ELEMENTS FOR AN AGENDA OF THE SOUTH
REPORT OF THE NAM AD HOC PANEL OF ECONOMISTS

     PREFACE
     SUMMARY
     ELEMENTS FOR AN AGENDA OF THE SOUTH

I. THE EVOLVING EXTERNAL ENVIRONMENT FOR DEVELOPMENT
II. KEY ISSUES FOR AN AGENDA OF THE SOUTH
III. DEVELOPING AND APPLYING THE AGENDA

PREFACE

The meeting of Foreign Ministers of the Non-Aligned Movement convening in
New Delhi in April 1997 took the following decision:

"The Ministers decided to set up an ad-hoc Panel of Economists from
Non-Aligned countries to assess the current international economic
situation from the perspective of developing countries and to identify and
analyse major issues of concern to them and to assist in developing a
positive agenda of the South."

The present report is a response to this decision. It is submitted to
Colombia, current Chair Country of NAM, for eventual presentation to the
XIIth NAM Summit in Durban, South Africa. The report reflects the broad
consensus among Panel members, though not all Panel members were able to
attend the meetings.

The report seeks essentially to present a broad overview of the major
issues involved with the principal aim of assisting in the launching of a
process that would require continuing work by the Non-Aligned Movement in
the period ahead. The report seeks in particular to highlight key elements
in the evolving external environment for development and to outline in
broad terms the responses called for from the countries of the South. The
issues involved are wide ranging and would require further elaboration of
both their analytical and technical dimensions in the context of the
evolving global scene. The Panel hopes that the present report will assist
the Non-Aligned Movement by laying the foundations for such a task.

For information two Annexes are also provided. Annex 1 of the Report
contains submissions by individual Panel members. Annex 2 contains
contributions submitted by the South Centre at the request of Panel in
order to help it in its work and which the Panel decided should be appended
to its report for information. The Permanent Mission of Colombia to the
United Nations in Geneva, together with the South Centre, organized the
Panel's second, third and fourth meetings held in Geneva. The Centre
provided assistance to the Panel's Chairman.

The Panel consisted of nine members, each appointed by a country having
chaired the Non-Aligned Movement. The Panel members were H.E. Mr. Saad
Alfarargi (Egypt), Dr. Mohammed Bachir-Bouiadjra (Algeria), Dr. Jonathan H.
Chileshe (Zambia), Dr. Gamani Corea (Sri Lanka), Mr. Abid Hussain (India),
H.E. Mr. Tichaona Joseph B. Jokonya (Zimbabwe), Mr. Osvaldo Martinez
(Cuba), Mr. Gabriel Misas Arango (Colombia) and Prof. Widjojo Nitisastro
(Indonesia). Dr. Gamani Corea of Sri Lanka was elected by the members of
the Panel to chair the Panel.

SUMMARY

A New South Agenda: The Rationale

Recent political, economic, technological and institutional changes have
had a major impact on the global environment for development. In
particular, the end of the cold war signified the beginning of a new era in
international relations, in which the political and economic ideologies of
the major market economies gained a new ascendancy. Liberalization,
deregulation, privatization and monetary-fiscal discipline as policy
prescriptions came to be presented as a universal panacea of benefit to the
developing and developed countries alike.

There have been significant developments in the global economy under the
influence of this new doctrine. However, initial high hopes in developing
countries have given way to concern. Many countries have taken significant
steps to deregulate, liberalize and integrate further into the world
economy, but major benefits have not been realized. The development of the
poorest countries has in some cases been prejudiced. Several richer
developing countries, with a long history of fast growth and sound economic
fundamentals, have recently experienced a severe economic setback, arising
from a financial crisis generated by the instabilities associated with
financial liberalization and from inappropriate policy prescriptions to
deal with the crisis.

For the South, it is of major concern that the reforms which have led to a
greater integration of developing countries into the world economy have not
diminished the economic gap between rich and poor countries. What is more,
most countries are experiencing a worsening of internal income disparities,
which are generating complex domestic social and political tensions.

At the level of North-South relations, the new doctrine has had
particularly far-reaching implications for developing countries. Almost
exclusive emphasis on the role of unfettered markets has displaced key
principles that underpinned earlier multilateral discussions and
negotiations on economic issues. The role and responsibilities of the
international community, the need for non-commercial international
transfers and the need of developing countries for special and differential
treatment no longer orient international policies and action to foster
development. As a result, the concept of international development
cooperation and multilateral negotiations with a North-South or development
orientation have virtually ended. Instead, the international agenda is
dominated by the concern of developed countries to gain greater freedom for
foreign investors and for capital flows and the export of their goods and
services.

The earlier agenda of the South was therefore side-lined and developing
countries did not develop an agenda of their own to promote their key
interests during the negotiating processes promoting liberalization and
globalization. Now, in the light of experience, it is imperative that they
face the task of adapting the liberalization and globalization process to
their own situations and development needs so that the process strengthens
their own indigenous capabilities. Equally importantly, they must also
review the role they are playing in multilateral decision-making and work
out approaches and actions that will enhance their cohesion and
effectiveness on the international scene. Their impact in multilateral
negotiations still derives from the strength of numbers. Their unity and
cohesion remains, therefore, the source of their strength. A new Agenda of
the South therefore needs to identify major issues around which all can
rally.

An Agenda of the South: Principal Issues

The Panel's report identifies the principal issues that must make up any
new agenda of the developing countries, outlining in broad terms what the
objectives of the developing countries might be in respect of each of the
major issues. The issues, old and new, are as follows.

The Governance of the Global Economy

In a world of growing linkages the issue of governance of the global
economy and of representative mechanisms for dealing with this assumes a
special importance. At present the developed country G7 or G8 groupings,
and the institutions over which they exercise almost exclusive influence,
have a virtual monopoly in determining policies affecting the entire globe.
The South needs to give serious consideration to the development of
institutional mechanisms at the highest level, representative of the
interests of all countries or groups of countries, to deal with the task of
global economic surveillance and management.

The Monetary and Financial Environment for Development

Developed countries have begun to distance themselves from the earlier
edifice of development cooperation in the area of money and finance, and
the current emphasis is on market forces and private financial flows. Any
agenda of the developing countries must, however, emphasize the following:

Official financial flows

   * official development assistance, both bilateral and multilateral, must
     remain an important means of meeting developing countries' need for
     external financing;

   * the contribution of the multilateral financial institutions towards
     meeting the capital needs of developing countries must be enhanced;

   * the creation of international liquidity to replace the dollar and
     other national currencies as internationally accepted reserves and
     proposals for these to be channeled to developing countries are policy
     propositions that deserve renewed attention;

   * new revenue raising instruments, urged as a means of helping to
     resolve a number of environmental problems and to curb short term
     speculative capital movements, could also help meet the need for
     official capital transfers to developing countries.

External debt and other issues related to the need for finance

   * means to achieve a speedy resolution of the continuing debt burden
     which hinders growth and development in a number of countries must be
     sought and effectively promoted, including efforts to improve the
     Heavily Indebted Poor Countries (HIPIC) initiative and its
     implementation;

   * regional funds to provide liquidity to help contain financial crises
     and resume economic growth could provide financial assistance
     associated with locally and regionally appropriate policies.

Private capital flows

In the context of financial liberalization and the crisis affecting South
East Asia and the prescriptions applied by the multilateral financial
institutions, a South Agenda must give serious attention to:

   * measures and mechanisms to control and moderate short term and
     speculative international capital flows to reduce vulnerability and
     instability;

   * dissuading the IMF from revising its articles of agreement in order to
     require developing countries to move towards capital account
     convertibility, so as to maintain the right of developing countries
     exercise controls over their capital account.

The reform of the multilateral financial institutions

In view of the overwhelming influence of the Bretton Woods institutions on
developing countries' policies either through structural adjustment
policies or prescriptions for crisis management, a range of issues relating
to the conduct of the institutions needs to be placed on an Agenda of the
South. In particular, serious consideration needs to be given to
establishing new policies and mechanisms in these institutions to achieve
improvements in:

   * the objectivity of their analysis;

   * criteria for lending;

   * the relevance and impact of conditionalities;

   * transparency and accountability of these institutions;

   * voting procedures to end the marginalization of developing countries
     in the policy and decision-making processes.

International Trade and Trade-related Issues

World Trade Organization (WTO) matters

In addition to trade, the WTO agenda now covers a wide range of
trade-related matters, agreements on which determine or circumscribe wide
areas of domestic development policy in developing countries. The
experience of the Uruguay Round and its aftermath demonstrates the need for
developing countries to ensure a mutually reinforcing relationship between
trade liberalization and development goals. These matters must be a
continuing subject for any South Agenda.

Developing countries will need to develop proposals relating to the
implementation of agreements already reached, to the new issues that have
subsequently emerged, or to any new negotiating round proposed for the
future. In doing so the South must:

   * give consideration to the pace, direction and content of
     liberalization, taking into account levels of development and the need
     to build up national capabilities;

   * make concerted efforts to prevent technical, environmental, social,
     health and other grounds being used to introduce what in effect are
     measures with a protectionist intent;

   * formulate and present as united a policy front as possible in
     negotiations on items on the WTO built-in agenda and with respect to
     implementation of the Uruguay Round Agreements;

   * develop a common position on whether there should be a new round of
     WTO negotiations or whether a sectoral approach is acceptable. In any
     event, the South must take the initiative and place proposals of its
     own on the WTO negotiating agenda;

   * suggest improvements in WTO procedures and mechanisms on the basis of
     which agreements are negotiated and implemented, so that these do not
     prejudice developing country interests.

There are other key issues which must form part of the South's agenda on
trade and trade-related matters. These include:

   * food security;

   * rapid and full implementation of the Marrakesh Ministerial Decisions
     concerning least developed and net food-importing countries;

   * special and differential treatment for developing countries; and

   * competition policy.

A multilateral investment agreement

The advanced industrial countries' quest to establish a multilateral regime
to liberalize foreign investment and establish standard rules of treatment
has far-reaching implications for developing countries and ought therefore
to figure in any new South Agenda. In considering whether it is in their
interests to participate in possible negotiations, developing countries
need to define a set of principles for a policy framework which correspond
to developing country interests in this matter.

Other trade-related issues

   * Commodities

The importance of commodity trade in the exports of developing countries
taken as a whole has declined. Nevertheless, the weakness of commodity
prices and hence their terms of trade in recent times has severely affected
many developing countries, many of them the poorest. The commodity issue
must therefore remain an important element in any new Agenda of the South.
In particular, the rationale underlying the dismantling of the framework of
international commodity agreements must be contested, and consideration
should be given to undertaking schemes of supply management among the
producing countries themselves.

   * Regional and other trading arrangements applicable only to selected
     countries

The growth of preferential trading arrangements, including mega-blocs,
which embrace both developed and developing countries, raises a number of
important issues for developing countries. Two such issues are the
discriminatory treatment of developing countries that do not belong to
these groups and the erosion of generalized preferences. Such issues
relating to the evolution of the international trading system must be part
of an Agenda of the South.

Science and Technology

The widening science and technology gap between developed and developing
countries is of central concern since technological transformation lies at
the core of the development process. Capacities in science and technology
determine a country's ability to compete successfully in the increasingly
integrated world economy. Moreover, science and technology issues are a
crucially important aspect of an ever wider range of issues dealt with in
international fora, including the WTO. Developing countries therefore need
to place science and technology firmly on their agenda. In particular, a
South agenda pertaining to science and technology needs to establish
organizational arrangements within the South in order to develop proposals
regarding:

   * effective international institutional arrangements to deal with
     science and technology as an area of international cooperation;

   * inputs into an agenda of international cooperation and for South-South
     cooperation on matters of science and technology, including harnessing
     S&T to resolve key problems on the global development agenda relating
     to poverty, food security, health and environmental matters;

   * an assessment of the respective roles of the public and private
     interest in influencing the direction of scientific and technological
     initiatives and knowledge, and an examination of the possibilities of
     treating scientific and technological knowledge as a common heritage
     of humankind;

   * seeking new means to achieve a wider and more equitable spread of
     scientific knowledge and technologies.

In this context and more specifically, the South needs to place on the
international agenda a well formulated proposal for an in-depth review and
adaptation of the Uruguay Round Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPs) in order to evolve an intellectual
property rights regime which responds to the need for development in the
South.

Environment and Development

The issue of environment has relatively recently become a subject for
discussion and negotiation in the international arena. Two particularly
important concerns must be addressed by a new Agenda of the South.

   * Developing countries must continue to urge the full implementation of
     the Agenda 21 package of agreements and measures related to the issue
     of environment and sustainable development.

   * The aim of ensuring sufficient "environmental space" to accommodate
     the development process in countries of the South must be a central
     concern of the South and must sustain the positions it develops in
     relation to a range of environmental discussions and negotiations in
     international fora.

Reform of the United Nations

The changes in the global political scene have brought into focus the issue
of the role and reform of the United Nations system, in particular in
relation to the management of the global economy. The South's Agenda must
include the bolstering of the UN's role in placing the development problem
in a global perspective, the strengthening of the UN's contribution in the
development field and resisting any retrogression in this area.

Social and Other Issues

In recent years, considerable international attention has been given to
social and related aspects of development in contrast to that devoted to
"hard core" international economic issues affecting development. But the
former cannot be a substitute for addressing the key economic issues. As
part of its agenda, the South must try to rectify this situation and
continue to encourage initiatives in the United Nations intended to bring
about a mutually reinforcing relationship between these two dimensions.

South-South Cooperation

South-South cooperation has long been an important part of the overall
agenda of the countries of the South on development issues and in the
context of negotiations with the developed countries. Recent years have
witnessed a weakening of the cohesiveness and preparedness of developing
countries in multilateral fora. New developments in the South and in the
international economy suggest that the need for exchanges and cooperation
between developing countries to discuss and develop multilateral questions
is even more imperative. How to deal with this matter is therefore a matter
of central importance for a South Agenda.

Developing and Applying the Agenda

A more comprehensive analysis of each of the above subjects will need to be
undertaken by the developing countries as a follow-up to the present
report. In view of ongoing or imminent discussions in international fora on
many of the issues suggested as items for a South Agenda, it is a matter of
considerable urgency that joint approaches and policies be formulated
However, if an Agenda of the South is to be formulated and applied
effectively, it is vital that developing countries address immediately the
question of how the work required for such a task could be organized. A
number of possible actions in this respect are put forward in the final
section of the Panel's report. It is hoped that the forthcoming Summit of
the Non-Aligned Movement to be convened in South Africa will launch the
actions that would achieve this aim.

ELEMENTS FOR AN AGENDA OF THE SOUTH

Report of the NAM Ad Hoc Panel of Economists

I. THE EVOLVING EXTERNAL ENVIRONMENT FOR DEVELOPMENT

The changes that have taken place in recent years have had a major impact
on the global environment for development. The changes are political and
economic, technological and institutional and are of profound significance
to both the prospects facing the developing countries and to their policy
responses. They are also of significance to the underpinnings of
international development cooperation. The developing countries need
urgently to fashion their responses to the evolving situation. They need to
determine how best they could take advantage of and improve upon the
positive elements of the changing scenario and at the same time counter and
minimize the drawbacks. They need, for this purpose, to review the platform
that has served to guide them in the past in their negotiations on
multilateral issues and adapt it to reflect the needs of the day. Many of
the basic elements of this platform remain valid; but they require updating
and recasting in the new context. Even more important, there are new issues
that have arisen or are emerging that call for new responses from the
developing countries. All this requires that these countries review the
role they are playing in the realm of multilateral decision making and work
out approaches and actions that will enhance their cohesion and
effectiveness on the international scene.

Major international developments, in particular the end of the cold war and
the break up of the socialist bloc, have had a strong impact on the global
environment as its affects the developing countries. Much of the earlier
motivation for international development cooperation was spurred by super
power rivalry and the desire of these powers to prevent opposing forces
from extending their influence in the countries of the Third World. This,
in the context of the emergence of new sovereign states in the South after
decolonization, encouraged support from the major powers and other
developed countries for the development aspirations of Third World
countries. The numerical preponderance of these countries in the United
Nations system encouraged the latter to sharpen the focus on development
issues in the economic field. The international secretariats of the United
Nations system themselves contributed strongly to setting out the
analytical underpinnings of international development cooperation and to
drawing out the policy conclusions that flowed from them. This helped to
offset the absence of organizational arrangements among the developing
countries for conducting studies on multilateral issues and for deriving
their policy implications for collective initiatives by them.

(a) International Development Cooperation: The Early Phase

The early years saw, against this background, a degree of progress in
international development cooperation. Most of the leading developed
countries launched programmes of bilateral aid to developing countries on
concessional terms. Multilateral financial institutions established after
the war, particularly the World Bank and the International Monetary Fund,
shifted their attention from post war reconstruction and international
monetary management to the needs of developing countries. International
Development Strategies were launched in the United Nations with the support
of the developed countries as a guide to successive "Decades of
Development". The early 1960s also saw the mobilization of the developing
countries on a global basis. It saw the launching of the Non-Aligned
Movement as well as the creation of the Group of 77 in the context of the
birth of UNCTAD, the United Nations Conference on Trade and Development. A
"platform" of the developing countries came to be forged to reflect their
needs and to identify the responses called for from the developed countries
in the arena of multilateral negotiations. The platform embodied such
issues as the need to enhance capital flows to the developing countries, to
improve and stabilize the terms of trade for primary products, to
liberalize the markets for their exports and to provide preferential access
to such markets on a non-discriminatory basis. These needs were also given
quantitative dimensions through the elaboration of such concepts as the
"Trade Gap" facing the developing countries in pursuit of accepted targets
for their average growth.

The progress made by the developing countries in gaining acceptance of
these goals was limited but there were nevertheless some advances. The
early years saw the acceptance by the developed countries of such concepts
as the generalized system of preferences, overall targets for official aid,
the participation of the developing countries in shipping, the need for
producer-consumer cooperation to stabilize the prices of selected
commodities and the international creation of liquid reserves. There was
also a recognition of the special needs of categories of developing
countries, in particular that of the least developed among the developing
countries. Such progress was not made through the use of the numerical
voting strength of the developing countries but with the acquiescence of
the developed countries whose support was needed for the implementation of
decisions.

The decade of the seventies, in particular, was one of intensified activity
in the arena of North-South negotiations. The action of the members of the
OPEC, the Organization of Petroleum Exporting Countries, in unilaterally
raising the price of oil, created a new atmosphere in which an element of
Third World leverage was seen to be present. The years that followed the
"oil shock" of the early seventies resulted in a new focus on North-South
negotiations for which the 6th Special Session on the UN General Assembly,
launched on the initiative of the Non-Aligned Movement, served as a
springboard. The Declaration and Programme of Action on a New International
Economic Order, embodying the twin themes of structural change in the world
economy and collective self-reliance on the part of the developing
countries, provided the backdrop to a new phase of intensified negotiations
on North-South issues. UNCTAD served as a forum for a number of successful
negotiations, including the Integrated Programme for Commodities and the
Common Fund, the Code on Restrictive Business Practices, the Convention on
Multi-modal Transport, the cancellation of the official debts of the poorer
countries, and the first Conference of the Least Developed Countries. These
instruments were initiated by the Group of 77 based on studies and policy
recommendations by the UNCTAD secretariat. The seventies also saw the
inauguration in Paris, outside of the United Nations, of the Conference on
International Economic Cooperation (CIEC) to which the term "North-South"
dialogue was first applied.

(b) Later Developments

The situation, however, began to change over the succeeding decade of the
eighties. A number of developments contributed towards this change.
Conservative regimes, with market oriented ideologies, assumed office in
the United States and several countries in Europe. They initiated domestic
policies of contraction aimed at overcoming the "over-heating" of their own
economies. They also viewed efforts to fashion the international economic
environment for development, through multilateral negotiations in United
Nations bodies, as "interventionist" and "statist". At the same time
developments in the market for oil saw a weakening of the position of OPEC
and its ability to sustain the rising trend of prices.

All these changes had a severely negative impact on the developing
countries as a whole and on their ability to initiate and influence
multilateral negotiations on North-South issues. The contractionary forces
emanating from the leading developed countries severely affected the demand
for the exports of the developing countries with drastic consequences for
their external payments balances and their growth rates. It was these years
that witnessed the deepening of the debt burdens of many developing
countries and the recourse they had to the multilateral financial
institutions for relief. The attention of the developing countries shifted
away from multilateral negotiations on global economic issues to corrective
responses at the domestic level. Such responses were linked to
prescriptions for structural adjustment provided by the World Bank and the
International Monetary Fund with the support of the major donors of
bilateral assistance. These prescriptions embodied a progressive widening
of the parameters of "conditionality" as they applied to the domestic
policies of the developing countries.

The crisis facing the developing countries was compounded by further
developments on the international political scene. The end of the eighties
and the early nineties saw the finish of the super power rivalries of the
earlier period following the collapse of the communist regimes of eastern
Europe. This development signified the beginning of a whole new era in
international relations with many ramifications. It signaled the beginning
of a phase in which the political and economic ideologies of the United
States and the Western powers gained a new ascendancy. The changed context
affected some of the earlier underpinnings of international development
cooperation and the political considerations that had fashioned them. As
mentioned before, the political compulsions that had earlier served to
focus the attention of the developed countries on the situation in the
Third World came to be diluted. The problems of the former communist
countries of Eastern Europe and the need for a smooth and successful
transition by them to a market oriented system became issues that claimed
the prior attention of the developed countries of the West. These
developments had their impact on both their bilateral aid and their
commitment to multilateral negotiations on North-South questions.

There were also economic and institutional dimensions that attained an
added significance in the new scenario. The emphasis that the United States
and the developed countries of the West had already begun to place on
market forces and the private sector was further reinforced and woven into
policy prescriptions for the developing countries authored by the
multilateral financial institutions. At the same time, the quest for
lowering the barriers to international trade and other exchanges and flows
acquired a new vigour calling for responses from both the developed and the
developing countries. Multilateral negotiations with a North-South or
development orientation came virtually to an end giving way, in the arena
of trade for example, to activities and negotiations that essentially
reflected the priorities of developed countries.

The new environment also had institutional consequences affecting, in
particular, the development contributions of the United Nations and its
organs. With the end of the cold war vetoes that thwarted the political
role of the Security Council, a new emphasis came to be placed on the
involvement of the United Nations in peace keeping and other political
issues. Given the budgetary and other constraints this change was at the
expense of the previous focus of the United Nations and its secretariat on
economic and development questions. The Bretton Woods institutions and the
newly established World Trade Organization, on the other hand, benefited
from an enhancement of their role. The end of the cold war also diminished
the voting strength the developing countries had earlier been able to
mobilize in the United Nations on their behalf. There was no longer a
socialist bloc to support their quest for systemic changes in the global
economy in favour of development. The relative numerical strength of the
Third World countries in the United Nations was itself, in fact, reduced by
the adhesion of new members that followed the break up of the Soviet Union
and the other communist countries of Eastern Europe.

(c) "Globalization and Liberalization"

The result of all these changes was the emergence of a new ideology
sponsored by the countries of the West and the international organizations
they influence. The new thinking came to be summed up under the caption
"Globalization and Liberalization". To a large extent this concept
displaced many of the principles that guided earlier multilateral
negotiations on economic issues, in particular the acceptance of the role
and responsibilities of the state and the recognition of the need of the
developing countries for special treatment. Globalization and
Liberalization came to be presented as an universal panacea of benefit to
the developed and developing countries alike. Its principal theme was that
trends towards the integration of the global economy, stimulated by
political and technological developments, needed to be accelerated to bring
virtually unlimited benefits to all countries. The concept of an eventual
"Global Village" excited the imagination of many.

At the level of policy, the principal active channels for the transmission
of the changes called for by the theme of globalization and liberalization
were the Uruguay Round and its product the World Trade Organization, and
the Bretton Woods institutions. The Trade negotiations under the Uruguay
Round extended the concept of trade liberalization to new areas beyond that
of the trade in merchandise that had been the focus of earlier GATT rounds
of negotiations on the reduction of trade barriers. These included the
trade in services, trade related investments, and intellectual property
rights. The World Bank and the International Monetary Fund, for their part,
promoted the further unilateral opening up of developing country markets
under the aegis of structural adjustment policies that became the core of
conditionality packages. These and other changes adapted the framework of
national and international policies to facilitate the process of
globalization that had already begun to gain momentum because of the
changes in the global political scene, technological developments in fields
such as transportation and communications, and the related increase in the
mobility of transnational corporations and other agents of private economic
activity.

The principles and policy prescriptions that arose out of the theme of
Globalization and Liberalization had virtually a devastating impact on the
themes that had earlier been interwoven with the concept of international
development cooperation. They shifted the focus of policy from multilateral
negotiations on development issues to the domestic actions and policies of
the developing countries. The key to boarding the fast train of
Globalization was the opening up of the domestic economies of these
countries to the powerful forces of the market, both local and foreign.
Liberalization, deregulation, privatization and monetary-fiscal discipline
became the policy instruments needed for economic success. Countries that
adopted them would be carried to ever increasing heights of progress while
those that failed to do so would be left behind and be "marginalized".
International actions aimed specifically at improving the global
environment for development, such as aid on concessional terms, measures to
counter the instability and weakness of commodity markets, preferential
tariffs for developing country exports, debt reduction, and guidelines for
the transfer of technology, to name a few examples, ceased to form part of
the imperatives for global policies. To the extent that some of them were
still applied they would be focused on the poorest and the weakest
countries and made subject to a strict adherence to the dictates of
conditionality. The North-South dialogue has ceased virtually to exist. For
well over a decade now there have been no negotiations on international
development issues comparable to those that took place before and during
the seventies. In effect, the Globalization and Liberalization philosophy
has displaced the concept of international development cooperation.

There have been significant developments in the global economy under the
influence of the Globalization and Liberalization doctrine. There has been
a vigorous, and possibly historically unparalleled, surge in the growth
rates of international trade and financial flows across borders. But, the
overall growth rates of the developed countries, and consequently of the
global economy, have not shown any dramatic acceleration in recent years.
The opening up of national markets for goods, services, and investment in
the context of striking advances in the field of science and technology,
particularly communications technology, has indeed made a reality of some
of the expectations concerning global integration and global linkages.
Domestic markets, including those of an ever increasing number of
developing countries have been progressively opened up along with the
liberalization of investment requirements. Liberalization within regional
groupings also provided an additional tier to the global process. The
overall picture of developments in the global economy did indeed suggest
the birth of a new phase with the promise of even greater possibilities for
the future.

(d) Concerns for the South

The achievements on the positive side, however, have had their limitations
and drawbacks in respect of the developing countries and in the more recent
period the initial euphoria about Globalization and Liberalization has
begun to wane. In the first place the distribution among countries and
regions of the benefits of the process has come into question. World trade
growth though rapid has mainly been a reflection of the growth of trade of,
and between, the developed countries. The share of the developing countries
in the recent increase in world trade has been modest. The same is true of
the growth of financial flows and foreign direct investments. The
distribution of benefits among the developing countries has also been
highly unequal with much of them being confined to a relatively small
number of developing countries mostly in East and South East Asia.

In fact, there is now an increasing recognition that the benefits of
globalization have to a greater or lesser degree by-passed most of the
developing countries despite their adherence to the tenets of structural
adjustment policies. The poorest of them in parts of Africa, Central
America and Asia have experienced, in fact, an increasing marginalization
of their place in the world economy. The result of all this has been a
widening of the gap in income distribution between the categories of the
developed and the developing countries taken as a whole even when the
rapidly growing countries of the latter group are included. Globalization
and Liberalization has, paradoxically, increased the economic distance
between rich and poor countries at least in the initial phase. Domestic
policy reforms undertaken by a large number of developing countries in the
direction of liberalization and deregulation have not ensured them a place
on the Globalization Express.

There has also arisen a second category of concerns relating to the fact
that policies of extensive deregulation and liberalization seem to be doing
little or nothing to promote a pattern of development which serves to
promote equity and social justice and widespread human development -- the
end purposes of all development endeavours. The domestic liberalization
measures undertaken by many of the developing countries have contributed
towards a widening of internal income disparities as well. A number of
countries that have witnessed some acceleration of economic growth in the
wake of liberalization and deregulation have witnessed a shift in income
distribution in favour of those in the upper income groups. Budgetary
constraints on health, education and welfare measures and social
programmes, tax concessions on profits, the modification of price controls,
and the dismantling of state owned enterprises have been among the
contributory factors. Many developing countries have also experienced the
pressures of rapid urbanization accompanied by unemployment and social
unrest. Not a few of them have also witnessed an intensification of social
and political problems, including such phenomena as crime, corruption, drug
trafficking, sex exploitation, illegal migration and terrorism. Moreover,
the economic and social pressures arising from domestic and international
policies have sometimes contributed to igniting severe internal conflicts,
which themselves stand in the way of making any significant progress on the
development front, as do armed conflicts between countries of the South.

In addition to the above, there have also been concerns over the curbing of
national sovereignty including in such fields as trade and investment
regulation. Indeed, critics are already beginning to point to the parallel
between the domestic policies of developing countries in the era of
globalization with those of the colonial period. The colonial epoch also
saw, in many parts of the world, a framework of domestic liberalization
accompanied by balanced budgets, stable exchange rates, openness to foreign
investment, the free movement of funds to and from other parts of the
world, and indeed even the relatively free movement of labour. This
framework saw the partial integration of many of the colonial territories
into the world economy through the export of primary products and the
import of consumer and capital goods from abroad. But the process stopped
short of industrialization and left behind a legacy of dependence
characteristic of the relationship between the "centre and the periphery".

A third concern is that until now the Globalization and Liberalization
process has unfolded in such a way that developing countries have not
participated in shaping the policy framework that underpins such a process.
As mentioned before, the global political changes following the end of the
cold war and the liberal market oriented ideologies of the major developed
countries served as the launching pad for the new global economic
environment that has now come into being. Understandably, the major powers
placed emphasis on the directions of change that served to enlarge the
opportunities open to them. This was reflected in the new issues brought
before the Uruguay Round and its creation the World Trade Organization. It
is also, in a sense, reflected in the policy prescriptions of the
multilateral financial institutions that are applied virtually entirely to
the developing countries. The developing countries did not have an agenda
of their own to guide and shape the unfolding of the process of
globalization and liberalization. They lacked the organizational capacity
for serious substantive work in such a field. In the event, the task they
faced was one of reacting to the initiatives of the developed countries and
engaging, where such initiatives were unfavourable to their concerns, in
efforts at modification and damage limitation.

In the more recent period a fourth cause for concern has become manifest.
The economic performance of the countries of East and South East Asia was
seen as compelling evidence of the success of Globalization and
Liberalization in speeding up the tempo of development. The experience of
these countries in sustaining impressive rates of economic growth over a
considerable period and their advance towards modernization and
transformation were indeed striking. The differentiation among the
developing countries, never a homogenous group, increased still further and
those that did not enjoy the success of the "emergent economies" were urged
to follow their example in the realm of domestic policies. Now the optimism
has given way to anxiety and concern. The emergent economies in Asia are in
crisis experiencing sharp downward pressures on their currency and capital
markets and emergent stresses on their economic and social well being and
political processes. There are, indeed, fears of widespread international
repercussions.

Many explanations have been given about the crisis and its causes, both
internal and external. But one of the lessons that has become all too
obvious is the vulnerability of economies to uncontrolled financial flows
of various kinds, including those of a speculative nature. The
globalization and liberalization environment contained no safeguards that
served to control and regulate destabilizing factors in the context of the
vast movements of finance across national borders that have become manifest
in recent times. The response of the multilateral financial institutions
and the major powers to the East Asian crisis has been ad hoc and ex-post
but the need in the first place was for preventive mechanisms. All these
developments have added a new dimension to the global and liberalization
experience and brought into focus the workings of the international
monetary system in the context of the evolving global scene.

(e) The Task Ahead

The experience of the changes in the global economy over the last few years
brings out important lessons for the countries of the Third World. The
trend towards globalization and liberalization has been dictated by a
constellation of forces -- political, economic and technological. Whatever
its limitations its general thrust is, in a sense, irreversible. The
growing linkages between countries, the opening up of markets, the spread
of investments, and the impact of technology on standardizing products,
shortening distances, and modern communications offer new vistas of
opportunity for the development process if their positive aspects are
grasped and their drawbacks averted. The task facing the developing
countries is one of adapting the globalization and liberalization process
to reflect their own situations and development imperatives. Their central
concern must be on utilising such a process for the strengthening of their
own indigenous capabilities at the national, regional, and global levels.
They need to match the priorities of the developed countries in
multinational negotiations with their own priorities and identify and
pursue the adaptations, modifications and objectives that reflect their
interests. This in essence would be the primary objective of an economic
Agenda of the South in the evolving global economy of today.

Such an agenda needs to be pursued in a setting of Southern unity and
cohesion. The developing countries were never a homogenous group, but in
the early phase of North-South negotiations the countries of Latin America,
Africa, and Asia were able to forge common positions and present a united
front through the Group of 77 and the Non-Aligned Movement. In the recent
period the differentiation among the developing countries has increased
further. Their range extends from countries described as newly
industrializing to least developed with vast differences in their economic
and social situations. Nevertheless there continue to be powerful factors
that serve to bind them together and give reality to the concept of the
South. None of the countries of the South partake in the management of the
global economy. Their impact at multilateral negotiations still derives
from the strength of numbers. Their unity and cohesion remains, therefore,
the source of their strength. A common platform for the South needs to take
account of the major interests of all the developing countries. While
individual items in the platform could be of varying importance to
different countries, the platform, taken as a whole, needs to be one around
which all could rally. The sections to follow attempt to identify the major
issues that need incorporation in an Agenda of the South. They are intended
as a guide to the further work that needs to be initiated in the period to
come.

II. KEY ISSUES FOR AN AGENDA OF THE SOUTH

Against this background of changes on the world scene, it is necessary to
identify the major issues of concern to the developing countries and the
objectives that they themselves need to pursue in the global context. As
the previous section has indicated the thrust towards globalization and
liberalization has been spearheaded by the developed countries and the
international organizations which they influence. Whilst certain changes in
the global economy could benefit the developed and the developing countries
alike, there are qualifications and adaptations that are needed to reflect
the situation and the interests of the latter countries. There can be no
presumption that the benefits of liberalization and free market activities
are always mutual, let alone equally distributed. The developing countries
need to identify the strengths and the weaknesses of the process so as to
maximize the benefits they derive and minimize the negative features. They
need, in other words, to have their own agenda for change in the present
context, an agenda that will set out their own goals in the setting of the
evolving global economy. It is such an agenda that they must carry into
multilateral processes with a view to influencing negotiations and arriving
at results that are acceptable to all groups of countries.

The new agenda must cover the major issues pertaining to the functioning of
the world economy and its continued evolution. Some of these issues have
assumed aspects that are relatively new, particularly in the realms of
money, finance and trade. Others have older origins but retain their
relevance in the new scenario despite attempts to down-play or reject them
in the name of new ideologies and realities. These also require
reassertion, with adaptations where needed. In fact many elements of the
earlier agenda such as debt relief, official financial flows and technology
transfers all on easy terms are being applied to the "countries in
transition". There are, at the same time, issues that relate to new
subjects that have received attention in relatively recent times. These too
must form part of the agenda of the developing countries. The discussion
that follows in the present section attempts to identify the principal
issues that must make up any agenda of the developing countries. It only
seeks, however, to outline in broad terms what the objectives of the
developing countries might be in respect of each of the major issues. It
does not aim at a comprehensive analysis of each subject. This must be
undertaken by the developing countries as a follow up to the present
report, a task that would require organizational arrangements in the period
ahead.

The several elements of an agenda of the developing countries would need,
moreover, to be pursued in a number of different fora. These include the
United Nations and its subsidiary bodies, the specialized agencies of the
United Nations, the multilateral financial institutions, the world trade
body, and periodic global conferences devoted to selected subjects. Some
proposals may be initiated by the developing countries in the relevant
fora, others may take the form of responses to initiatives by other groups
of countries or by the secretariats of international organizations. The
agenda of the developing countries, however, when taken together must set
out their views and objectives in respect of the changing global economy.
It must, at the same time, serve to mobilize their collective strength
which constitutes the principal source of leverage at their disposal.

The sub-sections that follow attempt, in the light of these considerations,
to broadly outline the principal issues that must figure in any Agenda of
the South. Such issues are presented under general headings that reflect
their subject matter.

1. Governance of the Global Economy

A discussion of sectoral and specific issue needs to be preceded by a wider
and urgent question of interest to all countries: the question of the
governance of the global economy. Unlike the increasing insistence by the
North in every possible forum on the need for good governance in developing
countries, the issue of global governance has hitherto not formed part of
any agenda, whether of the developed or developing countries or of the
entire system of international organizations. Yet, such a concept assumes a
special importance and urgency in a world of growing linkages, linkages
that reflect the trend towards globalization and liberalization. The
performance of the global economy and the containment of destabilizing
forces is of ever-growing concern to all countries. This has been
dramatically underlined in recent times by the East Asian crisis and the
fear that it might assume global dimensions. Yet, however, there are at
present no institutional mechanisms at the highest level, representative of
the interests of all countries or groups of countries, that are charged
with the task of formulating and implementing policies for global economic
surveillance and management. The issues at stake go beyond the sectoral
responsibilities of such bodies as the International Monetary Fund, the
World Bank, and the World Trade Organization. The summit of the major
developed countries (now the G8 after the inclusion of Russia) does survey
global economic developments from time to time. But it is a self appointed
body and not, by virtue of its very constitution, a representative body
that allows for the participation of countries such as the developing
countries or of bodies representative of them. A situation in which
developing countries play no part in the management of the global economy
or in global economic governance is wholly unacceptable. Moreover, in a
world of growing interdependence in which developing countries have
increasing economic weight this is a gap that needs to be filled for the
sake of all.

The successful operation of market forces does in any case call, despite
the anti-state rhetoric, for a regulatory policy framework, supervised
regularly at the highest level, that deals with global developments and
their repercussions on all groups of countries. The issue of global
economic governance and of representative mechanisms for dealing with it is
thus, on any reckoning, one that requires the attention of the developing
countries in the context of any revised agenda for multilateral
negotiations that is pertinent to the evolving global economic environment
and global governance.

This exclusion has continued for too long and, as part of their agenda,
developing countries need to formulate proposals on how to end what is an
unacceptable situation.

2. The Monetary and Financial Environment for Development

Any agenda of the South must focus sharply on the subject of money and
finance. For developing countries, particularly those at very low levels of
development, the gap between the investment resources required to
accelerate development and the resources generated internally through their
own savings is a crucial issue. The same is true of the gap between their
foreign exchange earnings acquired through trade and other means and their
need for imports. The bridging of these gaps through international
cooperation is, therefore, central to the establishment of an external
economic environment that is supportive of development.

The agenda of the developing countries forged in earlier years reflected,
therefore, a sharp emphasis on issues in the areas of money, finance, and
trade. It focused on the need for concessional capital flows from both
bilateral and multilateral sources to overcome the limited access the
developing countries had to private capital markets. It urged, and won
acceptance for, a quantitative target of 0.7 per cent of the GNP of
bilateral donor countries as assistance to the developing countries, with a
sub-target of 0.15 per cent for the least developed countries. It supported
the enlargement of the resources of the multilateral financial institutions
and the creation of soft loan windows. It underlined the need for debt
reorganization specially through debt reduction, and also the need for such
reductions to encompass debts owed to the multilateral financial
institutions.

On the side of international monetary issues, the agenda stressed the need
for adequate resources for the International Monetary Fund to support
balance of payments requirements, the need for the compensatory and
supplementary financing of shortfalls in export earnings, the easing of the
conditionalities accompanying various tranches of Fund lending, the need
for giving attention to developed countries in chronic surplus, and, not
least, the international creation of liquid reserves and the channeling of
such reserves through the developing countries.

This agenda of the developing countries was not, of course, adopted in full
by the developed countries. But the climate of earlier years encouraged a
degree of sensitivity to developing country concerns and to the need for
positive responses, however measured. As mentioned earlier, the
international political climate and the objectives of the major powers
encouraged such responses. In the more recent period, however, the scenario
has changed markedly. The developed countries have begun increasingly to
distance themselves from the earlier edifice of international development
cooperation, specially in the area of money and finance, and to turn to the
advocacy of the policy requirements of the new doctrine of globalization
and liberalization. In brief, the highlights of the new approach point to a
reliance on market forces spurred on by deregulation and a consequent
emphasis on the role of private actors. It is paralleled by a scaling down
of concessional official aid, both in relative and absolute terms save for
the least developed countries, and a reluctance to expand the resources of
the multilateral financial institutions, especially resources for
concessional flows. The concept of "conditionality", however, has not been
a victim of these changes and cutbacks. On the contrary, it has been
acquiring ever widening dimensions often inversely proportional to the
trends relating to financial flows.

The new agenda of the developing countries has to react to these changes.
As mentioned before, there are positive aspects to the globalization and
liberalization process that have favoured the opening up of markets and the
flow of finance. But already there is too much that is negative in the
experience so far. The glaring defect has been the maldistribution of the
benefits of the process and the consequent by-passing of perhaps the vast
majority of the developing countries. Aid restraints, inadequate debt
relief, and declining terms of trade have led to faltering growth rates and
explosive social and political situations in a growing number of countries
of the Third World. The crisis in East and South East Asia, embracing the
countries that were seen as the very success stories of the new paradigm,
has further undermined the balance sheet.

The South cannot, therefore, resign itself to these developments regarding
money and finance and trade-in its old agenda for an agenda that embodies
the perceptions and interests of the developed countries. It has to address
the new situation from the viewpoint of its interests and needs and draw up
an agenda of its own that is pertinent to the new situation. The updated
agenda need not jettison what remains valid and relevant in the earlier
platform on money and finance. But it must pay special attention to the new
global scenario and to the responses that are now called for from the
developing countries. It must, in particular, identify the ways in which
the globalization and liberalization process needs modification,
qualification and adaptation to meet the vital interests of the South. The
major issues that must form part of an Agenda of the South in the new
situation are outlined below.

Indeed there is some urgency in the need to discuss and formulate proposals
on these matters, since the developing countries will need to prepare their
positions if they are to participate effectively in the shaping of the
agenda for the proposed UN Conference on Financing Development and in the
ensuing deliberations and negotiations.

(a) Finance for development

Official development assistance

Any agenda of the developing countries must retain a sharp focus on the
ways in which their need for external financing could be met. In recent
years private capital flows have increased while bilateral aid on
concessional terms has stagnated or even declined. But as already mentioned
there has been, and can be, no satisfactory trade off between these sources
for many, possibly most, developing countries. Private capital flows tend
often to go to where profits are highest and not just to where policies
seem to be right. Domestic policies of structural adjustment in the
developing countries, even when vigorously applied, have not ensured that
capital needs would thereafter be met by market forces. The emphasis on
official development assistance, both bilateral and multilateral, must
therefore remain as an important item in any South agenda despite the
discouraging trends of recent times. The donor countries are still
committed to the aid targets they had earlier endorsed. Some continue with
aid performances that match these targets. Others, and particularly the
large and wealthy countries, must be encouraged to reverse recent negative
trends in aid budgets and return to a path of vigourous aid flows. The need
for concessional flows is not confined to only the poorest of the poor
countries. Many developing countries are not in a position, due to limits
on their credit worthiness and other factors, to access private capital
markets and hence to mobilize and direct private capital flows to sectors
and activities of high priority. The attention of donor countries needs to
be drawn to the high risks, political and social, that are in prospect for
the developing countries in the face of diminishing or stagnating flows of
official development assistance. A return to an upward path must,
therefore, be seen as a vital element of an international economic
environment that is supportive of development. Official development
assistance should not be a victim of globalization and liberalization. The
donor countries have a stake in global and regional political stability and
in ensuring that this is not jeopardized by diminishing capital flows to a
large part of the world.

The multilateral financial institutions

The contribution of the multilateral financial institutions towards meeting
the capital needs of the developing countries is another aspect that needs
highlighting in an Agenda of the South. Meeting the financial needs of
member countries constituted the very raison d'être for the setting up of
these institutions. In recent times, however, the net lending of
institutions like the World Bank, and possibly some of the regional
development banks, has been declining and at times net transfers have been
negative, thereby intensifying the capital constraints facing the
developing countries. The soft windows of these institutions have been
particularly affected by the diminishing aid performance of the major
donors. These trends need to be reversed. Indeed, it would be logical for
the multilateral financial institutions to take on a bigger role in
development financing thereby making up for the constraints on bilateral
assistance, many of them political. This requires a major overhaul of these
institutions touching on such issues as their access to resources, the
criteria for lending, the content of conditionality and the role of the
member countries in policy making. The evolution of the multilateral
lending institutions like the World Bank and the regional development banks
in the years to come must be a major preoccupation of the developing
countries and remain a crucial issue in any updated agenda of the South.

The creation of international liquidity

Against the background of the adverse trends of recent years relating to
bilateral assistance and the net lending of the multilateral institutions,
attention has been drawn to other possible sources of official finance for
development purposes. One of these, that has long figured on the agenda of
the developing countries, relates to the creation of international
liquidity by the International Monetary Fund to replace the dollar and
other national currencies as internationally accepted reserve assets. The
developing countries had suggested that the reserve assets to be created by
the International Monetary Fund -- on a scale determined by the world's
need for liquid reserves -- should be distributed to its developing country
members as a means of channeling them eventually through trade etc. to the
reserves of surplus countries. This proposal for the "link" has not gained
acceptance so far while the scale of Special Drawing Rights created by the
Fund has itself been severely limited. However, the question of
international liquidity creation may acquire a new significance in the
context of the need for international control over destabilizing capital
flows and the inadequacy of the resources presently available to both
international and national authorities for preventive and even corrective
actions. The concept of the "link" may thus acquire a new relevance and
should therefore be a subject for attention in any new Agenda of the South.

New revenue raising instruments

In the recent period a number of innovative suggestions have been made for
the introduction of new revenue raising instruments whose proceeds could be
directed in varying degrees towards meeting the need for official capital
transfers to the developing countries. These include measures to raise
revenues from activities relating to the exploitation of the global
commons. Some instruments were linked in the first instance to objectives
other than finance, as for example a tax on speculative capital movements
(e.g. the Tobin Tax.) and the proposals for a carbon tax to regulate the
emission of greenhouse gases.

These proposals have not progressed very far at the international political
level. But they are worthy of attention for at least two important reasons.
They are, in the first place, linked to objectives that are, in one way or
another, of common concern to all countries. Secondly, depending on the
scale of the impositions introduced, they have the potential for generating
a relatively significant volume of resources that can contribute
meaningfully to the developing countries' need for capital and also certain
international needs. Thirdly, the resources thus generated would not be
dependent on individual countries and shifts in their domestic policies and
would be subject to more democratic and genuinely multilateral management.

In the light of the constraints that are now emerging on the conventional
forms of official capital flows to the developing countries these, and
other similar proposals, merit introduction and elaboration in any agenda
of the South.

External debt

Another issue relating to the capital availabilities of developing
countries in the present context is that of external debt. The issue has
been subject to metamorphosis over the years relating both to the type of
relief provided and the creditors involved in such operations. In the early
stages debt relief was focused on delaying debt servicing -- an expedient
that, more often than not, compounded the burdens on the debtor countries.
In the later period debt rescheduling gave way, to some extent, to debt
reduction, a more meaningful approach. At the same time there was some
evolution in the groups of creditors involved in debt reorganization
starting from creditor governments and then reaching out to private banks
and other non-official creditors. The multilateral financial institutions
were the last to participate in debt reorganization, despite significant
debts owed to them, claiming "preferred creditor" status.

In recent times there has been a degree of evolution in the creditor
approach to debt reorganization with the announcement of a plan for the
so-called HIPC (Heavily Indebted Poor Countries) countries in which all
groups of creditors will participate in various ways. But progress has been
slow. There are two major constraints on the value and efficacy of the new
plan. One is the extremely limited number of eligible countries. (This
contrasts with the proposal of a NAM expert group that 58 countries which
in 1992 were in payments arrears in excess of 20 per cent of scheduled debt
service should qualify for debt reduction applied to all three major
classes of debt, namely, official bilateral, multilateral and private
debt.) The other constraint is the stringent "conditionality" that
determines the implementation of relief measures. Obviously, the debt
relief issue has to be carried many stages farther. The debt burden dampens
growth rates, hinders access to new capital and undermines social progress.
It remains a major problem for the South that needs attention in any South
agenda. In fact, the debt problems of developing countries have acquired an
additional dimension in the context of the East Asian crisis, where the
external debts of private sector borrowers have emerged as a major issue.

Conditionality

One of the issues that has come to be associated increasingly with the
access of developing countries to official capital flows and debt relief is
that of conditionality applied by the World Bank and the International
Monetary Fund. Originally confined to requirements to ensure the soundness
of projects seeking financing , the concept of conditionality -- generally
embodied in programmes of "structural adjustment" -- has come in recent
times to embrace ever widening dimensions. These extend from the overall
macro-economic policies of borrowing countries to domestic liberalization,
deregulation, privatization and other areas -- in fact to virtually all the
important aspects of domestic policy. Conditionality has indeed become one
of the major channels through which developing countries have been induced
to adapt to the requirements of globalization and liberalization.

There is much that is sound in the stipulations for macro-economic policy
disciplines since these could contribute towards improvements in the
domestic economic performance of borrowing countries. At the same time,
questions have arisen about the validity of these policy prescriptions
which exhibit a high degree of uniformity despite significant differences
in individual country situations. Criticism has also been made of the
neglect of the social and political implications when designing and
imposing these packages. There are also questions relating to the
ideological elements embodied in conditionality packages touching on such
issues as the relative roles of the public and private sectors and of
market forces.

The content of structural adjustment policies has not normally been a
matter for discussion in the United Nations, giving the Bretton Woods
institutions a near monopoly on this matter. The current experience of the
South East Asian countries in crisis reinforces, however, concerns
regarding the IMF diagnosis of the situation, the appropriateness of its
remedies and the range of conditionalities imposed. Many of the
conditionalities imposed on the Asian countries in crisis have nothing to
do with the immediate liquidity crisis in Asia but the situation has
provided an opportunity to gain implementation of political and
institutional changes favoured by major industrial powers which had not
previously been achieved by other means.

These issues concerning the applicability of the IMF's analysis and the
relevance of its policies to the varying situations merit close attention
in a new Agenda of the South, as does the question of transparency and
accountability of this institution. The IMF asks for transparency in
developing countries, but developing countries need to demand transparency
and accountability from the IMF, bearing in mind the domestic and wider
impact of the policies it prescribes and imposes. The developing countries
should discuss these issues in their own intergovernmental fora and
formulate views on how these matters could be better dealt with.

Private capital flows as a source of finance for development

The developing countries, almost without exception, have sought to welcome
private capital flows, especially foreign direct investment, as a source of
finance for development. The importance of this source of capital has
increased against the background of globalization and liberalization and
the growing constraints on official development assistance.

In recent times, two aspects relating to private capital flows have
attained prominence. One is the quest, under the auspices of the World
Trade Organization, to establish a global regime pertaining to the
treatment of foreign private capital in recipient countries. The other is
the need for appropriate regulatory mechanisms at the international level
to control and moderate international capital flows, especially speculative
flows of a volatile and destabilizing nature.

Each of these aspects is relevant to the question of finance for
development and must, therefore figure in any updated agenda of the South.
But, though mentioned here, the issues pertaining to them are likely to
arise in the context of proposals in the areas of trade and international
monetary issues and hence are also referred to in the sections to follow.

(b) International monetary issues

As mentioned earlier, the workings of the international monetary system are
of crucial importance to a global economic environment that is supportive
of development. The earlier agenda of the developing countries included a
number of issues in the field of international monetary reform some of
which have already been referred to in the discussion above. In one way or
another they related to the need to enhance the support extended by the
International Monetary Fund to strengthening the external payments
situation of developing countries. They ranged from compensatory financing
to international liquidity creation, from larger credit tranches to the
balanced treatment of both countries in payments surplus and countries in
payments deficit.

The developing countries should maintain these earlier goals in an Agenda
of the South. But today, more than ever before, they also need to give
attention to at least two major aspects of the workings of the
international monetary system that have acquired a new importance in the
background of globalization and liberalization. These aspects are, on the
one hand, the need for regulating the vast increases in capital flows that
have manifested themselves in the background of globalization and
liberalization and, on the other, the absolute imperative of affording a
greater voice to the developing countries in the decision-making process of
the multilateral financial institutions.

International liquidity

Reform of the International Monetary Fund

One of the glaring weaknesses of the global monetary system is the paucity
of resources that could be applied for regulatory and corrective purposes.
This has led to suggestions, emanating as much from the developed as from
the developing countries, for a major reform of the International Monetary
Fund whose present structure derives from the conditions and experiences of
earlier times. Proposals have been made for a major strengthening of the
capital structure of the Fund so as to enable it to deal with emergent
instabilities in the world financial system and to regulate speculative
capital flows. Specific suggestions have also been made, as referred to
earlier, to the introduction of such instruments as tax surcharges on the
movement of short term financial assets.

Regional funds

The current Asian crisis has demonstrated the paucity of international
funds to provide liquidity in times of financial crisis and the need for
supplementary regionals funds to assist affected countries contain a crisis
and resume economic growth. Such regional funds, independent of, though
working in cooperation with, the IMF and based on a close understanding of
the region's economies and problems would arguably provide financial
assistance associated with more appropriate policies.

Regulation of private capital flows

The failure, up to now, to regulate private capital flows in the context of
the opening up of capital markets and revolutionary changes in
communications technology has been a major shortcoming of the international
monetary system. It has resulted in efforts to correct disturbances after
they have occurred and through one-sided actions focused only on the
borrowing countries.

From the point of view of development, what developing countries need are
capital inflows which can make a contribution to development rather than
inflows of speculative short term capital. The latter tend to come and go
in surges, which causes serious difficulties for the recipient countries,
including with respect to the exchange rate.

Moreover, as the Asian crisis has shown, the introduction of extensive
capital account liberalization in recent years has made it difficult for
governments to respond effectively to crises of confidence and to
speculative attacks on their currencies. Developing countries individually
therefore need to proceed with caution on the matter of financial
liberalization. Moreover, in view of the awesome consequences of financial
crises, a South Agenda must resolutely question the IMF's intention of
promoting capital account liberalization in all developing countries, and
must work to prevent the proposed change in the institution's Articles of
Agreement which would facilitate this plan. Maintaining control over the
capital account would also help developing countries avert speculative
attacks on the currency since restrictions on capital outflows would
prevent the transfer abroad of the proceeds of such speculation, whether
owned by nationals or foreigners.

Ending the marginalization of developing countries from decision-making

Any agenda of the South must also underline an issue, which though not new,
is gaining critical importance in the context of the evolving world
economy. This is the need to put an end to the marginalization of the
developing countries in the policy and decision making processes of the
multilateral financial institutions -- the International Monetary Fund, the
World Bank and the regional development banks. At present voting power in
the multilateral financial institutions is proportional to the capital
contributions of individual countries and allows undue influence to be
exercised by the major shareholders over their work, including the analysis
and policy recommendations made by the Fund. Such a formula is consistent
with the rationale and practices of private sector corporate bodies devoted
to profit maximization. But it is hardly compatible with the
representativeness and the needs of multilateral financial institutions
that play a critical part in global economic governance. As mentioned
earlier, the developing countries now account for nearly half of world
output and are predicted to take up, in about a decade or so, the major
share of global consumption and capital formation. They have been the major
victims of recent disturbances in global capital and financial markets and,
save perhaps for the countries in transition, virtually the exclusive
objects of structural adjustment prescriptions. Their need for a much
greater voice in the governance of the multilateral financial institutions
is, therefore, compelling. This must be a crucial dimension of any process
of institutional reform and a major element in any new agenda of the South.
Developing countries themselves must give detailed attention to the matter
with a view to putting forward concrete proposals of their own on how this
could be put into effect.

The developing countries need, therefore, to place the above and other
related issues high up on any Agenda of the South and institute early
preparatory work on the subject on international monetary reform. The
subject is, on any reckoning, an important dimension of the thrust towards
globalization and liberalization.

3. International Trade and Trade-Related Issues

The international trading system is the other parallel track on which the
globalization and liberalization express rolls forward. This is reflected
in the transformation of the traditional GATT processes in the course of
the Uruguay Round and the subsequent establishment of the World Trade
Organization. The earlier preoccupation of the GATT with the lowering of
barriers to the international trade in merchandise were continued and even
extended to embrace two important areas that had up to then been excluded
-- the trade in agriculture and in textiles. These were areas of interest
to the developing countries although the liberalization processes were
extended over considerable periods to reflect mostly the concerns of
developed country producers. The benefits of the Uruguay Round, even in the
traditional field of merchandise trade were, however, uneven as applied to
different groups of countries. There were indeed shortcomings from the
viewpoint of the developing countries. The average reduction in tariff
rates, for example, was steeper for products exported by the developed
countries than for products of interest to the developing countries. The
escalation of tariff rates in developed countries in respect of processed
products from the developing countries continues. The lowering of MFN
tariff rates has led to an erosion of preferential tariff margins enjoyed
by the developing countries under the Generalized System of Preferences.

The Uruguay Round, however, introduced other changes which were even more
far reaching. They arose essentially out of the wish of the developed
countries to introduce new dimensions into the international trade system
that reflected their interests in a changing pattern of comparative
advantage. Accordingly such new issues as trade in services, trade related
investments, intellectual property rights and certain others were brought
into the ambit of trade negotiations. Subsequent to the conclusion of the
Uruguay Round, other new issues were also introduced such as the need for a
multilateral investment agreement, the linking of environmental and labour
questions with trade rules, competition policy, government procurement and,
more recently, electronic commerce. In addition, there has now been the
call from the United States and other developed countries for the early
launching of new multilateral negotiations under the auspices of the World
Trade Organization intended to extend still further the liberalization
process.

The developing countries must assess these developments and forge their own
responses and proposals which will form an important part of any new agenda
of the South. The experience of the Uruguay Round and its aftermath points
to several conclusions that serve as a guide to their future responses --
whether they relate to the implementation of agreements already reached, to
the new issues that have subsequently emerged, or any new negotiating round
proposed for the future.

   * First, the developing countries, though potential beneficiaries of an
     open and rule based trade system, need to have their interests
     reflected in both the tempo and direction of trade liberalization.
     There is no necessary convergence of interest in this matter, at all
     times and on all subjects, between countries at different stages of
     development.

   * Second, the developing countries need to study and respond carefully
     to proposals initiated by the developed countries to ensure that their
     own interests are also met to as great an extent as possible, going
     beyond mere damage limitation.

   * Third, the developing countries should prepare and initiate their own
     proposals regarding the manner in which the process of liberalization
     needs qualification and adaptation to reflect their own interests and
     situations. Such proposals must reflect the interactions between trade
     liberalization and new trade regimes, on the one hand, and development
     goals, including the fundamental goal of building up national
     capabilities, on the other.

   * Fourth, the developing countries need, at both the national and
     regional level, to build up their own expertise and analytical
     capability so as to enhance the effectiveness of their spokespersons
     at international negotiations.

   * Fifth, and of overriding importance to any common agenda of the South,
     the developing countries must coordinate positions, reconcile
     conflicts of interests between them and present as united a front as
     possible in multilateral trade negotiations. They are not, in contrast
     to the situation in the multilateral financial institutions, a
     minority voice in the field of decision making in the World Trade
     Organization. United positions adopted by them cannot but influence
     greatly the course of multilateral negotiations in the field of trade.
     It is for them to ensure a mutually reinforcing relationship between
     trade liberalization and development goals.

Developing country interests are affected by the whole array of issues
covered by the WTO and in the period immediately ahead there are a number
of key tasks facing the developing countries. Even a brief indication of
the sort of concrete tasks on which they will need to collaborate to
promote their agenda indicates the magnitude of the challenge.

The follow-up to the Uruguay Round Agreements

In relation to the Uruguay Round Agreements, developing countries will need
to:

   * try to rectify what they perceive as shortcomings in these agreements;

   * ensure that the reviews that are to take place as part of the Uruguay
     Round built-in agenda are not used to prejudice South interests. A
     case in point is the proposal by the major developed countries to
     widen the Uruguay Round TRIPs Agreement to include treaties negotiated
     in the World Intellectual Property Organization (WIPO). Indeed, the
     South has strong grounds for proposing a revision of TRIPs to
     establish an intellectual property rights regime which is responsive
     to development needs;

   * agree on means of trying to ensure full implementation by the North of
     the Uruguay Round commitments in areas of special interest to the
     South. In particular, attention needs to be given to gaining "full and
     faithful" compliance with the terms of the Agreement on Textiles and
     Clothing.

The Marrakesh Decisions

Developing countries also need to formulate their position and work to
ensure the rapid and full implementation of the Marrakesh Ministerial
Decisions, particularly the Decision on Measures in Favour of Least
Developed Countries, the Decision on Measures Concerning the Possible
Negative Effects of the Reform Programme on Least-Developed and Net
Food-Importing Developing Countries, and the Declaration on the
Contribution of the WTO to Achieving Greater Coherence in Global Policy
Making.

Food security

In this context developing countries must address the issue of food
security. A considerable number of least developed countries and a
significant number of net food importing developing countries continue to
suffer from food insecurity, a condition which manifests itself in
continuing high levels of malnutrition in a substantial proportion of the
local population and an important percentage of the overall population of
developing countries. In the face of inadequate domestic food production,
declining food aid and potentially higher world food prices in the wake of
implementation of the Agreement on Agriculture the situation threatens to
become worse. An Agenda of the South must bring forward fresh proposals
that would relieve the short-term food security problem and help remedy the
problem in the medium to long term.

Special and differential treatment for developing countries

An Agenda of the South must also give attention to matters of principle
relating to negotiations. The principle of "special and differential
treatment" for developing countries in negotiated agreements was largely
abandoned during the Uruguay Round negotiations in favour of achieving
"level playing fields". The main concession gained by developing countries
was a transitional period allowing a short delay in the application of
equal obligations. Taking the Uruguay Round as whole and certain individual
Agreements, such as those on agriculture and on textiles, a number of
aspects of the agreements suggest that it was the developed countries which
benefited from special and differential treatment. Now that the WTO 1998
Ministerial Declaration has agreed on the need for effective implementation
of special provisions in favour of developing countries, developing
countries need to present their own proposals on how such special and
differential treatment can be implemented.

Apart from focusing on substantive matters, an Agenda of the South in
relation to trade matters needs also to focus on the procedural rules and
processes in the WTO, relating to matters such as the Dispute Settlement
Understanding which currently works to the disadvantage of the developing
countries.

Foreign investment and competition policy

Other activities in the WTO point to further crucial issues for attention
on the South's agenda on trade-related matters. The working groups
(established as a result of decisions of the WTO Singapore Ministerial
Meeting) are due to report soon on possible future work on two issues of
vital importance to the future prospects of developing countries, namely,
trade and investment and trade and competition policy. The matters
pertaining to these two issues are in fact highly inter-related.

As mentioned earlier, the advanced industrial countries aim to encourage
developing countries to become party to a multilateral agreement, possibly
within WTO, to liberalize foreign investment flows and establish standard
rules of treatment. If the rules were similar to those being established in
the Multilateral Agreement on Investment (MAI) being negotiated in the
OECD, multinationals would have even wider scope for their activities than
at present. Unfettered access for foreign direct investment in developing
countries raises a number of legitimate concerns with respect to their
broad contribution to development. One of these vital concerns pertains to
the issue of competition and the current trend of international mergers and
acquisitions and of strategic alliances among major enterprises. Whether
these corporate strategies will strengthen the productive capacity of host
countries, or whether local capacities will be eliminated as part of
corporate global designs, is of crucial importance to developing countries.
Hence, it is of the utmost urgency that an updated agenda of the South
address the issue of foreign investment and of competition policy, both
national and international. To do so adequately, the developing countries
will need first to define a set of principles for a policy-framework which
reflects their interests in these matters.

New protectionism

Another broad area for concern on the part of all developing countries is
one which runs across a number of trade and trade-related matters, namely
new forms of protectionism, which unless halted, will replace tariffs as
the principal barrier to North-South trade. In the WTO and other
organizations such as UNCTAD, ILO, UNEP and WHO, developing countries will
need to work in concert to prevent technical, environmental, social, health
and other grounds being used to introduce what in effect are measures with
a protectionist intent.

The commodities issue

There are also other features of the world trade scenario that need
attention in an Agenda of the South. The commodities issue is one of the
most important of these. It figured prominently in the earlier agenda of
the South since its inception. It was a high-water mark of the North-South
dialogue during the 1970s and the subject of the agreements reached
unanimously in UNCTAD on the Integrated Programme for Commodities and on
the establishment of the Common Fund. In the more recent period the
commodities issue has been dropped from the agenda for international
development cooperation. The weakening of developing countries, many of
them commodity producers, and the advance of free market ideologies in the
developed countries were decisive factors. Previously existing
producer-consumer commodity agreements were allowed to lapse preventing the
use of the buffer-stock financing facility of the Common Fund.

Nevertheless, despite the decline in the importance of commodity trade in
the exports of the developing countries taken as a whole, the weakness of
commodity prices and hence their terms of trade has been a crucial factor
in the severe difficulties experienced in recent times by developing
countries, many of them among the poorest, in Africa and elsewhere. The
commodity issue must, therefore, remain an important element in any agenda
of the South. A revival of growth rates in many developing countries is
scarcely possible without a return to stronger and more stable commodity
markets. The developing countries must, therefore, contest the rationale
underlying the dismantling of the framework of international commodity
policy. They should, in the absence of positive responses from the
developed countries, initiate and encourage schemes of supply management
undertaken by the producing countries themselves. Supply management was, in
any case, at the heart of producer-consumer agreements. Its rationale has
for long been endorsed by even classical economic theory.

Trading arrangements and groupings

A development that has paralleled the evolution of an unified and global
trading system under GATT and WTO auspices has been the emergence and
proliferation of trading arrangements applicable only to selected
countries. Apart from regional and sub-regional cooperation arrangements
between neighbouring countries, recent times have witnessed the creation of
vast and powerful cooperation groupings that span continents and include
both developed and developing countries. These groupings, large enough to
be described as "mega blocs" are, as in the case of the Asia Pacific
Economic Cooperation (APEC) and potentially NAFTA and even the European
Union, spread over a wide geographical area. Their purpose is to liberalize
trade and other exchanges between their members, a goal that is said to
represent a "fast track" towards global trade liberalization.

However, these developments raise important questions of relevance to the
developing countries. Since such groupings aim at the reduction or
elimination of tariffs by the member countries in favour of each other, the
question arises of the discriminatory treatment of developing countries
that do not belong to these groups. The developing country agenda on
North-South issues had placed emphasis from the earliest times on
generalized preferences applicable to all developing countries. The present
arrangements suggest a departure from this principle with the preferential
treatment of even the developed member countries in the markets of the
developing member countries. This is an issue that merits attention to
ensure that, to the extent possible, the negative effects on non-member
developing countries are minimized. "Open regionalism" should pave the way
for an early transition towards an universal trading system. It should not
result in a fragmented "federal trading system" for the world economy and
vertical zones of influence for powerful countries of the North. This too
is an important strategic issue for an updated Agenda of the South relating
to the evolution of the international trading system.

4. Science and Technology

Technological transformation lies at the core of the development process
and advanced technological capability is one of the distinguishing
attributes of developed countries. Advances in this realm have been so
rapid that the future is being portrayed as belonging to a "knowledge
society". Yet the prevailing gap between the developed and developing
countries in this field -- despite some notable advances in some countries
of the South -- remains enormous. Thus, while the per capita income of the
24 richest countries is about 60 times that of the 50 poorest countries,
the science and technology expenditures of the former are 250 times greater
than that of the latter. The OECD countries account for 85 per cent of
total world R&D expenditure on science and technology. The narrowing of
this gap must, therefore, be a major objective of the countries of the
South and an issue of the highest priority in any agenda of the South.

Scientific and technological capability, including the all important human
resource capacity, grows in many ways -- through national actions, through
South-South cooperation, and above all through a variety of interactions
between the developed and the developing countries. International trade,
foreign direct investment, facilities for education, advanced studies, work
experience, links between centres of research and learning, arrangements
for the purchase and sale of innovations and intellectual property, are
among the multiple channels through which scientific and technological
advances are developed and disseminated across national boundaries. Both
the state and private actors have been important agents in the generation
and transmission of scientific and technological advance. Any agenda of the
South will need, therefore, to deal selectively and constructively with the
manifold aspects of science and technology. This is a task that needs to be
organized in the context of the follow-up work in the period ahead.

There are, however, two broad developments that have emerged in the more
recent period that need immediate special attention as part of a broad
framework to guide the elaboration of an Agenda of the South. These are
outlined below.

Institutional arrangements

One of the developments in recent times has been the weakening of the
institutional arrangements for dealing with the subject of science and
technology in the multilateral context. In 1979, the UN Conference on
Science and Technology for Development, convening in Vienna, and the
preparatory process that preceded it put a strong spotlight on
international cooperation on science and technology for development. Many
recommendations were made including those relating to significant
arrangements for the handling of the subject in the UN system. The years
that followed have seen, unfortunately, the dismantling of much that was
established and a marked loss of momentum in the thrust towards
international cooperation on science and technology for development. The
treatment of the subject has been relegated to a small unit in UNCTAD and
to ECOSOC's Committee on Science and Technology. There is a similar void
within the multilateral financial institutions on advancing science and
technology for development. During the 1970s UNCTAD had initiated
negotiations for the establishment of a Code of Conduct on the Transfer of
Technology that was intended to cover the concerns of all groups of
countries. The work on the Code reached an advanced stage, almost the stage
of finalization, but an ultimate conclusion was never reached. The proposed
Code became a victim of the free market ideology that was beginning to gain
ground at the time.

The revival of effective institutional arrangements to deal with science
and technology as an area of international cooperation for development
becomes, in the light of this experience, a relevant issue for an updated
Agenda of the South. In the context of UN reform, the South needs to put
forward proposals for the introduction of a highly improved S&T
institutional capacity in the United Nations at both intergovernmental and
secretariat levels, which offers a forum for research, analysis, dialogue,
debate and negotiations.

Science and technology and globalization

A second and closely related development concerns the impact of
globalization and liberalization philosophies on the concept of
international cooperation in the area of science and technology. The
emphasis of such philosophies has been on the operation of market forces
and private sector actors as instruments for the spread of scientific and
technological advance. In consequence, important aspects of the technology
question came within the scope of the Uruguay Round negotiations under the
heading of Trade-Related Aspects of Intellectual Property Rights (TRIPs).
Paradoxically, however, the main thrust of the negotiations on the subject
was not the liberalization of technology transfers but the protection of
intellectual property rights. There have been serious misgivings on the
part of the developing countries regarding the thrust of the new
arrangements, misgivings that all this would favour the monopolistic
control of technology transfers and raise their price, misgivings about the
patenting, with minor modifications, by foreign agencies of indigenous
knowledge that has been in common use for centuries, and other drawbacks
and disadvantages.

All this indicates that the science and technology issue is a crucially
important aspect of a number of wider processes such as those covering the
reform of the United Nations, the programme of the World Trade
Organization, international negotiations on biodiversity, climate change,
telecommunications, the activities of the multilateral financial
institutions in the realm of structural adjustment, and South-South
cooperation

A substantial science and technology capacity is therefore crucial to the
ability of the South to participate effectively in discussions and
negotiations on range of matters on the global agenda. Developing countries
therefore need to act collectively, in order to improve their bargaining
and negotiating power on these and other matters on the global agenda, so
that the North does not continue to benefit from the South's lack of
awareness or preparation. This would merit the establishment within the
South of continuing organizational arrangements to monitor the evolving
scene and to formulate inputs into an agenda for international cooperation
and for South-South collaboration.

From a South perspective, there are a number of key policy issues which
merit urgent and sustained attention in the global political arena. The
South could prompt the necessary deliberations on these matters by
preparing well formulated proposals and pressing for UN initiatives to:

   * harness S&T, through long-term internationally coordinated and funded
     programmes, to resolve key problems on the global development agenda
     relating to poverty, food, health and environment matters;

   * assess the respective roles of the public and private interest in
     influencing the direction of S&T initiatives and knowledge and examine
     the possibilities of treating scientific and technological knowledge
     as a common heritage of humankind;

   * seek new means to achieve a wider and more equitable spread of
     scientific knowledge and technologies.

In this context, and more specifically, the South needs to place on the
international agenda a proposal for:

   * an in-depth review of the TRIPs agreement in WTO, in order to evolve
     an intellectual property rights regime which responds to the need for
     development in the South, which promotes efforts to build S&T
     capabilities in developing countries, and which secures a more
     equitable and preferential access to knowledge and technologies needed
     to improve living standards and fulfill the right to development.

5. Environment and Development

Since the early days of the North-South dialogue a number of new issues
have emerged which have been the subject of discussions and negotiations in
multilateral bodies and are of relevance to the developing countries. The
issue of environment is among the most prominent among these. The theme of
"sustainable development" is one of the outcomes of the environment debate.
Nevertheless, environmental issues cannot be focused primarily on the
development processes of the developing countries in the name of
"sustainability". It is true that attention needs to be given to avoiding
or limiting, as far as possible, the adverse environmental and ecological
consequences that could accompany the acceleration of economic growth.
International cooperation can play a major part in assisting in this
objective through technological and financial support.

Agenda 21, the product of the Conference on Environment and Development
held in Rio de Janeiro in 1992, has set out a comprehensive programme of
action, a programme that ranges from technological and financial support to
the levy of taxes on environmentally harmful activities. But, as revealed
at the recent review by the UN General Assembly, progress has been slow
with most commitments by the developed countries remaining unfulfilled. The
developing countries must continue to focus on ensuring the full
implementation of the programme of action in Agenda 21 and the issues
involved must form part of an Agenda of the South.

There is, however, another major dimension to the environmental issue that
goes beyond the "sustainability", taken in isolation, of the development
process of the countries of the South. It is that the pressures already
being imposed on the global ecological system by the advanced countries are
pre-empting the future development prospects of the countries of the South.
It is indeed being said that the global ecological system cannot
accommodate the replication by the developing countries, with their vast
populations, of the present development models, living standards, and life
styles of the North. Yet, a world of highly contrasting living standards
should not be the result of the development process. A development model
that is sustainable globally calls first and foremost for actions and
efforts by the developed countries to evolve, apply, and disseminate
technologies and models of production and consumption that relieve the
pressures that are already being imposed on the global environment. Without
that there will be insufficient "environmental space" left in the global
system to accommodate the development process of the countries of the
South. This subject is related to the conventions and other instruments
that are being negotiated in the multilateral context on global warming,
the release of greenhouse gases and related issues. Progress in these
areas, deriving from purposeful actions and commitments by the advanced
countries, is of vital importance to the South no less than support for the
latter's own environmental policies and programmes. This aspect must,
therefore, be an imperative for an Agenda of the South.

6. The Reform of the United Nations

Relatively recent changes in the global political scene have brought into
focus the issue of the role of the United Nations and of UN reform. The
countries of the North are largely of the view that the end of the cold war
has provided new opportunities for the United Nations under the guidance of
the Security Council to discharge the political role originally intended
for the Organization. According to this same view, the new emphasis on
market forces in the context of liberalization and globalization also means
that the earlier involvement of the Organization with economic issues and
policies for development should be lessened. The United Nations would
continue to deal with social aspects of development, humanitarian and human
rights issues, but the management of the global economy, including that
part which relates to developing countries and development, should be left
primarily to the Bretton Woods institutions and the newly established World
Trade Organization.

Pressures on the United Nations to conform with these views have resulted
in a significant retrenchment in the UN's development mandate and in its
budgetary resources and staffing devoted to economic and development
activities. The result has been to dilute the UN's critical contribution to
the analysis of economic and development problems and to policy formulation
in the context of negotiating activities on these subjects. As a
consequence, the Bretton Woods institutions and the WTO, which are de facto
outside the UN system and dominated by the economic and political powers of
the North, exercise the major influence with regard to management of the
global economy, the overall direction of economic policy and development in
the South.

Such developments are not ones that could be acceptable to the developing
economies whose numerical preponderance in the United Nations and its
Specialized Agencies still prevails. They are not in harmony with the basic
inspiration of the UN Charter or the roles intended for the United Nations.
Moreover, they prejudice the possibility of achieving an integrated
approach to global development and greatly reduce the possibility of
promoting developing countries' collective and individual interests.

One of the main, overarching objectives of the South's new agenda,
therefore, must be to press for reforms in the United Nations which will
reinstate and strengthen the Organization's economic and development
mandate and rebuild its capacity to take effective leadership in these
matters. UN bodies such as UNCTAD should be given more resources in order
to strengthen their intellectual role and the negotiating functions they
have performed over the years.

A United Nations empowered in this fashion would bring new hope to the four
fifths of humanity which populate developing countries and whose needs must
receive more careful attention in the current liberalizing world economy.
The issue of UN reform in fact embraces the principal objective of an
Agenda of the South, which is essentially to bring development back to the
centre of the world's attention. Moreover, the United Nations, above all
other international organizations, is of crucial importance to developing
countries as it is the only institution which is democratically inspired
and of wide-ranging and global importance and in which they have a solid
majority.

7. Social and Other Issues

In recent times a growing number of other issues normally pertaining to
domestic goals, essentially of developing countries, have also become the
subject of international conferences and negotiations. These include, among
others, subjects such as population, social justice, gender equality,
poverty alleviation, working conditions, child labour, the habitat, and the
separate yet closely related issue of human rights.

Social questions are, of course, of great intrinsic importance to the
developing countries, since they pertain to the social situation of their
peoples who are the ultimate objective of development, and they involve
vital questions of internal equity and distribution. They need and should
be pursued in the international arena, examining such matters with respect
to both North and South, and by drawing policy lessons to be learned from
recent and current experience in different developing countries.

However, action on these matters is not a substitute for dealing with the
"raw nerves" of international economic relations in the broader context of
development and the global policy framework. In fact the aim should be to
achieve a mutually reinforcing relationship between the two.

The UN Social Summit in 1996 represented a significant attempt to
re-establish the severed link between the "social" and the "hard core"
economic issues of the global development agenda, such as international
trade, finance, and monetary issues. It documented the social consequences
in the South, as well as in the North, of the globalization process.

A new Agenda of the South must address itself to the challenge of pressing
for continuing and new initiatives in the United Nations to overcome this
imbalance.

8. South-South Cooperation

South-South cooperation has for long been an important part of the overall
agenda of the countries of the South on development issues. In the early
period the logic of South-South cooperation was based largely on the need
to widen markets on a sub-regional or regional basis, as a framework for
import substituting industrialization reflecting the economies of scale.
The scope for the export of manufactured products to outside markets was
believed, at the time, to be limited. The concept of globalization and
liberalization has shifted the emphasis from self contained growth within
regional or sub-regional parameters to one of enhancing the capacity of
developing countries to participate in the global economy. Preferential and
free trade arrangements within regional groupings were seen as a "fast
track" within the global liberalization process that encouraged both
domestic and foreign investors. Moreover, groupings have begun to emerge
with overlapping memberships that serve to extend the network of linkages
between countries. As mentioned before, groupings have also emerged that
include both developed and developing countries as members.

The impact of regional and sub-regional groupings on accelerating the trade
among member countries has in most cases been limited. This reflects, in
contrast to the situation in Europe, the usual absence of complementarities
within groupings of developing countries and the historical orientation of
their trade towards the markets of the North. This suggests that
intra-regional preferential or free trade needs to be supported by other
measures of cooperation in such areas as business linkages, technological
development, infrastructure improvement and finance. The creation of
institutions in the South for the promotion of sectoral issues such as
science and technology has also been urged in the context of South-South
cooperation. Strengthened and regular contacts between regional groupings
can also result in an exchange of both information and of facilities.

The cooperation of developing countries across the board, that is to say at
the global or inter-regional level is also an important aspect of
South-South cooperation. The Global System of Trade Preferences (GSTP) has
been launched, but is still in the early stages of evolution. Progress
needs to be accelerated. As mentioned earlier, the developing countries
need also to give attention to the impact of global developments such as
trade liberalization on an MFN basis on the preferential margins they
extend to each other. The impact of cooperation groupings that include both
developed and developing countries is yet another dimension that calls for
attention.

Attention should also be given to the scope for South institutions. In the
past the proposal for establishing a South Bank gained the spotlight but
never materialized. This and the scope for regional monetary arrangements,
as well as the need for establishing scientific, technological, and
educational institutions open to all developing countries, and other
measures for institution building should also be part of the Agenda of the
South.

The coming together of countries of the South in the context of
negotiations with the developed countries is also a crucial aspect of
South-South cooperation. The Group of 77 and the Non-Aligned Movement
played a pivotal role in this process. In recent years there has been a
weakening of the cohesiveness and preparedness of developing countries in
multilateral fora. There have been a number of factors that have
contributed to this situation. The reversal of this state of affairs would
be a vital objective of any new agenda of the South. Some of the issues
involved are touched upon in the concluding section of this paper. But one
observation is, perhaps, specially pertinent to the present discussion.

Virtually all developing countries today belong to one or more sub-regional
and regional groupings. Such groupings are supported by secretariats of
their own and by regular gatherings of policy makers at the highest levels.
Up to now, however, these mechanisms have rarely addressed North-South
issues in the context of multilateral negotiations or devoted expertise to
the treatment of multilateral issues. Such a need is likely to grow in
importance in a changing setting which has already witnessed a weakening of
the contributions of international secretariats to development issues,
contributions that helped in the past to forge the platform of the
developing countries as a whole in international fora. In the present
context there is a growing need for exchanges between developing countries
on multilateral questions and for various forms of networking among them.
The institutional machinery for regional and sub-regional cooperation can
be among the focal points that could be drawn upon for this purpose.

III. DEVELOPING AND APPLYING THE AGENDA

The putting together of a new Agenda of the South raises a number of
issues, other than the substantive, that are pertinent to ensuring and
enhancing its efficacy. These include the interactions with the developed
countries in multilateral fora, the mobilization of the developing
countries around a coherent and acceptable platform, and the organization
of the substantive work that determines the content of the platform. The
developing countries need to address these and related questions which are
central to the value and success of any platform or agenda. As mentioned
before these questions have acquired a new urgency against the background
of the changing global setting and developments affecting the earlier role
of the United Nations Organization.

The need for a positive agenda

South-South cooperation apart, any agenda of the developing countries must
serve as an instrument for their interactions with the developed countries
in multilateral bodies and negotiating processes. This requires that it
provide the basis for identifying developing country interests in the
functioning of the global economy with a view to gaining recognition for,
and the reflection of, such interests in the outcome of negotiations. Other
parties to the negotiations will also have their agendas and the ultimate
test of success would be the reconciliation of viewpoints in a result
acceptable, as far as possible, to all.

In the absence of their own agenda the countries of the South will have
little option but that of reacting to the initiatives of others and of
focusing their efforts on damage limitation. A degree of confrontation is
implicit in any negotiation that aims at reconciling different viewpoints.
What needs to be avoided is the sterile confrontation that produces no
results. In the context of the globalization and liberalization process,
all groups of countries have common interests pertaining, for example, to
the dynamism and good functioning of the global economy, the widening of
opportunities for trade, capital flows, and technology transfers and their
equitable distribution, and the avoidance of disruptions in countries on
account of totally unregulated developments and premature shifts in policy.
All this provides a basis for multilateral negotiations focused on shared
interests. Multilateral negotiations should not be a one way street leading
from those who ask to those who give or from those who dictate to those who
accept.

Developing a coherent platform

In their dealings with the outside world, the developing countries have
both multilateral and bilateral interests. They need to pursue each of
these without subjugating the one to the other. Some problems can only be
solved by multilateral accords, particularly those relating to global
mechanisms and trends. Others could benefit more directly from bilateral
relations with affluent countries. All countries should recognize that
progress requires walking on two feet. In the recent period, the developing
countries that had become vulnerable to adverse external developments have
tended to afford priority to relief actions that were more immediate than
could arise out of multilateral processes. But the dichotomy is unreal and
unnecessary. The more the developing countries unite around common
initiatives and positions the less subject would they be to pressures
emanating from their bilateral connections. On the side of the developed
countries, the earlier dominance of the cold war calculus must give way to
a recognition of the stake they have in progress and good order in the
countries of the South. There can be no iron curtain to shield them from
the spread of a variety of destabilizing factors -- social, economic and
environmental as much as political. Increasing inter-dependence is of the
essence of a successful process of globalization and liberalization.

An agenda of the South needs to recognize not only the linkages between
development and the global economy but also the commonality of many of the
major problems facing the developing countries. As mentioned earlier, the
developing countries have never been an homogenous group with identical
problems and needs. Regional locations and degrees of development were
factors of differentiation. In the recent period, however, the degree of
differentiation among the developing countries has widened with, for
example, the rapidly growing countries of East and South Asia having
different experiences to most of the poorer and least developed countries
in different parts of the world. This development has its implications for
the forging of a common agenda of the South around which all countries can
unite. Some countries, for example, have a strong stake in strengthening
commodity markets, concessional aid and debt cancellation while others are
primarily concerned, for example, with market access, capital movements and
technology transfers. An agenda of the South cannot be built just around
issues in which developing countries have a common and equal interest. On
the contrary, it must also take account of the varied interests of all such
countries. This implies that such an agenda be inclusive of all the major
problems faced by the South despite the different degrees of interest on
specific issues on the part of individual developing countries. The
overriding need is for an agenda around which all the developing countries
can unite because its elements include the concerns of each of them while
the support of all is needed for success in the multilateral arena. The
design of such an agenda, however, is a more challenging task now than
before.

Organizing the substantive work

If an Agenda for the South is to be formulated and applied effectively, the
developing countries need to address the question of how the work required
for such a task could be organized. As already mentioned, recent
developments are tending towards a reduction of the role played in the past
by the United Nations secretariats in highlighting the development
dimension of problems and proposing corrective actions that could be agreed
upon, after negotiations if necessary, by all members. This is a void that
the developing countries themselves would need, in large part at least, to
fill themselves. At present they are not organized for such a task.
Proposals made in the past to establish an OECD type secretariat for NAM or
the Group of 77 did not find acceptance. If such a course is ruled out
there has to be a search for alternatives.

The developing countries need arrangements for the elaboration and regular
updating of their agenda. The issues broadly outlined in the preceding
section all need further study if they are to be translated into specific
proposals that could be advanced in a negotiating process. The developing
country representatives participating in negotiations also need
professional support in the course of such negotiations. In the absence of
such back-up the focus will tend to be limited to general positions and
approaches rather than on concrete proposals and responses.

There are various possibilities that might serve to fill the present
vacuum. One is the development of a networking system between countries of
the South involving specialists and researchers in the various fields of
importance. This will require actions and activities at the national level
that will serve to create a wider circle of developing country
professionals to support the work of ministry and departmental officials
who are generally the most familiar with the multilateral scene. It will
also require linkages between research institutions and individual experts
in different countries. Use will need to be made of modern advances in
electronic communications that provide new opportunities for such linkages.

In this connection two specific proposals have been made by a member of the
Panel. The first is to institute an Economic Coordination Scheme using
regional focal points among NAM members to help identify and analyse
aspects of international economic and trade-related issues of importance to
NAM and to suggest means of increasing the negotiating leverage of
developing countries in international fora. The second proposal is for a
scheme to link research institutions throughout the South into networks in
order to improve developing countries' scientific infrastructure and
technological base. These proposals are set out in more detail in Annex 1.

Regional cooperation organizations of developing countries should also be
invited to address issues relating to the impact of global developments and
negotiations on their respective regions. There is too little of this at
the moment but it could serve in helping to reconcile the positions of
different countries and groups of countries in relation to multilateral
issues and thus in forging common positions. The overarching need in
respect of all such proposals and possibilities is that of coordination.
The establishment of mechanisms for such coordination is a sine qua non for
progress on any agenda of the South.

The developing countries would need to explore these and other
possibilities that could improve coordination. Use must be made, in any
case, of the overall inter-regional groupings of the developing countries.
These comprise the Non Aligned Movement and the Group of 77. They have,
with an overlapping membership in large part, played a mutually reinforcing
role in the past and must continue to do so in the future. NAM receives its
guidance from periodical meetings of the Heads of member countries. The
Group of 77 is specially geared to the activities of the UN system and has
"chapters" in the principal cities where UN agencies are located. The
interaction between NAM and the G77 is facilitated by the fact that the
latter group includes all NAM members. Another mechanism of the South is
the Group of Fifteen: The Summit Level Group of Developing Countries, which
during its annual summits addresses issues which are of relevance both for
North-South dialogue and for South-South cooperation. There is also the
Group of 24, a part of the Group of 77, which focuses on international
monetary matters and the evolution of the international monetary system and
institutions.

In the present context of building up an Agenda of the South there is a
need for setting up some overall point of coordination. Suggestions have
already been made during the work of the present Panel that the Presidency
of NAM undertake such a task and assemble and launch the expert groups,
both overall and sectoral, that would be needed. In this connection, it
could mobilize those national and inter-South institutions, including for
example the South Centre, which contribute or could contribute to the work
of NAM and the Group of 77. Whatever the path chosen, the prime requirement
at present in respect of any agenda of the South is one of organization and
mobilization. It is hoped that the forthcoming XIIth Summit of the
Non-Aligned Movement due to convene in South Africa will launch the actions
that would meet this need.