DEVELOPMENT BULLETIN-GROUP OF 77: Globalisation Marginalising the South

By Thalif Deen Reprint | | Print |

Thalif Deen

UNITED NATIONS, May 9 1998 (IPS) - The growing trend toward globalisation and liberalisation has further marginalised developing countries from the mainstream of the world economy, says the of head the Third World coalition ‘Group of 77.’

“Many developing countries, particularly in Africa, have not been able to attract any significant amounts of foreign investment while their debt burden has increased and external assistance diminished,” according to G-77 chairman, Makarim Wibisono of I ndonesia.

Speaking on behalf of 132 developing nations and China, Wibisono declared Wednesday that economic cooperation, in the new era of globalisation and liberalisation, has to be on new terms and conditions.

“When all is said and done, the fact remains there must be a flow of resources from the developed towards the developing countries. Recycling of existing resources is not the answer,” he said,

Addressing a one-day seminar on “Perspectives from the South on Financing for Development in the Globalisation Process,” Wibisono said net transfer of resources to developing countries have averaged less than one percent of their gross domestic product (GDP).

The seminar, sponsored by the Group of 77 in cooperation with the Rome-based Society for International Development (SID), was attended by Third World diplomats, senior U.N. officials and representatives of non-governmental organisations (NGOs).

Wibisono said the demands of development are such that there must be an injection of new resources through official development assistance (ODA). But he regretted that ODA itself has declined: from 58.9 billion dollars in 1995 to 55.1 billion dollars in

1996.

“This declining trend continued unabated in 1997,” he noted, adding that the decrease has been in the region of about 4.0 percent in real terms.

Wibisono also said that although private financial flows to developing countries have increased in recent years, they have remained uneven and lopsided. Only few countries have accounted for more than three-quarters of the total flow in 1996 and 1997.

“Obviously, it is very difficult to developing countries, to attract these private flows on any substantial scale, bearing in mind their extremely difficult socio-economic conditions and structural constraints,” he added.

Roberto Savio, Secretary-General of SID, said globalisation refers to a new form of global and national governance which gives precedence to organisations monitoring and promoting neo- liberal policies such as the World Bank and the World Trade Organisati on (WTO) over other multilateral organisations such as the United Nations.

Savio said globalisation also subordinated national politics to the international economy and concepts such as “social justice, solidarity, welfare and development” were disappearing from the political lexicon of the North.

The new political jargon from the North included “efficiency, effectiveness and markets, ” he said. The new North-South dialogue should go far beyond official development assistance (ODA) and financial flows.

“If development (in the ideological sense) remains first and foremost a project of the South, we may ask to what extent the new institutional arrangements for globalisation are responsive to Southern concerns,” Savio said.

Under the development regime, ODA was the central component of North-South relations for development. But under the globalisaton regime, ODA becomes a secondary component which merely complements other financial and trade arrangements.

“There is therefore a risk that ODA becomes a sort of an international safety net, more geared to ensuring survival than to promote development processes,” Savio added.

James Gustave Speth, Administrator of the U.N. Development Programme (UNDP), pointed out that foreign direct investment (FDI), although massive, has largely bypassed low-income countries. About 90 percent of FDI going to the develoing world today goes to middle income countries and to China.

“Most of the developing world is benefiting only marginally from this crucial aspect of globalisation. One of our roles in development cooperation, therefore, is to help developing countries attract FDI, both direct and portfolio,” Speth said.

A central element of development cooperation, where UNDP has been taking a lead role, is the eradication of poverty. “The poor are not in the modern market, neither as producers nor as consumers,” he said.

Speth said the eradication of poverty would increase the size of the global market, it would creat incentives for the expansion of production and of consumption. “The importance of bringing the poor to market, and of eliminating poverty by achieving bot tom- up growth, is beginning to be recognised by private enterprise, by those enterprises driving globalisation,” he added.

Speth also said that by its very definition, globalisation calls for multilateral solidarity. Developing countries cannot effectively take advantage of globalisation individually. “They must pool resources, linke up markets, and exchange valuable lesson s in management and technology.”