|
|
|
|
 |
 |
November 2004 Development Economics Must Reform
by Marguerite Rigoglioso Half-filled promises, dissension, trade barriers, inadequate representation, and economic instability impede growth of developing economies, says South Africa’s finance minister.First-world nations are not living up to their commitments to help the developing world, including the pledge to provide up to 0.7 percent of their gross domestic product in development aid, Trevor Manuel, South Africa's minister of finance, told the Business School’s Conference on Global Business and Global Poverty. "On balance, the developed world is not living up to its own commitments made at the Millennium Summit in Monterrey, Mexico, and Johannesburg, South Africa," Manuel said. "Very few come even close to achieving that [level of aid], in particular the United States, which gives a mere 0.13 percent of its GDP." Rich nations also have failed to lower sufficiently trade barriers and subsidies to exporters of goods such as textiles and agricultural products, he said. "It becomes increasingly difficult for developing countries not to view the lack of commitment as a veiled attempt to constrain development in developing countries," Manuel told the conference organized in May by the School’s Center for Global Business and the Economy. He was one of 10 business, government, and academic leaders from three continents who presented their ideas on coping with global poverty at the daylong conference. Manuel, who is a governor of the World Bank, argued that European countries are overrepresented on the boards of the International Monetary Fund and the World Bank. "Why is it that the managing director of the IMF must come from Europe, when almost of all of its lending, whether short or medium term, goes to developing countries?" he asked. Developing regions must overcome economic expansion and industrial diversification barriers through extra-regional trade and financial alliances, he said, citing the examples of Brazil, India, and South Africa, which have begun to build and strengthen cooperation on international financial issues and trade. At the national level, Manuel observed, African countries need macroeconomic stability and microeconomic policies that help shift workers from old and noncompetitive industries to new industries and new forms of economic activity. Such policies require introducing new skills into the workforce, "high-quality education, and access to social and other forms of capital and open environments," he said. To qualify for financial assistance, certain countries should be required to reform their domestic policies so that the burden of economic adjustment is not continually pushed onto the poor and marginalized. The problem, however, is that weak states are unlikely to achieve such reforms, and they often find themselves in an even weaker position when large-scale financial assistance comes with strict conditions. He urged African countries to band together to build regional economies—a main objective of the African Union. African countries have been slow to integrate regionally, in part because many African communities hold dear their recently won national sovereignty. Manuel argued, however, that the European experience of economic integration demonstrates that national sovereignty may actually be enhanced through regionalization. "Poverty in Africa is of such scale that efforts to address it require far more than reform in individual countries. It requires a wide range of actors, reform to our multilateral institutions, their instruments and their attitudes, and a sea change in political attitudes on trade and agriculture in developed countries." In trying to globalize their economies, African nations face inconsistent growth and widespread poverty that can tip them in the wrong direction—away from good governance, effective regulation, and pro-growth policies—and further weaken already inadequate social policies and institutions. The Center for Global Business and the Economy is codirected by professors John McMillan and John Roberts. It was created to support research into issues faced by business, governments, and nonprofit organizations operating around the world. For details on the conference and the Global Center, see www.gsb.stanford.edu/cgbe. |
|
|
|
|
 |
|
|
|
|
