Singapore

Although the global economic situation has improved considerably, it is still fragile. Much of the relief has come from the massive liquidity that has been pumped into the global financial system by national Governments. That bought us time to restructure our economies and correct the underlying imbalances that led to the crisis in the first place. Whether the restructuring is happening fast enough is, however, still an open question. The economist Joseph Schumpeter viewed economic downturns as the system renewing itself, a process he described as creative destruction. In theory, that sounds good. In practice, it is difficult for political leaders to stand idly by when companies go bust and jobs are lost. Everyone likes the creative part. Destruction, however, can mean losing an election, which politicians invariably try to avoid. The repricing of production factors such as real estate and labour is politically sensitive in any country, and Governments get blamed for it. Adjusting relative factor costs through the exchange rate is usually easier to achieve, although currency devaluation can create 17 10-55264 other problems such as inflation. The argument over fair exchange rates in the world today reflects competing domestic pressures to ease the pain of restructuring in different countries. Thus the United States wants China to revalue the yuan renminbi, while China protests that it is being blamed for the economic weaknesses of other countries. Of course, if the whole world were to use the same currency, the only way countries would be able to adjust would be through improved productivity and repricing. Exchange rate adjustments can facilitate structural adjustment, provided that the deeper economic problems are also tackled. With the world becoming multipolar, global macroeconomic coordination has become more complicated. Recognizing the inability of the Group of Seven or the Group of Eight to achieve such coordination, the Group of 20 (G-20) was formed two years ago when the global economy stared into an abyss after the collapse of Lehman Brothers. Without the G-20 acting in concert, the economic crisis could well have led to a global depression. The G-20 — the members of which collectively account for some 85 per cent of total global gross domestic product — is therefore a vital grouping in the community of nations. Going forward, the G-20 has to go beyond the reform of international financial institutions and better coordination of fiscal, monetary and exchange rate policies. Without fundamental restructuring of the real economy, we may experience a double dip. Without fundamental restructuring, increased liquidity in the global system will end up creating new asset bubbles, some of which we already see forming in Asia. For this restructuring to take place, the international trading system must be kept open. Only then can markets make adjustments and prices find their right levels. In fighting protectionism in all its forms, the leadership of the G-20 is critical. If, for lack of political will, the G-20 is unable to avert the crisis of a second dip, crisis will in the end force it to act, and by then it will be at much greater human cost to all of us. For precisely that reason, we must not allow interest in the Doha Development Agenda to flag. When the Doha Round was launched in November 2001, a key consideration was development. For many of us who were in Doha during the negotiations, the Millennium Development Goals were uppermost in our minds. I remember Tanzanian trade minister Iddi Simba insisting, on behalf of the African, Caribbean and Pacific countries, that the word “development” be explicitly incorporated into the name of the new round. It has been 10 years since the Millennium Development Goals were launched. While some countries have done well, many others have not. The G-20 countries must take into account, in their deliberations, the interest of all countries, not only of their own. The G-20, which together accounts for 80 per cent of international trade, has to play a leadership role in breaking the current impasse in the Doha negotiations. In particular, we must ensure that the needs of developing countries, especially the needs of the least developed countries (LDCs), are met. Freeing up agricultural trade, for example, will make a huge difference to their welfare. With those concerns in mind, a loose grouping of countries calling itself the Global Governance Group, or 3G, was established more than a year ago. Its objectives were spelled out in a document circulated to the Members of the United Nations on 1 March. The basic stance of the Group is to support the work of the G-20 and hold it accountable to the general membership of the United Nations. Permanent Representatives within the 3G Group meet regularly in New York, including before and after G-20 meetings, to present views and make suggestions, which are circulated to everyone at the United Nations. Depending on the subjects discussed, we invite individual members of the G-20 to join us at our meetings. For example, in preparation for the coming G-20 Summit in Seoul, the 3G Group had several meetings with senior Korean officials, including their G-20 “Sherpa”, to convey some of our views and concerns. A major concern of the countries of the Group is development. In this regard, we have prepared inputs to be submitted to the G-20 working group on development. It is good that both Korea as the current Chair of the G-20 and France as the incoming Chair are pushing development on the agenda. Let us be clear at the outset that development is not principally about aid. Whether a people is able to lift itself from the depths of poverty depends more on internal than external factors. Good governance is, of course, paramount. Investing in the inherent potential of citizens and creating a favourable environment for that potential to be realized are central to good governance. We would like to commend President 10-55264 18 Deiss on his decision to make “Reaffirming the central role of the United Nations in global governance” the theme of this General Assembly. It is most timely. A critical element in good governance is education. With education, individuals are able to acquire the information and knowledge they need to add value to the world. Aid that helps a people to build up its internal strength is valuable. Aid that creates dependency is harmful. With education, a citizenry is more able to insist on democratic safeguards against the abuse of power and corruption. Taking full advantage of globalization and information technology, we can now spread education into remote corners of the world. One of the most important developments in the world today is the widespread availability of cheap mobile phones, often with built-in cameras. Mobile phones have altered traditional power relationships everywhere where they are available. No longer can individuals be kept ignorant and exploited for long, because they have alternatives. As smart phones fall in price — which they are bound to do — social networking infrastructures like Facebook, which already has half a billion users in the world, will radically change the world we live in. Without being planned for or financed by any national Government, Facebook is arguably the most important social infrastructure in the world today. It is an astonishing phenomenon. Yet, it is only one wave of many more waves to come. Whether we like it or not, the revolution in technology — not only information technology but also in genetics, material science and other fields — will cause the creative destruction that many politicians dread. Communities and Governments that work with technological change will surge ahead, while those fighting change will be left behind. In this new age, those who are wedded to dogma and ideology become stuck in the past. Therefore, when we talk about development, the key is education. We must make sure that basic conditions are met, that children are fed and healthy and that no group is discriminated against on the basis of ethnicity, religion or gender. The knowledge needed for development is already available in the world, and delivery systems can be readily put into place. Unfortunately, there are many obstacles impeding the flow of knowledge. Protectionism is a major obstacle. It slows the spread of education and knowledge. Throughout history, every time a new trade route is established, knowledge flows along it, enabling the relatively backward to catch up. Our inability to move the Doha Development Agenda forward is particularly injurious to LDCs. An important way to help communities acquire more knowledge and use information better is to foster the growth of liveable cities. To develop, countries have to urbanize, and in the coming decades large parts of the world will be urbanized on every continent. China during Mao Zedong’s time was 20 per cent urban. Today, it is almost half urban. In 20 years’ time it will reach the same level of urbanization as Taiwan or countries like Korea and Japan, which are over 90 per cent urban. Urbanization as an organic process of development can be healthy or unhealthy. Cities can be energy-efficient, knowledge-intensive centres of production, education and sustainable living, or they can be hellholes festering with poor education, unemployment, inequality, crime and pollution. Because of the specific challenges that we had to overcome in our own development, Singapore has been promoting the sharing of urban developmental experiences as a practical way to help countries develop in areas such as public administration, low-cost housing, water management, transportation planning and better logistics. Developing countries that are urbanizing rapidly — and they have to do so in order to develop — should not have to repeat the mistakes of those who have gone before them. All of us have a vested interest in the growth of liveable cities in the third world. For example, carbon emissions cannot be reduced without healthy urbanization. We hope that fostering liveable cities will become a major objective of the G-20 countries. The best form of aid we can provide is knowledge and training. Two years ago, Singapore signed an agreement with the World Bank to establish an urban hub for the dissemination of knowledge about liveable cities. A basic requirement for healthy urban development is good water management, which has become a major challenge in various parts of the world. We should do much more to learn from one another’s experiences, especially in the face of growing weather volatility. Last Friday, Slovenia convened a 19 10-55264 Green Group meeting involving a small group of countries to discuss the subject of water management, which we hope will be given more attention in the future. Despite the concerns about the global economy, never before have the prospects of bringing development into every continent been so promising. This is not to say that outcomes will be equalized. Human beings as individuals and in groups are competitive by nature, and we must expect that some will do better than others at any point in time. Indeed, by learning from the successes and mistakes of front- runners, human communities often leapfrog over one another, and this is a historical process. Competition, however, should be conducted in a civilized way and within an overall global framework and value system that recognizes our global humanity and destiny.