World crises test UN development goals — INT’L HERALD TRIBUNE
World crises test UN development goals
By Daniel Altman / International Herald Tribune
Wednesday, August 13, 2008
This month readers of the Managing Globalization blog had the chance to pose questions to Kemal Dervis, administrator of the United Nations Development Program. Here is an excerpt from their dialogue, which is available in its entirety online at blogs.iht.com/globalization:
Your program has the Millennium Development Goals on its agenda. Now you have several unexpected events like rising oil and natural gas prices, global financial turmoil and increasing food prices. Another angle on the issue is climate change: clamors and demands for restrictions on air, land and sea transport, and technology upgrades for reducing emissions - an anti-movement to the globalization process, putting a premium on developing countries. How are you harmonizing these conflicting demands without jeopardizing international cooperation or obstructing growth and antipoverty programs?
S. Lakshma Reddy, India
Making progress toward the Millennium Development Goals, or MDGs, while we face crises like the current global financial turmoil and the rising cost of energy and food will be a huge challenge. Initial estimates indicate that more than 100 million people will fall back into extreme poverty because of the increase in food prices alone, unmatched by increases in their already meager income - a serious setback for the MDGs. There will be secondary effects on the other MDGs: children, and particularly girls, will drop out of school, health care will suffer and deforestation may accelerate.
While globalization has facilitated a long period of rapid growth and also poverty reduction in many parts of the world, particularly in East Asia, the problems we face are serious and indicate that globalization can also amplify economic problems and vulnerabilities. The farmer in Africa who faces large increases in the price of fertilizer or the slum dweller, who can no longer afford even a subsistence meal, are in no way responsible for the energy often wasted in the rich countries, which helps drive up prices, or the huge mistakes made by some financial institutions that are slowing down world growth.
Failures in regulation and excessive behavior by managers in the financial sector have led to a major slowdown in the U.S. economy, which has in turn spilled over into the global economy. The inter-linkages in our financial markets create vulnerabilities that threaten development, as we saw during the Asian financial crisis in 1997 and which we experience with much greater force today. So there are problems of regulation and stability. There is also the problem of inequality. Understandably, there has been a negative reaction against the kind of globalization and technological changes that continue to concentrate wealth at the top and increase the gaps between rich and poor. We must consider whether or not this type of globalization is sustainable, which leads naturally to the question below.
Is capitalism sustainable? Is the future in regulation and redistribution, so as to help 6.6 billion people - the poor - to catch up with the 0.05 billion rich?
Kelvyn Richards, Greece
Even very strong supporters of “capitalist globalization” believe that greater and more effective regulation is needed to make what some call “financial capitalism” sustainable. The market economy has brought the world huge benefits, and we need to avoid the bureaucratic and centralist mistakes of the past. What we need to invent and develop are regulatory mechanisms that, on the one hand, do not stifle private initiative and the creative energy of a market economy, but on the other hand, are very effective in their correction of the market failures that lead to excesses and misallocation of resources.
The current global financial crisis provides a stark example of the consequences of missing and misguided regulation in the market economy. The renewed environmental challenge is another example of the need for powerful public policy to complement and guide the work of markets.
