Trade and Development Report, 2001
Total Page:16
File Type:pdf, Size:1020Kb
UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT GENEVA TRADE AND DEVELOPMENT REPORT, 2001 Report by the secretariat of the United Nations Conference on Trade and Development UNITED NATIONS New York and Geneva, 2001 Note • Symbols of United Nations documents are composed of capital letters combined with fig- ures. Mention of such a symbol indicates a reference to a United Nations document. • The designations employed and the presenta- tion of the material in this publication do not imply the expression of any opinion whatso- ever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory, city or area, or of its authori- ties, or concerning the delimitation of its fron- tiers or boundaries. • Material in this publication may be freely quoted or reprinted, but acknowledgement is requested, together with a reference to the document number. A copy of the publication containing the quotation or reprint should be sent to the UNCTAD secretariat. UNCTAD/TDR/(2001) UNITED NATIONS PUBLICATION Sales No. E.01.II.D.10 ISBN 92-1-112520-0 ISSN 0255-4607 Copyright © United Nations, 2001 All rights reserved FOREWORD International economic issues touch the lives of people everywhere. Whether grappling with the challenges posed by new information technologies, seeking to draw policy lessons from financial crises in emerging markets, or assessing the possible impact of China’s entry into the World Trade Organization, we look to economics as a guide in our rapidly changing world. The poorest nations especially require a clear economic road map if they are to make progress against the persistent problems of hunger, ill health and social insecurity. Over the past 20 years, UNCTAD’s Trade and Development Report has established itself as an authoritative voice on key international economic issues. This year’s Report offers an assessment of recent trends and prospects in the world economy, with particular focus on the impact that developments and policies in the industrial economies are likely to have on prospects in the developing world. With policy makers everywhere concerned about the effect of the economic slowdown in the United States, the Report’s call for greater coordination and cooperation on economic issues deserves careful consideration. In the past decade, there has been growing concern about the ability of multilateral rules and regulations to meet the challenges posed by global financial markets. This year’s Report examines in depth the ongoing discussions about reforming the multilateral financial system. It looks at key areas such as codes and standards, the contributions of private institutions in managing financial crises, and the workings of the exchange rate system. On each subject, it offers challenging recommendations on how to move the reform process forward. Many of these issues are expected to be discussed at next year’s high-level event on financing for development. I hope this Report will make a useful contribution to those discussions. Kofi A. Annan Secretary-General of the United Nations Trade and Development Report, 2001 v Contents Page FOREWORD ............................................................................................................................................... iii Explanatory notes ........................................................................................................................................ xi Abbreviations .............................................................................................................................................. xii OVERVIEW ............................................................................................................................................... I-X Part One GLOBAL TRENDS AND PROSPECTS Chapter I THE WORLD ECONOMY: PERFORMANCE AND PROSPECTS ............................................... 3 A. Global outlook ...................................................................................................................................... 3 B. Developed economies ........................................................................................................................... 7 1. The slowdown in the United States economy ................................................................................ 7 2. European Union .............................................................................................................................. 10 3. Japan ................................................................................................................................................ 14 C. Developing countries ......................................................................................................................... 16 1. Latin America ................................................................................................................................. 16 2. Asia .................................................................................................................................................. 18 3. Africa ............................................................................................................................................... 21 D. Transition economies ......................................................................................................................... 23 Notes .......................................................................................................................................................... 25 vi Page Chapter II INTERNATIONAL TRADE AND FINANCE.................................................................................... 29 A. Recent developments in international trade ................................................................................. 29 B. Non-oil commodity markets ............................................................................................................. 33 C. Recent developments and emerging trends in oil markets ......................................................... 35 1. Prices, supply and demand............................................................................................................. 35 2. Impact of the increase in oil prices ............................................................................................... 36 3. Prospects .......................................................................................................................................... 38 D. Currency markets and selected financial indicators in emerging markets ............................. 39 E. Private capital flows to emerging-market economies.................................................................. 48 1. Developments in 2000 .................................................................................................................... 48 2. Outlook ............................................................................................................................................ 52 F. External financing and debt of the least developed countries ................................................... 54 Notes .......................................................................................................................................................... 56 Part Two REFORM OF THE INTERNATIONAL FINANCIAL ARCHITECTURE Chapter III TOWARDS REFORM OF THE INTERNATIONAL FINANCIAL ARCHITECTURE: WHICH WAY FORWARD? .............................................................................. 61 A. Introduction ........................................................................................................................................ 61 B. The governance of international capital flows.............................................................................. 63 C. The exchange rate system ................................................................................................................. 65 D. Orderly workout mechanisms for international debt ................................................................. 68 E. Reform of the IMF ............................................................................................................................. 70 1. Surveillance and conditionality ..................................................................................................... 70 2. Liquidity provision and lender-of-last-resort financing .............................................................. 71 F. Governance of international finance .............................................................................................. 74 Notes .......................................................................................................................................................... 76 vii Page Chapter IV STANDARDS AND REGULATION .................................................................................................... 79 A. Introduction ........................................................................................................................................ 79 B. Themes of the key standards............................................................................................................ 81 1. Macroeconomic policy and data transparency ............................................................................. 81 2. Banking supervision ....................................................................................................................... 83 3. Payments and