U.N. report: Globalization failing to halt mass poverty in world's poorest nations

May 27, 2004 8:52am Associated Press WorldStream

GENEVA_Globalization is having little effect on persistent mass poverty and may even worsen the trade balance in the world's poorest countries, according to a U.N. report released Thursday.

"The notion that it's enough to integrate in the world trading system and liberalize your economy is not working," said Carlos Fortin, deputy secretary-general of the United Nations Conference on Trade and Development.

Global trade liberalization is not inclusive enough to support sustained development in countries including Sudan, Afghanistan and Angola, said the agency's 362-page Least Developed Countries Report 2004. Overall, the world's poorest nations are showing encouraging gross domestic product and export growth, but their populations are seeing too few benefits, it said.

"Although international trade can play a powerful role in poverty reduction in the least developed countries ... in practice the positive role of trade in poverty reduction is actually being realized in very few," the UNCTAD study said.

The usual view of trade liberalization is that it is likely to have adverse effects on developing countries in the short term, but in the longer term will increase their potential for economic growth.

However, as countries develop, increased income from trade is offset by reduced aid from richer nations, the study noted. Other factors maintaining poverty levels include conflict, high population growth rates, slow export growth and low levels of investment.

"Poverty is a mass phenomenon in these countries," said Charles Gore, who led the team which compiled the report.

Average GDP per capita in the world's 50 least developed countries in 2001 was just 79 U.S. cents a day. The report did not provide more recent figures.

Most of the poorest nations also do not appear to be benefiting from the current global economic recovery, said UNCTAD.

"There are many grounds for concern about the long-term effects (of trade liberalization) in terms of both the sustainability of economic growth and its inclusiveness," the report noted. "Although least developed countries with declining exports are almost certain to have a rising incidence of poverty, increasing exports do not necessarily lead to poverty reduction."

The links between trade and poverty can vary enormously between countries according to their economic structure and level of development, and so increased international trade is benefiting the poor in some countries. The report cited Bangladesh, Mozambique and Mauritania and several other African and Asian nations.

UNCTAD said that sustained poverty reduction requires a coordinated approach by governments, which need to maintain their export-led growth strategies while also taking advantage of international financial help to meet the basic social needs of their people.

Countries are designated as least developed by the United Nation due to their very low per capita incomes and high vulnerability to economic shocks. The latest country to have joined the ranks of the least developed is East Timor.

(sjc-jf)

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