Statement by Mr. Martin Khor, Executive Director, South Centre, to UNCTAD XIV General Debate plenary, in Nairobi, presented by Dr Li Yuefen, Special Advisor, on behalf of the South Centre.

First of all, on behalf of the Executive Director of the South Centre, Mr. Martin Khor, I would like to join previous speakers in expressing our sincere gratitude and appreciation to the hosting government of Kenya for their warm hospitality.

UNCTAD XIV is taking place against the backdrop of uneven and protracted recovery from the 2007/8 global financial crisis which has slowed down and even reversed in some cases the economic catching up process of emerging and developing countries.  Negative and destabilising spillovers from some of the crisis management measures together with the legacies of the global crisis have hit the developing countries hard. Dramatic swings in exchange rates, volatile and speculative capital flows, anaemic or even negative growth, declining trade, rising debt levels, higher unemployment especially among the young, and  commodity price fluctuations are among the problems the policy makers and ordinary citizens have to cope with, even though there are variations between countries. In addition, political risks which have their roots in the economic plights are also on the rise. Forecasts from major international institutions have warned us of moderate to low economic growth and headwinds in the coming few years.

The last time UNCTAD held its conference in Nairobi was in 1976 for UNCTAD IV. That was the time when the world just started to emerge from the 1970s stagflation for some developed countries. The economic recovery then was followed in the 1980s by debt crisis in Latin America and severe crisis in HIPCs which were concentrated in Africa. Yet, this period also saw big developing countries like China and India starting to grow rapidly, and the increasing integration of the global economy through the rise of globalization. It was a time marked with despair but also hope. We could observe similarities and differences in terms of development challenges for developing countries between UNCTAD IV and UNCTAD XIV. However, one thing that has stood out is that the desire to strengthen UNCTAD has been stronger more than ever at times of crisis.

At that time, UNCTAD shone in being the UN system's premier institution providing UN Member States, and particularly the developing countries, with important development policy research, rigorous and innovative analytical thinking about multilateral trade and development issues, and a strong norm-generating intergovernmental machinery.  Since the last time that UNCTAD was in Nairobi forty years ago, UNCTAD's work and mandates have shifted. It has developed its technical assistance pillar on trade and investment policies and largely retreated from serving as a multilateral norm-setting machinery while retaining its strong tradition of independent, critical and heterodox policy research and analysis for development policies particularly on globalization and development strategies.

But despite the impressive development and industrialization progress among a number of developing countries, particularly in Asia, in the past four decades, the fundamental development gap between developed and developing countries continues to exist – in many ways even exacerbated by the very processes of globalization and speculative financialization of the global economy during the last decade of the 20^th century and the first decade of the 21^st century.

This continuing development gap lies at the heart of what UNCTAD’s mandate and activities should be responding to, given that it is the UN system’s focal point for the integrated treatment of trade and development, and the interrelated issues in the areas of finance, technology, investment,  and sustainable development. UNCTAD has done excellent work on the interlinkages among these key issues and should continue its analytical activities on this.

The theme of UNCTAD XIV “From Decisions to Actions” reflects what UNCTAD should do in light of the present turbulence in the global economy, the adverse effects on developing countries, and the growing concerns on the alarming inequalities and social divisions arising from globalisation. UNCTAD should also contribute to the actions in implementation of the outcomes of the 2030 Agenda including the SDGs, and the financing for development conference of 2015 and to the ongoing efforts to combat climate change following the Paris Agreement. 

For the purpose of promoting development, it is imperative to respect the important principles affirmed in the aforementioned international outcomes, including policy space for developing countries as one of the main principles shaping global economic relations. This stresses the need for international rules to allow policy flexibility for developing countries in view of their development stage and the gap that exists with the developed economies. Special and differential treatment in the context of multilateral trade relations; and common but differentiated responsibility and equity, in the context of sustainable development, environment, and climate change, reflect this principle of policy space.

Allow me to mention the views of the South Centre on a few areas of UNCTAD work that we believe should be reflected in clear outcomes here in Nairobi:

One, UNCTAD should be given a clear mandate to work on the integrated treatment of trade and development, and the interrelated issues in the areas of finance, technology, investment, and sustainable development. The fact that UNCTAD is the focal point in the UN system with this mandate should be reaffirmed.

Two, technology is one of the interrelated issues for promoting trade and development that UNCTAD has been mandated to work on. This is because the development of domestic technological capabilities is an important means for promoting economic development and the implementation of the SDGs and the Paris Agreement.

Three, the Addis Ababa Action Agenda on Financing for Development indicated the need to scale up international tax cooperation. Recent developments have also pointed to the importance of international tax regime reform which can be a significant avenue for resource mobilization as well as  addressing income inequality. UNCTAD should continue to work in this area.

Four, UNCTAD has a long and solid track record in working on debt issues for developing countries. Debt explosion is one of the most important legacies of the global financial crisis and up to now much of the world GDP growth, though slow, has been financed and driven by debt creation. In view of debt vulnerabilities for an increasing number of developing countries including post-HIPC initiative countries, it would be important for UNCTAD to be mandated to strengthen its work on debt issues including  UNCTAD’s work on debt workout mechanisms and responsible lending and borrowing.

Five, UNCTAD has distinguished itself by providing deep and cutting edge analyses of globalisation and development strategies including analyses and recommendations on the recent global financial and economic crisis and the uneven benefits or losses from globalisation.   UNCTAD must continue and indeed expand its work in this area.

Six, in order to take effective actions to implement the decisions made by the international community, it is important to strengthen UNCTAD’s institutional ability to support Member States, especially developing countries, in implementing the 2030 Agenda for Sustainable Development, the Addis Ababa Action Agenda on Financing for Development, and the UNFCCC’s Paris Agreement, particularly through increasing the budgetary and human resources made available to UNCTAD from the UN’s regular budget to conduct its research and analytical and technical assistance.

In concluding, the South Centre expresses its readiness to work with developing countries and development partners in strengthening UNCTAD and implementing the 2030 Agenda. We wish this Conference a great success.

21 July 2016

SOUTHNEWS No. 119, 22 July 2016

South Centre: www.southcentre.int