Unctad suggests a ‘South-centred global development' strategy

The UN Conference on Trade & Development (Unctad) has plumped for a “new modality of inclusive, cooperative and South-centred global development” strategy by ensuring a more sustainable and socially legitimate pattern of development.

This is sorely needed in a world driven and riven by “a regressive model of growth launched over three decades ago and currently mired in a crisis which victimises disproportionately the poor and the poorest countries”, the Geneva-based UN body said in its latest policy paper on South-South cooperation.

Stating that the world economy is seriously out of kilter as finance-led globalisation over the last 30 years has distorted developments in the real economy, it said global imbalances continue to haunt “the recovery process, which has been slow and erratic especially in the most heavily financialised and indebted economies and in the most vulnerable countries in the South”.

For countries in the South the economic shocks were compounded by food and energy insecurity and climate variability, it said.

Prolonged recovery

Unctad warned that the adjustment process in key advanced economies would be prolonged with a “danger of slow growth, high unemployment and expanding pockets of deprivation being a permanent feature with damaging implications including the threat of protectionism, without a change in policy direction”.

Fiscal pressures might lead the major donors to further reduce their aid disbursements and if this becomes a reality, the markets, resources and foreign exchange needed to underpin the growth of the South may not be found in the North, it cautioned.

Unctad contends that the current crisis is due to a systemic, policy-driven milieu of financialisation and speculation originating in the North which was, often, foisted upon reluctant developing nations through “misguided advice and aid conditionality”.

As such, it said, the crisis should be resolved through intervention at those levels, rather than through stimuli generated in the South.

“Hasty speculations about the ability of the South to drive the world economy could also shift attention away from the responsibility of the advanced countries for driving the recovery and rebalancing the global economy in a more inclusive and sustainable direction, preserving stability and securing a fair distribution of wealth between countries and across regions,” Unctad stated.

South-South cooperation

Flagging off the point that a realistic South-South cooperation agenda could help to rebalance the world economy at two levels, it said foremost it could support multilateral arrangements channelling into productive use resources that are currently trapped in speculative financial circuits.

Second, it could promote more even, dense and egalitarian global trading relations, which would help developing countries escape from poverty traps.

It said the emergence of this trading pattern, underpinned by deeper regional and trade relationships, builds upon the achievements of the Unctad-sponsored Global System of Trade Preferences (GSTP) negotiations.

It can be enhanced by a global commitment to the development of employment, technology and skill-intensive productive capacities in the South, particularly in manufacturing, it said.

Unctad asserts that “these are essential underpinnings” of ‘a high-road of (converging) development based on increasing sophistication of production and South-South integration, supported by regional policy coordination, global trade and investment agreements and the expansion of regional infrastructure”.

According to Unctad, this new stage of globalisation should transcend the current pattern of financial over-expansion and speculation and foster a better regulated more equal and resilient global economy.

In order to realise this transition, Unctad said that it is centrally crucial to ensure that Southern balance of payments surpluses are recycled within the South since there are multiple opportunities for investment in the South.

Recycling surpluses

Such a path of recycling Southern surpluses within the South could help to stabilise the global economy, remove financial and balance of payments constraints to growth in the poor countries, build productive capacities in line with national development priorities and support the domestic policy space.

> geeyes@thehindu.co.in

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