To build or to destroy It’s always difficult to build or construct. Values have to be constructed as well as the expected goals, must come with the law in the hand with economic freedom, with rules of the law and a solid protection towards private property. Ethics must be strengthened as well as responsibility, etc.; all this is hard to achieve. We also have to add to this list, the accountability, the timing and execution to emulate prosper nations. All the scaffolding takes us to obtain a successful construction, to live in peace and improve our life quality. Is this difficult to do? Yes, it is, because it isn’t easy to turn a stony road into a modern and clean one. To dismantle or destroy is easy. Hate is used, the discretion for donations in an arbitrary way, division, envy, the lack of values, the arrogance, the lack of law, the hound, pushing the country towards a backward movement plus malpractice to isolate us from the world’s advances, achieve crisis and therefore destroy the small and medium industries which depend from the domestic market and attack people’s pockets, etc. At the end, all the above mentioned and even more, leads us to job and family’s destruction and with it , the opportunities for growth. In 2008, with an oil price of US$ 146 per barrel, we really had the lotto, but that money was promptly spent and wasted and currently we have a similar price as it was in 2001. At that time our budget of State was of US$ 4.853 million (the average price per barrel of Ecuadorian oil was 18.36). Nowadays there is an insolent project for the 2009 budget of State of US% 20 million. When we as country declared the “default”, we destroyed the little credit left and I ask: Who will give us money when in an inappropriate way we decide not to pay? In case that the debt would have been illegitimate, there are procedures to follow for the nations well being. It looks like the desire is to destroy the country, to remove the dollar and finish knocking it down. Our wish is to have a builder and not a destroyer, because the direct investment flows are attracted by constructing a country with a strong legal security, State policies resolving about corruption and a strong currency: the dollar for it to continue providing an appropriate reinforcement. Let’s learn from this world’s crisis as an opportunity and not as a country turned into a world’s parenthesis. Let’s point out worldwide for the good things and it would be the opportunity to make the difference. Ing. Joyce Higgins de Ginatta
International Conference about
FINANCING FOR DEVELOPMENT From November 29th to December 2nd, 2008, the United Nations organized an International Conference about Financing for Development, which was held in DohaQatar and gathered distinguished and recognized personalities of the whole world. The FIE had its appearance in such a grand event, because its President was invited to participate as a lecturer in the agenda called “Mobilizing International Resources for Development: Foreign Direct Investment and other private flows”.
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From left to right: Hiroto Arakawa, Japan’s International Cooperation Agency; Joyce de Ginatta, Ecuador’s President of FIE; Supachal Panitchpakdi, UNCTAD Secretary General (United Nations); Bob Mc Mullan Secretary or the Australian Parliament for International Assistance and Development; Denis Sassou Nihuesso, Congo’s President, Huguette Labelle, President of International Transparency; among others Segunda foto a la derecha
From left to right: Hiroto Arakawa, Japan’s International Cooperation Agency; Joyce de Ginatta, President of FIE, Ecuador; Supachal Panitchpakdi, Secretary General of UNCTAD (United Nations).
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Moments in which Joyce de Ginatta, gave her lecture at the Round Table “Mobilizing International resources for development: Foreign investment and other private flows”.
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At the meeting, with Ana Vilma de Escobar, El Salvador’s Vice President.
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We can see her sharing with Princess Maxima of the Netherlands (Holland) Foto 6 derecha arriba
With Oscar Arias, Secretary Executive of the Conference and Director of the Financing Office for Development.
Foto izquierda abajo numero 7 With Ricardo Espina, Secretary of the Committee Guide of the Private Sector of the Conference Foto 8 abajo derecha
IWF Award The International Womenâ€™s Forum (IWF) awarded a prize to women members which stood out by making the difference in their countries, obtaining that dignity Joyce de Ginatta, as President of IWF Chapter Ecuador. The graphic shows the received award.
FOREIGN RESOURCES MOBILIZATION FOR DEVELOPMENT Foreign direct investments and other private flows Dr. Supachal Panitchpakdi Secretary General of the United Nations Conference About commerce and development (UNCTAD) The topic about mobilization application of foreign financial resources for development shows up in a different way as it was in 2002. Since Monterrey’s consensus was formulated, and even until recent times, many developing countries’ have been beneficiated of a global economic environment more favorable than in the previous decade. Strong improvements of the country’s developing current balance account were the result, not only of the raw materials boom, but also in many cases a way out to past strategies concerning to macroeconomic policies management and the change. The conventional theory predicted that the capital flows from rich countries to poor ones is the result of high marginal return about investment which has been lately assumed. In fact, in recent years, there has been a fast expansion of the gross private capital flows towards developing countries. However, the total net flows have been going to the opposite direction, as well as several developing countries have registered big excesses of current balance account (and some industrialized countries accumulating a big deficit). In that way, the developing countries –as a group- have been able to generate adequate resources for their development. Of course you have to count on that some of those current balance accounts excesses plus the accumulated reserves are concentrated in East Asia and in the Middle West, while the situation of some countries with low income and also the ones severely indebted, have developed in a less favorable way and continue depending of net capitals. Nowadays, the international community is confronted to one of the most severe financial foreign crisis. This crisis is without doubt a pause for the growth and path of economies’ global system. We still don’t know when this pause and volatility will end, or the “new regime’s” outline, when the world’s economy recovers. At the same time, with or without pause the need continues being there, to assure continuous flows of financial resources for the poor economies, including private capitals. At an empirical level, it’s well known that growth in developing countries depend very much of the type of capital income and its management. In particular what we have to pay attention to is if the private income has a positive effect in the productive investment and the structural change. In this context, it’s clear that not all the private capital flows for developing countries are equally desired. This is particularly the case for the flows which aren’t related to a true commercial investment. They could raise the grade of instability in the financial sector of the receptive countries. Even more important, those money flows have the tendency to turn into a super valuation to the exchange with negative implications for domestic producers competitiveness which have the double effect to reduce net importations and therefore make the debts payments difficult even if the foreign debts value, expressed in domestic currency, is contracted. On the other hand, there could be some doubt about the usefulness, in principle, of the direct foreign investment which helps to increase exportations and the production capacity in the receipting countries. Here, the macroeconomic considerations to finance a current balance account deficit, aren’t fundamental and it isn’t the capital flow impact in the exchange type which matters, but it is the microeconomic aspect to finance an investment in particular and the advantages related to the managerial capacity in the construction area, as well as access to technology and markets, which is what really concerns.
Therefore, I would like to focus my observations in FDI (Foreign Direct Investment), one of the predominant private capital flows. I’d like to mention some of the words about FDI panorama changes, experimented since Monterrey’s consensus and the diverse potential contributions which the FDI can do for development. 1) FDI for the developing countries has grown to an accelerated rhythm. Since 2002, the FDI flows for developing countries’ have risen annually, to almost three times more than the last six years. Even if those money flows have been separated in a more extended way to developing countries’, they still concentrate in a fast growth and/or big developing economies (for example: Brazil, China, India, Saudi Arabia, Singapore and South Africa). A number of developing countries are still in disadvantage to attract FDI: for example, the whole group of underdeveloped countries receives less than 3% of the FDI flows at world’s level. 2) The FDI’s panorama has changed in a noticeable way since 2002. The investors from the south have emerged as a new force in FDI’s panorama. Its investment has been duplicated for five occasions since 2002. This phenomenon which anchors as well as more and more companies of developing countries’ internationalizes, have significant implications for development financing. In fact, a great amount of the mentioned investments is directed towards developing countries’, especially to neighboring economies. Besides, of the above mentioned, those money flows increase the options for available financing for developing countries’ governments which are hosts. Finally the companies of the south are particularly active in certain industries for developing countries’ such as: extraction industries (oil, gas and some minerals), infrastructure (especially harbors and telecommunications) and some manufacturing activities (electronics for example). In recent years, the Patrimony Sovereign Funds (PSF), which have their basis at developing countries’, have begun to direct their formidable resources ($5 trillion in 2007) towards the FDI. The FDI’s total amount continues being only $10 billion per year and only a forth of the FDI flows, goes to developing countries’. However they represent a potential and significant financing source for development. 3) FDI is one of the financing origin keys for development. FDI has been growing faster than other financing sources for development including the Official Development Help (ODH), and nowadays enters in the books around half of the net financing flows for developing countries. At the same time, it showed being a financing source more stable than other private flows, including a foreign investment portfolio or foreign bank flows. This relative stability is related to FDI’s nature of the projects at long term and, in the majority of the cases, it isn’t possible to be at the advantage of an investment (for example in a factory) in a quick way. Investment recuperation has the tendency to be at long term, in that way the transnational corporations (TNC) are prone to overcome short term drops. 4) The financing crisis and the FDI The current crisis will have a clear impact over the FDI’s global flows. There is a great concern among the developing countries’ when the UNCTAD estimated that the mentioned impact will be delayed and will be relatively smaller in comparison with the FDI for the developing countries. Preliminary estimates show that FDI’s flows for the developing countries will be 7% higher in 2008 over 2007 (in comparison to the developed countries’ flows which will drop more than 20% in 2008). As far as FDI’s flow perspectives for developing countries for 2009, the exact predictions are difficult to make, because we don’t know how long and how deep the current crisis could be. A drop of the FDI in developing countries isn’t excluded, even if it isn’t expected to be as bad as the declension of other financing flows (including AOD and others). One of the reasons for FDI’s relative resistance towards financing crisis in developing countries is the attraction for investors which look for markets as well as for developing countries whose GDP’s growth is still relatively high. Another reason is that the crisis can
push some TNC to reduce costs, locating the production in developing countries. The TNC are determined to reinvest their profits in some developing countries instead of repatriate them to developed countries in which there exists a significant uncertainty in their financing system. To conclude, as the years pass by, the FDI’s performance in this process has been reinforced. The FDI can contribute to development, not only as a financing source but because it is able to accept the technology of economies, skills and other technical abilities as well as access to exportation markets and other potential advantages. You have to take in account about which role, the FDI’s and TNC’s are able to develop highlighting infrastructure in developing countries, including the poorest and vulnerable ones, in which the lack of the mentioned infrastructure is hindering economic and social progress. In this context, the international community must consolidate its efforts to move investments in this crucial area. However, one has to recognize that the FDI’s advantages, aren’t automatic and there could be significant costs (in terms of competence), because the local companies could not be able to compete with the big and sophisticated TNC, fiscal interests or employment, (as an example). Therefore, the government’s policies matter a lot. For example, to earn as much as possible in FDI internal flows, and minimize the costs which are associated to TNC’s activities, the governments need to line up the TNC interests with the countries’ ones. The governments pertinent actions, imply among others, to assure that the appropriate industrial policies are in place, that the domestic capacities be created in order to be able to compete or collaborate with foreign investors, that the links between the TNC and the local companies are promoted, and that there exists a strong, transparent and responsible institutional and regulator frame to assure that the FDI contributes with the objectives of a shared development.
Dollarization: a central theme for investment, development and equity
Ing. Joyce de Ginatta, President of the Federaciòn Interamericana Empresarial (FIE), was invited by the United Nations, to participate in a dissertation of the International Conference about Financing for Development, which was carried out in Doha-Qatar on November 29th to December2008. Her participation brought up the topic “To mobilize international resources for development: Direct foreign investment and other private flows”. What is expressed next was her statement. Going back in History, 25 days after Normandy’ disembark (June 6 th 1944), 44 countries where summoned at Bretton Woods, to establish a new world’s economic agenda, quick and coordinated actions and decisions, in which the IMF and the World Bank (WB) were created; in which they decided to link the dollar to gold and other economies to the dollar. This model lasted until Richard Nixon in 1971 in a unilateral way suspended the conversion from the dollar to gold. In those days the Keynesian vision had top priority, and this was among others, to boost the economy through a bigger public expense. Since this didn’t work out, the market opening appeared, promoted by Margaret Thatcher in England and Ronald Reagan in USA, which worked out well except that both, the IWF and WB didn’t fulfill their task, and the epilogue of this announced war was the strong entrance to speculation without control and derived in the subprime crisis. At the beginning of my businesses activities I could say that I was successful because we had a hard currency which allowed small businessmen as I, to have 80% of our decisions in our hands, we were able to buy and sell at long term and only 20% of the decisions were in hands of the government in turn and of the nature. Since 1991 I started to protect the small and medium industry to strengthen the middle class, as the domestic market became stronger, which was the scenario of those enterprisers. In 1995 as economy began slipping through our fingers, the equation changed, and the businessmen had only a 20% of decision power, and a speculative economy began in which the annual results were a product of monetary speculation and not the businesses direction; how near we were to that power circle which managed the economy. That’s why I start the analysis which made me remember the Argentinean’s experiences: this is, in 25 years those betting to a local currency, collapsed and the ones which survived where the ones that sheltered under a stable currency such as the DOLLAR. When I started being President of the Small and Medium Industry Chamber in 1991, I could feel how harmful devaluations were and that political decisions prevailed over the economic ones, and that’s why in September of 1998, once another presidential period had begun and after observing that it was once more the same thing, I launched a Macroeconomic Plan which had as an axe, the dollar, eliminating the local currency and started growing again and recovering property from people’s pockets. This was meant to put a straitjacket which would force politicians to do whatever they had to do and not what
they wanted to do. That Macroeconomic plan emphasized that it was important to adopt the dollar but the country needed to solve three big topics: First: the elimination of oil, electricity and telephone monopolies, which hasn’t been done until now. Secondly: to implement consistent tools with the development, how to diminish the state’s size, fiscal discipline with a zero base budget, with items according to the GDP’s percentage to hinder the expenses excesses. If the zero base budget is designed in percentages, the only way for the Government to have more resources was through an economy’s sustained growth. If we take as a base the real public expenses of Ecuador’s 2006 government and represent it as a GDP percentage establishing the rule in which each item expenses can only represent the GDP’s mentioned percentage, for 2007 for example, the government couldn’t have spent more than 76 million dollars in the Administrative sector, however, 90 million dollars were spent. In general terms the Estates budget couldn’t have exceeded 9.589 million dollars, but we can see that it reached to 10.462 million dollars. In this sense, without this rule, the public expenses wouldn’t be tied up to the societies’ richness increase. With this rule, the country is forced to increase its productivity and richness instead of increasing expenses, disguising us of the political decisions of the public expenses (populism) And the third great topic is the investment attraction through: a tributary system to incentive and not the opposite, strengthening competitiveness to impel exportations, legal security and corruption reduction with the answer of the following equation: Corruption = monopoly + discretionary – account surrender In the dollarization stage, speculation dropped and inflation was reduced as a consequence of using a hard currency and a cautious Estates General Budget management, which linked to a fiscal discipline reduced the annual inflation from 91% (at the beginning of 2000) to 1.39% (to April 2007) and the minimum wage rose from $40 to $250 per month in March 2005. The non oil exportations increased from US$2.971.4 million in 1999 to US$4.629 million in 2007, of which the nontraditional exportations rose from US$ 1.156 million to almost US$ 3.000 million. And the real economic activity was so valid that the electricity consume rose almost a 40% from 1999 to 2006. But the interesting part of the topic is that in that seven year period we had six presidents and thanks to the dollar, the economy didn’t suffer at all, not even with president’s Lucio Gutierrez’s take off. We can’t continue having a similar economy and path as the previous one to the globalization and therefore I would like to make several annotations: It’s true what I mentioned in my book DOLLARIZATION IN AN ARMORED COUNTRY: “The time has come in which USA must be aware that if it wishes to help its own economy and internal social well-being, they must redefine the IMF’s, IDB’s and WB’s role”, because there must be a fair play, because the aims for which they were created haven’t been fulfilled. In XXI century measuring are made in function of the achieved objectives. We could name thousands of mistakes such as the desire to raise interests and taxes when a crisis arises, promote devaluations instead of competitiveness. I could also show that the IMF never gave the approval to our dollarization project, arguing that the local funds would escape from the country. This was far away from reality, because the funds stood and grew.
The strategies which were considered by these institutions are far away from the countries’ and regions’ cultural realities. In many senses, their strategies are damaging and reject the
essence of economic reforms. As an example, many representatives of these multilateral organizations are sent to other continents, wasting their local knowledge and forcing them to act based to the transferred region’s theorist knowledge. Nowadays, 2008, with all the available communication technology, the IMF and WB didn’t even realize about the crisis because they weren’t prepared to take action and be able to avoid it. We, simple economic actors, were aware of the permanent growing bubble and the abuse of Wall Street’s speculations. Changes must be globalized, and therefore in 2003 in one of the FIE’s MIPYMES magazine we published an editorial with a new approach for supply and demand, called WORLD’S ECONOMIC COLLAPSE which expressed: “Latin America isn’t still aware that the world’s economy has collapsed. My theory is that technology helped production to grow in a geometric way, while the demand stays flat or in a descendent way. It isn’t enough that the First World’s countries incentive their domestic market to accelerate the demand, because families can’t have seven cars or ten washers and dryers. It’s fundamental that the developed countries try to improve life level of the Third World’s countries to increase the demand. If this should happen, only in Latin America there would be 600 million of inhabitants which would start to consume and maybe there would be 880 million in Africa. The problem now isn’t the offer but the demand. The theory about devaluation generating competitiveness is a big lie which now more than ever, has to be eliminated from all the world’s economy books. Devaluation is the result of poverty, because the products become cheaper –not due to the efficiency but because it liquefies the workers’ pockets-, which eliminates each time more the purchase power by dissolving the wages which blocks the demand, eliminating new markets. If this wouldn’t be so, Ecuador in 1999 would have been a champ in this area. When exporting in base to devaluations, the result impoverishes the domestic market and our misery is transferred to products through unjustifiable prices, even more having internal bad conditions for the micro, small and medium businesses which haven’t got support”. In addition to the above mentioned, a change in the world’s financing system management is needed; Bretton Woods had its cycle, new regulations should have been implemented to avoid excesses in the fiscal and financial topic. The Nations are anxious for constant investment flows, and even if it’s late, we are on time to correct and are emphasizing my 2003 proposal: to change the order of things to assure investors’ safety. The past is gone and the future is now, and we can’t continue having old rules. In 1944 and without having the current technology, in only three weeks 44 countries could be summoned. How is it that in this technological era, in which capital vanishes or returns in seconds, we have to support such a crisis of enormous magnitude without solving it and which could have been even worse because of the delay in actions and decisions which are taking months to be resolved? The only way to avoid speculation and canalize the capital flows to generate employment and balance the offer and demand, is with globalized norms. Therefore this is my proposal: 1. To disappear local currencies, using according to the region, the dollar, euro or yen. In Ecuador the dollarization saved the economy from political crisis, it strengthened the banking business and generated confidence with which the deposits increased. With these simplifications, it could be much easier for the countries to handle their economies and also the currencies distortions could be reduced
2. The direct investment flows, in many cases, depend on the legal security (The Estate of Right), of Estate’s policies and a political bored country. In Ecuador these three axes aren’t fulfilled. However, thanks to the dollarization we can count on an interesting domestic market, with an increase of important stockholder capitals and direct resources through lending. 3. Standardize the standards, because there shouldn’t be different norms among the countries For example, the way of measuring unemployment in Chile, differs totally from Ecuador. The measure to define the micro, small and medium business differs from one country to the other. It isn’t possible to think that the economic and financing information comes out late in this technological era, because it hinders comparison, or that the global competitiveness indexes are based in ciphers which are two years behind. The standards must be standardizing. 4. To globalize that the budgets have a zero basis and that each item is fixed in GDP’s percentage, so each government in turn can take over the economy making it grow instead of doing what happens nowadays. These gaps also happen in the First World, in which the public expenses grow without proportion in base of increasing taxes, devaluating currencies, disguise inefficiencies and always attack people’s pockets. 5. Solve corruption equation. 6. Timing. It’s absurd that after 25 months there aren’t real solutions for the economic crisis. 7. Nowadays we can see the main actors of world’s economy, placing patch after patch as if they were in a laboratory, without having a real solution for the world’s financial crisis. The time has come to modernize the World’s Bank, the IMF and the IDB, to avoid crisis instead of accelerate them. 8. We must impel the development of alternative fuels because we have to diminish the world’s dependence towards petroleum and the related volatility and uncertainty. Sixteen years of working to solving the small and medium businesses problems, have allowed me to know in detail about them and affirm that only global changes and stable currencies –which shouldn’t be in hands of local politicians- are the ones to diminish corruption; they make the domestic markets grow; and therefore, the small and medium businesses which are part of the bone marrow of a new economic and social order become strengthen.
Facts about the international crisis Dr. Pablo Lucio Paredes Economic Analyst The general appreciation about the world’s crisis which we are living has its origins in the following explanation: the financing system abuse, ergo of the capitalist market, because it has been allowed to take advantage of avarice, speculation and abuse. To this we can add, in occasions, analysis which try to look “deeper” into and the problem and inside the Marxist logic they show that this is the result of a capitalist economy trying to recover the capital’s profit rate which has been declining regularly. And obviously, the solutions go on the same path: more regulations for the financial system “because markets don’t work” and nothing else. But the truth is that the previous words only reflect a part of the problem and certainly not the most important one. There is no doubt that the markets fail (who pretends them to be perfect? Its role isn’t being perfect but to processing interchange between people and organizations in a lesser bad way in front of what any other system does), and fail in the measure in which people which do marketing, fail. When does this happen? Obviously, when the markets are placed (this means people and organizations) in a negative and distorted environment which takes them to make wrong decisions. Because people haven’t turned suddenly into more speculators, abusive or avaricious, but a certain type of environment has favored or expanded that type of behavior which are always present and in general are useful for society. Or perhaps the families which have subprime mortgages never before have had the opportunity to indebt themselves for their homes; they became “crazy” and took absurd credits which were rejected before? No, the environment of artificially low interests and the excess of liquidity which led them to have been offered conditions impossible to reject, added to the related increase of their homes value, took them to make a bet for the future. Is it that maybe the bankers suddenly decided to take the worst decisions than in the past regarding to financing prudence? No, the environment took them to that direction. Obviously their decisions were “bad”, but that criteria of bad or good, can’t be taken in care as a value judgment, but if those decisions looked right or wrong (for the person which got into debt and the bank which lend the money). Apparently the decisions were correct and that’s why they took them, but evidently the result was that they were wrong. This is the distorted environment in which we have been living these past years. It was distorted by the actions of Governments and Central Banks. Which ones? To keep via stock exchange and monetary controls the USA’s external imbalances and the result is that the North American economy “is always indebted”. Plus the abrupt and artificial drop of the interest rates as a mechanism to correct diverse problems, the linked liquidity injections, and the incentives via guarantees for the real-estate markets to expand towards greater risk segments. The entire above mentioned are the distortions which lead to price bubbles, take excessive risks, liquidity increase, etc. And these are the maintained distortions when the Governments try to save everybody in the system, the good the bad meaning that once more it’s impeding the market adjustments whose objective is to precisely make a cleanup operation among the ones which have viability and the ones which haven’t got it. At the same time there are regulation problems, and in many cases, of contradictory regulations. For example, the wall between the investment and commercial banking was knocked down, without applying for the first one the same leverage standards which the second one has. For example that wall was knocked down, but it was kept between the private investment funds and the banks, which hindered that those funds (which are liquid) could have been purchased among the financing assets instead of being the Government the one to do it. There is the need to wonder if the bank rules of leverage are
the most sensibly ones. In consequence, the considered solution is to emphasize on the financing regulator system, and the correct question should be: Which are the basic essential regulations to be applied? This means that, not more but better regulation and information (which without doubt should exist). But mainly we should be aware that the best regulation for the financial system is a stable macroeconomic environment, and this is the result for eliminating or limiting the Government’s discretionary matters, especially in exchange, monetary and other areas. Therefore it’s necessary to think about taking a system as the gold pattern again. Certainly, some people point at that direction and afterwards they turn away from that path; they outline that a global monetary handling should be done through a world’s Central Bank which would have the same discretionary way as the current banks, meaning that we would continue having a manipulative currency and not based in a real support. The best way of returning to a non discretionary world’s monetary system, is the gold pattern or any other variant. Does it have faults? Of course it has, but once more I have to say that it’s not pretended to be perfect “but the less bad possible system”.
FOREIGN DEBT MORATORIUM Economist Mauricio Pozo C. Economic Analyst Former Secretary of the Treasury Countries as well as businesses and persons, must go into debt to finance projects or acquire goods and services. This means that the majority of nations, with very limited exceptions, have a lack of internal savings, for which they are forced to look for savings or foreign financing. This implies that getting into debt isn’t a mistake but a need. Therefore the important part is to acquire debts in adequate conditions, not going over the budget or using the credits in an improper way. The contracts of getting into debt are subscribed by an agreement between the parts; this is, between the debtor and the creditor. This means that it is a voluntarily agreement in which both actors decide to contract a relation through a credit operation. If the debtor uses in an inadequate way those funds, the creditor has no responsibility at all; because he expects the agreement to be fulfilled and that the debtor cancels its obligation in the agreement terms. Likewise, the conditions that establish the debt contracts undergo the characteristics of the market at that moment in which the operation was subscribed. For these reasons you could affirm that the debt contracts are based in willingness criterion between the parts and over markets conditions. Regarding to public debts all indebtedness processes require the approval and favorable reports of a number of decision requests and without them, it’s impossible and illegal to subscribe any agreement. The comptrollership, the proctorship, the Central Bank, the nowadays called Semplades, the legal and technical departments of the Secretary of the Treasury, among others, are the ones which have to emit their favorable reports. This means that it’s difficult, if not almost impossible, to subscribe a public domestic or foreign contract for debt, without the previous acceptance of all the above mentioned institutions. Therefore it doesn’t fit for any concept to accept that there is illegal debt, making reference to the so badly called the illegitimacy foreign debt, because the law writers sustain that illegitimacy of any action means that it’s illegal. Nevertheless, there could be an indebtedness which didn’t have the expected results, that the credit resources were distracted or that there was an excess of debt. This could be an inconvenience of certain indebtedness but never an illegitimate debt. For the above mentioned reasons, it isn’t proper to accept the criterion of illegitimacy and therefore decide not to pay the debt, because this argument is mainly sustained upon political decisions, because from a legal and economic point of view, they are unacceptable. The previous mentioned precedent are a base to affirm that the government’s decision to declare the foreign debt moratorium concerning to the global bonuses segment, was an absolute wrong and inappropriate decision. On one hand, the public debts burden regarding to the GDP has been reducing gradually since 2000 to 2008, passing this percentage of near 90% to less than 30%. This means that the so called debt burden which in the past represented a relevant importance nowadays isn’t that difficult any more. It could even been said that it is one of Latin America’s lowest relationships. In conclusion, to adopt the decision of not paying and considering this criterion also, it hasn’t got a technical base. In foreign countries Ecuador is known as a country which doesn’t pay because it doesn’t have the will to pay and not because of having a lack of money to do so.
Another fundamental element to be mentioned is the context of the foreign crisis and the Ecuadorian foreign debt moratorium. This means that if for Ecuador the conditions to fulfill the public obligation meant to have less foreign resources and help, with this decision the situation turns even more complicated. The few foreign financing possibilities left for the Ecuadorian economy could be cancelled, and as a result the capacity to obtain the necessary liquidity is reduced in a drastic way. In that sense, to the mentioned characteristics of an international crisis which leads to a capital and credit restriction, we have to add the effects of not paying the foreign debt. We can’t stop discussing about the document prepared by a Commission which was created for that effect and can’t be called an audit inform, because it suffers of serous technical and legal deficiencies, turning it more or less into a summary of expressions and adjectives which takes away all the seriousness and objectivity. It is a document with a clear ideological and political turn which could never been considered as an objective and independent piece of work. Even the people who integrated this Commission are included because all of them are actively opposed to the foreign debt payment and there isn’t one single name whose opinion would be different or which fulfills the technical ideal conditions to perform a work of this nature. For these considerations it can be said that the mentioned document will be a motive of an immediate reject by the international community in case it’s used as a basis to defend the foreign debt default. The government hasn’t refuted nor accepted the fact of repurchase the global funds. However, if this should be confirmed and because of the contracts jurisdiction which were hold under the Manhattan’s, New York city, it’s probable that legal actions towards the Ecuadorian State might start, because according to that countries’ Security Exchange Commission, the actions used by the Ecuadorian government to ruin the global bonds prices and afterwards buy part of them at lesser prices would be considered as a felony. It would be about a market manipulation which is a reason to receive penalty in the North American normative. These eventual actions aren’t absolutely unaware of the actions that the moratorium possessions of the Ecuadorian debt undertake, turning this problem even worse. It could also be said that if the repurchase would have been done, the criterion of foreign illegitimate debt, wouldn’t have made sense and not be proper with the above mentioned in which the government calls it illegitimate or illegal. It either makes sense that the government has cancelled the interest of a remaining sum for the Brady bonds which weren’t exchanged at the proper moment to global, because if the debt is called illegitimate how are we able to understand that the bonds which were cancelled and are now known as global bonds
What can be understood about these events is a lack of coherence in the adopted decisions and all the uncertainty which the national and foreign markets carry along. The decision of debt moratorium complicates severely the private sector’s activities, because the banking financing capacity will be reduced in an important way. Foreign commerce operations could be seriously affected, with which obtaining dollars from foreign countries would diminish. On the other hand, the banking system would limit the credits because of the need to look after liquidity and take precautions with the deposits security. All this, definitely, will affect the economies’ growth rhythm with consequences to employment and people’s well-being, especially for the poorest.
If the environment about the foreign debt moratorium is analyzed, this is, jointed to the oil prices abrupt fall; the remittances reduction from Ecuadorian’s living abroad; the non oil exportations; the taxes to capital escapes and to foreign deposits; the fund liquidity management by the majority of the government, among other factors, shows a worrying panorama. The summary of the analyzed topic presents an accelerated tendency to lose dollars, to a severe liquidity restriction and therefore a great threat for the dollar to stay. If the government doesn’t rectify its economic policy, that is, if it doesn’t administrate the public finances with discipline, if it doesn’t back up in the debts default, and if the decisions about tributary law and the ones related to the financing system aren’t corrected, the dollarization in Ecuador has only a short amount of time left. All countries as well as people, must be responsible of their commitments. This responsibility assures the nations to be respected in the international environment. However, if everything is being politicized and the economy continues being an election instrument and not a national priority, the countries’ future looks dark and has the risk of repeating after 10 years, the same crisis or even worse than the one lived in 1999 which is unpleasant to remember.
The challenge of the regional competitiveness Alejandro Indacochea Càceda firstname.lastname@example.org www.indacocheaempresas.com “The basic natural resources are no longer the capital, the natural resources or work. The basic resources are and will be the knowledge… Value is now created by productivity and innovation, both generated as a consequence of the application from the knowledge of work” Peter Druker. The Columbia Journal of World Business. The new world’s economic order, the markets opening and the media globalization have made obvious the fact that not only the countries compete, but also the regions and cities do. The regional competitiveness is the new future’s task and the winners will be those which understand the changes and achieve to adapt the soonest to Century XXI’s economy. There the importance to identify each regions competitive sector as a base for development. Unlike to the past, in which the regional projects emphasized in planning as an instrument of developing policies; nowadays, with the opening and globalization, the important matters are the mechanisms for market assignments in development policies. The regional development is focused to competitive capacities of the private sectors or as the support of economic activities of the place. Once identified, you pay attention to the multiplier effect which these could generate over the rest of the economic activities. Once the sectors with bigger development possibilities are defined, which are usually based in natural resources, they think about strategic actions to develop real competitive advantages for the region. The selected sectors allow constructing the region’s future image and are clear about the destiny to which you want to reach with a “vision” of it. The simple fact of trying to define a “vision to future” for the region, takes us to think on a long term basis and be aware of the direction in which we must join regional efforts so our future actions and policies have a clear direction and know where to arrive at the region. This is what constitutes a competitiveness regional project and its fulfillment requires the jointed efforts of all the involved sectors in the regions development; all this from the public, private and academic sectors through their regional leaders as well as the institutions. It is so, that experiences of the regional competitiveness shops arise, whose objective is that the different regional actors, understand the importance of competitiveness challenges, to elaborate a shared vision for the region and identify the current and potential sectors in which they can be competitive, defining in this way the strategic direction in which it’s necessary to move forward and achieve the regional competitiveness and be able to improve the inhabitants life level. A very important aspect for achieving competitiveness is that the regional vision must be understood and shared by all the citizens.
It’s useless that “the high command” explains its vision if the population doesn’t feel it like its own. The vision must be developed in the productive sectors base, to unite society in its group of action. The only way to be successful and confront the challenges for the future is that the leaders make true that shared vision with the population’s participation. This implies the compromise of all the economic and political agents to concentrate efforts in the same direction. For Michael Porter, competitiveness is the capacity of stocking up goods and services which are better and/or cheaper than the foreign competence, and has to be reflected in the region’s life level increase. This is obtained only through innovation and the permanent improvement when you are able to incorporate new technologies and new ways of doing business in new companies. The achievement of the above mentioned doesn’t occur in a free way, and the creation of Competitiveness Centers is required, which are autonomous entities for each region to promote competitiveness search and development according to the technological changes and the world’s commerce tendencies. The previous mentioned must be reflected in a regional competitiveness program which must become true through an adequate strategy to obtain at short term, the desired results clearly defined. Without doubt, the new Estate’s roles as an entity provider is important when establishing the rules of the game and provide the service infrastructure which allows to achieve competitiveness, as well as an appropriate legal security and a good institutions performance.
Another key aspect to compete is the treatment of the so called “invisible barriers” for competitiveness development which currently is called “models or mental ceilings” which is the way how people see the world and thinks or acts to solve their problems. The change can only be possible in the measure in which the paradigms change plus the regional leaders’ attitude, so they will be able to understand that whatever they do or not will only depend on themselves and the solutions won’t necessarily come from outside. How can we talk about competitiveness if richness isn’t well seen or success is punished, and the population has been taught –about the culture of failing- that the responsibility is only from others? Or that the simple fact of having natural resources is conditioned to richness, which nowadays isn’t true and creates confusion. If these outlines or mental paradigms aren’t changed, definitely the competitiveness can’t work. This is the new treatment for competitiveness, starting from the regions’ leaders mental attitude change. Only a population with a competitive attitude, understanding the new world’s economy, in which the natural resources and cheap manpower isn’t anymore the most important things to compete in the world, is what will allow to develop the regions’ potential. The end of the comparative advantages is a fact; paradoxically the countries whose lack of natural resources was bigger are those that bigger competitiveness has reached. This is what is called “selective disadvantages” and we can clearly appreciate it in Japan or Sweden: The first one hasn’t got natural resources at all and the second one doesn’t have in its territory even a single cocoa plant and however it’s recognized as a worlds chocolate producer. Nowadays, the technological changes are the ones which determine the comparative advantages, exceeding the limitations which could exist because of the lack of resources. Changes in nanotechnology, bio technology and the materials science are really impressing. Bio technology exceeds all limitations imposed by the climate or time; the genetic mutation creates new agricultural varieties in animal breeding as well as oil and synthetic minerals which are a reality. To clone is also nowadays a threat, and has been happening with Peruvian step horses which are exported and also some natural species. The synthetic or virtual tourism is already a reality; we are able to see in Florida an Amazonia jungle and Caribbean beaches in an artificial way which are a real copy of the original, and this process could become true in the future with a synthetic Galapagos. With the previous oil increase, the synthetic oil is also real by means of transformation of the bituminous sands; 16% of the demand from the State of Alberta, Canada is supplied with this product, estimating that each year the production will increase. With all the above mentioned facts, it’s evident the lesser importance for raw materials in the productive process, which are each time a less relevant component inside the total structure of the products costs and therefore can’t be the support for competitiveness as they were in the past. The wages either determine competitiveness, because we can observe man powers’ cost of the manufacture sectors and see that the costs are: $US19.5 per hour in Sweden; US$ 17 in Germany; US$15.3 in Japan; US$10 in USA, US$5 in South Korea and around US$ 3.8 in Latin America. At the other extreme, there are the African countries in which man power doesn’t even reach one dollar per hour. This shows us that man power isn’t a competitive advantage anymore because competitiveness doesn’t depend of man power’s cost but of productivity for which we need bigger investment in human capital. In the new knowledge economy there is no longer spoken about “manufacture “to show the great importance of the so named human capital. The technological innovations taken place in the last fifty years have been of such a magnitude, that they are equal or exceed the accumulated changes of several centuries. Like that, we have that knowledge in mankind has been doubled in the last 14 years and it’s estimated that from 2012 this process will occur every 173 days, this is, around each six months. Likewise, it’s expected that people change their careers twice or three times during their lives with which the outdated knowledge will be really impressive.
Nowadays, manpower and cheap raw material have lost the importance and significance they had in world’s economy; the old model isn’t valid anymore. Peter Druker points out that the key activities for wealth or value creation are based in productivity and innovation, both as the result of the application to work knowledge. What makes a country or region rich is productivity and innovation which is the capacity of using efficiently the manpower, the recourses and the human capital. As we can see, in the current world, competitiveness is a complex task and requires of a great vision for the future and of a long term analysis, independent of the political swings and situations. Nowadays, with the current crisis, to insert oneself in the new worlds’ economy, a new competitive strategy is needed at regions level. It isn’t possible to do the same things because time and reality are different. In a globalized economy with so many strong changes, to think and act only at a short time period could be dangerous and even have a high cost for the future. The short term is already gone and the regional competitiveness is the new task for the future. The world doesn’t wait for us. The winners will be those regions which understand the change and achieve adapting opportunely to XXI century’s economy. Invisible Barriers of the Regional Competitiveness: Wealth is not well seen: Being the base of a market economy the creation of wealth, paradoxically in many cases, isn’t well seen and not accepted. There are cultural variables which lead to a confrontation between richness and poverty. False solidarity with mediocrity: Why should you stand out? This is something which is repeated since school times, in which often the student who studies and makes an effort, which tries to stand out to be the best, is being isolated and even is exposed to make fun of him from his classmates and even from the teachers. After all, why is his average going to increase? Low self esteem: “How are you?” “Bad, I do what I can”, “But watch out, you have a job” “Well, I move along but you know, I can’t manage on this salary”. We are the country of poor people, and that situation ends up competing in generating pity. The values and the social capital: Are important in a country’s development; often, the values, ethic in business and in our daily work are left aside arguing that “everybody does it” or “that’s how the system works and it
The human rights: a concept which increases Ab. José Luis Ortiz Political Analyst It’s very difficult to approach a topic in which the human rights and corruption are related. To get into it, I’m inclined to choose a globalized factor for both elements: the power. Starting from there, the scenarios begin to be designed, the events start taking place and experiences are produced. That’s why, the center of the analysis, should be the way of conducting and managing the Estate. The development of Political Science, having as a main aspect the democracy, has never been able to get apart from the binomial man-power or citizen-Estate. In that dynamic, the diverse thinking trends have tested proposals about the opportune systems to protect the individual from authority abuses. Except for the pragmatic sagas to advise the rulers about the procedures to maintain the collectivity submissive, as Prince of Machiavelli did or the studious and investigators of the different periods have made transcend their references to the described situation. The thought of the illustration, and inside it, its radical style of the encyclopedic way, acquire the characteristics of the citizens’ religion in front of the Estates absolutism. And the scientific socialism inaugurated by Marx and turned into the ideology of the proletarian interests at the capitalism beginnings, has as a philosophical base in the transformation of a society of classes into a fraternal and equal society. The subsequent changes to this important way of thinking are only a demonstration of how an elite follower (the communist party) finished using in an excluding way, the people’s will which was expressed with sacrificed and bloody events. In the young Marx’s work, the mankind value recovery in a fragmented society because the exploitation of few in front of poorness of the majority, assumes the nature of central conviction. The totalitarian experiences (Nazism, Fascism, Stalinism and other populisms) started up from the liberal feeling of the subjected societies, answers which began to constitute the support of democratic claims. And in such dynamics, the fight for human rights was placing and assuming the role of the energy concentrating factor of a community each time more aware of its rights and prerogatives in front of the Estate. The human rights, as a policy acquire an identity as the world was recovering itself from the tragic effects of the Second World War. Since then, none of the nation’s constitutions which live under a state of right stops to insert in its normative, clear and precise dispositions, oriented to defend the inhabitants life; to protect its right to object, its faculty to talk, associate, to protest and move around, to determine its full right to demand from the governments the accountability. This last faculty expresses the nature of delegate which the power has in hands of governments or presidents. We could list several matters which finally would end being the Corruption. These are: If the full knowledge of the term of office doesn’t fulfill. If the leader hides matters of social concern related to the people. If the president or governor doesn’t explain in detail to the collectivity which elected him, the way he’s handling the public resources, or if things aren’t clear and clean. Therefore we have to make a reflection about the corruption phenomenon as a concentrated and excluding way of managing power. When democracy functions well, we can see that society is informed about the Estates developments, also about the public sector’s formalities, the performance of those which are part of bureaucracy; there is a horizontal relation between public action and citizen’s life. The individual has the certainty that his contributions are well administrated; that in front of any circumstances there are other instances which supervise them and represent their interests. But if any governmental action concerning to the administration above mentioned is hidden, if the authorities don’t inform to the collectivity or the governor acts as if he would be the
owner of social richness, we would be living a flagrant and dangerous violation to human rights. As we can see, democracy is turning into a wide river bed, in which the diverse social expressions and aspirations walk. And these, as new communities arise with their respective interests, press on the political and legal institutionalization, for those to be admitted as innate factors for coexistence. This scenario, typical of a mature democracy, has as one of its components, the conviction that power is subjected to social control. Society moves forward, democracy improves and the citizens have a growing authority. If our national political experience doesnâ€™t show up as a transparent reality, the citizen has the right to claim if his wishes are not being fulfilled. Only the popular will is absolute.
The need of solidarity, training and unity Reverend Armando Janssens CESAP was created in 1973 by a group of young people, lyceum students and public Universities with the name of “Centro al Servicio de la Accion Popular” (Centre for popular Action Service). The idea was born as a consequence of young people’s work and reflected the wish to work with communities for their overcoming. We don’t give ideas, we only promote the communities to defend and act in the solution of their problems. Financing source First of all CESAP’s maintenance arose from their own effort, as well as the collaboration of foreign institutions linked to German Churches (Catholic and Protestant) which gladly and without limit helped and whose contribution was prudently managed, which was of great help to start this task. Later on we achieved to extend the help with other donors, but especially through programs in which we, with the people, could be able to find sources. For example, people never received a gratuitous course in CESAP (in our formation centres). It could be said, that it was logic that there were sometimes people who couldn’t make all the payments but only part of them; but evidently, the parish churches collaborated finding resources so we obtained a balance. It’s very important that social developing organizations look for self financed programs in a great extent. Nowadays, more than half of CESAP’s resources come from what CESAP produces in a social way, such as, micro business work, field, promotion, etc., but we finally obtained the resources from their own work. To Promote Development and obtain fair well-being. How to manage them in societies in which there is difference between social classes? Societies aren’t static, but they are always moving, which provides of energy that has to be used to balance the social situation. As an example, if we compare what happened 40 or 50 years ago in reference to education and literacy campaign levels, there can be noticed a great difference because of the enormous progress. Inside these “modern” societies there are energies that if well used –at public, business and social organization levels- can help raise people’s life level and dignity. Religion Unity The Catholic and Protestant Churches at Northern Europe are precisely the ones which have organized structures to collect funds, besides of having stability, obtaining the collaboration of their countries’ respective governments. This is the way how a sustained support has been obtained with the churches help. Venezuela wants leaders in constructing a plural, participative and fair democracy country. Along the years we have learned to be humble, not to fantasize too much, to have very clear that in spite of the importance of having contributions, these aren’t absolute. The reality of peoples’ progress doesn’t depend on one institution or initiative. Peoples’ Progress in a determined country depends on a confluence of elements, both from the Estate (with its public services, as well as for its education especially), as for the big and small businesses (which generate work and produces societies well-being), or of social organizations which normally succeed to take care of niches which generally the Estates Programs can’t cover. And talking about niches, nowadays it’s very common to talk about micro-business, while we, since 25 years ago had already considered it and this happened while we discovered it in the day by day way of living, the need to support people through their small businesses, so they could move forward with their families.
Progress depends on many factors, there isn’t an absolute factor. You could think that churches are a great contribution, and yes, it is, but it isn’t absolute; and we could also name the Estate among others. At the end, it’s the confluence, the sustained effort, the decision to stay well, which allows little by little, the programs to succeed. Forming Leaders There are a variety of initiatives which we develop in this field, because the formation of prepared leaders in the rural area is different of those of the production area. For example: the micro businessman knows his job, because he studied or did it by himself. However, it’s logic that they have a lack of other ingredients, starting with the simplest one which is accounting. If you don’t know how to do accounting, you ignore the income or the take out, which is a small but serious problem. It’s there were we give support creating for them bigger capacity. We also need people to be leaders for their communities to become better, because often, communities live a feeling of failure in which all this type of initiative must turn into a creative and enthusiastic feeling only as leadership can be. It’s logic that when we talk about community leaders, we talk about a long process of formation, and in this case, CESAP has a huge experience in forming leaders at different levels: with a common and basic formation to be able to serve the community; a specialized formation so the person can work in determined areas and an advanced formation to be placed inside a worldwide project. Talking about the country, it’s almost parallel, but without doubt, much simpler, in spite that now that we have entered into the country with more productive initiatives, we have acknowledged that we also need a more adequate leadership. Training to micro businessmen and small producers We can mainly talk about administration, the legal topics and production quality, because many things are pretty from a distance, while from near..........its worth to mention that the Venezuelan have the characteristic in acquiring quality products. They are also trained for marketing, experience exchange, which is a permanent process, in which people who learned, have exchange and got advice, turning into a much more formal businessman. During all the process, the permanent evaluation is very important; something which is thought is executed; weaknesses, failures, limitations and results are discovered. This is how a process of moving in a collective construction of a need, starts. I feel very happy to see that in Venezuela, there are many micro businesses that want to get away from informality and become legal; they wish to pay taxes to have the right to be considered as producers, and have access to the services which the country offers. The support to this type of initiatives from the enterprisers’ side and civil society There are several ways, and one of them is the social worry of the leaders and undertakers. I’ve luckily found businessmen that before they became so, have had a social worry, which has been kept so through their ascent. There are also tendencies around the world, which have revaluated the social responsibility, which has grown in the last 10 years, especially in the measure in which globalization, discovered the extreme poverty, man power exploitation (even with children), etc. That’s why, many businessmen began to react and of course the laws in this and other countries, promoted the obligation for social responsibility. I can again observe a confluence of circumstances which allow nowadays to live a great moment of social responsibility growth. You can see everywhere businessmen that collaborate in one or another way; there are also people which don’t go to reunions or do not have too many elaborated projects, etc. They are normally voluntary and generous collaborations, which allow the advance of social projects. It’s necessary to know, promote, argue or demonstrate that the world must be constructed between each one of us. To leave the world of the poor to the poor isn’t human and doesn’t agree with the occidental culture and even less with the Christian message.
No to Separatism I don’t have any doubt about the eventual good intentions of our leaders to act at their way, thinking that in this way they support the country. At the same time I have no doubt that at medium term these measures will not be well seen or accepted. If to construct a country with its own people and strength, they exclude the remaining countries, and even more than that, they act against them, it means that you don’t want to realize that we live in an international open world, in which the country can move forward with its people, in the measure in which an exchange exists. Nobody discusses that the limits should be applied, plus supervisions or requirements for the accurate performance of the law, but without locking up the country as if it were an island. Last year’s experiences have failed and in case of continuing that path, the results would be fatal. In Venezuela people are impoverishing; it’s true that we have oil and it’s also true that people think that with it, you can cover up everything, but in the bottom, growth doesn’t exist. These last years’s tendency is to give people resources coming from oil, which has really generated a redistribution of poverty, because people have restricted the development of their capacities and believe that life means to receive gifts. There is no doubt that what is needed is solidarity, support for people that really aren’t able, but to create a dynamic of this kind is completely impossible and against everything which common sense teaches us. To work united for the expected “common good” I hope that the reality which we are going through, will force all sectors to sit back and talk about topics of mutual interest. There shouldn’t be any more insults, the divisions, 500 year-old stories that revalue –without saying that situations don’t get solved and through the years should have been solved-. It’s not possible to live of separation and internal struggle which finally restricts the country. There aren’t countries which have fought more than the Europeans, and as a result, nowadays there is the European Community, which has created well-being and not conflicts, it gave people the possibility of a decent survival. Leaders Profile Armando Janssens is a diocesan priest born in Belgium 75 years ago. His profession is Industrial Chemist, with a small military career. He made some studies at Louvain’s University. He has a PhD in Psychology and is Doctor Honoris Causa of Simòn Rodriguez University in Venezuela. He has 45 years of priesthood (his ordination was at 31), of which 43 he served in Venezuela. Rome invited all European Bishops to allow their priests to work in other countries. “Nobody suggested going to Venezuela, but I was interested in that country. Of course this implied that I wouldn’t depend from the Belgian church, but yet under the Venezuelan. I came with the wish to do something but nothing was clear for me. I only had the experience of a European organization, because I always worked around this topic. And as I was invited to work with students of public lyceums in Caracas (which at that time was very complicated), I found my way. People were always discussing in an ideological way, and what I did was make the neighbourhoods work achieving the interest and incorporating many people”.
International monitoring Conference about financing for development in charge of considering the application of Monterrey’s Consensus Doha (Qatar) November 29th to December 2nd, 2008 Summary of the final document Reaffirmation of the objectives and commitments in Monterrey’s Consensus 1. We, the Head of State, Head of Government and High Representatives, gathered in Doha (Qatar) from November 29th to December 2nd, 2008, seven years after the historic International Conference about Financing for Development 1, held in Monterrey (Mexico), reiterate our decision in adopting specific measures to apply Monterrey’s Consensus, and to face up financing problems for development in the spirit of a world’s association and solidarity. We commit ourselves again to eradicate poverty, to obtain a sustained economic growth as we move forward towards a world’s economic system completely incorporated and equitable. 2. We also reiterate the importance of freedom, peace and security, the respect to all human rights, including the right to develop, the estate of right, the equality among mankind and the general commitment of achieving fair and democratic societies in benefit to development, as it was formulated in Monterrey’s Consensus. We reiterate that each country must assume its prime responsibilities for their own economic and social development and that it will never be enough insisting in the importance of fulfilling the national policies, the internal resources and development strategies. At the same time, the national economies are actually connected to the economic world’s system and, among other things, the efficient use of commerce and investment opportunities which could help the countries to fight poverty. It’s necessary that the efforts for national development are sustained in an economic favourable foreign environment. Mobilization of national financing resources for development 8. In the subsequent years of the Monterrey’s Conference, many developing countries have achieved significant advances in the application of development policies in fundamental spheres of their economic frames, which has frequently contributed to increase the mobilization of national resources and to raise the economic growth level. 9. We also reiterate that the involvement and national leadership regarding to development strategies and the good way of governing are important for an efficient mobilization of the national financing resources and the promotion of a sustained economic growth and supported development. In that context, we have to take in mind the different characteristics and peculiarities of each country. 10. We are aware that a private, dynamic, inclusive, efficient and socially responsible sector is a valuable instrument to generate economic growth and reduce poverty. To stimulate the private sector’s development, we will try to promote a favourable environment which facilitates the business initiative and the participation of everybody in the commerce, including women, the poor and the vulnerable.
Mobilization of international resources for development: the direct foreign investment and other trends of private capitals. 23. We are aware that the private foreign capital flows, in particular the ones of direct foreign investment, are essential complements in national and foreign development activities. We can observe the increase of the international flows of private capitals towards the developing countries which took place after Monterrey’s Conference and the improvements in the business environment which have helped to promote them. However, we are worried to see that a great number of developing countries haven’t experienced an increase of the international private capitals flows. We will try to increase those flows for development support. In that context, we will reinforce the national, bilateral and multi lateral activities, to help the developing countries to exceed the structural restrictions and of other type that currently limit their attractiveness as private capital and direct foreign investment destinies. 24. We will make a special effort to mobilize investments of all kind of human, transport, electricity, communications, information technology sources and other type of structures such as: physic, environmental, institutional and social to allow reinforcement in the business environment, improve competitiveness and extend commerce in developing countries and countries with an economy in transition. We admit that the bi lateral and multi lateral associates give technological assistance and share the best experiences related to these activities. 25. Experience has demonstrated that to promote the national and foreign private investment, it’s fundamental to establish a proper atmosphere for national and foreign investment. All countries must continue creating an atmosphere of stable and foreseeable investment in which the contracts are executed and the property rights are properly respected. We will continue introducing transparent and appropriate rules at national and international levels. Efforts must be redoubled to improve the knowledge and technical capacities of human resources, improve the financing availability for business, and facilitate the advisory mechanisms between the private and public sectors and promote the social responsibility of the companies. International commerce as development promoter 30. We also reaffirm that a multi lateral commercial system, open to everybody’s participation, based in norms, without discrimination and fair, together with a real commerce liberalization, can substantially stimulate the development around the world, and benefit the countries in all the stages of development. We also reaffirm our compromise to promote real commerce liberalization and assure that commerce fully contributes to promote the economic growth and development of all the countries. 31. An efficient multi lateral commerce can benefit everybody and contribute for the developing countries, and especially those less advanced, to integrate better in the system. 32. It worries us, that in spite of the considerable efforts made, the Doha’s Round Table developing program for multi lateral commercial negotiations haven’t yet conclude. A satisfactory result must support exportations expanding of developing countries, reinforce the possibility that commerce carries out the role it concerns as a growth and development promoter and provide bigger opportunities for the developing countries to use commerce in supporting development. With this aim, the flexibility and political will are essential. We accept very pleased the recent compromises related to commerce and the fundamental importance to reject protectionism and don’t withdraw into oneself in times of financial uncertainty, especially because it could affect developing countries. Based on this, we will try to urgently renew the negotiations and come to an agreement about modalities which would allow concluding successfully, at latest at the end of the
year, Doha’s Program for the Development of the World’s Commerce, with an ambitious, well-balanced result and oriented towards development. 33. We admit that the ideal rhythm and sequence of commerce liberalization depend of the specific circumstances of each country, and each one of them will decide depending of their own evaluations of costs and benefits which it entails. The liberation of commerce must be complemented by adopting appropriate measures and strategies at national level to expand the productive capacity, develop the human resources and the basic structure, allow the absorption of technologies and establish adequate social security nets. The consequence of the positive effects which the commerce release would have in developing countries will also depend of the foreign support which is suitable to the above mentioned measures and the activities to be set out against the policies and practices which distort the commerce. Increase in the international financing and technical cooperation for development 40. We admit the critical consequences of the current financing and economic crisis of the developing countries capacity to mobilize resources for development. We enhance the importance which official assistance exerts for development (OAD), mobilizing finances for development in a sustained way in developing countries. Regarding to this topic, we remember the acquired compromises concerned to the developing intended objectives for development internationally agreed, including the Millennium Development Objectives, and we urge the international community to redouble their efforts to facilitate the achievement of these goals. 41. We reaffirm the essential role of the OAD, as a complement of other financing sources for development, to facilitate the achievement of the developing objectives, including the development goals internationally agreed and, in particular the Millennium Developing Objectives. For many African countries, less developed countries, small insular developing countries and developing countries without coast, The OAD continues being the main source of external financing. The OAD could be a catalytic element for developing countries assistance, to eliminate limitations towards sustained and fair growth, and which includes everybody, for example improving the social, institutional and physic infrastructure, encouraging the foreign direct investment, the commerce and technological innovation, improving health and education, promoting the gender equality, maintaining the environment and eradicating poverty. 42. It encourages us the OAD recuperation after the negative tendency previous to the Monterrey’s Conference, (the OAD in real ciphers increased in a 40% between 2001 and 2007), although we point out that a very important part of trend for subsequent assistance after 2002, consisted in lightening the debt and humanitarian assistance. Nevertheless we can see with concern the general reduction of the OAD in 2006 and 2007, mainly driven for the debt relief from its highest value in 2005. The fact that some donor countries have fulfilled or exceeded the OAD’s objectives established in Monterrey’s Consensus, encourages us, (the goal to dedicate 0.7% of its gross national product (GNP) as the OAD for developing countries and assign between 0.15% and 0.20% of their GNP to the less advanced countries). It also encourages us the fact that other have established an agenda to fulfil their compromises on a long term as the European Union did, which have agreed to contribute in a collective way, the 0.56% of its GNP to the OAD for 2010 and the 0.7% for 2015, as well as to orient at least 50% of the collective increase of Africa’s aid, respecting in full the priorities of each Member State related to developing assistance. We are pleased to see that the United States have more than doubled its OAD. We are also pleased to see the declaration formulated in Hokkaido (Japan) by the leaders of the Group of the 8 which firmly made an effort to fulfil the commitments contracted in Gleneagles, among them, to increase with other donors and taking as a reference 2004, the OAD facilitated to Africa 25.000 million dollars for 2010. We encourage donors that for the end of 2010, they establish national agendas to raise the levels for aid in their respective processes of budget assignment to obtain the settled goals regarding to the OAD. The
fulfilment of these commitments will substantially raise the available resources to promote the international program for development. The foreign debt 56. Although the volume of the debt of the developing countries, considered as a group, continues increasing, all the fundamental sustenance indicators of the debt have improved considerably since Monterrey, but it is necessary to be careful to avoid incurring into untenable levels of indebtedness again. The debt refunds made by many developing countries, the measures of relief of the debt adopted with arrangements to the initiative in favour of the very indebted poor countries, the initiative for the Relief of the Multilateral Debt and Evian’s approach adopted by the Club of Paris, besides of other measures of the debtor countries and other initiatives in course, as the frame of support for the debt for countries with low income from the IMF and the World Bank, have contributed to achieve this progress. It is calculated that the initiative in favour of the very indebted countries will offer a total of 71.000 million dollars to 41 countries which fulfil the appropriate requirements and that the initiative for the Relief of the Multilateral Debt will offer 28.000 million supplementary dollars. The indebted countries have also improved their debt administration program and many of them have accumulated reserves. 57. We point out about the importance of continue acting with flexibility regarding to the criterion of concession for the Relief of the Multilateral Debt. We remember our urge to the donating countries so that they take measures guided to assure that the resources contributed to the relief of the debt don’t affect in a negative way the resources of the OAD that have been foreseen for the countries in development. 58. We underline that the very indebted poor countries that complete the requirements to benefit the relief of the debt, will not have all the benefits of it, unless all the creditors, both public and private execute the contribution that corresponds them, and participate in the international mechanisms oriented to solve the problem of the debt, to guarantee the debt’s support of the countries with low income. Treatment of systematic matters: promotion of consistency and coherence of the international monetary, financing and commercial systems in supporting development. 68. Since Monterrey’s Conference we have achieved several results in the treatment of systematic matters, but new progresses are still needed. This matter is now more urgent because of the current financing crisis. The foreseen progresses after Monterrey’s conference with the work in charge to the multilateral financing institutions included the IMF’s function to reinforce the monitoring, to give priority to determination and prevention of possible crisis and strengthen the foundations of international financing stability, continue being incomplete. The current financing crisis, as well as the continuous weakness of the international financing system, they underline the need to strengthen the international financing structure again. The reform of the international financing structure should be centred in the way to offer more transparency and strengthen the voices and participation of developing countries and those countries in which the economy is in transition by adopting decisions and establishing international rules. Therefore, we decide to take appropriate and timely measures to improve the international economic and financing system’s operation. It is essential that the participation of the United Nations in these activities is maintained. This is also fundamental for the integrated application of Monterrey’s Consensus. 69. We decide to strengthen the coordination in the United Nations system and all other financing, commerce and multilateral development systems to support the economic growth, the reduction of poverty and a sustained development worldwide. There is the need for more cooperation between the United Nations, the Bretton Woods
institutions and the World’s Commerce Organization, with the basis of a clear understanding and respect to their respective governments. 70. We encourage having a better coordination and bigger coherence among the country’s competent ministries to help, and formulate and application of all level policies. We also encourage the developing international financing institutions to continue improving the coherence in policies for development, having in mind the needs of diversity and changing circumstances. In order to complement the national activities for development we request to all the countries whose policies have an impact over the countries in development, to increase their efforts to formulate policies which are related to the objectives for a sustained growth, poverty reduction and sustained development in countries in development. Other challenges and emergent issues 80. We commit to reactive the worlds association in benefit of development to be able to approach efficiently all the range of financing questions pro development which the world is confronting nowadays. 81. We are deeply worried by the effects of the current financial crisis and deceleration of the world’s economy in the capacity in which the developing countries could obtain the necessary financing to obtain their development objectives. Countries in development and countries with economies in transition run the risk to suffer severe setback related to the achievement of their developing objectives, in particular, the objective of development convened internationally, including the Millennium development Objectives. It’s of great importance to adopt promptly other decisive measures to stop the current crisis and reestablish the sustained economic growth. In view of this world context, we point out to the attention of all donors the situation and necessities of the poorest and more vulnerable. We also urge to all the donors to maintain and fulfil their commitments related to the OAD and we exhort the international community, including the Worlds Bank and the IMF, to turn to all the advising services to policies and resources, as it proceeds, to help developing countries and the ones with a transition economy to re enforce their economy, maintain the growth and protect the vulnerable groups of the critical current crisis. In this context, it’s also important for the developing countries to maintain good macroeconomic policies to support a sustained economic growth and poverty eradication. 82. The international community’s worries regarding to the climate changes, has notoriously increased since the Monterrey’s Consensus approval. The efforts to confront the climate changes must be compatible with the common responsibility principle but differenced to the respective capacities. We reiterate the importance to achieve an agreed result in the 15th Conference of the Frame Convention of the United Nations about Climate Changes, which will be held in Copenhagen from November 11 th to December 2009, and we urge everybody to participate in a constructive way, in negotiations according to the Action Plan of Bali. The possible and current answers to confront this phenomenon have important consequences for the financing to development and will impose more substantial costs for each country, requiring therefore a new mobilization of resources, including the private sector, and particularly for the developing countries, with the purpose to confront the climate changes, to support the adequate national adaptation and the strategies and measures of alleviation. We reiterate that this is essential to pay attention to the urgent needs of the developing countries, in particular those more vulnerable to the adverse effects of the climate changes, as for the less advanced countries, the small insular developing States and other affected African countries. Regarding to the above mentioned, we urge to all the countries to participate in this ongoing process in a way to assure the agreed result related to the implication and urge of the climate change challenge. The Estates parts in the Kyoto Protocol celebrate the creation of an Adapting Fund as a part of the structure in the Frame Convention of the United Nations about climate changes and wait with interest the soon operation with full support.
Commitment maintenance 87. We agree to commit ourselves again to maintain in full the national, regional and international plans, to follow the adequate and effective monitoring of the Monterreyâ€™s Consensus application, having in mind the final agreed document at intergovernmental level and approved in this Conference. We will also continue working restless to lay bridges between all the parts in the frame of an integral financing process program for development. We recognize the United Nations function as a coordinator centre of the monitoring process for development. It will be important to maintain this function to guarantee the continuity and dynamics of our process. We reaffirm the need to intensify the participation of all the interested parties, including the United Nations system, the World Bank, the IMF, and the Worldâ€™s Commerce Organization in monitoring and applying the Monterreyâ€™s assumed compromises and reiterated here in Doha.