From: Rakesh Bhandari (rakeshb@STANFORD.EDU)
Date: Fri May 28 2004 - 04:51:00 EDT
from lbo-talk Full report at: http://www.unctad.org/Templates/webflyer.asp?docid=4810&intItemID=2068&lang=1 UN: trade rise is hurting poorest Ashley Seager Friday May 28, 2004 The Guardian An increase in international trade for the world's poorest countries has not led to any real reduction in poverty in those countries, the United Nations said yesterday. Releasing its two-yearly report on the world's least developed countries, the United Nations Conference on Trade and Development (Unctad) said many least developed countries were more integrated into the world economy than their rich counterparts but had seen trade balances worsen as they have liberalised trading. The report will act as a warning to policymakers who argue that opening up markets will benefit all countries. Unctad does not argue against free trade, however, but says it is not sufficient on its own. "Trade is the fuel for growth but not the engine," said Unctad's least developed countries specialist Michael Herrmann. "The current approach is for trade-led growth, but we need development-led trade policies," he added. The key reason why there was little direct link between trade and poverty was that trade rarely increased the incomes of the people in the world's 50 least developed countries - many of whom are surviving on less than $1 a day, half the level of subsidy given to European Union cows. The two main ways in which people gained more money was through aid or the creation of meaningful jobs. That required more investment, more innovation and better use of technology, the report said. Often a country's export sector is dominated by enclaves of low-cost textile manufacturing or oil production. Much of the money made in this way goes to the international firms concerned or a few local bosses, rather than to the local economy - except in wages. Government spending on economic development often goes into expanding such export opportunities, the report said, rather than local infrastructure projects that benefit domestic economies directly. Another problem is that many of the least developed countries, particularly the 34 in sub-Saharan Africa, rely on exports of basic commodities, prices of which have fallen significantly in recent years. Aid to the poorest countries fell in the 1990s and, while it has picked up again since 2000, has been directed mainly to health and education projects which do little in the short term to boost domestic growth. The report also highlights the impact of HIV/Aids. Although they only have 11% of the world's population, the poorest countries have half the world's sufferers. "The HIV/Aids epidemic threatens to become a particularly vicious link in a cycle of pervasive poverty, economic stagnation and low levels of human development," said the report. On present trends, it forecast that the number of people in the least developed countries living in absolute poverty, or less than $1 a day, would rise to 471 million in 2015 from 334 million now. The report's one bright spot was that in 2000-2002, the latest period for which data is available, economic growth in the poorest countries was relatively good, at an average of 4.9% in real terms, thanks to higher aid flows and foreign investment. But Mr Herrmann warned that growth was uneven and most of the foreign investment went to the handful of poorest countries, such as Nigeria, which produce oil. ------------------------------------------------------------------------
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