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Proposals from Business and Civil Society

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Proposals from Business and Civil Society FINANCING FOR DEVELOPMENT: PROPOSALS FROM BUSINESS AND CIVIL SOCIETY The United Nations University is an organ of the United Nations established by the General Assembly in 1972 to be an international community of scholars engaged in research, advanced training, and the dissemination of knowledge related to the pressing global problems of human survival, development, and welfare. Its activities focus mainly on the areas of peace and governance, envi- ronment and sustainable development, and science and technology in relation to human welfare. The University operates through a worldwide network of re- search and postgraduate training centres, with its planning and coordinating headquarters in Tokyo. The United Nations University Press, the publishing division of the UNU, publishes scholarly and policy-oriented books and periodicals in areas related to the University’s research. Financing for Development: Proposals from Business and Civil Society Edited by: BARRY HERMAN FEDERICA PIETRACCI and KRISHNAN SHARMA United Nations asdf University Press United Nations TOKYO • NEW YORK • PARIS © The United Nations University Press, 2001 The views expressed in this publication are those of the authors and do not necessarily reflect the views of the United Nations University or the United Nations. United Nations University Press The United Nations University, 53-70, Jingumae 5-chome Shibuya-ku, Tokyo, 150-8925, Japan Tel: +81-3-3499-2811 Fax: +81-3-3406-7345 E-mail: [email protected] http://www.unu.edu United Nations University Office in North America 2 United Nations Plaza, Room DC2-1462-70, New York, NY 10017, USA Tel: +1-212-963-6387 Fax: +1-212-371-9454 E-mail: [email protected] United Nations University Press is the publishing division of the United Nations University. Cover design by Joyce C. Weston Printed in Hong Kong UNUP-1073 ISBN 92-808-1073-1 Library of Congress Cataloging-in-Publication Data Financing for development: proposals from business and civil society / edited by Barry Herman, Federica Pietracci, Krishnan Sharma. p. cm. Includes bibliographical references and index. ISBN 9280810731 (pbk.) 1. Investments, Foreign—Developing countries. 2. Economic development— Finance. 3. Finance—Developing countries. 4. International finance. I. Herman, Barry. II. Pietracci, Federica. III. Sharma, Krishnan. HG5993 .F559 2001 338.91—dc21 2001005191 CONTENTS Preface . x Introduction . 1 Barry Herman, Federica Pietracci and Krishnan Sharma PART ONE: INITIATIVES FOCUSING ON THE POOR. 15 1. Supportive domestic policies for micro credit. 17 John de Wit 2. Financing for the poor and women: a policy critique . 25 Zo Randriamaro 3. A special role for foreign banks in poor countries . 35 Hanns Michael Hoelz 4. Stripping structural adjustment programmes of their poverty-reduction clothing. 41 Douglas Hellinger, with Karen Hansen-Kuhn and April Fehling PART TWO: DEVELOPING COUNTRIES IN THE INTERNATIONAL ECONOMY. 53 5. What foreign direct investors provide and what they seek. 55 Andre van Heemstra 6. Gender in international trade and investment policy . 63 Mariama Williams 7. The global financial market is vast and can be tapped . 71 Marshall N. Carter 8. Why is there not more international project financing for emerging economies today?. 75 Tom Marshella 9. An investor’s perspective on corporate governance in emerging markets. 81 Cheryl Hesse PART THREE: EVOLVING NATIONAL FINANCIAL SYSTEMS AND POLICIES . 87 10. Financing for development in the context of national development planning . 89 Roberto Rubio-Fabián 11. Financial restructuring in Thailand . 95 Chulakorn Singhakowin v CONTENTS 12. Lessons for domestic financial policy from the Asian financial crisis . 99 Victor B. Valdepeñas 13. Liberalization of financial markets: the case for capital controls . 107 Marina Ponti and David Zanoni PART FOUR: PROPOSALS FOR MAJOR INTERNATIONAL INITIATIVES . 115 14. Rethinking and recommitting to official development assistance . 117 Jens Martens 15. A unified programme to bridge the digital divide. 123 Rodney Harper 16. Spreading the capacity for effective demand for finance: a new cooperation framework . 127 Tariq Banuri and Erika Spanger-Siegfried 17. Required international initiatives in trade policy . 135 Tom Niles 18. Tax competition and tax havens . 139 Jenny Kimmis and Ruth Mayne 19. Currency transaction tax: an innovative resource for financing social development . 145 Bart Bode 20. Arbitration to solve the debt problem. 153 Kunibert Raffer 21. Strengthening the Economic and Social Council . 159 Julian Disney Notes on the contributors . 169 Index . 175 vi PREFACE We live in an era of rapid change. One central component of that change is the process of globalization. Globalization has created enormous wealth for some in many parts of the world, but it has also left many behind. NGOs have been at the forefront of pointing to the downsides of globalization, whether it was through articles, the Internet or, more recently, the streets of Seattle and Genoa. Regrettably, this has at times been accompanied by violence. There are legitimate concerns about the workings of the world economy, the depth of poverty, inequalities and marginalization. The United Nations is in a unique position to engage in a constructive dialogue, not only with those who are most critical of the workings of the international economy, but also with those who drive the international economy, i.e., the business sector. The United Nations is currently preparing for an unprecedented confer- ence that addresses the interlocking issues of financing and development in the context of globalization. This International Conference on Financing for De- velopment, to be held in Monterrey, Mexico in March 2002, offers an ex- tremely important opportunity to create a new international partnership for a more equitable economic and financial governance of the world economy. This partnership cannot be reached without the participation of “all relevant stakeholders”. This, of course, includes the Governments of the Member States of the United Nations and all appropriate official international organizations, but it also includes the business sector and civil society. The present book is a case in point. Compiled after hearings held in the General Assembly as part of the preparatory process for the International Con- vii ference, it includes a broad sample of views and aims to facilitate a discussion among all interested parties about the future directions of globalization and de- velopment. As readers will see, the question of financing seems to impinge on all aspects of both subjects. Different readers will approve or reject different proposals that are made here. That is as it should be. That is the nature of de- bate. I myself do not necessarily agree with all of the ideas expressed here. But it is crucial that readers appreciate the concerns that motivate the proposals, as- sess the analyses critically and sharpen their own thinking about global policy needs. That is precisely the kind of active engagement the forthcoming confer- ence needs if it is to succeed. Kofi A. Annan Secretary-General of the United Nations viii ACKNOWLEDGEMENTS This book is appearing because quite a few people believe something im- portant is happening at the United Nations regarding the initiative called “fi- nancing for development” and they wanted to help support it. Above all are the authors of the essays in this book, who volunteered the time and effort, firstly, to participate in the hearings organized for the United Nations Preparatory Committee for the International Conference on Financing for Development. They all patiently and quickly worked with us to revise their presentations for this volume. As editors, we can say we thoroughly enjoyed working with each of them. We also wish to express our appreciation to the other participants in the hearings whose statements we could not include owing to space limitations. It is one thing to produce a manuscript for publication and it is quite an- other to produce the book itself and do it so expeditiously. For this, we are in- debted to the United Nations University Press, its head, Ms. Janet Boileau, and her capable staff. The manuscript was ably copy-edited, probably in record time, by Ms. Elizabeth Lara of the United Nations and the index was prepared by Ms. Angela Cottingham. We are also very grateful to Mr. Valerian Monteiro for design and typesetting of the book, to Ms. Remedios Catolico, Mr. Kalu Odege and Ms. Maria Consuelo (Suzette) Limchoc for their quiet efficiency in preparing the manuscripts, as well as to the many staff and interns of the De- partment of Economic and Social Affairs who were pressed into service for proofreading. Colleagues like these made it a pleasure to work on this book. ix Introduction 1 Introduction BARRY HERMAN, FEDERICA PIETRACCI AND KRISHNAN SHARMA1 In the present volume, representatives of business and civil society offer ad- vice to policy makers on how to improve financing for development. Most fi- nancing in most developing countries involves private enterprises, whether in the formal or informal sectors, whether domestic or foreign. Even so, the public sector plays a major role in directly financing some activities and in policy guid- ance over others. The nature of the public role and the content of public policies are of prime concern to all parties interested in financing for development. This book brings together a diverse set of assessments and proposals from the busi- ness sector and civil society in different parts of
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