The global economic crisis highlighted the necessity of transforming global economic governance. But least developed countries (LDCs) have little voice in this process. It is time they are allowed a seat at the meetings of the Group of 20 industrialised and emerging economies.
This emerged at a discussion on LDCs at the 2010 public symposium hosted by the United Nations Conference on Trade and Development (UNCTAD) in Geneva on May10-11.
“LDCs face a double challenge: they have to absorb the impact of the economic and financial crisis, but in the resolution of the crisis itself they have a very marginal role to play,” stated Debapriya Bhattacharya, special advisor on LDCs at UNCTAD.
“This is not only a question of transparency, but also of inclusiveness and accountability. How to address these issues? Do we need new platforms or do we have to improve their participation in existing ones?” he asked.
Mothae A. Maruping, ambassador of Lesotho to the United Nations in Geneva, pointed out that LDCs have been devastated by the economic crisis, contrary to the initial forecasts of the Bretton Woods institutions. The Bretton Woods institutions are the two international financial institutions called the World Bank and the International Monetary Fund (IMF).
LDC external trade has declined; remittances have dropped; official development assistance has been jeopardised; and foreign direct investment has slowed down or declined, with some countries even experiencing disinvestments, said Maruping.
Bhattacharya indicated that aid flows increased in 2008 – 2009 but remained below the level needed to reach the MDGs (millennium development goals). “In terms of its composition, if one takes out humanitarian aid there has not been a substantial increase. Also, aid goes to social sectors with little reaching productive sectors.”
Maruping agreed that poor countries won’t achieve the MDGs: “In the aftermath of the crisis, LDCs are experiencing fiscal imbalances and destabilised monetary policies. They have relapsed into unsustainable external indebtedness and widespread and deeper poverty.
The World Bank and the IMF have special programmes for LDCs, but these are bound to so many conditionalities that they are almost unaffordable, he argued. On the World Trade Organisation (WTO) side, the Doha Development Round has stalled.
Maruping pointed out that LDCs have called for an “early harvest” in the WTO negotiations: duty-free and quota-free market access; elimination of export subsidies in agriculture by developed countries; and quicker resolution of the cotton issue with special and differential treatment, aid for trade and an enhanced integrated framework for the LDCs.
But will they be heard? “LDCs have little or no say in the World Bank and the IMF. They have some say in the WTO, where the voice is based on membership and where there is an LDC consultative group. But they need stronger technical back-up, as well as a secretariat and lobbying strategies and activities,” Maruping demanded.
In the Bretton Woods institutions they should form consultative or pressure groups and have their own secretariat, technical back-up, a website and lobbying strategies, Maruping insisted.
Maruping lamented the fact that LDCs have “no voice” in either the Group of Eight (G8) or the Group of 20 (G20). The G8 represents industrialised countries while the G20 brings together “systemically important” industrialised and developing countries to discuss global economic issues.
Dr Dirk Willem te Velde, programme leader of the investment and growth programme at the Overseas Development Institute (ODI) in London, argued that, “there are new global economic issues being discussed in the G20 that have a huge impact on the LDCs. Where is the voice of LDCs?”
The ODI is a British think tank researching and providing policy advice for the achievement of sustainable livelihoods in developing countries.
He added that, “the G20 is likely to be with us for some time. But to establish itself as a forum, it needs to find ways to formally accommodate the voice of the 15 percent of the world’s GDP (gross domestic product) — and most of the countries of the world – that it does not represent.
“The LDCs should have a seat at the G20 table. They have to push for an analysis of how G20 policies are affecting them.”
According to te Velde the aid increase in 2008-2009 played a counter-cyclical role, meaning it alleviated some of the effects of the global crisis.
In the wake of the energy crisis, technology transfer to ameliorate climate change is also vital for LDCs.
“LDCs are mainly interested in pro-poor technologies that help them adapt to climate change, like water-saving and disease and pest-control,” argued Ahmed Abdel Latif, a former Egyptian diplomat that now works for the International Center for Trade and Sustainable Development (ICTSD), a Geneva-based think tank.
But the issue of technology transfer is very complex, particularly because of intellectual property rights.
“The important increase in the patenting of clean energy technology is dominated by Japan, the U.S., Germany, Korea, Great Britain and France,” he noted. “Few patents are registered in low income countries. Also, in a survey most of the respondent companies had never entered into a licensing agreement with developing countries.”
Licensing agreements would allow developing countries to use technology owned by an intellectual property rights owner.