Frans van den Boom, President and CEO of NCDO
Ladies and Gentlemen
It is a pleasure to be back in the Netherlands, just over a year after I had the honour of addressing the NCDO's jubilee conference.
Thank you to the organisers for inviting me to share my thoughts on inclusive and sustainable development.
The Netherlands is a pillar of the rules-based trading system, a strong advocate for keeping markets open, and a leader in development co-operation. This country is home to several dynamic global corporations, and displays excellent trade and investment performance. However, you are not a country that remains stationary. Constant dialogue to ensure your development co-operation is more effective testifies that The Netherlands appreciates the important role which Official Development Assistance, investment and growth play in moving forward the development agenda.
The current Millennium Development Goals (MDGs) have roughly a thousand days to go before their end-2015 target date. The significance of the MDGs lies first and foremost in the fact that they gave the world a shared development agenda. They identified a set of shared goals around which we could collectively mobilise and they established time-bound goalposts for progress, many with quantifiable targets, against which we could measure our performance.
But beyond these targets and goals, the MDGs placed poverty reduction at the top of the global agenda. In doing so, they reshaped policy priorities, galvanising the attention and interest of governments, international organisations, the private sector, and individuals.
The WTO has embraced this role by remaining intimately involved in ensuring delivery on MDG 8 on the Global Partnership for Development including through using its leadership on the Aid for Trade (AfT) agenda to create a platform for inter-agency coherence.
Economic growth and trade — as a driver of growth — deserve a prominent place in the development agenda. We need an agenda that integrates economic growth with social inclusion and with environmental protection. We need a transformational agenda which creates jobs, develops infrastructures, raises productivity, improves competitiveness and promotes sustainable production and consumption'. Strengthening international co-operation in the area of trade is an important element in achieving this agenda.
This is supported by the evidence. Virtually all cases of large-scale human development and poverty reduction have been marked by a high average rate of economic growth sustained over a long period. And every country that has achieved this kind of sustained high growth has participated actively in international trade. In addition, diversified productive capacity is essential for growth to be resilient. Therefore, growth, trade, and productive capacity must be part of any long-term global development effort.
But growth is not an end in itself. Rather growth is an important factor in enabling individuals and societies to realize their potential and pursue their dreams. As Mike Spence’s Commission on Growth and Development put it, “growth can spare people en masse from poverty and drudgery. Nothing else ever has.”
A pragmatic take on the trade-growth relationship comes from the Growth Commission, based on decades' worth of empirical evidence. It has found that the open global economy served as a source of demand far greater than that offered by many home markets, but also as a source of ideas, technology, and knowhow. It enabled countries to specialise, boost value-addition, and increase output many times over. A list of ingredients is not the same as a recipe but nevertheless, in the past two decades, many developing countries have embarked on a path to higher growth supported by trade which has contributed to the attainment of many MDG targets.
Today, the rise of value chains provides important new avenues for trade, growth, and diversification. For developing countries in particular, regional and global value chains lower the bar for entry into the global economy. Smaller countries and small and medium enterprises no longer need to have a full-fledged vertically integrated industry producing finished products to participate meaningfully in international trade. And this is why the WTO's 4th Global Review of Aid for Trade in July 2013 will focus on how to support developing countries connect to value chains.
Improving the broad economic and policy environment in which developing countries produce and trade is an area in which global co-operation has to keep playing a constructive role. And I think this is where the efforts to conclude a WTO deal on trade facilitation come into play.
Trade facilitation, a key issue that WTO Members are working to deliver for the 9th WTO Ministerial in Bali in December, can help reduce the thickness of borders i.e. time, red-tape, and cost of transit and customs clearance. Predictability and efficiency in importing and exporting is essential for inclusion in value chains. And its gains could be impressive: A Trade Facilitation agreement at the WTO could bring down the cost of moving trade today from roughly 10 per cent [of trade value] to 5 per cent. Globally, removing these barriers could stimulate the US 22 trillion dollar world economy by more than US 1 trillion dollars. Simply reducing this red tape by half would have the same economic effect as removing all remaining tariffs.
But it is clear that many poor countries will require help to implement this agreement. And this is where the deal being negotiated in Geneva is smart: it links for the first time “implementing rules” to “receiving assistance”. It is not a deal with exceptions or exclusions. It will be a deal empowering countries based on a thorough, tailor made assessment of their needs.
Catalysing efforts such as trade facilitation would prove particularly advantageous over the next few years as more trade-led growth could create virtuous circles with other priorities as we look post-2015. There is clear symbiosis between growth, sustainable development and poverty reduction and the growing recognition that a holistic approach is the best way to achieve progress is to be encouraged.
The world post 2015 will be different in some dramatic ways to the world of 2000 when the MDGs were born. And we need a narrative that effectively captures this. The poles of economic growth have changed; there are new and emerging actors on the trade and development landscape that may have the means and indeed the desire to contribute more to shared global prosperity. These new actors — the emerging countries, the private sector, and philanthropic organisations — must be active partners. We are in search of a truly global partnership for development.
The crisis is also impacting on ODA levels. Despite a potential flat landscape for ODA in the near future, I contend that placing growth and trade on the post-2015 development agenda could catalyse new resources and attention towards these objectives.
In spite of trying economic circumstances, the Netherlands has kept ODA spending above the 0.7% threshold. I commend you for this but also strongly encourage you to continue to see development aid, not as charity, but as an investment in growth and development. Please keep investing in development. Keep investing in Aid for Trade.
Collectively we must plan for a common destination for the post-2015 development agenda. We need a compass that has countries converging around the same destination. ‘Convergence’ must be an overarching principle. At the same time we need to allow for differences in the pace and rhythm of getting there. And we must make special efforts towards the poorest and weakest. These are in my view the three basic ingredients for a post-2015 development agenda.
We may not have yet eradicated poverty, but the world today is a better place for many more billions of people than it was in 2000 when the MDGs were launched. For sure, absolute poverty reduction has not reduced inequalities which have grown, during the same period, within many countries. We should learn from this experience, from what we did right and what could have been done better to build a common post-2015 development agenda for the benefit of all citizens.