Service on Finance and Development (Sept15/03)
22 September 2015
Third World Network
S-G proposes action lines for post-2015 era
Published in SUNS #8093 dated 16 September 2015
15 Sep (Kanaga Raja) -- The Secretary-General of the United Nations
Conference on Trade and Development (UNCTAD), Dr Mukhisa Kituyi, on
Monday proposed four specific action lines where the organisation
can and should contribute to the post-2015 era.
These action lines are set forth in his report to UNCTAD-XIV, scheduled
to take place in Lima, Peru from 14-18 March 2016.
The report was unveiled by Dr Kituyi during the sixty-second session
of UNCTAD's Trade and Development Board, which began on Monday.
The action lines highlighted by the S-G are: (a) Building productive
capacity to transform economies; (b) More effective States and more
efficient markets; (c) Tackling vulnerabilities, building resilience;
and (d) Strengthening multilateralism, finding common solutions.
In a foreword to his report, titled "From Decisions to Actions",
the head of UNCTAD said that the fourteenth session of UNCTAD will
mark a critical moment not only for economic and social progress in
the developing world, but also for the common future of all countries
"As the first United Nations ministerial conference of the post-2015
era, it will represent a starting point to translate the heightened
ambitions and commitments of the international community into concrete
plans of action," said Dr Kituyi.
He further said in his report that the fourteenth ministerial Conference
in Lima should reaffirm UNCTAD's core mandates and the work programme
that was started in Doha, which must continue if UNCTAD is to fulfil
its overall objective of assisting developing countries and economies
in transition to achieve inclusive and sustainable development.
According to the S-G's report, with the creation of UNCTAD 50 years
ago, the United Nations embraced for the first time an inclusive and
forward-thinking trade and development agenda initiated by the developing
world, on behalf of the developing world, with a vision of prosperity
UNCTAD provided the means through which the South, including through
the formation of the Group of 77, could voice its collective ambition
and mobilize the international community to deliver on the economic
promise of political independence for the benefit of all the world's
"The last 25 years have been important in terms of achievements,
but also in terms of lessons. They have taught us that we can expand
the boundaries of what we think is possible. They have taught us that
significant improvements can be made with the right policy mix and
conducive national, regional and global environments. Change is possible
and it is within our grasp to make it happen," the S-G said.
There are still far too many nations and people being left behind.
Poverty and inequality, both between and within nations, remain a
Most of the dramatic reductions in poverty since 1990 occurred in
a few large emerging countries. The world is still far too divided
between large areas of poverty and deprivation, on the one hand, and
pockets of prosperity, on the other.
Dr Kituyi said: "Islands of prosperity surrounded by poverty
are incompatible with the world that we strive for. New vulnerabilities
and risks have emerged, linked in particular to the rise of ‘casino
capitalism' and an unhealthy dependence on debt. Financial shocks
and crises have become more frequent, setting back development prospects
by years and, in some extreme cases, by decades."
A key reason for this continues to be the challenges in many, if not
most, developing countries in diversifying their economies and their
failure to translate growth into sufficient poverty reduction and
more and better jobs.
This challenge is the greatest for those countries with limited productive
capacity and financial resources.
Narrowing the inequality and prosperity gaps is critical and will
require more concerted efforts, he said.
In the absence of genuine economic recovery, and more stable financial
conditions, bridging the "prosperity-poverty divide" among
and within nations will be increasingly challenging.
Furthermore, continuing recent trends in global income distribution
will certainly make eradicating poverty all that much harder. Post-crisis
growth remains predominantly "wage-less" as well as "jobless".
Dr Kituyi said: "We need to finish the task we started at the
dawn of the millennium. Much work remains. Yet there are also emerging
challenges to prosperity, dignity and a better planet for all that
jeopardize the progress we have made, and the world we want to build
by 2030. This calls for new global action."
In the face of these remaining and emerging challenges, the sustainable
development goals, to be adopted in New York in September 2015, form
a new global consensus on ensuring dignity for all, prosperity for
all and a sustainable planet for all by 2030.
The post-2015 sustainable development agenda raises the bar and demands
unprecedented actions and efforts. No one must be left behind: islands
of prosperity surrounded by poverty, injustice, climate change and
environmental degradation are neither sustainable nor acceptable,
said the report.
It noted that the sustainable development goals will require resource
mobilization, from all different sources, on an unprecedented scale.
Developing countries alone will need to invest on the order of US$3.3-US$4.5
trillion per year in basic infrastructure, food security, climate
change mitigation and adaptation, health and education.
Current levels of investment leave a gap of US$2.5 trillion annually
in real terms.
"The challenge of achieving sustainable development goals will
be exacerbated by uncertainty in the external environment as the global
economy continues to struggle in the wake of the global financial
Mobilizing all available policy instruments for the sustainable development
goals will be critical. The political declaration to be adopted in
New York, the 17 sustainable development goals and their related 169
targets, as well as the Addis Ababa Action Agenda, agreed at the third
International Conference on Financing for Development in July 2015,
will together lay a comprehensive global framework for ensuring adequate
means of implementation.
The S-G said that "UNCTAD must complement the efforts of the
international community in our collective quest for a world of shared
prosperity, not only for ourselves, but for future generations. To
this end, the fourteenth quadrennial ministerial conference to be
held in Lima, in March 2016, must set out a robust set of actions
for UNCTAD to shoulder its responsibility."
ACTION LINES FOR POST-2015 ERA
On the first action line of building productive capacity to transform
economies, the report said that to achieve the sustainable development
goals, it is essential to build productive capacity and provide economic
transformation. Eradicating poverty by 2030 requires a massive acceleration
in the development of productive capacities, especially in LDCs (least
"We need to increase productivity within and across sectors.
We need to diversify economies by shifting resources from less productive
and environmentally unsustainable sectors to more productive and sustainable
ones. We must also do this in such a way as to create enough higher-quality
jobs and economic opportunities to allow everyone to generate incomes
above the poverty line," said Dr Kituyi.
This will mean putting structural transformation, environmental sustainability
and decent work at the core of actions taken to apply any of the available
Investment, trade, technology and entrepreneurship, and the nexus
between them, can be important means to help build critically needed
For the post-2015 agenda, these tools - accompanied by complementary
measures and as part of a broader industrial development strategy
- must be utilized more and better, and be more fairly and equitably
at the disposal of all countries.
"We cannot build productive capacity and transform economies
without investment. Resource mobilization to bridge an annual investment
gap of at least US$2.5 trillion is a daunting challenge, but it is
achievable. It will require public and private resources, as well
as domestic and external resources."
Domestic resource mobilization for investment is, and will continue
to be, key, said Dr Kituyi, adding that notwithstanding, there is
ample scope - and urgent need - to broaden tax bases, strengthen collection
capacity, reduce tax evasion and avoidance, and stem capital flight
and illicit financial flows.
For example, had the resources that left African countries as capital
flight from 2000 to 2010 been invested instead, poverty in the region
could be 2.5 percentage points lower.
The report also noted that it has become increasingly rare that goods
or services are produced entirely in an integrated production process,
in one location and by one entity. Rather, the production of goods,
and even services, involve an increasingly complex process with intermediate
inputs and supporting activities sourced globally from wherever it
is most efficient to do so.
These complex international production arrangements, together with
improvements in transport infrastructure, logistics and cross-border
trade facilities, as well as improvements in business environment,
trade and related investments, have enabled some developing countries
to deepen their trade through integration into regional and global
"The benefits of regional and global value chains, though, are
not automatic. Furthermore, accessing regional and global value chains
and, more importantly, climbing the value addition chain is neither
an automatic nor an easy process."
To link into regional and global value chains successfully, cutting
overall trade and investment costs, including through improved soft
and hard infrastructure, is necessary. Implementation of trade facilitation
measures is central in this regard, said the report.
A country's existing productive capacity also determines what it can
export and what FDI it is likely to attract, and thereby what potential
benefits it can derive from regional and global value chains.
Those developing countries with limited productive capacities can
remain trapped in, and competing for, the lowest value added activities
at the bottom of regional and global value chains, particularly production
of primary commodities, with hampered the potential to move up the
value chain or to upgrade through technology transfer and learning.
Many LDCs, landlocked developing countries and small island developing
States belong to this group. Many middle-income countries, though,
also face challenges in progressing upward in regional and global
Breaking out of those traps requires active policies to boost productive
capacities, widening the product base and making it more competitive.
These policies are crucial to harness the full potential of regional
and global value chains for inclusive and sustainable development.
The report underlined that much remains to be done in order to more
effectively draw benefits from integrating into regional and global
value chains, as well as to better access and climb regional and global
Tariffs in product segments of interest to developing countries tend
to be higher and escalate with increased product sophistication, throwing
sand in the wheels of increased value addition in poorer countries.
Agricultural exports face particularly large hurdles and distortions,
as do fisheries.
In addition, while LDCs have been granted significant preferential
access, even complete duty-free, quota-free treatment in some key
import markets, they continue to face challenges in utilizing this
access in a number of markets due to complicated and restrictive rules
Similarly, non-tariff measures are playing a greater role in global
trade, affecting many developing countries, particularly LDCs.
According to the report, technological upgrading is critical for enhancing
productivity and the development of productive capacities.
Average productivity in LDCs is about 10 per cent of that in the European
Union and 7 per cent of that in North America. Even in other developing
countries, it is 45 per cent of the European Union average and 32
per cent of the North American average.
Technological gaps are an important part of the reason for this, and
closing them will be essential to reduce the prosperity-poverty gap
between nations. Developing countries should actively foster ICT adoption,
especially among microenterprises and small firms, to increase their
productivity and to help them overcome barriers to their growth.
Similarly, said the report, ICTs can be leveraged for enhanced trade
and investment. For instance, the shift towards online commerce is
also enabling more countries to participate in global value chains.
One example is India, where exports of information technology and
information technology-enabled services have surged from US$24 billion
in 2005 to more than US$84 billion in 2013.
"As ever more economic activities move online, adequate policy
responses in developing countries are essential to seize the potential
benefits and mitigate risks, and to ensure that technological change
narrows existing divides rather than widens them. Affordable broadband
access can facilitate services exports; and cloud computing, big data
and three-dimensional printing could all have a profound impact on
The report also said that enterprise development and fostering entrepreneurship
capability are core elements of productive capacity-building and,
as such, they can promote structural transformation, encourage inclusive
growth, create jobs and expand opportunities for all, including women
On the second action line of more effective States and more efficient
markets, the report stressed that to achieve the sustainable development
goals, many countries and particularly developing countries will need
to take wide- ranging economic, environmental and social actions and
ensure that markets work more efficiently for their people.
"The State remains the only institution that can manage large-scale
societal changes, such as those envisaged in the sustainable development
This is particularly so in developing countries whose markets are
still weak; a "developmental State" is needed to direct
resources from low to higher productivity sectors. It is crucial to
ensure that the State remains efficient and effective through targeted
industrial policy and incentive measures for strategic sectors.
"Effective and development-focused States are also needed to
create the right incentives and regulations for markets to responsibly
deliver growth and development in the interest of the population at
large. Markets, of course, can play a useful role in many respects.
Leaving both national and international markets to their own devices
and without proper regulatory mechanisms, though, would be a fallacy."
Dr Kituyi noted that citizens in most developing countries are confronted
by persistent market failures, compounded by inadequate State provision
of services and the prevalence of the informal sector.
Therefore, reforming or adapting markets at all levels must be a priority
in order to ensure that markets work more effectively and sustainably.
The State can and must correct market failures and, beyond that, play
an enabling role (through incentives, policies and institutional support)
for market actors to increasingly commit to long-term productive investments
for development, social and environmental objectives, in line with
"Markets and regulations can, in such circumstances, be two sides
of the same coin, such as in the provision of infrastructure network
services. Ensuring a level playing field, through pro-competitive
regulations, is especially important."
In this context, the report highlighted the enhancement of competition
and consumer protection; scaling up infrastructure services encompassing
financial services, transport and logistics, telecommunications, water
and energy; fostering an appropriate business environment; and investing
in skills and leadership development.
On the third action line of tackling vulnerabilities, building resilience,
the report said that being vulnerable implies being less capable to
deal with sudden changes, crises and shocks.
"One of the great injustices in our world is that those that
are poor are more often the most vulnerable - both in terms of people
and nations. As such, they tend to carry the brunt of the cost of
economic, social and environmental crises."
Vulnerabilities, especially of the poor, must therefore be a global
concern and a shared obligation to address. In order to enhance sustainable
development prospects that genuinely benefit all, countries, regions
and the international community need to tackle the specific challenges
of weak economies, address financial instability, combat climate change
and empower the more vulnerable groups within societies.
"Of course, prevention is the best cure. Still, we also need
mechanisms to ensure that when crises erupt, countries are able to
manage them effectively," said the UNCTAD S-G.
The current global economic situation, with the continued repercussions
from the financial crisis, compounds the challenges of financial and
economic volatility. This volatility, short-termism and boom and bust
cycles not only threaten to delay recovery, but can also make countries
slide back in their economic development, especially if there are
According to the report, a key driver of economic vulnerability in
recent years has been unregulated global financialization and the
large and predominantly short-term capital movements that this has
given rise to.
It emphasised the need to better manage financialization and its macroeconomic
effects, as well as strengthen the link between fiscal and monetary
policies and development goals. Strong regulation at the domestic
and global levels needs to be at the core of efforts to harness the
benefits of international finance.
It is increasingly recognized, including by international financial
institutions, that a judicious combination of capital controls and
exchange rate management, including by influencing the amount and
composition of capital inflows, could help maintain access to productive
external finance while also encouraging domestic investment.
"Proactive fiscal and industrial policies are also essential
for generating the structures and circumstances that support domestic
productivity growth and the expansion of aggregate demand."
The report also highlighted the need to address climate change and
biodiversity loss, diversification in the most vulnerable and weak
economies, transforming rural economies to end poverty, and empowering
On the fourth action line of strengthening multilateralism, finding
common solutions, the report noted that in 2015, multilateralism is
at a crossroads.
"The need for global collective action to tackle cross-border
challenges is at an all-time high. Yet collective solutions are in
"Multilateralism is pivotal for delivering these collective solutions.
Only multilateralism can avert global environmental catastrophe. Only
multilateral cooperation can countermand recent economic mismanagement,
which caused the Great Recession, and set the world economy on the
path to genuine recovery. Only multilateral cooperation can reduce
to zero the social deprivations that keep millions locked in extreme
poverty or held back by inequality."
The sustainable development goals, and the universal ambitions that
they embody, offer the international community the opportunity to
turn the page and put multilateralism and robust global economic cooperation
back on track.
The report called for supporting global economic governance and reform
of the international financial system.
"More inclusive and better coordinated international economic
cooperation can strengthen the global economy, result in better reforms
to international financial institutions, improve financial regulation
and help implement key economic reforms. Global economic governance
should complement State capabilities."
Reforms to the international financial system should be undertaken
with a view to greater collective engagement of countries at different
levels of development, it said.
"Continued vigilance and innovative multilateral solutions are
needed to ensure debt sustainability and to work towards a multilateral
sovereign debt restructuring mechanism that protects the rights of
borrowers and lenders and promotes orderly workouts in case of crisis."
For aid-dependent countries, particularly LDCs, ODA (official development
assistance) remains crucial, said the report. Development Assistance
Committee donors need to meet their longstanding commitment of 0.7
per cent of donors' gross national income, in addition to continuing
to improve the quality and effectiveness of aid.
"It is essential that the principle of additionality with respect
to ODA is respected and that some of the new and innovative sources
of financing under discussion do not end up diluting that commitment."
The report further called for making the multilateral trading system
more effective in the coming decades; on enhancing policy coherence
for investment with sustainability; and promoting a global enabling
environment for technology.
Despite recurrent setbacks, the multilateral trading system remains
a crucially needed global public good, it said.
However, in the seven years since the global crisis, trade growth
has not rebounded to its pre-crisis levels, and trade policy has come
under increasing scrutiny.
Its impact on development is also being brought into question. In
the light of twenty-first century development challenges, reinvigorating
the multilateral trading system as a global public good with renewed
momentum and relevance is thus essential for the sustainable development
At the global level, the WTO through the implementation of WTO agreements
and conclusion of the Doha Development Agenda, with its development
dimension intact, can help to engender more sustainable trade, said
The Ninth Ministerial Conference of the WTO in 2013 was a timely gain
with the agreement of the "Bali package", including the
Agreement on Trade Facilitation and decisions on agriculture, cotton
and development and LDC issues. All of these are important from a
Nevertheless, this must only be a first step to reinvigorate WTO and
its longstanding negotiations on the Doha Development Agenda.
"Conclusive steps forward on other key issues of the Doha Development
Agenda, with priority given to development issues, can and should
be made at the upcoming WTO Ministerial Conference to be held in Nairobi
in December 2015," the report said. +