Angeline Oyog in Paris
Industrialised nations may in the long term have more to=20 gain than lose from the rapid expansion of emerging=20 economies in certain developing countries, says the=20 Organisation for Economic Co-operation and Development=20 (OECD) in a new report.
Looking at long-term economic interests, the report said=20 the industrialised OECD members should be heartened by the=20 prospect of the rapid expansion of the so-called “major=20 developing economies” in the south.
Industrialised nations’ concerns about short-term losses,=20 such as increased unemployment and erosion of salaries,=20 have at times overshadowed the advantages and new=20 opportunities opened up by the changes in the major=20 developing economies, the report says.
Among the opportunities would be high investment returns,=20 and the fact that emerging economies will continue to seek=20 capital and technological expertise and equipment from=20 industrialised countries.
“It is important to exchange views with them. And we will=20 have to remain flexible in our relations with them,” Jean-=20 Claude Paye, secretary-general of the OECD, told reporters=20 in Paris this week.
“We will identify areas of common interest that we can=20 discuss with specific countries. And so the trend is to=20 move forward.”
His comments came at the end of a two-day OECD ministerial=20 council meeting at which it was decided that the=20 industrialised nations should forge closer relations with=20 developing countries.
“In view of global interdependence and the continuing=20 importance of development co-operation, the council is=20 committed to supporting the integration of developing=20 countries and economies in transition (in the former Soviet=20 Union) into the world economic system,” the final=20 communique stated.
The ministers also said they were committed to mobilising=20 “as many public resources as possible and to encouraging=20 private flows to back the self-help effort of developing=20
Such commitments were in keeping with the report, Linkages:=20 OECD and major developing economies, which had been=20 submitted for discussion at the annual meeting.
The report was based on a OECD-commissioned study on the=20 economic reforms undertaken by 15 major developing=20 countries in Asia, South America, Africa and the Middle=20 East. It examined the impact of their growth on the 25=20 member countries that make up the OECD.
The countries examined were “the big three” — China, India=20 and Indonesia — as well as South Africa, Algeria, Saudi=20 Arabia, Bangladesh, Colombia, Egypt, Iran, Nigeria,=20 Pakistan, Peru, the Philippines, Venezuela and Vietnam.
The report outlined the challenges that lay ahead for the=20 OECD as emerging economies begin to take a lead role in the=20 world economy.
If China, India and Indonesia maintain a growth rate of six=20 percent annually, the gross domestic product (GDP) of “the=20 big three” alone will represent 60 percent of the GDP of=20 the OECD zone in the year 2010.
Due to their economic growth, these countries have a=20 voracious appetite for capital and offer a growing=20 portfolio of high-return investment options for OECD=20 institutional savings.=20
They are also eager to acquire capital goods and technology=20 from OECD countries, the report said.
As their middle classes grow, the major developing=20 economies also provide a potentially enormous market for=20 exports from the OECD of consumer goods and services. =20
Fears that competition from major developing countries=20 would result in job losses and erosion of salaries in the=20 OECD zone is not necessarily true, said the report. It=20 pointed out that imports from other OECD member countries=20 retain a more significant portion of the market share than=20 developing countries’ exports.
Thus, the report stressed, except in a few sectors like=20 clothing and footwear, major job displacement from import=20 competition from developing countries cannot be plausibly=20 linked to growing exports from developing countries.
A related OECD study said that the impact of OECD trade=20 with low-wage countries in Asia on employment is found to=20 be very small, partly because exports of manufactured goods=20 to the countries concerned have risen at about the same=20 rate as imports from them.
The most effective way to ensure that the markets in the=20 major developing countries become more open to OECD=20 exporters and investors is through encouraging the=20 participation of these emerging economic powers in the=20 multilateral trading system under the auspices of the World=20 Trade Organisation (WTO).
In return, the report stressed likewise that access to OECD=20 markets will remain critically important if the leading=20 developing countries are to have a chance to establish or=20 maintain a rapid pace of development.
Some major developing economies, notably those of China and=20 India, have become more heavily dependent on OECD markets=20 over the last decade.
Still, the report cautioned against the temptation to=20 resort to trade restrictions to protect local industries in=20 the OECD.
Despite what has in general been a limited penetration of=20 OECD markets by developing country exports, the pressures=20 from industry shareholders, farmers and workers=20 disadvantaged or threatened by the competition from imports=20 have frequently been sufficiently strong, the report noted.
“In effect, the OECD countries’ trade policies vis =FC vis=20 the developing world are a patchwork reflecting compromises=20 between conflicting impulses and interests,” the report=20
The OECD member countries are Australia, Austria, Belgium,=20 Britain, Canada, Denmark, Finland, France, Germany, Greece,=20 Iceland, Ireland, Italy, Japan, Luxembourg, Mexico,=20 Netherlands, New Zealand, Norway, Portugal, Spain, Sweden,=20 Switzerland, Turkey and the United States. — IPS
OPEN AFRICA (supplment to The Mail & Guardian)