Autumn 2018 Issue
> UNCTAD's World Investment Forum:
Looking for a Way Out of the Lucas Paradox
Any and all talk about a determined, sustained, and final push to eradicate poverty from the face of the earth revolves around a single question, one often lost in the peripheric chatter: How best to allocate the world’s savings?
T
he answer is deceptively straightforward and involves doing the right thing by the investors who own or manage those savings. What this entails is up for discussion at the 10th annual World Investment Forum (WIF) set to take place from October 22 to 26 at the Palais des Nations in Geneva, the United Nations’ European headquarters. The event, organised by the United Nations Conference on Trade and Development (UNCTAD) brings together all stakeholders in the global development value chain, from steelyeyed fund managers to starry-eyed idealists, a vast and diverse universe held together by experienced policy advisors and assorted experts in various fields related to growing something out of (nearly) nothing, otherwise known as development economics.
ALTERNATIVES TO AID Perhaps even more importantly, the global development agenda as compiled and driven by the UN has come to recognise that dispensing aid – while certainly useful and welcome – is not the most effective way to end world poverty. Aid, even at today’s near-record volumes, offers incidental relief and seldom, if ever, sets the recipient nation on the path of sustained growth. The reformulated mantra of the global development agenda now reserves a leading role for the formerly eschewed private sector whose untold billions must be mobilised for, and channelled towards, those countries – now called markets in tune with the new philosophy –lagging in development or mired in poverty. CFI.co | Capital Finance International
The updated mindset, already reflected at last year’s WIF in Doha, includes the ditching of most appeals to conscience. With a few exceptions, investors are seldom moved by humanitarian reasons. In Doha, pragmatism prevailed over woolliness. UNCTAD, formerly a bastion of leftish progressive thought, has become a UN agency that leverages knowledge and experience to make a clear-cut business case for development. UNCTAD’s message to the private sector is simplicity itself, and rather brilliant: The eradication of world poverty can be made into a profitable pursuit with the potential to add untold trillions to the bottom line of private enterprise as millions of formerly marginalised people join the market as consumers. UNCTAD may, in fact, owe a debt of gratitude to China. Without much assistance from a sceptical outside world, the People’s Republic demonstrated how a desperately poor nation that suffered a string of unspeakable tragedies can reshape and reinvent itself in a single generation. LESSONS FROM CHINA When, in the late-1970s, the reformist Deng Xiaoping emerged from the Cultural Revolution and outmanoeuvred his opponents to assume the de facto leadership of the country, China’s per capita income (PPP) hovered around the $200 dollar mark. Last year, China boasted a per capita income in excess of $15,500. The country is 37
Cover Story
Since the first WIF took place in 2008, the world has changed: it has suffered a Long Recession, entered an equally long expansion phase, and managed to successfully implement an ambitious set of Millennium Development Goals. Just as the Asian financial crisis of the 1990s did, the Long Recession – sparked in the United States but mainly, though not exclusively, focused on Europe – saw the accumulation of a savings glut created by policies to hedge against future cash crunches. In times of crisis, creditor nations usually fare much better than those in the red.
"The eradication of world poverty can be made into a profitable pursuit with the potential to add untold trillions to the bottom line of private enterprise as millions of formerly marginalised people join the market as consumers."