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Making Globalization Work for the Least Developed Countries United Nations Development Programme UN Office of the High Representative for the Least Developed Countries, Landlocked Develo

Making Globalization Work for the Least Developed Countries

United Nations Development Programme

UN Office of the High Representative for the Least Developed Countries, Landlocked Developing Countries and the Small Island Developing States Republic of Turkey

United Nations Development Programme

One United Nations Plaza

New York, NY 10017

www.undp.org

blank page

Kamal Malhotra

Core Team

Nelly Ahouilihoua, Zamira Eshmambetova, Fred Kirungi, Paul Ladd, Luciana Mermet, Rosemary Nuamah, Damla Say,

Haldun Tekneci, Yasemin Ustay

Principal Authors Globalization and the LDCs

Kathryn Glynn-Broderick, Paul Ladd, Luciana Mermet,

Sukyung Park and Sabrina Varma

Trade and Investment

Charles Gore and Michael Herrmann

Technology

Charles Gore and Michael Herrmann

Agriculture

Suffyan Koroma

Energy

Ellen Morris, Kamal Rijal and Minoru Takada

Principal Editor

Anita Palathingal

4 Preface

6 Acknowledgements

9 Abbreviations

12 Introduction

15 Chapter 1 Globalization and the Least Developed Countries

45 Chapter 2 Globalization and the Least Developed Countries:

Issues in trade and investment

63 Chapter 3 Globalization and the Least Developed Countries: Issues in technology

81 Chapter 4 Globalization, agriculture and the Least Developed Countries

99 Chapter 5 Energizing the Least Developed Countries to achieve the Millennium Development Goals: The challenges and opportunities of globalization

2 Making Globalization Work for the Least Developed Countries

115 Istanbul Declaration on Least Developed Countries: Time for Action

123 Statements

Minister of Foreign Affairs of Turkey*

Nations General Assembly

the Republic of Benin and Chair of the Group of Least Developed Countries

United Nations Conference on Trade and Development

Deputy Director-General, World Trade Organization

United Nations Economic Commission for Africa

Representative for the Least Developed Countries, Landlocked Developing

Countries and Small Island Developing States

Republic of Tanzania

Development Programme

the Ministry of Foreign Affairs of Turkey

161 Annexes

*President of Turkey at the time of publication.

3

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4 Making Globalization Work for the Least Developed Countries

Preface

‘Making Globalization Work for the LDCs’, hosted by the Government of Turkey and jointly organized by United Nations Office of the High Represen-tative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States (UN-OHRLLS), United Nations Development Pro-gramme (UNDP) and the Government of Turkey took place in Istanbul (Turkey) from 9

to 11 July 2007

The conference sought to address questions of full and beneficial integration of the LDCs in the world economy, as there is widespread agreement that most such countries have not participated in the economic and financial benefits of the current phase of globalization Senior policy makers and representatives of international organizations, including those from 47 LDCs, therefore gathered in Istanbul to dis-cuss ways of harnessing globalization’s potential for development, to draw attention

to LDCs in the global economy and to promote South-South cooperation between LDCs and other developing countries as well as between the LDCs themselves The conference stimulated considerable discussion, sparked ideas of cooperation

as well as yielded results that reaffirmed the commitment to the Brussels Programme

of Action for the Least Developed Countries for the Decade 2001-2010 Indeed, the Istanbul Declaration on LDCs can be viewed as a ‘Call for Action’ for the Brussels Declaration While recognizing that the process of globalization and interdepend-ence is potentially a powerful and dynamic force that can contribute to growth, poverty reduction and sustainable development, the ministers of the LDCs recog-nized and affirmed the need for fair and equitable globalization Conference partici-pants also emphasized that if properly managed, additional trade and investment, increased transfer of technology, agricultural productivity and affordable, reliable, economically viable and socially acceptable forms of energy can help LDCs build a competitive environment in a truly inclusive and globalized world

Yet, today’s reality is different While the economic reforms of the last few years in the LDCs have resulted in more open economies and greater integration of these countries into the global economy, they have often simultaneously imposed eco-nomic hardships on large parts of the population in many LDCs Small businesses in these countries have lost out either to the big international players or to cheaper imports There has been a shrinking of the public sector and withdrawal of state sub-sidies without any commensurate growth of strong market and other institutions, resulting in loss of jobs and reduced national capacity to deliver on many of the Millennium Development Goals Moreover, without social safety nets, many people have seen their standards of living plummet The benefits of what little economic growth has taken place, have, in most cases, failed to trickle down to the poor Structural constraints — ranging from weak institutional and technical capacities

to a limited knowledge base — make it likely that without special measures, LDCs will not be able to take full advantage of the opportunities offered by globalization Nor will they be in a position to minimize the hardships

How to maximize the gain while minimizing the pain remains the central question

and challenge The UN Ministerial Conference of the LDCs offered some

recommen-dations which could help in this respect Foremost among them is that LDCs need

to walk the road of globalization at their own pace and on their own terms As

stat-ed in the Istanbul Declaration, ‘It is for each Government to evaluate the trade-offs

between the benefits of accepting international rules and commitments and the

constraints posed by the loss of policy space’

Moreover, policy space at home needs to be matched by a stronger voice at the

international level, enabling the LDCs to influence the global economic architecture

In addition, progress is needed to ensure the effective access of the products of the

LDCs to global markets on a duty-free and quota-free basis, and the elimination of

trade-distorting subsidies in rich countries which continue to undermine the

com-petitiveness of goods and services from LDCs

In addition, LDCs will need external support both to cope with the downsides of

globalization and to take advantage of the opportunities it offers South-South

coop-eration and regional integration in the form of partnerships between middle-income

countries and LDCs will be vital for this Often the problems of middle-income

coun-tries are closer to the challenges that an LDC faces than the problems in a very

advanced country In such a context, appropriate partnership arrangements need to

be institutionalized to ensure that the support and cooperation they engender are

lasting, predictable and effective

Ultimately, the current phase of globalization will be judged by whether it is able

to transform itself into a vehicle for eradicating poverty, marginalization and

inequal-ity, and for promoting sustainable development This is the moral imperative of our

time Putting LDCs in the driver’s seat will be a prerequisite for this

5

Moussa Affolabi

Okanla

Minister of Foreign

Affairs, Republic of

Benin and Chair of

the Group of Least

Developed Countries

(2002-2007)

Cheick Sidi Diarra

High Representative for the Least Developed Countries, Landlocked

Developing Countries and Small Island Developing States

Kemal Dervis5

Administrator, United Nations Development Programme

Ali Babacan

Minister of Foreign Affairs, Republic of Turkey

‘Making Globalization Work for the Least Developed Countries’ held in Istanbul (Turkey) from 9 to 11 July 2007

The co-organizers of the conference — United Nations Office of the High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States (UN-OHRLLS), United Nations Development Pro-gramme (UNDP) and the Government of Turkey — are most grateful to the govern-ments, organizations and individuals whose contributions made the conference and this publication possible

As the chair of the Group of the Least Developed Countries, the Government of Benin provided valuable policy guidance and played a major role in mobilizing the participation of the Least Developed Countries for the conference

The Government of Turkey hosted the conference and provided substantial finan-cial, logistical and administrative support to make it happen This publication has also been funded through a generous contribution from the Government of Turkey for which the co-organizers are very grateful

The Special Unit for South-South Cooperation located in UNDP provided generous financial support which enabled the production and presentation of the issues papers The co-organizers are also indebted to the principal authors and peer reviewers of the issues papers for sharing their knowledge and expertise, as well as to the individu-als and teams within the United Nations system that made substantive contributions The chapter ‘Globalization and the Least Developed Countries’ was prepared in the Inclusive Globalization Cluster of the Poverty Group of UNDP’s Bureau for Development Policy by a team comprising Paul Ladd, Luciana Mermet, Sabrina Varma, Sukyung Park and Kathryn Glynn-Broderick under the overall guidance and supervision of Kamal Malhotra, Senior Adviser and Cluster Leader, Inclusive Globalization This chapter benefited from peer review by Dr Debapriya Bhattacharya, then Executive Director of the Centre for Policy Dialogue in Bangladesh (now Ambassador and Permanent Representative of Bangladesh to the WTO and UN Office in Geneva), and by Pedro Conceição and his colleagues in UNDP’s Office of Development Studies and by the Executive Office of UNDP Comments were also received from Mehmet Arda on behalf of the Government of Turkey, David Luke of UNDP’s Geneva Trade and Human Development Unit and UN-OHRLLS

The chapters ‘Globalization and the Least Developed Countries: Issues in trade and investment’ and ‘Globalization and the Least Developed Countries: Issues in technology’ were prepared by Charles Gore and Michael Herrmann from the Division for Africa, Least Developed Countries and Special Programmes (ALDC), in UNCTAD, with inputs from Kamal Malhotra and his colleagues in the Inclusive Globalization Cluster of the Poverty Group in UNDP’s Bureau for Development Policy Both chap-ters also benefited from comments by Pedro Conceição and his colleagues in UNDP’s Office of Development Studies and the Executive Office of UNDP

6 Making Globalization Work for the Least Developed Countries

The chapter ‘Globalization, agriculture, and the Least Developed Countries’ was

prepared by Suffyan Koroma from the Trade and Markets Division, Economic and

Social Department, FAO Comments were provided by the Inclusive Globalization

Cluster of the Poverty Group in UNDP’s Bureau for Development Policy and by Pedro

Conceição and his colleagues in UNDP’s Office of Development Studies Additionally,

the paper benefited from comments by Mehmet Arda on behalf of the Government

of Turkey and by UN-OHRLLS

The chapter ‘Energizing the Least Developed Countries to achieve the Millennium

Development Goals: The challenges and opportunities of globalization’ was

pre-pared by Minoru Takada, Kamal Rijal and Ellen Morris from the Environment and

Energy Group, Bureau for Development Policy, UNDP This chapter benefited from

comments provided by Olav Kjørven, Philip Dobie, Abul Barkat, Abeeku

Brew-Hammond and staff in the Inclusive Globalization Cluster of the Poverty Group in the

Bureau for Development Policy It also received comments from Pedro Conceição

and his colleagues in UNDP’s Office of Development Studies Additionally, the paper

benefited from comments by Mehmet Arda on behalf of the Government of Turkey

and by UN-OHRLLS

Contributions are also gratefully acknowledged from UNDP country offices in

Bangladesh, Malawi, Mauritania, Nepal, Rwanda and Senegal The feedback from

these country offices was invaluable because it provided grounded, first-hand

infor-mation and analysis

Charles Gore (UNCTAD), Kamal Malhotra (UNDP), Alexander Sarris (FAO) and

Minoru Takada (UNDP) made excellent presentations at the Istanbul conference on

the issues papers on technology, trade and investment, agriculture and energy,

respectively Summaries of discussions for round tables on trade and investment,

technology, agriculture and energy were prepared by Nelly Ahouilihoua and

Luciana Mermet

The publication has also enormously benefited from the work of our editor, Anita

Palathingal The cover and layout design were done by Laurie Douglas Graphic

Design Guidance and assistance in producing, translating and distributing the

publication were provided by UNDP’s Communications Office, especially from

Chirine El-Labbane, Rajeswary Iruthayanathan, Maureen Lynch and Nicole Pierron

Aleida Ferreyra from UNDP’s Democratic Governance Group in its Bureau for

Development Policy also provided useful guidance

UN-OHRLLS is thankful to its staff members for their tireless efforts to ensure the

success of the conference and for providing support in the preparation of the

publication They include Nelly Ahouilihoua, Paola Babos, Annie Concha, Zamira

Eshmambetova, Fred Kirungi, Carol Sakubita and Harriet Schmidt

7

UNDP is grateful to their staff for their diligent efforts in ensuring the success

of the conference and the overall coordination and preparation of this publication They include Annette Edra, Cosmas Gitta, Nergis Gulasan, Ragnhild Imerslund, Ramakrishnan Iyer, Paul Ladd, Rosemary Nuamah, Sarah Renner, Yasemin Ustay, Sabrina Varma, Siromi Wanasundera and Kale Yideg Farah Siddique provided assistance while doing an internship at UNDP The final revision benefited from continuous support from Luciana Mermet

Most importantly, the co-organizers are especially thankful to H.E Mr Baki Iilkin, Ambassador and Permanent Representative of Turkey to the United Nations, H.E Mr Anwarul Chowdhury, then UN Under-Secretary General and High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States (until June 2007), H.E Mr Cheick Sidi Diarra, UN Under-Secretary General and High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States (from August 2007), and

with-out which this conference and publication would not have been possible

8 Making Globalization Work for the Least Developed Countries

Abbreviations

BRICS Brazil, Russia, India, China and South Africa

CGIAR Consultative Group on International Agricultural Research

ECOSOC United Nations Economic and Social Council

ECOWAS Economic Community of West African States

Assistance to Least Developed Countries