing for development process held in preparation for the special high-level meeting.  The hearings featured panel discussions on external debt, international trade, global governance reform, the Millennium Development Goals, official development assistance (ODA) and policy coherence.

The second addendum, a summary of the hearings and dialogue of the Economic and Social Council with business interlocutors (New York, 21 March 2003) (document A/58/77/Add.2-E/2003/62/Add.2), notes the Council’s morning session with the business community to identify and eliminate obstacles to private investment; improve information, analysis and communication of country opportunities; develop risk and investment transaction services; improve developing-country access to long-term infrastructure development financing; and create public-private sector partnerships to implement the Monterrey Consensus.  In the afternoon, business interlocutors gave progress reports on initiatives and projects launched at the Monterrey Conference, as well as relevant new ventures.

Also before the Committee was a report of the Economic and Social Council (document A/58/3, Part 1 and II).  Part I details the Council’s 2003 organizational and substantive sessions, which includes consideration of United Nations operational activities for international development cooperation, implementation of and follow-up to major United Nations conferences and summits, and preparations for an international meeting to review the Programme of Action for the Sustainable Development of Small Island Developing States.

Part I also recounts the high-level segment of the Council’s substantive session in June on promoting an integrated approach to rural development in developing countries for poverty eradication and sustainable development.  Part II recounts various segments of the July substantive session.

Introduction of Report

JULIAN HUNTE, President of the fifty-eighth session of the General Assembly, introduced the Summary by the President of the General Assembly of the High-level Dialogue on Financing for Development (document A/C.1/58/L.58/555).  More than 190 governments, 35 intergovernmental organizations and 50 civil society stakeholders held a frank and open dialogue on implementation of the Monterrey process thus far.  For the first time ever, the presidents of the World Bank and the IMF had addressed the Assembly’s plenary session.

Participants welcomed the progress made, but said much more must be done, particularly concerning international trade and financial transfers, he said.  Many participants called for Member States to submit progress reports on the implementation of the Monterrey commitments and the Millennium Development Goals as they related to mobilizing resources, ODA, private capital for development, creating fair trading rules, easing the external debt burden of developing countries, improving economic governance and staying engaged on the matter.


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