Almost five years have passed since the global financial crisis, and the world economy is still reeling from its consequences. The main reason for this is the continued stagnation in developed countries, which is adversely affecting economic dynamism in other regions.
The global repercussions of the 2007-2008 financial crisis are a stark reminder of the economic interdependence in our globalising world. No country was spared from the shock waves that originated in the financial systems of developed economies.
The global economy weakened significantly towards the end of 2011 and further downward pressure emerged in the course of 2012. The growth rate of global output, which had already decelerated from 4.1 percent in 2010 to 2.7 percent in 2011, is expected to slow down even more in 2012 to around 2.3 per cent. Developed economies as a whole are likely to grow by only slightly more than one per cent in 2012, owing mainly to the recession currently gripping the European Union (EU).
Although it remains the fastest growing region, Asia is already experiencing an economic slowdown, with gross domestic product (GDP) expected to fall from 6.8 percent in 2011 to slightly below six percent in 2012. Several countries - including China, India and Turkey - have been adversely affected by weaker demand from developed countries.
In 2010, global biofuel production (bioethanol and biodiesel) reached 105 billion litres and is expected to almost double by 2020. Provided that oil prices remain relatively high which is likely the production of biofuels is expected to grow at double-digit rates for the next decade. Most of the biofuels produced are consumed at the national and local levels, with only seven percent of total production being exported. This reflects the fact that biofuels are mainly used for energy diversification and national energy security strategies.
In the past two decades, it has often been claimed that trade liberalization can, on balance, be a positive force for development. During this time, the Least Development Countries (LDCs) themselves became some of the most open economies in the world, based on the share of their exports in Gross Domestic Product (GDP). But greater opening of LDCs markets has not always benefitted all people in these countries, and the impact of trade reforms has affected their populations differentially.
Commodity producers are again reaping the benefits of high growth, particularly from high-demand importers, like China, and are increasingly formalising their integration into global commodity value chains. There is a growing recognition that, properly managed, resource rents can provide an important tool in the fight against poverty.
The multiple challenges now faced by the global community can perhaps be summed up in one word: imbalances. Imbalances in food, energy, housing and financial markets were allowed to grow during a sustained economic boom, becoming increasingly interdependent. These mounting imbalances generated a level of economic fragility which eventually shattered with the collapse of Lehman Brothers in September 2008. But despite the massive amount of public resources that have been mobilized to deal with the resulting collapse, the underlying forces have been left untouched in the aftermath of the crisis. They remain a toxic threat to stable and inclusive growth and the sustainability of the recovery.
This time last year, the global economy had reached the nadir of the financial and economic crisis. Since then, a succession of optimistic commentators, media reporters, economists and others has been pointing to the strength of the recovery: the resurgence in stock markets, the restoration of bank balances, and the reversals in growth rates. At the same time, data have emerged describing the full impact and cost of the crisis, particularly for developing countries, including an increase in unemployment, an additional 53 million people falling below the poverty line and over 100 million more going hungry.
The current financial and economic crisis drew attention away from the food crisis, but the latter still remains a threat to the achievement of the Millennium Development Goals (MDGs) and sends a warning of the dangers of low investment and poor policies in the agricultural sector.
In many respects, the diffusion of information and communication technologies (ICTs) continues to be a great development success story. Over the past four years we have witnessed dramatic growth in the use of various ICT applications, notably mobile phones. Developing-country populations now account for more than half of all Internet users. Improved connectivity has also enabled more firms to gain access to critical information, finance and knowledge -all key factors for enhancing competitiveness.
A major international conference on South-South cooperation is scheduled to take place early December in the Kenyan capital of Nairobi against the backdrop of a rising trend in regional economic integration in Asia, Africa, the Middle East and Latin America.
The current crisis has precipitated a significant downturn in world foreign direct investment (FDI) flows which over the past year has spread to all sectors and regions. 2008 marked the end of a growth cycle in international investment that began in 2003 and reached a historic high of nearly $2 trillion in 2007.
The attention of policymakers is being drawn to addressing fiscal policy and financial issues in an effort to close the credit crunch and release financial flows, especially investment.
Since the Great Depression of the 1930s, there have been more than 100 crises worldwide, says the secretary-general of the U.N. Conference on Trade and Development (UNCTAD), Dr. Supachai Panitchpakdi.
As the global economic crisis continues to unfold, it is having severe effects on international trade. UNCTAD estimates that merchandise exports from developing countries could decline by 15.5% this year. At the regional level, we expect export growth to shrink by 16.8% in Asia, 12.5% in Africa, and 10% in Latin America.
A fundamental transformation has taken place in the structure of the world economy. The dominant feature of this transformation is the emergence of the South. Indeed, the global expansion of the past five years has been more broad-based than even before. This has allowed many developing countries to become major players in trade and investment, wrires Supachai Panitchpakdi, Secretary-General of United Nations Conference on Trade and Development (UNCTAD) and ex Director-General of the World Trade Organization. Between 1990 and 2006, the real exports of developing countries nearly tripled, while those of developed countries grew by only 75%. Similarly, the share of developing countries in world exports rose from 24% to 37%. During the same period, our data show that the developing countries\' share of all inward foreign direct investment (FDI) doubled, from 18% to 36%; and perhaps more surprising, their share of outward investment tripled, from 5% to 15%. The geographical distribution of skills is also shifting. In 1990, for example, developed countries accounted for 40% of all technical tertiary enrolments globally; 10 years later, that share had dropped to 28%. The unprecedented expansion in South-South economic linkages has been demand-driven. In other words, South-South cooperation has been guided primarily by viable economic factors and not by political considerations, as had been the case in the past. In many cases, demand for South-South business ties increased despite relatively higher tariff barriers imposed by partner countries.
The world economy has seen an extraordinary expansion in the last five years, and the creative industries are in the forefront as a result of the globalisation and connectivity that have been reshaping the overall pattern of cultural production, consumption, and trade and transforming lifestyles worldwide, writes Supachai Panitchpakdi, Secretary-General of the United Nations Conference on Trade and Development (UNCTAD). In this article, the author writes that though developed countries still dominate this market, many developing-country products are already benefiting from the boom of their creative industries. Their exports of creative goods have increased astronomically, from USD 55.9 billion in 1996 to USD 136.2 billion in 2005, or about 140 percent. This rise is attributable primarily to China, which became the world\'s leading exporter of creative goods in 2005. A challenge to be faced, both domestic and systemic, is that most developing countries are not yet able to harness their creative capacities for development. In Africa, for instance, although there is an abundance of creative talents, the creative potential remains underutilised. The continent\'s share in global trade remains less than 1 percent of world exports, despite recent sharp increases. As is the case for other developing regions, this is a reflection of both domestic policy weaknesses and global systemic biases.
Many economic, social, and environmental goals could be fulfilled by increased production, use, and international trade of biofuels, writes Supachai Panitchpakdi Secretary General of the United Nations Conference on Trade and Development (UNCTAD). The author writes in this analysis that biofuels could slow global warming and provide an opportunity for developing countries to diversify agricultural production, raise rural incomes, and improve the quality of life. They could also enhance energy security, reduce expenditures on imported fossil energy, and foster other technological developments. But it is also important to consider the possible economic and environmental impacts of biofuels, the compatibility of biofuels with existing fuel delivery infrastructures, and competing uses for arable land. For example, the amount and type of primary energy consumed in producing biofuels - and the related emissions of greenhouse gases - vary enormously. And as long as current technology is used, the fast-growing demand for biofuels will mean devoting an increasing amount of arable and pasture land to the production of energy crops, which implications for food security.
The extent and pace of growth of foreign direct investment (FDI) from emerging economies heralds a new role for these countries in international production systems and the world economy as a whole, writes Supachai Panitchpakdi, Secretary-General of the United Nations Conference on Trade and Development (UNCTAD). In this article, the author writes that FDI from the South is also opening up new sources of finance, technology, and management know-how, critical ingredients for economic development. From the perspective of developing host economies, FDI from other developing countries presents a potentially broader range of sources of capital, technology, and management skills. South-South FDI has several advantages over North-South investment, including the fact that the technologies and business models of developing-country TNCs often have a lot in common. The emergence of new sources of FDI requires attention from policy makers and investment promoters in countries at all levels of development. In order to maximise the development impact of this it is important for officials and experts from both developing and developed countries to exchange views and share experiences.
Though the current state of the global economy is good, there are five areas of concern, writes Supachai Panitchpakdi, Secretary-General of UNCTAD (United Nations Conference on Trade and Development). In this article, the author writes that the first is the current impasse in the Doha Round talks, which hurts the world\'s poorest most acutely. The second concern is poverty. Globalisation and trade liberalisation have had a mixed impact. Some nations have been even further marginalised as a result, with poverty and income distribution in some cases worsening. The third area of concern is migration, which is sometimes perceived as a threat to jobs and to host societies ill equipped to absorb vast numbers of migrants. The fourth is energy security. The author calls for a well-structured, coordinated system of global economic governance that is beneficial to all countries and would help avoid potentially disastrous global imbalances and also avert distortions in international trade relations.