Dhaka, Bangladesh
LDC dialogue sees decline in North-South order

LDC dialogue sees decline in North-South order

Strategies for shedding the old North-South order in which the poorer countries of the world, concentrated mostly in the global South, depend on the richer countries of the North to lead them to prosperity, emerged as the overriding theme by the end of a dialogue aiming for a new partnership among the world's Least Developed countries, reports UNB.
The Centre for Policy Dialogue, a leading Dhaka think-tank, organized the dialogue that concluded Friday at a city hotel, partnered by the Development Centre of the Paris-based Organisation for Economic Cooperation and Development (OECD).
Foreign Secretary Mijarul Quayes, chief guest at the closing session, said the outcome of the three days of talks would be 'empowering' for the governments of the world's 49 Least Developed Countries, as they gear up for the UN's Fourth Conference on LDCs, to be held in Istanbul next March.
The UN defines LDCs as low-income countries that are suffering long-term handicaps to growth, in particular low levels of human resource development and/or severe structural weaknesses.
Most participants in the dialogue agreed that the world had changed profoundly since the last LDC conference was held in Brussels in 2001, which adopted the Brussels Plan of Action.
But since then, a series of structural changes in the world economy, exacerbated by the global financial crisis, has meant the old 'vertical' order dictating the North-South relationship 'no longer pertains', in the words of eminent economist Prof Rehman Sobhan, who chaired the dialogue.
Rather, he drew attention to the increasingly 'lateral' nature of trade and investment between nations, which was slowly giving rise to an 'East-West' order.
To reinforce his point, the CPD chairman held up the phenomenal growth in economic relations between African and Asian nations. Led by China and India, Asian countries have stepped up their investments in Africa, especially its natural resources, at a very rapid rate over the last decade.
These 'South-South' flows saw trade between the countries of Africa and Asia-Pacific rise from a 7.8 percent share of total global trade in 1990, to 19 percent in 2008, a twenty-fold increase in absolute terms, while global trade quadrupled.
A 2010 report by the OECD, titled 'Perspectives on Global Development 2010-Shifting Wealth', also shows a similar trend in South-South FDI flows and aid. China is said to be leading the pack in the developing world, with an estimated investment stock of $1 trillion. India, Brazil and Malaysia have also become lucrative sources of FDI for other developing countries, mostly from Africa and the Asia-Pacific.
In the face of this recalibration of the world economy, adherence to the old system, whereby the rich, industrialized countries effectively hold the development of poorer nations ransom (by attaching locally insensitive conditions to aid packages), only risks perpetuating the 'LDC trap', whereas the aim of every nation in the group must be to graduate out of it, as Botswana and Cape Verde have done.
Speaking at the closing, Mosharraf Hossain, Secretary to the Ministry of Finance's Economic Relations Division, was withering in his criticism of 'rich countries' for not living up to the promise of providing 0.15-0.2 percent of their national incomes as ODA to the LDCs, as promised at Brussels.
But other speakers urged the LDCs to stop harping on the issue of funds, as the current economic climate makes it highly unlikely that they will be forthcoming.
Professor David Hulme of the University of Manchester, while pointing this out, said developing countries may be better advised devising 'more effective' programs within the current aid regime.
The dialogue produced a 137-point draft of recommendations for the Istanbul conference, divided into five sections on enhancing trade, promoting investment, access to technology, ODA and its utilization, and domestic reforms. Although the foreign secretary, as well as the secretary to the ERD both declared they had much to learn from the 'enlightening' document, there seemed to be some consensus among the participants that the list of recommendations was too long, and lacking in focus.
M Syeduzzaman, a former secretary to the Finance Ministry and a member of CPD's Board of Trustees, criticized the set of recommendations for being 'highly generalized' in some portions.
But it was defended by Dr Debapriya Bhattachrya, Distinguished Fellow at the CPD, as only the first draft of what is sure to be a long discussion process that finally yields an end product in the form of a declaration in Istanbul.
Dr Bhattacharya said the logic behind the drafters coming up with a more 'comprehensive' document, as opposed to a more 'focused' one, was that in these early stages, it is better to start with a large number of recommendations, as the months ahead will surely see it culled, with politics starting to gain greater prominence in the process.
He stressed the importance of LDC governments providing the necessary support structure for development aspirations to be met, and of the rich countries participating in the process too. In this, he mentioned two nations in particular, France (as the next chair of the G20), and Switzerland (as the rotating head of the UN General Assembly) as having a big role in ensuring rich countries buy-in to the process.
Dr Bhattacharya also put the blame for the failure of the Brussels Plan of Action to gain much currency in LDC development plans, relative to the World Bank and IMF-backed Poverty Reduction Strategy Paper process, squarely on a lack of funds to back it up.

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