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Report Economic Development

If the most famous body of the United Nations, the Security Council, deals primarily with peace and security, the Economic and Social Council (ECOSOC) represents more than 50% of the whole UN budget. Its activity has two main pillars:

  • the ECOSOC is a forum to find consensus, prepare, promote and set the agenda on economic and social matters;
  • it gives advices and coordinates the concrete technical assistance between the United Nations and the Member States on the regional and sub-regional levels.

The ECOSOC is most of times the starting point for discussions and initiatives, but the General Assembly occasionally deals with these topics through its Special Summits on Sustainable Development, gender equality, food security, or the financing of development.

The briefing about Economic Development was delivered by Mr. Matthias Kempf, a German citizen working at the Analysis Division of the Department for Economic and Social Affairs. He gave us a very insightful overview of the current problems linked to economic development on the global stage. The main mission of the Analysis Division is a macro-economic policy analysis with regional focuses, being used by the Secretariat for action. It delivers material to colleagues working in the field and reports them annually in its “World Economic and Social Survey”. The Division works with its own economic model and provides with numerous quantitative analyses.

After these explanations, Mr. Kempf gave us some keys of the current situation of the world economy. The last 5 years had shown huge differences between developed and developing countries: while the developed world knew a significant slowdown, some developing countries grew very fast, even if this dynamic was not equally distributed. Today’s main risks are under-employment in rural areas, possibly leading to social and political tensions, the “twin deficits” in the United States and the Asian surplus, requiring more multilateral coordination, the bubble in housing markets in America and Western Europe and health risks and diseases such as HIV/AIDS and bird flu. However, some factors allow experts to lean toward optimism: growth in investment, potential gains in international trade with positive outcomes from the current WTO negotiations, low interest rates encouraging growth especially in developing countries, and a low inflation in most countries in the world.

Mr. Kempf finally focused on specific issues of great importance for the world economy in the near future. First he dealt with the question of energy and the oil markets. At the time of the briefing, energy prices had been rising dramatically for several months; crude oil in particular had reached the price of US-$70 per barrel. At that moment, he stated, the situation was not critical, such levels had already been seen in the past. But the structure of the market was totally new: the oil crises in the 1970’s and 1980’s were essentially driven by narrowing supplies due to the OPEC’s strategy to increase prices. Today, price increase was a result of strong demand from fast growing economies like China and India. The main consequence of the current crisis was inflation, but for some countries in Africa, the net effect was positive: price increases in oil were compensated by increases in export prices for other goods.

His second point was the case of China. The Chinese evolution was actually very similar to what Japan experienced in the 1980’s, he argued: strong industrialization, opening of its market, international networks, and the reallocation of resources toward export goods. But given China’s size, its emergence was far more important. Nevertheless some challenges were to be tackled by policymakers: would a slowdown in growth be sustainable, given the social and political tensions in the country? How about the numerous structural problems in China such as the bank sector, environment, geographical inequalities, and exchange rates? Policymakers lacked many of the traditional instruments of advanced economies, especially reliable financial markets or an efficient monetary policy. He stated that within the next years, the new strategies of investment and trade in emerging partner countries in Africa and Latin America would be interesting.

Lastly, he came to an evaluation of the Millennium Development Goals. They touch various topics: poverty, education, gender equality, health; and set quantitative targets by 2015. He was of the opinion that the good aspect was that they included concrete objectives which made them very workable and measurable. In some fields like poverty, progress was real, though Africa was excluded. Mr. Kempf thought that some goals might be contradictory, for example poverty alleviation as well as the respect for and the protection of the environment. Risks were high to sacrifice the environment on the altar of growth. According to his view, some specific initiatives for regions in difficulty, like Sub-Saharan Africa, should be taken.

After Mr. Kempf’s presentation, the audience took the chance to participate actively and further questions were discussed. Mr. Kempf was asked to express his point of view on the ongoing Doha Round development negotiations at the World Trade Organization. He replied by stating that from the perspective of the United Nations, the current talks and the possible progress on agreements about liberalization of agriculture markets were seen in a very positive way. Furthermore, he expressed his hope that the Doha Development Round could be finished successfully. Another question dealt with poverty in Europe and Mr. Kempf’s analysis of this problem. He agreed that the increase of poverty in Europe had to be considered as a serious negative development. However, in comparison with other regions, he was not able to find any dramatic impact on the overall stability of institutions and states.

Maxime Alimi, Nils Barnickel