State Secretary of International Development Sigrun Møgedal

Globalization, poverty and development

NUPI Seminar on International Economics, 18 October 2000

Will the next generations ever understand the way we, the people of this generation have behaved in facing the scandal of globalized poverty? They will study the broad agreements on what needs to be done. They will know that we knew only too well the consequences of failing to act on poverty. Yet – what will they see in terms of response? We in Norway are good at aid – yes! We want to do even more – yes! But in relation to the size and nature of challenges, international aid flows are largely insufficient and can only be part of the response. Dealing with the challenge of global poverty hardly generates public interest or political debate beyond special occasions. The world’s response is a response to symptoms that become unbearable. This is what the next generation will hold us accountable for.

In the campaign for our Norwegian seat in the Security Council we have echoed the words of the UN Secretary General, Kofi Annan, that Human rights, peace and development have to go together. Without being serious about poverty, there will be no peace. Without being serious about poverty, human rights will not be fulfilled. Without being serious about poverty, there will be no way to solve major environmental challenges and fight Hiv/aids and other infectious diseases.

Against this reality aggregated information on income and cost of living is merely one letter in a full alphabet. An academic argument on how to describe that reality is interesting enough. But if we want to act, make change and get results, the focus has to be on overcoming the forces and factors that sustain the poverty. There is no way to act on poverty without joining forces with the poor. That is true for national governments and for the global community.

The findings in the new NUPI report - that there is actually less inequality among countries - is obviously good news. It can demonstrate to the public that things are getting better. And we need that encouragement. But the poor, countries and individuals, are not fooled by this macro level news. It does not help Africa, and not even Laos, that China is doing better. The most interesting information is not the global trends, but going behind the macro figures to explain the variations. Moreover, we need to take care so that some measure of global achievement does not overshadow the facts of the Least Developed Countries that do not follow the same positive trends.

Whether globalization is a blessing or a curse for the poor has become a hot issue and has even been able to capture the attention of the media. It is actually, in terms of the current development debate, about the only theme that carries popular energy and engagement. There are a lot of concerned people who hold strong views about globalization and poverty - and act accordingly. Over the last year we have seen some of this concern unfold during the demonstrations in Seattle, Washington and Prague. This "backlash against globalization" (a phrase coined by the Financial Times) is legitimate. It has to be taken seriously in so far as it represent voices of civil society that join together in challenging a world power system that is perceived to dis-empower people and push prescriptions rather than provide opportunities.

The debate on globalization and its effects is still in its very early stages. If anything, those who hold very firm opinions in these matters should be met with a certain amount of skepticism. Why? – Because globalization is such a multi-faceted process, such a complex web of interrelated, sometimes breathtaking changes – and still such a big puzzle. In short, the jury’s still out on globalization and its effects. And the clues are not likely to be found in income distribution and cost of living figures.

While the jury’s still deliberating we must maintain a constructive dialogue to improve our mutual understanding of globalization - in all its diversity. There are few things more dangerous than actors – be they demonstrators or politicians – strong in convictions but short on knowledge.

In our common quest for knowledge - as apart from pure belief or speculation –we can pretty safely assume that globalization works differently under different circumstances, in different local communities, in different countries, in different parts of the world. This is probably one of the more important observations made in NUPI's report.

The point being that "the poor", quite simply, are a very heterogeneous group of people. They, like you and me, are affected by globalization in very different ways, according to the conditions and environment in which they live and breathe.

From a political perspective, the most important question is not an abstract discussion of "who benefits the most from globalization", but more simply: "How is globalization perceived by those who live with its effects?".

Even if, for the sake of argument, globalization were to be bridging the gap between the rich(est) and the poor(est), we would still have a problem if the poor(est) somehow feel otherwise. We would still have a problem if the poor feel just as powerless, just as marginalized, just as alienated as before. In a world of rising expectations, fueled by CNN and increasingly also by the Internet, perceptions of reality are fast becoming just as important as reality itself. The question is: " Whose reality counts"? Those of us in a position to deal with the political dimensions of international development can have only one answer to this question. What counts is the reality of those who see themselves powerless and marginalized by poverty. Their perspectives need to be included in the way we construct reality. The gap of trust needs to be bridged as much as the gap of inequality.

Seminars like this can both help us gain more knowledge and to maintain a good dialogue. We need the academics and the reality of facts and figures they present. We are very pleased that Norsk Utenrikspolitisk Institutt (NUPI), the United Nations Conference on Trade and Development (UNCTAD) and the United Nations Development Program (UNDP) have chosen this way to share their views with us.

I am not at all surprised by the scientific disagreement on methodology to describe poverty trends. It just underlines the need to look at research findings and implied causal links with a critical eye. A second opinion is often useful.

Income levels may follow the Human Development Index closely at an aggregate level. But this is a limited tool in terms of public policies to overcome poverty, such as how public policy is used in order to provide equitable access to benefits and how governments follow up commitments to human rights, democratic decisionmaking and opportunities. Information needs to be relevant to political decisionmaking. Sound facts are essential. The ways in which facts are interpreted and used - likewise.

In that perspective, both the UNDP's and NUPI's focus on income distribution is pertinent to today's main political objectives. We have made a commitment to halve the incidence of extreme poverty by 2015 (as compared to 1995). Regardless of who’s right and who’s wrong on globalization and inequality, this is a formidable ambition. Formidable, but – according to other research – attainable. At least globally, although perhaps not in each and every region. In this perspective, I hope the NUPI-UNDP discourse can go further in a more applied direction and not remain merely "academic".

UNCTAD's report on the Least Developed Countries for 2000 has a slightly different approach than the NUPI report. Like NUPI, UNCTAD is concerned with how events in an ever more integrated world impact on the lives of the poor. UNCTAD focuses on how events in the surrounding world constrain economic growth and the formulation and implementation of policies in developing countries. In advocating responses to these constraints, UNCTAD stresses the need for better equipped global - and national - institutions. The recommendations in this report are closer to policy, and set out a policy direction that we very much subscribe to.

Quite frankly: UNCTAD’s longtime call for a strong international public sector has hardly been more pertinent than today. Why? – Because globalization, far from being a product of historical determinism, is a reality in the making. It’s "man-made". In shaping globalization – in trying to somehow take command of these breathtaking changes of our time instead of being "rolled over" by them – there is, in my mind, no alternative to strengthening multilateralism. Governments negotiating and acting together. And civil society mobilizing and networking nationally and internationally. In short, we need policies, instruments and institutions that make marked-led globalization work for the poor – not against them.

I am confident when I state that there is now a genuine and shared will among all key public actors, the UN system, the financing institutions (including the IMF), the member countries and their subgroups and regional bodies to achieve results in terms of sustainable poverty reduction. There is also evidence of change in attitudes and ways of cooperation towards joint action, national ownership and genuine participation from civil society. Along with this, there is a common recognition of the need for a diversity of approaches, tailor made to the unique situation of each country.

Still there is a long way to go in order to measure up to UNCTAD's proposal for a 'New Deal' for the Least Developed Countries. This is the case in terms of adequate levels of aid flows and debt relief. Even more so we have not yet dealt with the question of policy coherence in a way that makes policies pro poor. There also remains much to be done before LDCs can participate in world trade on an equal footing with industrial nations. But it is beyond doubt that this is the way we need to go.

We have already taken steps in this direction, by making the coming year’s "Financing of Development" process of the multilateral system a priority project, also in terms of pro poor policy coherence in Norwegian policies. We want to stand accountable, not only for the way we act with our money, but also for the way we engage in transforming policies to serve global solidarity.

But as a Government we need partners. We need the push and the energy from civil society engagement and action. Our policies must be rooted in the realities of poor and vulnerable people. And policy choice must be informed by research, academic analysis and debates, linking scholars of the North and the South. The seminar today contributes to such a purpose.

If we keep our eyes open to the dangers, I believe that globalization - in the end - will benefit LDCs far more than it will hurt them. Until proven wrong, and inspired by the conclusions of the NUPI report, I choose to be optimistic.

Thank you.