|Global Economic Trends and Social Development (United Nations Research Institute for Social Development , 2000, 64 p.)|
The World Summit for Social Development, held in Copenhagen in 1995, concluded that poverty reduction and full employment were crucial aims for developing countries. The Summit recognized that a necessary condition to meet these objectives was an appreciable increase in the trend rates of growth experienced over the 1980s and 1990s in these countries. It was implicitly acknowledged that high economic growth is not in itself sufficient to achieve all the goals set by the Summit. The quality of growth also matters - that is, whether it entails, among other things, a more equal distribution of income, more and better paid jobs, more gender equality and more gender inclusiveness.¹ All were regarded as significant objectives in their own right, to which the World Summit attached great importance.
¹ There may well be a trade-off between the quantity and quality of growth - an issue that will be discussed later.
Newly industrialized countries (NICs) in East and South-East Asia seemed to be a striking exception to the need for higher trend growth rates because they had already been experiencing near double digit rates for a considerable period. At the time of the Summit the prospects for attaining the necessary growth (even if not at the East Asian rates) in the rest of the developing world seemed bright. In the event, this promise was not fulfilled in most countries, not least because of the subsequent Asian and Brazilian financial crises. Further, the current prospects are not encouraging for many developing countries, as outlined briefly in the next section.
The central purpose of this paper, however, is to examine whether developing countries will be able to expand at a sufficiently fast rate in the medium to long term so as to fulfil the poverty reduction and employment growth goals set in Copenhagen. It will be argued here that such growth rates are certainly feasible on the supply side. Humanity has the resources as well as the know-how required to reduce poverty and to provide productive jobs for all those who wish to have them. However, for such growth to be realized it would be necessary to remove the constraints on the rate of growth of real demand in developing countries and in the world economy as a whole. It will also be suggested here that the removal of these constraints is not just a technical question of changing fiscal or monetary policies in particular countries, but rather of carrying out major institutional changes both within national economies and in the international economy. Thus the emphasis in this paper is on the medium- to long-term growth of real demand rather than simply short-term changes in monetary demand.
The paper includes the following specific analyses:
· An examination of the economic record of developing countries of the 1990s from a historical perspective and an outline of the policy issues raised by such an analysis.
· A review of the complex interrelationships between economic growth, unemployment, poverty reduction and income inequality - both conceptually and empirically. Special analytical attention is accorded to the notion of full employment, the relationship between technical change and unemployment, the economic significance of the information and communications technology revolution, and labour market theories of unemployment and inflation.
· An overview of the changed historical conjuncture for economic development and for the development policy debate. The following themes and related analytical and policy questions concerning the development policy debate receive particular attention:
° Liberalization and globalization - Two important questions are examined here. First, why, contrary to theoretical expectations, has the actual experience of many developing countries with liberalization and globalization been negative rather than positive, i.e. why has it often resulted in crises rather than faster growth? Second, are these failures simply a matter of incorrect policies or are there more fundamental flaws from the perspective of developing countries with respect to the institutional arrangements of the world economy under liberalization and globalization?
° Washington Consensus - Has the Washington Consensus failed? What lessons should be learned from the implementation of that policy programme?
° Asian financial and economic crises - A very important and influential thesis concerning the Asian crisis suggests that the failure of Asian countries during 1997 - 1999 can mainly be ascribed to the dirigiste and corporatist model of capitalism that many of these countries were following. This thesis will be critically examined here.
It will be appreciated that many of the above issues - although listed under separate headings for expository convenience - are analytically interconnected. These interrelationships will become explicit in the course of the analysis. Further, it may be observed that almost any of these topics could be the subject of a long treatise; within the confines of a paper, however, their treatment must necessarily be brief.