A group of 30 graduate students from the Moscow State Institute of International Relations (MGIMO), accompanied by two lecturers, visited UNCTAD on November 26 as part of a one-week programme of meetings at international organizations in Geneva. It was the second study visit to UNCTAD organized for MGIMO by the Vi.
Complementing the programme at other international organizations, the sessions at UNCTAD covered the current global economic situation, developments in foreign direct investment, and South-South cooperation.
Nicolas Maystre, from the Division on Globalization and Development Strategies, shared with the students UNCTAD's findings on the state and prospects for the world economy, as well as policy recommendations to address the current crisis.
"Slowdown has been synchronized across the regions," he said. "A growing number of developed economies have fallen into a double-dip recession, and forecasts for 2013 point to only 2.5 percent growth worldwide."
The main reason behind the slow growth is the lack of global demand. Public expenditure has been falling as a result of austerity policies in developed countries and growing unemployment negatively affects private demand.
"There is therefore scope for counter-cyclical macroeconomic policies, especially in countries with current account surpluses," Maystre said.
UNCTAD also supports progressive taxation of purely financial or rent-seeking activities and the redistribution of income to benefit lower-income groups of population. To reverse the trend of wage compression, it is proposed to rebalance labour markets in favour of workers, who currently have a weaker negotiating power.
The next lecture, given by Kalman Kalotay, expert on Foreign Direct Investment (FDI) at UNCTAD’s Division on Investment and Enterprise, introduced basic concepts and determinants of FDI, and covered global and Russian investment flow trends.
“The importance of developing countries and transition economies has increased recently,” he said. “Nowadays, half of FDI inflows are hosted in developing countries and transition economies, and countries known as BRICS are among the top-ten destinations of FDI flows.”
The Russian Federation has a large potential to attract FDI given that determinants such as natural resources and market size, so efforts have to be concentrated in improving the business environment for foreign investors, Kalotay added.
“Russian FDI outflows have recently surpassed FDI inflows,” he said.* It is important to diversify those investments but also to keep attracting foreign investors to the country in order to recover from the global crisis.”
Following the presentation on FDI, Piergiuseppe Fortunato from the Unit of Economic Cooperation and Integration among Developing Countries, presented the most significant trends in South-South integration.
“Developing countries are exporting more to developing countries than to developed countries,* Fortunato said. “Countries in the South should focus on this type of trade, which helps countries moving along the structural transformation of their economies.
“However, the export growth observed in the Russian Federation is driven by exports of primary products and policymakers in the country should seek to overcome/reduce this dependence,” he added. “Regions should follow the East Asian example, whose interregional trade accounts for most of the exchanges between Southern countries and which has been a key factor in their development.
“Transnational cooperation among Southern countries should also be promoted, given that it tends to create more jobs, and focuses more on infrastructure projects that support productive activities of regions and countries,” he recommended.
The visit concluded with a guided tour of the Palais des Nations.