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More broadly, on these and a host of other issues related to reforms needed in the global financial architecture, there have been many useful proposals articulated, such as those by UNCTAD, the Commission of Experts of the President of the UN General Assembly on Reforms of the International Monetary and Financial System (???the Stiglitz Commission???), and those by the Group of 77 (G77), which is a group of 130 developing countries that caucuses together in the United Nations General Assembly. The G77 has called for a host of policy and structural reforms to the foreign aid system and the global economic architecture.
In addition to the proposal by the G77, the post-2015 global development framework must also be informed by the voices of other groupings of developing countries, such as the Group of 33 (G33). The G33 is a group of 46 developing countries currently engaged in the agriculture liberalization talks within the WTO who are advocating for some of their goods to be designated as ???strategic products??? (SPs) for purposes of food security, and thus for the right to use ???special safeguard mechanisms??? (SSMs), or temporary increases on tariffs when their domestic producers are threatened by floods of cheaper imports. Just as the BRICS countries and others want to be able to use capital controls to protect themselves from the destabilizing effects of rapid inflows of speculative capital, the G33 countries want to be allowed to adopt better trade protection from rapid flows of foreign agricultural imports that threaten their existing companies and farmers.
Similarly, the post-2015 framework must be informed by calls from the NAMA 11 countries, another group of developing countries opposed to the dramatic cuts in trade protection on manufactured goods currently being demanded by the rich countries in the WTO???s Non-Agricultural Market Access (NAMA) talks. One would think the experts on the Stiglitz Commission, and the developing countries themselves who comprise the G77 in the UN General Assembly and the G33 and NAMA 11 within the WTO, ought to know a few things about the necessary reforms to the global financial architecture, and those drafting a post-2015 framework should integrate their proposals.
Allowing a stronger role for the state in regulating finance and FDI as well as in trade protection for safeguarding the success of domestic industries is important for more successful development. In the absence of a strong state and with prohibitions against the use of industrial policies by developing countries, we have seen in the last few decades a failure of industrialization and development in many countries. This problem was noted by the African Development Bank???s Annual Development Effectiveness Review 2012: ??????Africa???s growth tends to be concentrated on a limited range of commodities and the extractive industries. These sectors are not generating the employment opportunities that would allow the majority of the population to share in the benefits. This is in marked contrast to the Asian experience, where the growth of labour intensive manufacturing has helped lift millions of people out of poverty???(p.2). The Review also notes: ???Promoting inclusive growth means finding solutions to some deep structural problems. It means broadening the economic base beyond the extractive industries and a handful of primary commodities??? (p. 21).
Donor agencies and the biggest donor countries which are currently seeking to influence the shape of the new post-2015 development framework simply must not continue with this failed free market policy advice that keeps developing countries locked into dead-end primary commodities and extractive industries. As the Ghanaian presidential candidate, Nana Akufo-Addo, warned earlier this year: ???About 30 years ago, some African nations, beginning with Ghana and Uganda, implemented liberal economic reforms to stop their economic decline. But in many cases we opened our markets to global competition when, beyond the extractive industries, we had nothing to compete with. So while the continent???s share of global foreign direct investment projects has improved steadily over the past decade, much of this investment has reinforced the structural deficits of our economies.??? Therefore, a more successful global development framework can take heed of these insights and take bold steps towards supporting industrial policies of various kinds to promote a more rapid transition into manufacturing and services industries in developing countries.
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The views expressed in this article are those of the author and do not necessarily reflect the institutional position of CESR