Freeman

ARTICLE

Stick to the Facts, Please

The United Nations Conference on Trade and Development Projects a Dark View of the Developing World

JULY 01, 2000 by TOMAS LARSSON

Filed Under : Protectionism, Poverty

Tomas Larsson is a Swedish journalist, based in Thailand. He is a columnist for Finanstidningen, Sweden’s leading financial daily, and author of a recent book on globalization.

“The Least Developed Countries 1999 Report” recently released by the United Nations Conference onTrade and Development (UNCTAD) in Bangkok paints a grim picture of the effects of global economic liberalization on the world’s 48 poorest nations. Wrongly so.

“Whilst the 1980s were dubbed the ‘lost decade’ for developing countries in general and LDCs in particular,” the report’s authors state in the introduction, “the 1990s have become, for LDCs, the decade of increasing marginalization, inequality, poverty and social exclusion. The violence and social tension which afflict several LDCs are caused, in part at least, by increasing deprivation and inequality.”

It is not hard to find out that UNCTAD is flogging a dead horse. Just turn to the statistical tables included at the end of the report. Let me highlight a few of the findings there.

Per capita GDP (in 1997 U.S. dollars) rose from $163 in 1980 to $235 in 1997. That represents a whopping 44 percent increase for the average inhabitant of the world’s poorest nations, ranging alphabetically from Afghanistan to Zambia.

Progress has occurred at an astonishing pace also in other areas during the past 20 years. Secondary-school enrollment rose from 15 to 19 percent of the relevant age groups in the LDCs. That’s a 26 percent rise. The number of radio receivers rose from 50 to 116 per 1,000 inhabitants—an increase of 132 percent. The number of daily newspapers in circulation rose from 5 to 7 per 1,000 inhabitants—a 40 percent increase.

In other areas, progress was less rapid, but no less important to the societies and individuals concerned. Between 1980 and 1997, mortality rates dropped from 116 to 108 per 1,000 live births in the LDCs. Food supply rose from 2,050 to 2,145 calories per capita per day. The primary-school enrollment ratio rose from 66 to 70 percent of the relevant age group. Obviously this leaves much room for improvement, but it is nevertheless clear that things are moving in the right direction.

Similarly, it is hard to find any evidence that the poorest countries are increasingly marginalized in terms of access to financial capital. Total financial flows to the LDCs rose from $10.441 billion in 1985 to $15.099 bil lion in 1997, measured in current U.S. dollars. The payments these countries had to pay to service their debts fell marginally—from $4.589 billion in 1985 to $4.374 billion in 1997. But more important, the debt-service ratio (debt service/exports) fell from 29 to 13 percent in the same period.

The devilishly glum picture painted by the UNCTAD report does not do justice to the real situation in the poorest of the poor countries. Things are bad—but the most important thing to keep in mind is that they are actually getting better.

It is sad that UNCTAD uses all its extraordinary rhetorical powers to project such a dark and pessimistic view of the developing world. One negative effect may be that the poorest countries lose investment and export opportunities. What companies would be so foolhardy as to try to build up long-term investment and trading relations with countries that UNCTAD, the supposed trade and development expert, is declaring unmitigated socioeconomic disaster areas?

Lost Credibility

Another negative effect is less direct. The blatant exaggerations by UNCTAD regarding the situation in the least developed countries result in a loss of credibility. This is a fatal flaw in an organization whose very purpose is to produce research and analysis on trends affecting trade and development in the developing countries. This lack of nuance and credibility also makes it hard, if not impossible, for UNCTAD to be persuasive when it counsels against protectionism by the rich countries against the poor.

That the official spin on the issues was so easily swallowed by the press that covered the UNCTAD X conference only goes to show that journalists have stopped reading anything but press releases and that they pay scant attention to that old journalistic virtue of getting the facts straight and presenting them in a balanced manner.

Do the leaders of UNCTAD believe that these nasty little untruths and half-truths about the effects of globalization somehow serve a higher purpose?

Poverty would have ceased to be a problem a long time ago if it could be eliminated by misleading rhetoric. Now it is time to try something new: stick to the facts, not the prejudices.

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July 2000

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