Presentation

Human Development Report Office, UNDP

(e-mail hakan.bjorkman@un.dk)

HAI/MSF/CPT

25-26 November 1999

I have the daunting task of providing the general backdrop to the discussion at this conference ¾ giving an overview of the main challenges of making globalization benefit people, not just markets. I will base my presentation on the messages of the 1999 Human Development Report, which focused on the theme of "globalization with a human face".

The structure of my presentation is very simple. First, I will look at some of the positive and negative aspects of globalization, and then I will go through a number of important recommendations for improving the governance and direction of globalization

Before I begin, I am going to kick of with some basic facts about globalization, so that we are all at the same level of understanding.

• Bill Gates earns $120 million a day
• 1.3 billion people live on less than 1 dollar per day

• Industrial countries have 88% of all Internet users
• 2 billion people do not have access to electricity

• 0.2 % of the world’s medical research focuses on pneumonia, diarrhoea and TB
• Pneumonia, diarrhoea and TB accounts for18% of the world’s disease burden

• The richest 20% of the worlds people accounts for 86% of total consumption
• Every three second a child dies because of poverty

These figures talk for themselves.

I would also like to say a few words on how we define globalization in the Report. Normally, globalization is seen as a process of economic integration, increased flows of money, goods and services across borders. We see globalization as more than that¾ a process that brings people together, making people more interdependent as well as more vulnerable. It is increasing the contacts between people across national boundaries, in economy, in technology, in culture and in governance.

It is important not to forget that globalization provides great opportunities for human development and the realization of human rights. Increased trade, new technology, foreign investments and the expansion of information and media networks are providing the fuel for economic growth and human development. Many countries have made impressive achievements because they have managed to capture the opportunities that globalization offers.

In fact, taking a longer-term perspective and looking at the overall picture in developing countries, progress in human development has been impressive. For example, child deaths have actually fallen by half since 1965 and adult literacy has risen from under 40% to over 70% since 1970.

Globalization is accompanied by technological breakthroughs in medical science, agriculture and new communication technologies. The Internet brings us closer together and can promote democracy. This new information technology provides a very useful tool for non-governmental organizations and people’s movements around the world. Organizations can exchange information and experience and coordinate their work. Just two examples where the Internet played an important role: the Jubilee 2000 campaign for debt relief and the successful campaign against Multi-lateral Agreement on Investment. The Internet will be of great help in the on-going campaign for equitable access to essential drugs. As activists, we can reap these benefits of globalization.

Globalization have many positive aspects and offers great opportunities, but the problem is that (i) the benefits are unevenly distributed, (ii) new threats to human security are created, and (iii) globalization limits the opportunities of governments to promote human development and fight poverty.

I will now go through these three points.

1. Benefits are unevenly distributed

Globalization is actually not global, but has resulted in a polarization of those who benefit greatly and those who are completely left out. Globalization leads to some very absurd outcomes, as evident from the statistics I showed at the beginning.

To further illustrate the disparities in global opportunities and to highlight the very difficult context in which globalisation is taking place,we can look at this chart.

SLIDE – Stark Disparities in Global Opportunities

Globalization also tends to lead to greater income disparities between rich and poor.

SLIDE – Global income gaps

Today, the richest 20% of the world’s people are 74 times richer than the poorest 20%.

But more troubling is the fact that poverty and violations of economic and social rights continue to be widespread, in great contrast to the economic and scientific miracles of globalization. Although poverty is gradually being reduced in relative terms because of rapid population growth, the actual number of poor people is increasing by about 25 million a year. Between 800 million and 1 billion people are denied such basic human rights as the right to adequate food, right to education, and the right to health.

Benefits are also unevenly distributed in the area of technology. Over the past 20 years, increasing privatisation of research and development, liberalisation of markets, combined with the tightening of intellectual property rights have set off a race to lay claim to knowledge. Poor people’s and poor countries’ interests are being left on the sidelines. From new drugs to better seeds for food crops, the best of the new technologies are designed and priced for those who can pay. In defining research agendas, money talks louder than need. Only $80 million is being spent on malaria research, and only a small portion of that is spent on developing a malaria vaccine. There is no market for vaccines in the developing countries (from the point of view of the private sector).

The evolution of patents is illustrative of the growing gaps between rich and poor countries. The past two decades have seen a huge rise in patent claims. The number of applications made annually through the World Intellectual Property Organisation rose from less than 3,000 in 1979 to more than 54,000 in 1997, totalling over 3.5 million individual patent applications. But the claims to intellectual property are concentrated among very few countries. Industrial countries hold 97% of all patents world-wide. By contrast, the use of intellectual property rights is alien to many developing countries. More than 80% of the patents that have been granted in developing countries belong to residents of industrial countries.

This trend is worrying, especially in the area of biotechnology. Developing countries are the source of about 90% of the world’s store of biological resources. More than half of the world’s most frequently prescribed drugs are derived from plants or synthetic copies of plant chemicals. In the current trade system, developing countries are missing out on potentially huge revenues from royalties and export. Biorich countries could have benefited just as the Arab world did in supplying oil to the world.

 

 

2. Globalization creates new insecurities and makes people more vulnerable.

SLIDE – New insecurities

Globalization creates economic vulnerability and financial instability due to the volatility of global capital markets. The financial crisis in East Asia is one example of how the instability of capital markets can destroy years of progress in human development.

Globalization also creates job and income insecurity due to dislocations from economic and corporate restructuring. Globalization creates cultural insecurity as western cultural output overshadows local diversity. Globalization creates environmental insecurity, hitting the poorest people the hardest. Globalization creates political insecurity as widening disparities and poverty creates social upheaval and is often the root cause of ethnic violence. Globalization creates personal insecurity as international crime benefit from unregulated capital markets and new technology. And globalization creates health insecurity as epidemics spread faster, exigencies of the global markets puts pressure on health budgets and patent rules limit access to new and emerging drugs.

3. Limits choices of governments

But probably most important, globalization limits the capacity of governments to deal with poverty and violations of economic and social rights. The exigencies of a competitive global market economy force governments to become "tax competitive", to forgo revenue raising through trade taxes, and limiting spending in social sectors. Economic policies have been harmonized the world over in line with the neo-classical approach to sound macro-economic management, dictated in Washington and not democratically debated at home. The perspective is hopelessly shortsighted¾ blind to the fact that investments in human development are the foundation for future economic success.

These negative impacts of globalisation are due to a failure in governance at the global, regional and national levels. It is important to stress the point that there is nothing inherently wrong with globalization in itself – its impacts depend on how it is managed. Today’s governance of globalization, at the international and national level, focuses on economic efficiency, increased production and profits, not on the real goal of human development and the fight against poverty.

Among policy-makers, academics and international civil servants there has been excessive faith in the market as a development panacea. The problem with the market is that (i) wealth and power tend to become concentrated among a select group of countries, corporations and individuals, (ii) markets can get out of hand, creating instability and set-backs in human development, (iii) profit motives can get out of hand, challenging ethics and human rights, and (iv) and the market fails to guarantee access to social services and technology to those that cannot pay for it.

But, having said that, it is important not to forget that the market system is the best way of ensuring an efficient allocation of resources. Without the market as a dynamo of economic growth, human development would not be possible. The problem is that markets are good for efficiency, but not necessarily good for equity. Without ‘sound’ governance, adequate rules and institutions, markets will fail in many respects to deliver equity and human development. In particular, the market will fail in assuring equitable access to essential medicines, which for obvious reasons must be seen as a ‘global public good’, exempt from the principle of non-intervention in market forces.

What needs to be done to make sure globalization and market forces promote human development and successfully eradicate poverty? There are many messages in the report and I will focus on those most relevant to our themes here today. General message number one in the 1999 Human Development Report is that stronger governance is needed to mitigate the negative impacts of globalization and ensure a more equitable distribution of benefits. I will now go thought four important policy messages of the Report for improving global governance.

1. Human rights as a framework for global governance.

The most important recommendation that the report makes is to strengthen existing human rights instruments and apply a human rights approach to global governance, (as well as national governance for that matter). All human rights¾ civil, cultural, economic, political and social rights¾ need to provide the principles and legal framework for dealing with global issues and for protecting people from the negative impacts of globalization. The impact on people’s right to food, right to an adequate standard of living, right to health and education, right to political participation, etc., must become the supreme consideration in global decision-making. Far more progress has been made in establishing norms, standards and institutions for open global markets than for people and their rights. Imagine a framework of rules and enforcement mechanisms for human rights as well developed as those for free trade.

In the context of access to essential drugs, a human rights approach is clearly needed. Article 15 of the Universal Declaration of Human Rights states that "Everyone has the right [. . .] to share in scientific advancement and its benefits" Article 12 of the Covenant of Economic, Social and Cultural Rights states that "State parties [...] recognize the right of everyone to enjoy the highest attainable standard of physical and mental health". This, together with many other provisions, provides us with a legal framework, binding on all states, to push for a more equitable access to essential drugs. Such international legal provisions also empower individuals and NGOs to advocate change and influence government policies and national legislation.

2. Reverse the marginalization of poor countries.

Another key message of the report is to do something about the economic and political marginalization of poor countries. The process of global governance is too geographically unbalanced, dominated by the concerns of the industrial countries, with the interests of poor countries neglected.

[SLIDE – cartoon "Level Playing Field?"]

Can we really talk about a level playing field in global governance, dominated by the economic muscle of OECD, G-7, and sometimes just the G-1?

The Least Developed Countries need to be empowered in international negotiations, and this is a hot topic for the next trade round being prepared in Seattle in a few days. We propose such practical actions as for example access to legal advise for these countries, support to policy research on issues of importance to them, appointment of Ombudsman within organisations such as the WTO, World Bank and the IMF, etc. But achieving political empowerment of the poorer countries requires strong solidarity and co-operation between them. In the process leading up to Seattle, this co-operation has greatly improved and with UNDP assistance, the Least Developed Countries have come up with a common understanding and negotiating position. Finally, to achieve better balance in global negotiations, NGOs must be given a bigger, more formal role, in advancing the interests of countries and people normally off the radar screen.

To achieve the economic empowerment of the poorer countries, a number of actions are needed. The report talks about more and better aid to promote good governance in developing countries, promote sustained economic growth by dismantling barriers in the textile and agriculture sectors on which these countries are so dependent, and an even faster and more flexible debt relief than what has so far been promised.

 

3. Strengthen national policies and actions for human development

Another important message of the report is the need to strengthen national governance, and adapt the role of the state to the new realities of the global economy. All countries need to revitalise their social policies, for redistribution, for safety nets, for the universal provision of social services. These human development policies need to take centre stage in order to deal with the new threats to human security and negative impacts of the globalized economy. The role of the State is changing, but is not diminishing. Governments need to find new sources of revenue to counteract the shrinking tax-base due to the exigencies of the global market, liberalisation of trade and financial markets and the growth of the underground economy.

4. A new technology agenda

The report places great emphasis on actions needed to ensure a more equitable distribution of benefits of technological progress. The potential of the new technologies for human development and poverty eradication must be tapped. Some important actions proposed by the report are:

• Intellectual property rights under the TRIPS agreement need a comprehensive review to redress their perverse effects undermining food security, indigenous knowledge, biosafety, and access to new essential drugs. The review needs to ensure that the room for manouever granted in the TRIPS is respected in practice, and is not taken away in the new trade round. A transparent review mechanism should be established within the WTO to track the human and economic costs of implementing TRIPS, the effects on prices, impact on biodiversity, and on access to medical resources.

• Public investment is needed in technologies for poor people and poor countries. In the area of medical research, an international programme could be considered, along the lines of the Consultative Group on International Agriculture Research, an initiative that brings together researchers to focus on the need for technology innovation in agriculture, not being supplied by the market.

• But where will the money for such public research come from? More cash is needed for technological innovation of benefit to poor countries and people. The report proposes a levy on patents applications made through the World Intellectual Property Organisation. Patents can cost tens, even thousands, of dollars to secure. An additional levy of just $100 on each patent application made would have raised $350 million in 1998 alone. This money or money from other sources could be given to a Millennium Vaccine Fund, as proposed by J. Sach’s (Economist 14^th August).

With those very concrete proposals, I will leave it at that. As a concluding remark, it is obvious that the debate about improving global governance is of absolute key importance. Because at this point, it is not sure at all where we are heading.

I hope over the next two days, we will come to better understand - at least on the issue of access to essential drugs – just where it is that we are heading, where in fact we should be going and how on earth to get there.

Thank you.