Financing Economic Development
I - The Monterrey Conference (Mexico, March 18th - 22nd, 2002)
The Monterrey consensus intends to make the 20th century “the century of economic development for all,” in a partnership scheme where “each country is primarily responsible for its own economic development.” This involves “eliminating poverty, achieving continued equitable growth, and promoting sustainable development.”
The consensus is based on six complementary pillars, broadly covering development and international economic relations issues:
1. Mobilizing National Resources
Increasing and diversifying national financial resources, facilitating private investment, developing microfinance, controlling inflation, broadening and diversifying the fiscal base, developing structural public investment, reinforcing governance, and controlling corruption.
2. Foreign Direct Investment and Other Private Sector Contributions
Developing investment, the primary flow of currencies towards southern countries, ensuring technology transfers, encouraging the relationship with the country’s general economy, the importance of FDI for extraction industries, including south-south, penalizing tools that reinforce cyclical effects, and developing counter-cyclical tools, favoring diaspora investment.
3. Reinforcing International Trade
Integrating trade, finance, and development, developing trade capacities, and redistributing the benefits of trade, increasing the share of services in developing countries’ international trade, maintaining the priority for development in the Doha Round, reinforcing trade assistance, developing regional trade.
4. Increasing Financial and Technical Cooperation
Progress between 2002 and 2005 but few additional resources and trend reversal in 2006, redefining the assistance domain, making it more predictable, better balancing allocations, particularly to post-conflict countries, applying the Paris Declaration. Economic and social consulting role for the UN, reinforcing management capacities, diversifying financial products, developing innovative mechanisms.
5. Reducing Foreign Debt
31/41 HIPCs have reached the decision point and 22 have achieved the completion point, broaching the issues of MIC debt and managing private debt, conceiving “post Paris club” debt management modalities, including new creditors.
6. Overall Coherence
Modernizing IFI governance and the IMF’s role to ensure surveillance and regulation of global imbalances, review the dollar’s role as a reference currency, develop standards and codes suitable for all economies in their diversity.
The Monterrey consensus approach remains the most inclusive reference to date in terms of financing development and defining the associated public policies. The consensus is subject to regular annual review, which is currently being reviewed to make it more effective. Each year, the European Commission assesses the Consensus’ implementation by the European Union.
II - The Doha Conference (November 29th - December 2nd, 2008)
The Doha (Qatar) Conference was held in a deeply modified international context compared to the Monterrey conference. Emerging countries, both assistance beneficiaries and donors, came into their own alongside sovereign funds in raw materials exporting countries; major private foundations and specialized global funds (environment, health) have become major actors. The global economic situation and the assistance landscape have changed; the interdependence of all the world’s countries is much stronger.
Moreover, significant progress has been made in the six years between the Monterrey conference and Doha (which was held before the full effects of the global crisis were felt in developing countries): unprecedented economic growth (until the crisis), continued increase in international trade and foreign direct investment in developing countries, strong growth of migrants’ transfers, massive debt cancellation, doubled public economic development assistance, creation of new financial mechanisms for assistance initiated by France. However, significant disparities between countries and within countries subsist. Africa is significantly behind and an unsettling increase in social inequality is evident everywhere.
After a year marked by global food and energy crises, then by the breakdown of the international financial crisis (September 2008) the United Nations Member States met for this conference. The European Union, presided by France at the time, played an essential conciliatory role providing for the adoption of the final declaration by consensus.
The Doha Declaration recognizes the progress made in reducing poverty and economic and social policies. It highlights the new challenges that have appeared: the financial crisis and economic slowdown, the volatility in commodities prices. It acknowledges the serious consequences of climate change. It calls for urgent measures for the most vulnerable populations and to continue mobilizing resources for food safety and advocates in favor of using renewable energies accessible to all. It strongly insists on systemic issues: financial sector regulation and transparency, reforming the World Bank and the IMF, reinforcing the participation of developing countries in the global economy’s governance. It decided to organize a conference on the global crisis presented in point 3 below.
The Doha declaration also notes the importance of internal financial resources for developing countries: private sector and financial sector contributions to economic development and mobilizing fiscal resources. It marks the will to combat tax fraud and corruption. It includes notable progress regarding social issues: equality between men and women, the importance of basic public services, decent work, “civic responsibility,” and corporate social and environmental responsibility. The final declaration also advocates equitable and inclusive growth, supplementing the fight against poverty by reducing inequality. Environmental issues are more briefly discussed, essential from the point of view of climate change.
International cooperation issues are particularly highlighted: re-affirming commitments to increase the volume of public economic development assistance, the recognition of the principles adopted regarding assistance effectiveness, and the success of the initial innovative financing initiatives.
The various situations of developing countries are better identified, in particular those of countries coming out of conflict and medium income countries for which factoring in their specificities is deemed a new issue. As for Africa, it is the subject of a long paragraph in the introduction dedicated to the commitments made on its behalf.
III - The United Nations Conference on the Global Economic Crisis and its Incidence on Developing Countries (June 24th - 30th, 2009)
This conference was preceded by two international meetings dedicated to the response to the global crisis, the G20 summit (London April 2nd), and the ILO Summit on the Global Employment Crisis (Geneva, June 15th - 17th). The debates preparing this event included proposed responses to the crisis by a commission of independent experts, chaired by Joseph Stiglitz and setup by the Chairman of the United Nations General Assembly.
Participating states acknowledge, in the final document that developing countries are proportionally more affected by this crisis, the most serious since the Great Depression. They also agree on the causal analysis (insufficient coordination in macro-economic policies; lack of transparency, regulation, and supervision in the financial sector; insufficient IMF supervision; increasing inequality; weak role of the state compared to the market) and on the primary transmission channels in developing countries (contracting international trade, decreasing foreign direct investment, rarefaction of credit, falling raw materials prices).
The final document insists on the amplitude of the crisis’ human and social costs, imperiling achievement of the Millennium Development Goals and takes up the theme of inclusive, equitable development focused on human beings. At the crossroads of human, social, and economic concerns, the question of employment takes on particular importance and brings up the issue of employment migrations. Corporate social and environmental responsibility is considered to be one of the foundations for the new global consensus to be forged.
For the first time, the United Nations, through its analyses, explicitly distinguishes emerging countries from developing countries, due to their full participation in the G20 summit.
The final document insists on the need for quick implementation and follow-up for the commitments made by the G20 and those concerning economic development assistance. New calls for changing the scale of innovative financing and concluding the Doha trade negotiations cycle are formulated. The place accorded to the regional level in the global financial architecture is highlighted, as well as the need to strengthen the United Nation’s role in economic and financial issues.
The conference’s primary results are as follows:
creating an ad hoc group in the United Nations General Assembly, unlimited in time, to monitor the issues dealt with in the conference’s final document;
joint review of the implementation of the Bretton Woods accords (1947) between the United Nations, IMF, and World Bank, to reinforce their cooperation;
launching a process aimed at setting-up a panel of independent experts responsible for providing decision-makers with analyses of the global crisis and its impact on development;
launching, after the conference, an ambition United Nations project regarding the creation of a global alert system regarding vulnerabilities, called the “GIVAS” (Global Impact and Vulnerability Alert System) project.
Updated on 11.10.10