Mr. Chair, thank you for the opportunity to address the Committee on a range of related macroeconomic issues, all of which can play a critical role in promoting economic growth and development. As in previous years, we will address the financing for development and macroeconomic agenda items in tandem, given their interlinkages.
We are now three years from the deadlines set for achieving the Millennium Development Goals. Progress on many fronts has been substantial, despite the headwinds faced by the world economy over the past five years. But these gains have not been universal. While many countries have made remarkable transitions over the past decade, challenges remain for the Least Developed Countries and low income countries, particularly those emerging from conflict. However, we have also seen great strides in many developing countries, which have succeeded not only in alleviating poverty in their own countries, but in becoming increasingly important development partners, contributing to global growth and taking their place as major trading partners and investors in other developing countries.
Mr. Chair, this committee must begin to address this shift in the global development landscape seriously. A static distinction between developing and developed countries still influences how many view development finance, with traditional donors on one side, emerging economies and developing nations on the other. This approach no longer reflects a much more dynamic reality, and should not sidetrack our debate and consideration of important and pressing issues.
A quick look at the numbers captured in the Secretary General’s Financing for Development report captures this changing reality. Developing countries now account for 47 percent of global exports, the highest share ever recorded. And developing countries are now the source country for more than one quarter of Foreign Direct Investment. South-South development cooperation is estimated to have reached a value of $20 billion in 2010.
Nonetheless, many of the least developed countries have been left behind, with a growing but still marginal share of world trade, and with levels of FDI decreasing in recent years.
Mr. Chair, the Monterrey Consensus clearly states that Official Development Assistance is a “complement” to other resource flows, and for Least Developed Countries it remains an important one. But in recent years ODA has been dwarfed by other capital flows. In 2010 the United States was the largest provider of ODA at over $30 billion. However, a recent Hudson Institute report estimated that ODA only accounted for 9 percent of total U.S. financial flows to developing countries. U.S. charities provided $39 billion in private philanthropy. U.S. private sector investment totaled approximately $161 billion, and remittances from the United States to developing countries reached nearly $96 billion, according to Hudson Institute calculations.
A Financing for Development agenda for the 21st century requires a wider focus. It will require that countries unlock their own domestic resources, find ways to engage the private sector in investing in the developing world, create avenues for trade and use all of the economic tools in our inventory.
Mobilizing and leveraging those resources, in particular private capital flows, will require that recipient countries put in place the democratic and legal systems needed to reassure potential investors and trading partners that they will be provided with broad market access and high standards of investment protection.
Trade is a tremendous potential driver of sustainable development and prosperity. We must continue to liberalize trade and deepen the rules-based international trading environment, resisting protectionism. Continuing to advance trade liberalizing initiatives at the WTO, including focusing on the elements of the Doha Declaration where short term progress can be achieved, is one of the most effective things we can do to make long-term progress on alleviating poverty and bolstering development.
Access to debt financing remains a critical tool for growth and development. Functioning debt markets help developing countries make the infrastructure investments essential to diversify economies and expand productive capacity.
However, excessive and unsustainable debt remains a concern. Through the ongoing Heavily Indebted Poor Countries Initiative and the Multilateral Debt Relief Initiative as well as the programs of the Paris Club, the international community has done a great deal to keep the debt of the world’s most vulnerable countries at manageable levels. The decision taken at Gleneagles to cancel 100 percent of eligible outstanding debts of qualifying HIPCs to the IMF, the World Bank's International Development Association, and multiple regional development banks, paired with additional relief from Paris Club creditors, is expected to reduce the debt burden for these countries by over 80 percent relative to pre-HIPC levels.
We will continue to engage collaboratively in this process. Creditor countries that are not members of the Paris Club should also examine what more they can do to keep debt levels in developing countries sustainable. We should work to ensure that debt transactions are firmly grounded in sound economic management and supported by maximum transparency and accountability to their citizens. We must continue to push for responsible lending and borrowing by all parties.
As we look to innovative financing mechanisms, we must respect the sovereign status of the members of this Committee and consider only mechanisms that are voluntary and truly additional. The United States cannot and will not participate in any system that effectively imposes a global tax. Decisions on taxation are a prerogative of individual states and are fundamental to self-determination and sovereignty.
Mr. Chair, we should integrate the process agreed to at Rio+20 on financing for sustainable development into the broader development financing discussion. We should not be duplicating efforts or creating competing venues and processes. The financing for sustainable development process agreed to at Rio+20 will come to closure in 2014. By then we will also be nearing the completion of the MDG timeframe and will be setting in place a new UN Development Agenda.
Until these processes play out, we should avoid setting the timeframe or agenda for a follow-up conference to Monterrey and Doha. In the same vein, we should look at how to improve the existing Monterrey and Doha follow-up processes, and avoid the creation of new mechanisms or commissions.
Mr. Chair, I thank you and the other delegations to this Committee for the time and effort that we have devoted, and will continue to devote, to these issues. They remain among the most difficult, but also the most important that this Committee will address.
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