PHM-Exch> Has Globalization Enhanced Development Cooperation?

[Claudio Schuftan]

From: Jomo <jomoks at yahoo.com>
Date: Wed, Aug 22, 2018 at 8:47 AM


Has Globalization Enhanced Development Cooperation?

Jomo Kwame Sundaram

KUALA LUMPUR, Aug 21 (IPS)  - Protracted economic stagnation in rich
countries continues to threaten the development prospects of poorer
countries. Globalization and economic liberalization over the last few
decades have integrated developing countries into the world economy, but
now that very integration is becoming a threat as developing countries are
shackled by the knock-on effects of the rich world's troubles.

Trade interdependence at risk

As a consequence of increased global integration, growth in developing
countries relies more than ever on access to international markets. That
access is needed, not only to export products, but also to import food and
other requirements. Interdependence nowadays, however asymmetric, is a
two-way street, but with very different traffic flows.

Unfortunately, the trade effects of the crisis have been compounded by
their impact on development cooperation efforts, which have been
floundering lately. In 1969, OECD countries committed to devote 0.7% of
their Gross National Income in official development assistance (ODA) to
developing countries. But the total in 2017 reached only $146.6 billion, or
0.31% of aggregate gross national income – less than half of what was
promised.

In 2000, UN member states adopted the Millennium Development Goals to
provide benchmarks for tackling world poverty, revised a decade and a half
later with the successor Sustainable Development Goals. But all serious
audits since show major shortfalls in international efforts to achieve the
goals, a sober reminder of the need to step up efforts and meet
longstanding international commitments, especially in the current global
financial crisis.

Aid less forthcoming

Individual countries' promises of aid to the least developed countries
(LDCs) have fared no better, while the G-7 countries have failed to fulfill
their pledges of debt forgiveness and aid for poorer countries that they
have made at various summits over the decades.

At the turn of the century, development aid seemed to rise as a priority
for richer countries. But, having declined precipitously following the Cold
War's end almost three decades ago, ODA flows only picked up after the 9/11
or September 11, 2001, terrorist attacks. The Monterrey Consensus, the
outcome of the 2002 first ever UN conference on Financing for Development,
is now the major reference for international development financing.

But, perhaps more than ever before, much bilateral ODA remains ‘tied', or
used for donor government projects, rendering the prospects of national
budgetary support more remote than ever. Tied aid requires the recipient
country to spend the aid received in the donor country, often on overpriced
goods and services or unnecessary technical assistance. Increasingly, ODA
is being used to promote private corporate interests from the donor country
itself through ostensible ‘public-private partnerships' and other similar
arrangements.

Not surprisingly, even International Monetary Fund staff have become
increasingly critical of ODA, citing failure to contribute to economic
growth. However, UN research shows that if blatantly politically-driven aid
is excluded from consideration, the evidence points to a robust positive
relationship. Despite recent efforts to enhance aid effectiveness, progress
has been modest at best, not least because average project financing has
fallen by more than two-thirds!

Debt

Debt is another side of the development dilemma. In the last decade, the
joint IMF-World Bank Heavily Indebted Poor Countries initiative and its
extension, the supplementary Multilateral Debt Relief initiative, made some
progress on debt sustainability. But debt relief is still not treated as
additional to ODA. The result is ‘double counting' as what is first counted
as a concessional loan is then booked again as a debt write-off.

At the 2001 LDCs summit in Brussels, developed countries committed to
providing 100% duty-free and quota-free (DFQF) access for LDC exports. But
actual access is only available for 80% of products, and anything short of
full DFQF allows importing countries to exclude the very products that LDCs
can successfully export.

Unfortunately, many of the poorest countries have been unable to cope with
unsustainable debt burdens following the 2008-2009 financial crisis.
Meanwhile, there has been little progress towards an equitable and
effective sovereign-debt workout framework despite the debilitating
Argentine, Greek and other crises.

Technology gap

In addition to facing export obstacles, declining aid inflows, and
unsustainable debt, the poorest countries remain far behind developed
countries technologically. Affordable and equitable access to existing and
new technologies is crucial for human progress and sustainable development
in many areas, including food security and climate-change mitigation and
adaptation.

The decline of public-sector research and agricultural-extension efforts,
stronger intellectual-property claims and greater reliance on privately
owned technologies have ominous implications, especially for the poor. The
same is true for affordable access to essential medicines, on which
progress remains modest.

An international survey in recent years found that such medicines were
available in less than half of poor countries' public facilities and less
than two-thirds of private facilities. Meanwhile, median prices were almost
thrice international reference prices in the public sector, and over six
times as much in the private sector!

Thus, with the recent protracted stagnation in many rich countries, fiscal
austerity measures, growing protectionism and other recent developments
have made things worse for international development cooperation.

Jomo Kwame Sundaram, a former economics professor, was United Nations
Assistant Secretary-General for Economic Development, and received the
Wassily Leontief Prize for Advancing the Frontiers of Economic Thought in
2007.

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Excerpt:
Related Links
+ Globalization, Inequality, Convergence, Divergence (
http://www.ipsnews.net/2018/07/globalization-inequality-
convergence-divergence/)


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development-cooperation
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