Supachai Panitchpakdi, secretary-general of the United Nations Conference on Trade and Development (UNCTAD). Credit: UNCTAD.

Transmitted through both trade and financial channels, they led to an economic slowdown in most countries, and even outright recessions in others.

These recent events call for a thorough examination of the different kinds of possible shocks to the external economic environment and the channels through which they spread. We also need to better understand the factors that determine countries’ vulnerability to such shocks, and how we can strengthen the resilience of different economies.

Perhaps the most obvious case of an external shock is that of a financial crisis, such as the Asian Financial Crisis initiated in the early summer of 1997, or the most recent global financial crisis.

These shocks have demonstrated that countries need to build resilience against the shortcomings of our international monetary and financial system. The most pertinent shortcoming is the failure to avoid a disorderly expansion of short-term capital movements, which have been a major factor in creating economic instability.

Partly as a result of the experiences of the Asian Financial Crisis, many developing countries have built up their resilience and are in a stronger position today to withstand shocks originating in international capital markets than in previous decades.

Lower debt-to-GDP ratios and improved debt management have been contributing factors in this resilience. But the most important factor in shielding these countries from the volatility of capital flows has likely been their accumulation of foreign exchange reserves.

However, reserve accumulation as an insurance against the instability of capital markets is a costly policy measure, and one that is always second best to multilateral measures to better regulate these markets.

Furthermore, not all countries have been able to build up such a “war chest”. Indeed, some countries are now left with little reserves to cope with future needs that may arise in international financial markets, making them more vulnerable to external shocks.

A second external shock that has recently affected many developing countries is the sharp slowdown in demand for their exports in the developed markets after the recent financial crisis.

In the decade preceding the crisis, many developing countries were able to benefit from a trade-led expansion, allowing them to achieve growth rates that were sometimes four or five percentage points higher than those of the developed world.

This resulted in a significant shift in the balance of the world economy, with developing countries accounting for a growing share of trade and growth, and led some pundits to argue that we were about to witness a “de-coupling”, which would see developing countries continue to grow despite the unsatisfactory performance of developed countries.

However, prospects in the developing world remain heavily influenced by the growth dynamism in the developed countries. To the extent that developing countries continue to rely on exports to developed countries as their key growth driver and have to cope with unfettered capital flows generating boom and bust cycles, their economies will remain vulnerable to shocks to their external economic environment.

Most forecasts predict that the current difficult external environment is likely to remain for the near future, with only a slow recovery towards a weak growth path in advanced economies.

This suggests that developing and transition economies will need to reduce their export orientation to developed economies if they want to continue to grow and increase their resilience to external economic shocks. Instead, they will need to rely more on domestic, regional and South-South trade. Thus they will need to adapt their development strategy in order to strengthen resilience.

On the other hand, coordinated measures at the multilateral level to expand global demand would be preferable. For example, increasing domestic demand in advanced countries with a current account surplus would stimulate global demand while helping to reduce global imbalances. This would be more appropriate than the current process of global rebalancing, which is being led by demand compression in deficit countries, accentuating the risks of a global economic downturn.

These are only two examples of significant external shocks that developing countries are vulnerable to. Identifying external shocks and mitigating their impact on trade and development requires the availability of statistical tools that capture the growing interdependence of national economies.

Among the many measures that are available, the terms of trade is a key indicator of the impact of external shocks, especially in countries with a high share of external trade relative to gross domestic product.

The United Nations Conference on Trade and Development (UNCTAD) has been particularly active in this area, pursuing the development of more disaggregated terms of trade figures by estimating the contribution of different product groups to changes in the terms of trade.

All these issues require the attention of policymakers, as a better understanding of the problems will help in finding solutions.

(END/COPYRIGHT IPS)

The newly completed African Union building in downtown Addis Ababa. Credit: Mekonnen Teshome/IPS

As the African Union celebrates its 50th anniversary this year, it is still younger and less integrated than the 56-year-old body that is now the European Union, and, according to politicians and diplomats, has a big advantage over the Europeans as it charts its own path of integration.

Africa can see where Europe has tried to move too far, too fast.  But it can also see where the Europeans have succeeded, as it plans its own path towards greater integration.

“Africa in particular has a need to integrate to take advantage of its massive resource economies of South Africa, Angola, Ethiopia, the Sudans and probably the whole Sahel area – and growing populous economies such as Nigeria and the Democratic Republic of the Congo,” former South African Trade and Industry Minister Alec Erwin told IPS.

Erwin negotiated his country’s trade, cooperation and development accord with Brussels, and has extensive experience in dealing with the EU.

There can be no doubt that the EU is willing to share the lessons it has learnt, and there is a regular dialogue between the European and African Unions.

European Commission President José Manuel Barroso and six of his commissioners travelled to Ethiopia’s capital Addis Ababa from Apr. 25 to 26 to meet their AU counterparts as part of the preparations for the EU-Africa Summit that will be held next year.

While the themes of cooperation and partnership will no doubt ring out, the recent crisis over the Euro, when Greece and some other members needed bailouts to keep their economies afloat, serves to highlight the way integration between sovereign nations can bring pitfalls as well as benefits.

However, while Europe has succeeded in many technical areas, the recent Euro crisis shows how political goals were pursued without the necessary backbone of economic and financial integration.

“The greatest caveat has emerged only recently and it came from the macro and monetary integration process,” Erwin said.

“Despite attempts to force a degree of harmonisation – with the Maastricht Treaty which established the European Union – it became clear that in fact the economies were too disparate in size, efficiency, and economic stability to survive a crisis.”

He said there is a clear lesson for Africa in that there has to be a systematic plan toward economic integration.

“We run the risk of running into problems with trade liberalisation,” he warned.

“Whilst this is important, it can backfire seriously if handled incorrectly. Trade liberalisation requires good trade facilitation between the economies and responsive economies.

“Both of these requirements essentially revolve around affordable and accessible energy, logistics and communications. In addition, there are a host of institutional trade facilitation reforms that have to be made.

“So like the EU at the outset we should be focusing on infrastructure and trade facilitation as key projects.”

Erwin said that in the past, Nigeria, Algeria, Ethiopia, Tanzania and South Africa cooperated more closely, and big progress was made in African development.

“It is this cooperation that is now most glaringly absent,” he said. “It requires diplomacy and tact since no one likes to think that the African world is going to be ruled by its giants.”

EU Ambassador to South Africa Roeland van de Geer told IPS: “If there is anything to be learnt from European integration it is that the road to union is a bumpy one – integration does not take place in isolation, and internal as well as external factors will place obstacles along the path.”

Former South African Ambassador to the EU Professor Eltie Links echoed this message, telling IPS: “My caution to Africa is to not try and emulate the Europeans in every aspect of the integration path.

“We have the benefit of their experience over the last couple of years and especially the last few months in trying to understand fully the way to manage the vast, enlarged EU in all of its spheres.

“These clearly point us to be more cautious in our own need to integrate, especially with regard to the speed and the depth of integration that we as Africans talk so easily about.”

Links said that the levels of development were so different in Europe, let alone in Africa, that talking of lumping countries together in an economic or monetary union without the necessary and thorough preparation would be a grave mistake.

Former South African diplomat John Mare, who served in his country’s Brussels Embassy, suggested that a lot of the more detailed harmonisation of standards and rules, which the EU has undertaken, could serve as a model for Africa.

“The AU has much to learn from the EU in terms of various forms of technical integration – such as getting similar standards for educational qualifications, road signs, environmental standards, food safety standards, infrastructural roll-out and so on,” he told IPS.

“It can learn how to delegate coordinated activities aimed at improved regional integration to sub-regional entities that firstly produce improved results, and secondly cut out duplication.”

However, Links suggested that Africa could learn not just from the practices of the EU, but also from its values.

He said three had stood out during his dealings with Brussels, namely respect for human rights, respect for the rule of law, and good governance, with the latter basically referring to corruption.

“Living in South Africa today these principles of democracy have become very obvious and imperative in our struggle to achieve our full potential as a democracy,” he said.

“Sometimes the source from where the advice comes clouds our willingness to accept it as good for us. We can do a lot more for the people of Africa if we strive diligently towards respecting and practicing these fundamentals in our society.”

Mare suggested that the AU should focus on areas of cooperation which are realistic and which will bring benefits.

“A key lesson is for the AU not to waste too much time on regional topics such as coordinated foreign affairs for the AU, or on a common monetary union – just think of the Euro,” he concluded.

Bolivian migrant in the airport in El Alto, next to La Paz. Credit: Franz Chávez/IPS

And in some regions of the world, they outnumber their male counterparts, says Dr. Babatunde Osotimehin, executive director of the U.N. Population Fund (UNFPA).

Addressing a weeklong meeting of the 46th session of the U.N. Commission on Population and Development (CPD), which concluded Friday, he pointed out that many women migrate on their own as heads of households, to secure a livelihood.

“Others leave their homes in search of more open societies, to get out of a bad marriage, or to escape all forms of discrimination and gender-based violence, political conflicts, and cultural constraints.”

Like other migrants, Dr. Osotimehin said, women contribute to the well-being of their households, through remittances that benefit the family.

An increasing number of migrants were women and children who bore the brunt of human rights violations around the world.

After a contentious debate, the CPD adopted a belated consensus resolution late Friday, recognising the central role of sexual and reproductive rights giving it prominent visibility.

This year’s CPD session focused on new trends in international migration. And the change in the gender composition among migrants is one of the growing new developments.

Yasmeen Hassan, global director of the New York-based Equality Now, told IPS, “In our experience, the so-called migration of women is deeply linked to trafficking, whether for sex or for domestic labour.”

She said women who see themselves as voluntary migrants find themselves trapped in situations of deep exploitation.

“And these are made possible and exacerbated by their vulnerable legal situation, their lack of social and family contacts, their isolation, their inability often to understand the language or to access systems of protection,” she said.

These factors make them a very attractive target of traffickers, said Hassan, formerly with the U.N. Division for the Advancement of Women and who worked on the implementation of the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW).

Speaking on behalf of the United States, Margaret Pollack said women migrants were often the victims of exploitation and sexual abuse, often lacking access to health care. She said this was particularly true for young migrants and others belonging to vulnerable migrant populations, such as LGBT (Lesbian, Gay, Bisexual and Transgender) persons and the disabled.

Pollack called for specific policies aimed at helping those groups and for the collection of data on the abuses to which migrants were subjected.

A study released last week by the Geneva-based International Labour Organisation (ILO) said an estimated 600,000 migrant workers “are tricked and trapped into forced labour across the Middle East”.

Based on more than 650 interviews conducted over a two-year period in several countries, including Jordan, Lebanon, Kuwait and the United Arab Emirates (UAE), the report points out the Middle East alone hosts millions of migrant workers, who in some cases exceed the number of national workers substantially.

In Qatar, about 94 percent of workers are migrants and in Saudi Arabia the figure is over 50 percent.

Last month a Sri Lankan maid, accused of allegedly killing an infant in her care, was beheaded in Saudi Arabia.

“Human trafficking can only be effectively tackled by addressing the systemic gaps in labour migration governance across the region,” Frank Hagemann, ILO deputy regional director for the Arab States, told the commission.

The resolution, adopted by the commission, calls on all member states to ensure migration is integrated into national and sectoral development policies, strategies and programmes.

At the same time, there should be due consideration to the linkages between migration and development in the further implementation of the 1994 Programme of Action adopted at the International Conference on Population and Development in Cairo, and in the elaboration of the post-2015 development agenda.

The resolution specifically calls for the protection of the rights of migrant women and children, including those related to sexual and reproductive rights.

In a new report on migration released last week, the United Nations says new poles of economic growth in the global South have created new migratory flows between countries of the South.

In recent years, there has also been a significant increase in migration from developing to developed countries.

“Growth in migration from the South to the North has generated significant remittance flows to the South that can spur economic growth,” the report said.

And according to the World Bank, officially recorded remittances to developing countries reached 406 billion dollars in 2012.

Many of the rapidly growing economies in East and Southeast Asia, South America and West Africa have become poles for migration within their respective regions, the study adds. In addition, the oil-producing countries of Western Asia and some countries of Southern Europe experienced a rapid growth in the numbers of international migrants between 1990 and 2010.

Following the onset of the global financial crisis in 2008, some trends slowed or reversed temporarily, but more recent national data indicate that migration to most of those countries rose in 2011.

A Chinese tourist shields herself from the blazing sun in Sydney, Australia. Credit: Alex E. Proimos (CC by 2.0)

China, which has outranked Japan as the world’s second largest economy and moved ahead of Russia as the world’s second largest military spender, has hit the top spot in global tourism.

Chinese tourists spent a hefty 102 billion dollars during their travels in 2012, more than any other nationality, making the Asian nation the world’s number one tourism source market, according to a report released last week by the U.N. World Tourism Organisation (UNWTO).

Asked if China will be able to hold on to the number one ranking in years ahead, Lakshman Ratnapala, chair of Enelar International, San Francisco, and emeritus president and chief executive officer of the Pacific Asia Travel Association (PATA), told IPS, “Yes, the primary reason being the continuing growth of the Chinese middle class.”

The steady rise in Chinese household incomes leading to more widespread disposable incomes will propel the travel habit, a common feature in affluent societies of the West, he added.

In 2005, China ranked seventh in international tourism expenditure, and has since successively overtaken Italy, Japan, France and the United Kingdom, according to UNWTO.

With last year’s surge, China leaped to first place, surpassing the top spender, Germany, and the United States. Both of these counties spent close to 84 billion dollars in 2012, UNWTO said.

Currently, the United States is ranked as the world’s biggest economy and the world’s largest military spender.

Ratnapala said the State Council of China recently announced a series of initiatives to “meet the people’s growing needs in tourism and leisure, promote the healthy development of the tourism industry, and build a Chinese-style national tourism system.”

These initiatives include putting in place, by 2020, a paid annual leave system for employees, specifically designed to encourage tourism as a leisure activity.

“Initially this will promote domestic tourism, but as the population becomes more sophisticated it will eventually lead to foreign tourism,” he said.

The plan provides for employees “to make flexible time arrangements on their annual paid leave” and for universities and colleges to “adjust their winter and summer holidays, and for local governments to explore spring and autumn holidays for primary and middle schools”.

The UNWTO report also singles out other “emerging markets” as having increased their share of world tourism spending over the past decade.

Russia’s increase amounted to about 32 percent in 2012, with total spending at around 43 billion dollars, and brought the country from seventh to fifth place in the international tourism spending rankings.

“Emerging economies continue to lead growth in tourism demand,” said UNWTO Secretary-General Taleb Rifai.

He said the impressive growth of tourism expenditure from China and Russia reflects the entry into the tourism market of a growing middle class from these countries, which will surely continue to change the map of world tourism.

Brazil also experienced a significant increase, which allowed it to move from the 29th position in 2005 to the 12th position in 2012.

In addition to urbanisation and rising incomes, says UNWTO, there are other factors such as the relaxation of restrictions on foreign travel and an appreciating Chinese currency contributing to this “boom in tourism”.

The report also says that countries which have traditionally ranked high in tourism expenditure also experienced growth, albeit at a slower pace than emerging economies.

Spending on travel abroad from Germany and the United States grew by six percent each, while UK spending grew by four percent, allowing the country to retain its fourth place in the list of major source markets, UNWTO said.

Expenditure by Canada grew by seven percent, while both Australia and Japan grew by three percent.

France and Italy were the only countries in the top 10 to record a decline in international tourism spending of minus six percent and minus one percent, respectively.

Asked if Chinese tourism is confined primarily to Asian countries, (and with Europe and the United States left out of this equation), Ratnapala told IPS the volume of international trips by Chinese travelers has grown from 10 million in 2000 to 83 million in 2012.

Expenditure has increased eight-fold since 2000.

“As societies advance from low income to middle income and finally high income economies, they begin by travelling first to neighbouring countries, then to the wider region and, as their disposable incomes reach the higher levels, their travel expands to the wider world,” he noted.

The evolution of the global travel industry, post-World War II, followed this pattern among the nouveau riche Americans, Europeans, Japanese and Arabs. Today’s Chinese and Indians are no exception. As their incomes rise and the middle classes expand, so will the reach of their travel wings, said Ratnapala.

The U.S. forecasts that that by 2017, Chinese visitor-numbers will grow by a hefty 259 percent and that, on average, each tourist will spend about 4,000 dollars in the United States.

Asked if Chinese are big spenders as individuals, Ratnapala said Chinese travelers are no different from other travelers. Their spending depends on what destinations have to offer. Initially, they will go on low-cost packaged tours, similar to European budget tourists in the Costa Del Sol in Spain.

Eventually they will spend more on trips that cater to their specific needs, he added.

“The rising sun cannot sneak past the rooster. The cock is crowing and the world has awakened to the potential of China tourism,” Ratnapala said.

José Antonio Ocampo. Credit: UN Photo/Mark Garten

The 2013 U.N. Human Development Report entitled, “The Rise of the South: Human Progress in a Diverse World” and its lead author, Khalid Malik, suggest that as the South grows economically, its citizens experience an “expansion of human capabilities and choices” that is leading to further social and political development.

Others are more sceptical of the purported “rise of the South”, pointing to the world’s widening income inequality, the lack of correlation between economic growth and equitable and sustainable socio-economic policies, and relatively unchanging global power dynamics.

On Monday, Columbia University’s Committee on Global Thought hosted a conference to discuss these issues with panelists including Malik, U.N. Ambassador Luis Alfonso de Alba of Mexico, and Dr. Jose Antonio Ocampo, a professor at Columbia’s School of International and Public Affairs and a former U.N. Under-Secretary-General of Economic and Social Affairs.

Ocampo called Malik’s characterisation of the rise of the South as a “tectonic change” a bit strong.

While he recognises the important changes that are occurring now, with regard to overall human development Ocampo says, “It’s a process that will have long-term implications.”

Excerpts from IPS’s interview with Ocampo on the impact of newly rising economies in international trade and global governance follow.

Q: Both you and Ambassador de Alba agree on the importance of multilateral global governance in terms of human development. Ambassador de Alba addressed the shortcomings of current institutions and, in particular, the U.N.’s inefficient decision-making processes. Discuss what productive, multilateral global governance would look like.

A: I have written extensively on the G20 and my perspective is that these informal institutions, which I call “elite multilateralism”, are not the best form of global governance. I like “the G’s” when they are part of multilateral institutions.

Global governance derives its legitimacy at the global level just as governance does at a national level, from universality. You have to have universal membership. For that purpose, the best way for these “G’s” to work is within a formal multilateral setting.

At the same time, I agree that you have to have effective decision-making mechanisms. Smaller decision-making bodies, in which everyone is directly represented, are fundamental. In all democracies, decisions are taken by a limited number of actors at the end, but those actors have to be representing all of the membership.

Q: What is the state of South-South trade relationships today? What constitutes an ideal South-South partnership that allows for progress toward a more advanced, dynamic economy?

A: There is one sort of South-South trade that is really part of North-South trade. For example, Southeast Asia is producing parts and capital goods that are assembled in China and then exported to the U.S.

In the case of China-India, it’s a huge deficit for India and surplus for China. There is a second China-centered relationship, in which China essentially imports raw commodities and exports manufactured goods. I would say, for commodity producers – i.e. sub-Saharan African, South America, and some of the Middle East – that’s an opportunity. But it’s still a very imbalanced trade relationship. In the long-term, you have to diversify away from that.

There is a third type which are legitimately South-South flows in which you have, more or less, a balanced relationship. For example, the inter-regional trade in Latin America is one relationship of that type – it starts and ends in developing countries. I think that’s the most positive of all, but it’s less common.

Q: As these newly rising economies close the income gap that separates them from developed countries, what do you think characterises fair and mutually-beneficial North-South partnerships?

A: In the past, the North-South relationship was considered to be an asymmetric relationship in which the North had to support the development of the South so it could cash out. I think that concept has become obsolete because of the heterogeneity of developing countries.

Ambassador de Alba mentioned this almost sacred principle of “common but differentiated responsibilities”. In the past, developing countries wanted to be treated according to the second part of that principle – “differentiated” – and I think, as de Alba pointed out, the “differentiated” still has to be considered today.

Even major emerging economies are developing countries – they are technologically dependent, they still have a large share of the labour force in low productivity activities, and the GDP per capita is still a fraction of that of developed countries. So they have a right to be treated with some differences internationally. But they are, at the same time, responsible and the responsibility those countries have is very important.

Q: How have Southern governments been an obstacle to human development and, on the other hand, what should they be prioritising in order to create positive conditions for growth?

A: The basic problem is that power ends up in the hands of the elite that uses power to further its own interests. This has been associated with developing countries, but it can also happen in developed countries, particularly in the financial sector. There has been a change in that regard during the recent crisis; now there is a bit more hope that financial policy will be detached from financial interests.

Successful human development strategy has to include very active social policy, including education, health, and social protections, and at the same time very active economic development policy, particularly the generation of employment.

We have seen so many cases of countries that have improvements in education and when an educated labour force comes to the market, there is no employment to absorb that population. You have to have an active social policy but also an active economic policy and the basic connection between the two is called employment.

The triumph celebrated by the Colombian expert, who is a special adviser for health and development at the South Centre, was a landmark ruling against Novartis handed down Monday Apr. 1 by India’s Supreme Court.

The Geneva-based South Centre is an intergovernmental organisation of more than 50 developing countries that functions as an independent policy think tank.

Velásquez, who worked for over 20 years in the World Health Organization, explains in this interview with IPS his point of view on the legal battle in the courts in New Delhi and its consequences for developing countries.

Q: How do you interpret the ruling by the Supreme Court of India?

A: There are problems with the information that is being reported. Nearly everyone says that India rejected the patent for Glivec. That’s true, but it’s not all the verdict says.

Q: Could you explain?

A: At the heart of the verdict is the ratification of the criteria set by the Indian law for the approval of drug patents. That is, whether or not it meets the requisite of containing a genuine innovation.

Q: Could you describe the legal battle?

A: It all starts with the adoption of the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), one of the treaties established at the same time the WHO was born, in 1995.

India was the only developing country to use the (entire 10-year) transition period to enforce TRIPS, in 2005, when it passed the patent act.

Q: What happened to the patent applications presented during that decade-long transition?

A: They accumulated, until there were around 10,000 applications, and it was not until 2005 that the patent office began to examine them. They included the application for the Glivec patent.

But the new standards turned out to be stricter, such as the one that indicates that the innovation can’t be just a small change to a molecule, but has to be something substantial. In short, the patent for local sales of Glivec was denied in 2006.

Q: How does the story continue from there?

A: Novartis challenged that decision and brought a lawsuit in a court in the city of Madras (the capital of the southern state of Tamil Nadu; the city was renamed Chennai in 1996.) But the High Court of that city, three years later, also rejected the application. That year, 2009, the company appealed the decision – and lost again.

Q: What options are left to the company?

A: This is the aspect that hasn’t been sufficiently reported. In a cynical, perverse and very serious move, Novartis says (prior to the ruling): “If they didn’t give me the patent, I’ll go to the Supreme Court, but to ask this time for the elimination of the strict criterion established in article 3 of the patent act.”

“If more flexible, lower standards are set, then my medicine will be in,” was its reasoning.

Q: So the dispute took on this other face?

A: Yes, because with the intention of introducing its drug by force, the transnational corporation was trying to modify the law of a country – and of a country like India. I think that its executives were being short-sighted when they made that decision. This has been very costly for them in terms of their image.

Q: How do you reach that conclusion?

A: It is clear that it was a misstep to denounce India’s patent law, with the risk of losing. The transnational industry in general had suffered a blunder in South Africa, when it was forced in 2001 to back down from legal action against a law that authorised the patenting of lower-price imported medicines in order to address the AIDS epidemic.

You could suppose that “Big Pharma”, as the major pharmaceutical companies are called, had learned the lesson. Especially knowing that Glivec was patented in 40 countries, including the United States, China and Russia.

Q: Are you insinuating that there may be a domino effect?

A: If Novartis loses in India, as it did on Monday, any of the governments of the 40 countries could ask themselves: “Why don’t I review that patent and revoke it?” That authority is granted by the legislation of all of those countries.

Q: What standing do those 40 countries that recognise the Glivec patent have?

A: Most of them are industrialised states, large markets. But they also include some that are currently experiencing severe economic difficulties, like Greece or Spain, whose authorities could ask themselves why they should pay 2,500 dollars a month per person for a treatment against cancer. They could say: “Why don’t I just have it produced as a generic drug, and invalidate this patent.”

I think the Novartis executives did not take that into account when they launched this legal battle. Obviously, after the first impetus, they continued on to the end, and today they’re going to see repercussions.

Q: What could those consequences be?

A: It should be a lesson for the rest of the countries of the developing South. They should try to follow India’s example and introduce in their legislation clauses like the ones contained in article 3d, which restricts and sets criteria with respect to what amounts to innovation, which is necessary in order to grant a patent. That there can’t just be a small change, which is sometimes merely cosmetic, to a molecule in the medication.

Q: What prospect is there for the spread of that criterion?

A: In India, the Philippines and Argentina, that prohibition already exists, while others are introducing it through alternative routes.

Q: And other consequences?

A: India will be able to continue to make generic versions of all new medicines that are not truly original, and it will continue exporting them without any problem. It’s necessary to take into account the fact that 95 percent of the antiretrovirals consumed in Africa come from that Asian country.

So that means the Indian Court’s ruling is extremely important, with very concrete repercussions for that medicine and some 10,000 others that are on the waiting list in the patent office in New Delhi.

Q: What percentage of those could get patents?

A: In 2010, Argentina approved 2,000 pharmaceutical patents, and China 4,000. But actually, just 40 or 50 products a year are true innovations.

Q: Why that enormous difference between patents that are granted and truly innovative products?

A: The pharmaceutical industry is facing huge difficulties in coming up with innovations.

So it clings to a very short-sighted way of thinking, very short-term, but enormously profitable. This consists of launching incremental innovations, as they are called – in other words, a small product with just a gradual change, but accompanied by a major marketing campaign.

The São Paulo Forum expressed its support for Nicolás Maduro in the upcoming presidential elections in Venezuela. Credit: Raúl Limaco/IPS

The São Paulo Forum, which groups leftist political parties and organisations of Latin America and the Caribbean, sees a victory by Venezuela’s acting President Nicolás Maduro in the Apr. 14 elections as key to the future of the left in the region, and to “containing the right”.

Maduro, the new leader of the United Socialist Party of Venezuela (PSUV), and Henrique Capriles, the candidate of the heterogeneous opposition coalition, will face off at the polls to win the six-year term to which the late Hugo Chávez (1954-2013) had been re-elected in October.

“For us the elections here are key, because an eventual defeat (of Chavismo) in Venezuela would mean a setback in the regional process of integration,” historian Valter Pomar, executive secretary of the Forum and a leader of Brazil’s governing Workers Party (PT), told IPS.

“It’s not the Brazilian or Argentine economy that would be affected in the case of a defeat (of Maduro) – which won’t happen – but the entire economy of Latin America, especially the weakest countries or the ones that are lagging the most in terms of industrial development,” Pomar said.

Parties that belong to the Forum, created in 1990 in São Paulo on the initiative of Brazil’s PT – in opposition at the time – currently govern Bolivia, Brazil, Cuba, Dominica, the Dominican Republic, Ecuador, El Salvador, Nicaragua, Peru, Uruguay and Venezuela.

Several of those countries belong to the Bolivarian Alliance for the Peoples of Our America (ALBA), Latin America’s alternative integration bloc founded by Venezuela and Cuba, or are beneficiaries of Venezuela’s Petrocaribe programme, which provides oil to 17 Caribbean and Central American nations under preferential payment conditions.

According to the Forum, Chávez’s initial election as president, in December 1998, marked the start of the rise to power of several of the group’s member parties. And since then, it says, none of them have been defeated in elections.

That does not count Chile’s Socialist Party, defeated by rightwing President Sebastián Piñera in 2010, because it was just one member of the centre-left Coalition of Parties for Democracy that governed since 1990.

The Forum working group, with 38 delegates from 27 parties in 18 countries, met Monday Apr. 1 in Caracas to pay homage to Chávez – who died of cancer on Mar. 5 – and express support for Maduro.

“This is an excellent show of support, which indicates to the popular movements of Latin America and the Caribbean that Venezuela is strategic and that the victory of Nicolás (Maduro) will also be a victory for the people,” Rodrigo Cabezas, a PSUV leader and Latin American Parliament lawmaker who hosted the gathering in Caracas, told IPS.

Maduro, meanwhile, said “this is the time of the greatest expansion of the struggles for the new independence of Latin America from U.S. hegemony and imperial domination. The road is just beginning in this new phase.”

The acting president and candidate, who joined delegates to the Forum in a visit to the mausoleum that holds Chávez’s remains in Caracas, expressed “special recognition of the Cuban revolution, as a forerunner to this Latin American and Caribbean process…It drove in the first peg, liberated the first territory, and generated the dynamic of resisting, fighting and winning,” he said.

“Yes, we are worried that the right is setting up an international operation, not only national operations, to deal us a blow. There is a counteroffensive by the right in the region, as seen in Honduras and Paraguay – the latter involving a coup by parliament,” Pomar said.

He was referring to the Jun. 28, 2009 coup that overthrew Honduran President Manuel Zelaya and the Jun. 22, 2012 toppling of Paraguayan President Fernando Lugo.

Nevertheless, “we see a situation of equilibrium. The right has failed to defeat us in the main countries where we govern, and we have not managed to get them out of power in Mexico, for example. But this relative equilibrium will not last forever,” Pomar said.

According to the Brazilian politician, “what could work in our favour is accelerating the changes in each country and deepening integration, a fundamental issue, because for many countries in the region it is impossible to forge ahead with the processes of change in an isolated manner. That’s why the presidential election in Venezuela is essential for us.”

This is reflected by the fact that the Forum has focused more on the vote in Venezuela than the Apr. 21 presidential elections in Paraguay, where the left is participating without a real chance of winning against the front-runners, who belong to the country’s traditional political forces: the Colorado and Liberal parties.

The Forum working group’s meeting also briefly discussed other international events, particularly the threats to global peace posed by the heated situation between South Korea and North Korea, the conflict in Syria and Iran’s nuclear programme.

Although the group agreed to protest what it called the provocation caused by U.S. military activities in South Korea, there were also voices in the meeting that complained that North Korea’s behaviour “facilitated” Washington’s alleged provocation.

In the debate on the situation in the Korean peninsula, the theory was set forth that the conflict there strengthens U.S. protagonism in the Asia-Pacific region to the detriment of China and its partners in the BRICS bloc – Brazil, Russia, India and South Africa – of emerging powers.

On the regional front, the meeting agreed that the most urgent situation involves the peace talks between the Colombian government and the FARC rebels, taking place in Havana.

As in nearly every Forum meeting, the Puerto Rican independence activists, this time through the words of Héctor Pesquera of the Hostosian National Independence Movement, insisted that the fight against the remnants of colonialism in Latin America not be forgotten, and called for the release on humanitarian grounds of Oscar López Rivera, who has spent nearly 32 years in maximum security prisons in the United States on charges of seditious conspiracy and armed robbery.

The project is feeding a long-standing desire for foreign investment, but it is also stoking wariness about foreign influence.

Set against a broad backdrop of crumbling, Soviet-era apartment blocks, the project — run by the Hualing Group, a privately owned, Xinjiang, China,-based company with banking, timber, and hotel investments in Georgia – is projected to remake about 420 hectares of land in the working-class district of Vazisubani.

In the first, 150-million-dollar phase, housing will be built on four hectares for the European Youth Olympic Festival, an event of young athletes from 48 European countries that Tbilisi will host in 2015. A subsequent step is expected to include a retail and residential area, to be built at an unknown cost.

Last year, President Mikheil Saakashvili’s government praised the Hualing Group for bringing in much-needed investment and employment to a poor, densely populated part of Tbilisi. The level of investment for the first phase amounts to more than five times the size of total Chinese foreign investment in Georgia in 2012.

At the same time, rumours that the project will bring 127,000 Chinese immigrants into the city to work and live are generating local concern – increasingly prevalent since the 2008 war with Russia — about foreigners pushing Georgians off their own land and depriving them of hard-to-find jobs.

“Nothing will be left for us [if so many Chinese come],” complained Gulara, a 62 year-old female pensioner who lives near the planned development site. “Where did all these ethnic groups come from?…God gave us this land.”

In recent years, Tbilisi has experienced an influx of immigrants from Africa and South Asia, as well as occasional Chinese traders, and Arab investors. But in a country of 4.49 million people with estimated rates of unemployment over 50 percent, these visitors are sometimes seen more as an economic threat than as a source of opportunity.

“People are not aware of how to deal with, how to cohabitate … with others,” said Nana Berekashvili, the head of the Department on Minorities and Gender at Tbilisi’s International Center on Conflict and Negotiation. “In [the] case of [the] Chinese, I think it is … [people] having the notion about China that it is huge and enormously populated, and their idea is somehow to expand.”

Representatives of the Hualing Group denied that there are plans for a massive resettlement of Chinese to Tbilisi. The residential buildings that will begin construction once the Olympic Village is finished will be sold on the open market, and are not sufficient to house 127,000 people, commented the company’s Georgia spokesperson, Tina Shishinashvili.

She emphasised that 531 of the project’s 659 workers are Georgian citizens. Hualing has also taken on Georgian architects to design its overall strategic plan, she said.

But such assurances mean little to figures such as Jondi Bagaturia, the outspoken head of the right-wing Kartuli Dasi (Georgian Troupe) political party. The party has played a prominent role in stoking popular discontent over the project with claims of a pending Chinese resettlement.

Bagaturia says he bases his opposition on what he purports to be a copy of the contract between the Georgian government and the Hualing Group. Although the investment itself is “very good,” he said any influx of Chinese immigrants is “unacceptable” since the government “must protect the labour market.”

Neither the Economic Development Ministry nor Tbilisi City Hall responded to requests for comment about the planned investment. The project’s architectural plan is still awaiting municipal approval.

Hualing Group’s interest in Georgia is not unusual. Chinese companies in the past have been involved in large-scale investments ranging from the construction of a hydropower plant to a railway tunnel. With a trade turnover of 591.5 million dollars, China in 2012 ranked as Georgia’s fourth largest trading partner.

Yet Georgians’ attitudes toward the Chinese — and immigrants in general — remain complex. A 2010 survey by the Caucasus Research Resource Center in Tbilisi found that while 57 percent of 2,089 Georgian respondents supported doing business with the Chinese, 80 percent were against the closer tie of marriage.

While Georgian culture stipulates hospitality and respect toward guests, Berekashvili commented, Georgians are selective about which ethnic groups are welcomed. They “are very hospitable toward people from Western cultures, from Europe, from the United States, but very little to others,” she said.

For Yu Hua, a Chinese businessman, Georgia is still a land of opportunity. After 14 years in the country, Yu serves as the president of the newly formed Chinese Chamber of Commerce and is married to a Georgian.

He says that he has never experienced racism or discrimination, but underlines that the government and media need “to offer… correct information” to dispel rumours that could spoil Chinese-Georgian business ties.

Right now, opinions are decidedly mixed.

As a small crew cleared mounds of earth from the European Youth Olympic Village site one day last month, a group of male onlookers dismissed the Chinese project with shrugs and a curse. But one 65-year-old woman selling sunflower seeds near the site remained optimistic.

“Let’s see what happens,” she said. “I don’t think it will be bad.”

*Editor’s note: Molly Corso is a freelance journalist who also works as editor of Investor.ge, a monthly publication by the American Chamber of Commerce in Georgia.

This story originally appeared on EurasiaNet.org.

World Bank president Jim Kim urged countries to “break the taboo of silence” around inequality. Credit: World Economic Forum/cc by 2.0

In a major speech at Georgetown University here on Tuesday, Kim fleshed out themes that he first introduced last fall, outlining a vision for how the World Bank can evolve and remain relevant in the coming decades. With an annual lending budget of around 30 billion dollars, the Washington-based bank remains one of the world’s largest development institutions.

“We are at an auspicious moment in history, when the successes of past decades and an increasingly favourable economic outlook combine to give developing countries a chance – for the first time ever – to end extreme poverty within a generation,” he said.

While those living on less than 1.25 dollars a day stood at 43 percent of the developing world in 1990, by 2010 that figure had fallen to 21 percent. The new plan would now bring this number down to three percent by 2030.

Kim warned that the new goals were extremely ambitious and would require “concerted global action on an unprecedented scale”. While cutting global extreme poverty levels in half – the first of the Millennium Development Goals (MDGs) – took some 25 years to accomplish, Kim said the 2030 goal would require cutting poverty levels in half, then in half again, then nearly in half a third time.

“If countries can achieve this, then absolute poverty will be brought below three percent,” he said. “Our economists set the goal line here because below three percent the nature of the poverty challenge will change fundamentally in most parts of the world. The focus will shift from broad structural measures to tackling sporadic poverty among specific vulnerable groups.”

The speech is being widely welcomed by development agencies and scholars.

“It’s refreshing to see a world leader outline a bold, focused and measurable vision,” Didier Jacobs, acting head of the Washington office of Oxfam, a humanitarian agency, told IPS. “Oxfam applauds refocusing the World Bank on eradicating extreme poverty while reducing inequality and curbing climate change.”

Indeed, climate change and inequality will now constitute a primary focus in all World Bank projects. On the first issue, Kim stated the bank is currently exploring ways to institute carbon markets and eliminate fossil fuel subsidies, among other initiatives.

On the second, Kim urged countries to “break the taboo of silence” around inequality, warning that around 1.3 billion people continue to live in extreme poverty despite massive economic leaps over the past decade.

Still, some are worried that the bank’s focus on the poorest 40 percent in each country will not do enough to address this growing inequality.

“The shared prosperity goal lacks a target,” Oxfam’s Jacobs says. “It is not enough to increase the income of the bottom 40 percent in every country. Income of the poor should rise faster than average and the gap between the very rich and poor should be reduced.”

As the bank begins to implement Kim’s new vision, Jacobs is urging the institution to commit to specific policies and investment priorities, including free universal public health and education services, fairer taxation, and replacing fuel subsidies with programmes that build the resilience of poor people in the face of climate change.

South-South delivery

Kim’s new vision for the World Bank comes in the context of two milestones. First, this week marks a thousand days until the end of 2015, the deadline for achievement of the MDGs.

While Kim said progress towards the MDGs, which are to be achieved by 2015, has been notable but uneven, he also pointed out that many developing economies have weathered the international economic crisis better than developed countries. World Bank forecasts currently suggest developing economies as a whole will grow by 5.5 percent this year, followed by incremental increases the following two years.

Second, Tuesday’s speech comes just days after five middle-income countries – Brazil, Russia, India, China and South Africa, known as the “BRICS” – unveiled new plans for a BRICS-funded development bank, to be initially capitalised at around 4.5 trillion dollars, that would work in concert but also in competition with the bank.

Due to this and other fast-changing dynamics, many are suggesting the bank will need to adopt new models to maintain its relevance. On Tuesday, Kim announced a new institutional focus on what he’s calling a “science of delivery for development”, which he says will position the bank to facilitate networking between development practitioners in developing countries.

“Knowledge transfer of new models of downstream work that takes a more social enterprise approach, rather than being state led – this is what is fresh and exciting in the new models of global South-South collaboration currently taking place,” Asif Saleh, communications director for BRAC, an international development organisation based in Bangladesh, told IPS.

“On a mass scale, how we highlight such partnerships will determine the success or failure of our fight against global poverty.”

While others suggest that development and delivery issues are more art than science, the initiative in general appears to be signalling a new direction for the World Bank.

“‘Science’ suggests that these approaches work the same the world over, whereas delivering development is entirely context dependent,” Charles Kenny, a senior fellow at the Center for Global Development (CGD), a Washington think tank, told IPS.

“Nonetheless, helping partners learn from one another is clearly a big future role for the bank. This would appear to suggest that the bank is moving away from the one-size-fits-most model and towards one that admits that what will work in development will depend on country circumstances and everyone learning together.”

Despite the scope of the new goals unveiled on Tuesday, Kenny says that Kim’s speech outlines a realistically scaled-down vision of the bank’s long-term global role.

“If absolute poverty is gone in 2030, the bank will need something to do, so this is a vision for the bank’s role in a richer world,” he notes.

“A new model where the bank is focused on small subsets of people and global public goods provision, rather than trying to do all of development, is a very pragmatic approach. A bank that focuses on where it can have the biggest impact – on remaining pockets of absolute poverty, on cross-country learning – seems like a very sensible agenda.”

In a landmark judgement, the Supreme Court said on Monday that the drug Glivec failed to qualify for a patent according to Indian law.

Since 2006, Novartis has been challenging the Indian government to give protection against Indian companies copying its drugs.

But the court ruled that the drug for which Novartis was seeking a patent “did not satisfy the test of novelty or inventiveness” required by Indian law.

In 2009 the company took its challenge against a law that bans patents on newer but not radically different forms of known drugs to the Supreme Court.

Al Jazeera’s Sohail Rahman, reporting from New Delhi, said the ruling is a “huge disappointment” for Novartis, as it allows Indian companies to continue producing cheaper generic medicine for domestic and international consumers.

Rahman said the ruling could raise questions about India breaking rules set by the World Trade Organization.

The case is the most high-profile of several patent battles being waged in India and could have far-reaching implications in defining the extent of patent protection for multinational drug firms operating in the lucrative market.

‘Dangerous precedent’

The Swiss firm threatened to halt supplies of new medicines to India if the court did not rule in its favour, London’s Financial Times reported on Sunday.

“If the situation stays as now, all improvements on an original compound are not protectable and such drugs would probably not be rolled out in India,” said executive Paul Herrling, who is leading the company’s handling of the case.

But Leena Menghaney, a lawyer with medical charity Medecins Sans Frontieres (MSF), said a legal victory for Novartis could “set a dangerous precedent, severely weakening India’s legal norms against evergreening” – the name given to the industry practice of seeking new patents after making small modifications to existing drugs.

It would “be dire for people in the developing world who depend on generic drugs made in this country. It could seriously curb access.”

Generic drug firms in India – long known as the “pharmacy to the developing world” – have been a major supplier of copycat medicines to treat diseases such as cancer, TB and AIDS for those who cannot afford expensive branded versions.

The cost difference between generic and branded drugs is crucial for poor people around the world, MSF says.

It points out that Glivec – often hailed as a “silver bullet” for its breakthrough in treating a deadly form of leukaemia – costs 4,000 dollars a month in its branded form while its generic version is available in India for around 73 dollars.

In the case of Glivec, Al Jazeera’s Rahman also said that most of the consumers in India could not even afford the drug given the average wage is only 120 dollars.

But Novartis and other global drug makers say India’s generics industry inhibits pharmaceutical innovation and reduces commercial incentives to produce cutting-edge medicines.

* Published under an agreement with Al Jazeera.