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1.16 Building a more inclusive global economy: Working Out of Poverty
| Guest post by: International Labour Organization |
Article Overview: A strategy that combines local action in a sound national macroeconomic framework with an international effort to boost and sustain investment, trade growth and technological transfers could yield a substantial dividend in the form of poverty reduction and growing markets. I would like to flag a few issues.
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Free Download - References: Learning to change: Skills development among the economically vulnerable and socially excluded in developing countries By International Labour Organization |
1.16 Building a more inclusive global economy: Working Out of Poverty
A strategy that combines local action in a sound national macroeconomic
framework with an international effort to boost and sustain investment,
trade growth and technological transfers could yield a substantial
dividend in the form of poverty reduction and growing markets. I would like
to flag a few issues.
Everyone has a stake in financial stability, especially the poor. They are
usually least able to protect themselves from inflation. But in many cases,
tight fiscal and monetary policies have retarded expansion, often for long
periods. Furthermore, the scale and volatility of international financial
flows, particularly investment in government bonds or emerging stock markets,
have caused major swings in exchange and interest rates, disrupting
growth and thus poverty reduction. Structural adjustment always hits the
weakest the hardest.
The international policy regime to prevent and, if necessary, control
sudden swings in capital inflows and outflows needs further strengthening to
ensure that developing countries – and the poorest people within these countries
– do not carry the costs associated with speculative financial movements.
This is possible. It should be done soon. Moreover, the gradual
opening up of financial markets according to the actual possibilities and
needs of a particular country is essential. This is where classical “one-sizefits-
all” policy advice has made major mistakes.
Increased analysis of the socio-economic costs and benefits of export
processing zones for developing countries could help identify the best
strategies for maximizing the development of foreign direct investment
(FDI) and ensuring that they contribute to greater decent work opportunities.
Such an analysis might also reveal the scope for South-South cooperation
to avoid situations where excessive incentives are offered to the
detriment of all countries. We should find ways to work together to reduce
and ultimately eliminate unnecessary tax and subsidy competition among
developing countries – and particularly among LDCs. The concessions
granted to foreign investors significantly reduce the resources available for
national poverty reduction strategies.
Market access is also critical. Many low-income countries are already
connected to international markets. Exports and imports of goods and
services, for example, constitute on average 43 per cent of GDP for the
LDCs. However, most of these nations are heavily dependent on exports of
non-oil commodities, which in 2001 registered prices averaging half of their
level 20 years earlier. Can you imagine the resources that would have been
available for them had appropriate policies kept commodity prices at stable
levels? This is a key issue for successful trade negotiations.
Opening industrial country agriculture markets and a reduction in high
tariffs on processed commodities through the current round of multilateral
trade negotiations are essential to harnessing trade growth to poverty reduction. Coupled with investment in the communications infrastructure
and education and training needed for a strategy of improving the export
revenues of developing countries, trade based on fair rules for all, and special
and differentiated treatment for LDCs, can be a powerful engine of
growth helping the poorest countries to raise their level of productivity.
Clearly, we are not yet there.
Finally, the burden of debt continues to weigh on too many low-income
countries – many of which pay more in debt servicing than they receive in
aid. In 2000, 59 developing countries paid an average 4.4 per cent of their
GDP on debt service, compared to aid disbursements received equivalent to
2.1 per cent of GDP. Although debt service payments for the poorest countries
are beginning to fall, significantly more relief is needed in this area.
What can business and governments do to promote SMEs?
Preface: Working Out of Poverty
1.18 Building bridges: Working Out of Poverty
1.0 Overview: Working Out of Poverty
1.4 Our experience: Working Out of Poverty
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About the Author: International Labour Organization RSS for International's articles - Visit International's website Click here to visit International's website   43 The impact of economic liberalisation 632 Group empowerment Forprofit and NGO training activities 753 Public sector services for the poor Institutional design and capacity building Preface Working Out of Poverty 521 Training outputs Public sector training |
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