Introduction

1. Upon the request of GRULAC in Geneva, in view of the preparation of UNCTAD X to be held in Bangkok, Thailand in the year 2000, and in accordance with the mandate of the Regular Meeting of the XXIV Latin American Council, the Permanent Secretariat of SELA is submitting its thoughts for the consideration of Member States. The objectives and format of this report were inspired by the agreements reached with GRULAC at UNCTAD IX in 1996 when the Secretariat drew up a similar report that contributed to the "Declaration of Caracas", adopted by GRULAC at its Preparatory Meeting.

2. The title of this report -"Globalization with development"- reflects a strategic course which, in this Secretariat's opinion, is the result of the experience the region has accumulated during this decade: the search for efficient and beneficial participation in the globalization process remains crucial. It is critical for speeding up the development process and thus guaranteeing democratic governance in the region. The challenge lies in overcoming the divergence that numerous factors seem to confirm, and that exists between participation in financial, commercial, technological and cultural globalization on the one hand, and integral and sustainable development of each State and region on the other. Overcoming this divergence calls for strengthening the link between globalization and development.

3. Emphasizing the dimension of development in the analysis of the policies necessary for integration into the globalization process implies that methods other than those already used by the region in the last two decades must be applied. It is important to recognize achievements as well as errors, but above all the shortcomings of the implemented policies must be identified. Through reflection and investigation it should be possible to move towards what UNCTAD has defined as the developing countries' "positive agenda." In this particular context it relates not only to international trade but also to the various issues that affect development. The "positive agenda" must be understood as a conceptual base, whose goal is not just participation in globalization but also development. It should propose solutions that are consistent with the conditions and diversities of the developing countries, and project its identity to the global system. Hence a "positive agenda" should not be restricted to dealing individually with each of the international economic issues from the development point of view. Rather, it should consider them as part of a whole, whose components are inter-related and thus indivisible as far as their causes and effects are concerned.

4. One of the essential elements that should guide our thoughts on the subject of a comprehensive and proactive development agenda is the need to take fully into account the diverse nature of the different countries and regions. Ever since the eighties an economic paradigm with few variations has been applied across the board to the very disparate economies of the Latin American and Caribbean region. By rejecting endogenous models, the same agenda has been applied to the majority of countries: liberalizing trade and finance, privatization, downsizing the public sector, eliminating subsidies, social security reforms, flexibilizing job markets, etc. This agenda assumes, on the one hand, the passive adoption of external and "universal" models and, on the other, the existence of structurally uniform economies, where markets behave similarly. It also makes a dual assumption: firstly that the domestic institutional framework is ready to implement the policy changes required by the model; and secondly, that the international environment will offer favourable conditions - particularly stability and development financing flows.

5. If endorsed by the Member States, the strategic direction that inspires the thoughts put forward in this report, could be covered by UNCTAD's current programme of activities, in addition to those agreed upon in Bangkok. To that effect, the programme adopted by the organization for the medium term should reflect the need to reduce the vulnerability¹ of the developing countries in the face of the new systemic crises, and to design internal and external strategies to overcome the insufficiencies that have been revealed by the current ones.

6. In effect, UNCTAD's relevance depends largely on its capacity to reflect the current national and regional agendas of the developing countries and to contribute elements for thought, analysis and action that are directly related to those agendas. It also depends on UNCTAD’s ability to demonstrate its comparative advantage, which consists in being an institution in charge of ensuring that the development aspect is present in international economic policies. Lastly, it depends on the capacity of the Latin American and Caribbean countries to include UNCTAD in their external economic policies as an instrument that supports learning and thought. The region has very few multilateral instruments for those purposes. There are very few fora for universal participation where development is at the centre of the debate, and where the opinions and experiences of Latin America and the Caribbean can have an international repercussion.

7. This report has three sections:

• The first part summarizes the main characteristics of the current international environment affecting the formulation of economic policies by the region’s countries. It includes some brief thoughts on the impact of the recent financial crises, not only on the situation and prospects of the economies of Latin America and the Caribbean, but also on the approach and the ideas behind the development strategies adopted to date. These are presented in the context of globalization which is the framework that defines the limitations and possibilities of national, regional and international policies.²

• The second section summarizes the main elements which, from this Secretariat's point of view, could make up the region's development agenda. It outlines the economic issues upon which the attention of the governments of Latin America and the Caribbean is focused today, without making any attempt to present an exhaustive list. Additionally, it delineates probable trends of the next few years. The aim is to point out the challenges of development assuming that there is room (and even need) for distinctive strategies focusing on positive action vis-à-vis the globalization process. The section also refers to the role UNCTAD might play in such matters, including specific suggestions for action. The central idea is that UNCTAD should make an ex ante and ex post evaluation of the costs and benefits of the guidelines, standards and international economic policies from the development point of view.

• The third section contains some general thoughts about the idées-forces which, in the opinion of this Secretariat, should drive UNCTAD's action in the coming years, as well as reflections on the development strategies of Latin America and the Caribbean.

NOTES

¹ It is interesting that in the most recent communiqué of the Interim Committee of the IMF, the term "vulnerability" is used and given a limited content, since it refers only to internal economic policy shortcomings, pre-supposing that crises of external origin could be avoided if those shortcomings did not exist,: "the Committee emphasized, in particular, the need to address the sources of economic vulnerabilities in a timely way, such as inappropriate policy mixes, leading in particular to significant exchange rate misalignments; excessive debt accumulation; imprudent debt management policies; financial sector fragility particularly in a situation of weak financial supervision and regulation; limitations in information available to markets; weaknesses in corporate structures; inappropriate sequencing of capital account liberalization; and deficient risk management by creditors." : Communiqué of the Interim Committee of the Board of Governors of the International Monetary Fund, April 27, 1999. But the term "vulnerability" can also be defined referring to both domestic and international structural weaknesses: "the economies of the developing countries are much more vulnerable at present than before because of their own weakness and also exposure to uncertain external environment.", Bhagirath Lal Das: Strengthening Developing Countries in the WTO, in: International Monetary and Financial Issues, Vol. XI, to be published, UNCTAD, 1999.

² The approach that inspired this report considers vulnerability from a broad perspective, which covers both internal and external policies, because these are inseparable and both determinants of development.

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