Thirty-nine students from Vi core member, the Pontifical Catholic University of Peru (PUCP) gathered in Lima November 19 to take part in a videoconference presentation of the findings of the 2014 edition of UNCTAD's Trade and Development Report (TDR).
The event was moderated by PUCP's Oriana Sanchez, and the presentation delivered by the leader of UNCTAD's TDR team, Alfredo Calcagno, of the Division on Globalization and Development Strategies.
"A point of departure of the analysis contained in the report," said Calcagno, "is that the global growth rates are well below their pre-crisis levels. Our diagnosis concludes that policies that were used did not address the causes of the crisis, and therefore, did not succeed to put the world economy back on the growth path.
"One of the problems faced by developing countries is the slower growth of world trade, in particular the slowdown of developed country imports," he pointed out.
In his view, the consequence is that "developing countries will have to think more about regional and South-South trade and less about exports to developed countries" in their growth strategies.
Another risk confronting developing countries is related to capital flows which are driven by developed country policy decisions ("push" factors) instead of developing country capital needs ("pull" factors). The TDR therefore argues in favour of capital control measures, which should be considered as a part of policymakers' toolkit and not only as an emergency measure in the event of a crisis.
As demand patterns in the South markets are different from those in the North, developing countries would need to adapt their export offer to this demand. "This will require industrial policies and macroeconomic policies that support them, along with public investment in infrastructure and human capital," affirmed Calcagno.
Governments will need to finance the investment and other public spending required for development. This will require stable and long-term capital inflows, but even more importantly, mobilization of domestic fiscal revenues.
"A large loss of revenue for developing countries is currently due to 'tax optimization' by international companies and 'tax competition' among developing countries," Calcagno said. “This situation will need to be addressed both at the national level and through international action.
"One of the measures governments could take is to renegotiate rent-sharing in extractive industries," he suggested. At the international level, the TDR recommends extending transparency initiatives and making them mandatory, taxing global revenues of transnational corporations irrespective of their seat, and concluding an international convention against tax avoidance.
The presentation was followed by comments from two discussants - Javier Rosas, Director-General of the Economic Studies Office at the Ministry of Foreign Trade and Tourism, and Elmer Schialer, Director of International Economic Negotiations at the Ministry of Foreign Affairs, currently Peru’s delegate to the Andean Community Secretariat - who linked the report to national policies in Peru.
Rosas welcomed the timely topic of this year's TDR, pointing out that structural transformation and adding value to national production are of utmost importance for the country. He also expressed a concern about the imbalance between the responsibility of states in trade and investment, under the WTO dispute settlement and the State-investor arbitration in investment agreements - and the lack of such responsibility in the area of financial policies. Schialer stressed the need for Peru to rely more on domestic demand, given the unfavourable external economic environment.
For more, watch the recorded videoconference on PUCP's website.