Trade and Development Report, 1993

The Trade and Development Report of 1992 had predicted that without a strong boost to global demand the world economy v.�ould continue to stagnate. So it has. Belying almost all other official forecasts, the North has failed to recover. As a result, commodity prices are falling yet again, intensifying poverty in the South, and the unemployed are multiplying, intensifying poverty in the North. Joblessness is now not only the prime issue in domestic politics: by providing humus for protectionist sentiments and xenophobia, it is also forcing itself onto the international agenda. The tide of market-oriented reform has continued to flow strongly in developing countries and the former socialist countries of Eastern Europe. In Asia, the fast-growing economies, which had managed to steer clear of the turbulence of debt and policy shocks, have continued ahead at full steam. Thanks to reform, Latin America has been showered with finance. In Africa, the winds of change have turned into a gale, but the economies are still in the doldrums. In the transition economies of Europe, the worst is over in some hut not in others. International financial flows have been bringing many benefits but also problems. Exchange rates have been under severe strain, and international trade negotiations have been teetering bern�een openness and protectionism. The new era after the Cold War should not be allowed to become one of economic conflict. Governments acknowledge the need for cooperation, but the real challenge remains. It is to translate the aspiration for harmony into practice-and do so in a way that will advance development and push back poverty The right approach is to marry boldness with realism. Without boldness structures will not change, but unless policies are tempered with realism there will be costly excesses. Boldness is also required to clear the debt overhang, which continues to bear down on 1nany developing countries. And unless there is boldness, too, infighting global deflation, the problems of the world economy will further multiply, and instability will overwhelm confidence.