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. To this end, Governments should encourage a supportive environment for the private sector, including active competition policies, the application of the rule of law, an open framework for trade and investment and sound fiscal and monetary policies. In the area of finance, policies need both to promote domestic savings and to attract external resources for productive investment. For both purposes, it is necessary to improve the efficiency of domestic financial markets. Addressing the needs of people living in poverty, disadvantaged and vulnerable groups of society and the creation of more and better jobs requires attention to be given to conducive macroeconomic policies and to such issues as human resources development, gender equality, public participation and social integration. Social and environmental factors should be considered as important elements to be taken into account by all countries in the formulation and implementation of macroeconomic policies. Particular attention should be paid to the effect of structural adjustment programmes on people living in poverty and on disadvantaged and vulnerable groups of society.
Increased economic integration and interdependence places greater responsibilities than before on all countries, but particularly the developed countries, to contribute to ensuring that their domestic policies are favourable to economic growth and development in the rest of the world. National and international actions are closely interrelated and should be seen as mutually reinforcing components of the overall goal of achieving development. In order to foster a supportive international environment for development, countries should pursue economic stability, full employment, a low rate of inflation, sustainable external and internal balances, including the avoidance of excessive budget deficits, low long-term real interest rates and a measure of exchange rate stability. They should also ensure open financial and commercial markets and, where appropriate, provide concessional aid flows.
. International cooperation in the formulation and implementation of macroeconomic policies should be reinforced with a view to promoting greater coherence and consistency of domestic policies and thereby enhancing their effectiveness. Measures should also be taken to broaden the cooperation among monetary authorities in order to maintain a sound international financial system. This enhanced cooperation should take full account of the interests and concerns of all countries. Multilateral surveillance should correspondingly address the policies and measures of all countries.
The liberalization of trade regimes and the promotion of an open and secure multilateral trading system are central requirements for the promotion of economic development. All Governments should commit themselves to the liberalization of trade and investment policies and should foster international cooperation towards this goal. All countries have a shared interest in an open, ruled-based equitable, non-discriminatory transparent and predictable multilateral trading system. While many provisions in this area have been identified by the General Assembly, over the last five years, the agreements as represented by the World Trade Organization (WTO) are particularly important. In this regard, the WTO dispute settlements mechanism is a key element for the credibility of the multilateral trade system. The Commitments agreed in the Final Act of the Uruguay Round should be implemented fully. Unilateral actions of a protectionist nature, inconsistent with multilateral trade agreements, should be avoided and prevented. Appropriate monitoring measures should be established to ensure that, in the implementation of the Uruguay Round, the rights, interests and concerns of all countries are protected, recognized and redressed.
. There is a need to promote greater integration in the world economy of those countries which have not yet benefited from the overall increase in trade and investment flows, in particular African countries and the least developed countries. Special attention should be given to the full implementation of the specific provisions for the least developed countries, including the provisions emanating from the Marrakesh agreements, and to the needs of the net food-importing developing countries, so that all countries benefit fully from the results of the Uruguay Round. These measures will also require domestic efforts to promote greater diversification of these countries' trade and to increase the competitiveness of their trading sectors.
Efforts to make trade and environment policies mutually supportive in favour of sustainable development should continue. Trade liberalization measures should be complemented by sound environmental policies, but measures adopted for environmental purposes should not become a means of arbitrary and unjustifiable trade discrimination or a disguised form of protectionism. In the same vein, social concerns should not be used for protectionist purposes.
Commodity exports continue to play a key role in the economies of many developing countries, especially in terms of their export earnings, the livelihoods of their people, and the dependence of general economic vitality on these exports. This makes the continuing deterioration in their terms of trade of special concern, even if there is some recent evidence of improvement in the prices of some primary commodities. Increased participation of developing countries in the processing, marketing and distribution of their commodities, if accompanied by improved market access, provides an alternative means for ensuring greater value added, as well as predictability and increased export earnings, from commodity production. This diversification will require such countries to continue their macroeconomic, trade and investment policy reforms.
It will also require a strong commitment by the international community to support such policy reforms. The international community should endeavour to improve the functioning of commodity markets, with greater transparency and more stable and predictable conditions. There should be further evaluation of the usefulness of commodity agreements in this regard, taking into account the potential of new financial and trading instruments and techniques. Improved market access for primary commodities, especially in their processed forms, should be provided, particularly by developed countries. They should also respond favourably to requests for technical assistance aimed at enhancing the diversification of the export sector in those developing countries which are highly dependent on the export of a limited number of commodities. The strengthening of multilateral compensatory financing schemes is a further means of addressing the short-term difficulties that can arise as a result of heavy dependence on commodity exports.
UNCTAD must build upon its comparative advantage and offer support appropriate to the needs of developing countries to ensure that they participate in the world economy on a more equitable basis. The policy research and analytical work of UNCTAD must illuminate the changes in the global economy as they relate to trade, investment, technology, services and development. This work should be undertaken in cooperation with WTO and other relevant international institutions.
. Both domestic and external resources are required for development. In most countries, domestic savings contribute by far the larger part of the resources utilized for investment and are mainly mobilized through national fiscal and monetary policies, including equitable taxation and fiscal incentives. Exploring new ways of generating new public and private financial resources, inter alia, through the appropriate reduction of excessive military expenditures, including global military expenditures and the arms trade, and investments for arms production and acquisition, taking into consideration national security requirements, so as to allow possible allocation of additional funds for social and economic development will be undertaken.
. The experiences of those developing countries which have achieved high rates of economic growth in recent years show that sustained economic growth is linked to an effective strategy for domestic resource mobilization. These economies have maintained significantly higher rates of national savings and investment than other developing countries. However, some developing countries have limited scope for increasing savings because of their low per capita income levels and because levels of consumption are already low and are difficult to restrain further; these countries will continue to need substantial external resources as an important complement to domestic efforts to stimulate their development.
(b) External resources
. Total net resource flows to developing countries have expanded rapidly in the 1990s. However, the trend has not been universal, in terms of either the types of financing or the recipients. Within the total, official (public sector) flows have languished; all the growth has been accounted for by an increase in the private sector component. Secondly, while some low-income countries have been the recipients of the increased private sector capital flows, others have not benefited at all.
(c) External debt
There is an urgent need for effective, equitable, development-oriented and durable solutions to the external debt and debt-servicing problems of developing countries, and to help them exit from the rescheduling process. The evolving debt strategy has contributed to the improvement in the debt situation of a number of developing countries. Debt-relief measures have been undertaken by creditor countries both within the framework of the Paris Club and through their cancellation and equivalent relief of bilateral official debt. Nevertheless, external debt and debt-servicing problems have persisted, particularly for the poorest and heavily indebted countries. Debt-service problems of middle-income countries should continue to be addressed effectively.
Those developing countries that have continued, at great cost to themselves, to meet their international debt and debt-service obligations in a timely fashion have done so despite serious external and domestic financial constraints.
(d) Official development assistance
. Official development assistance (ODA) is a small proportion of a country's total resources for development, but is a significant source of external resources for many developing countries, particularly African countries and the least developed countries. As such, it can play an important complementary and catalytic role in promoting economic growth. Despite its critical importance, the overall decline in ODA is a serious cause for concern.
(e) Role of multilateral financial institutions
. The multilateral financial institutions have an important role to play in meeting the challenges and urgent needs of development and the commitments made in a series of recent international conferences. Renewed efforts should be made in order to provide them with resources commensurate with their role, while pursuing ongoing efforts to increase efficiency and effectiveness. In order that international financial facilities, particularly the International Development Association (IDA), have more positive effects on development, the commitments for their replenishment should be fully implemented in a timely manner, thereby contributing more effectively to development.
(f) United Nations financing for development
. At present, the capacity of United Nations funds and programmes to respond to the needs of developing countries is being threatened by the persistent insufficiency of resources for the operational development activities of the United Nations, in particular the decline in contributions to core resources. At the same time, the present sequence of global conferences and other international meetings has resulted in a wide range of additional development demands being imposed on the United Nations. The efficiency, effectiveness, accountability, and impact of the operational activities of the United Nations system must also be enhanced.
(g) Private investment flows
. Private resource flows to developing countries, including foreign direct investment (FDI), have increased in recent years. Key determinants for attracting external private sector capital are, inter alia, a stable domestic political, legal and economic environment, based on the rule of law, sound economic policies and an openness to foreign investment. Other factors include the prospects for growth and a favourable external environment.
The growth in FDI in developing countries is of particular importance since, in addition to finance, the recipient economy usually benefits in terms of technology transfer and enhanced access to export markets. However, FDI in developing countries, as well as the recent parallel surge in international portfolio investment, has been concentrated in the more advanced economies, the larger economies and those with high rates of economic growth. This situation needs to be addressed. There is also a need to promote favourable conditions for achieving international stability in private capital flows and to prevent the destabilization arising from swift movements of private capital flows.
(h) Peace dividend
. When the cold war ended, a peace dividend appeared at hand. The relaxation of international tensions was thought to offer opportunities for reducing military spending worldwide and for using the resources so released to enhance spending on social and economic development for the benefit of all countries. There should be an appropriate reduction of excessive military expenditures, including global military expenditures and the arms trade, and investments for arms production and acquisition, taking into consideration national security requirements, so as to allow possible allocation of additional funds for social and economic development. While the reduction in global political tensions has yielded many benefits, the impact on development has not materialized in the tangible form or to the extent that was foreseen.
Promotion of science and technology for development calls for a clear definition of the respective roles in this area of the private sector, Governments and international organizations. The private sector plays a role in the productive application of science and technology and most commercially relevant technology is controlled by the private sector. Governments play a role in ensuring that there is a propitious environment for the development, access to, transfer, adaptation and application of environmentally sound technologies, and in providing appropriate regulatory frameworks and incentives for the development of scientific and technological capabilities. Promotion of science and technology for development also requires a labour force that has the professional and technical training necessary to utilize newly introduced technologies.
. Developing countries should further advance their collective efforts in promoting technology research, training, development and dissemination, as well as facilitating the access and exchange through information and technology centres. This development calls for the continued and enhanced support from the international community through technical assistance and financing. The international community should also continue to promote the development of effective and mutually beneficial technological cooperation between countries with economies in transition and all other countries, including in the area of new and emerging technologies.
. International cooperation can complement national science and technology policy measures and is necessary in areas where global interests are at stake. The world community has a common interest in the development and widespread dissemination of technology geared towards environmental protection and conservation and the rational use of energy and raw materials. Governments should implement the commitments they made in Agenda 21 on this subject.
. Exploiting trade opportunities among countries of the South by undertaking trade promotion activities, devising payment arrangements and expanding availability of trade information is particularly important. At the same time, there are many other areas, such as communications, information, transportation, investments, science and technology, environment, food and agriculture, population, education, and human resource development, in which South-South cooperation can be fostered and promoted.
. Technical cooperation, arrangements to improve market access, technical and financial assistance, sharing of knowledge and technology, and exchange of information are some of the many ways and actions by which developing countries that have been able to achieve social and economic progress can assist those that have been less successful. The concept of triangular cooperation, which involves, inter alia, technical, financial and other support by developed countries and international organizations for South-South cooperation, can also make a significant contribution to the promotion of cooperation among developing countries. All these collaborative efforts should be accorded high priority and increased support from the international community and assistance from all sources, including relevant multilateral institutions and non-State actors.
Regional economic integration and cooperation should be actively considered as a means of eliminating obstacles to trade and investment and of fostering economic cooperation within a region. However, there is the risk that regional organizations may turn inward and that the world will evolve into competing economic blocs. Therefore, reductions of barriers to trade and investment among members or participants in regional groupings should be consistent with internationally agreed rules, where applicable, and without detriment to other economies.
Regional economic groupings should be outward oriented and supportive of the multilateral trading system. This requires a strong commitment by the international community, in its pursuit of regional economic integration and cooperation, to open regionalism within the framework of an equitable, non-discriminatory and rule-based multilateral trading system.
82. Regional cooperation also provides a vehicle for addressing environmental and social issues of common concern. The development of common approaches to environmental problems of a transboundary nature is particularly pertinent. National efforts in combating poverty and unemployment and promoting social integration can also benefit from regional cooperation. Furthermore, possibilities could be explored to use regional forums as means of cooperation in supporting national action to promote and protect all human rights and fundamental freedoms, the rule of law and democratic institutions.
. Regional integration and cooperation should be complementary and contributory to national policies and to global multilateralism. In order to take advantage of regionalism, multilateral economic and trade institutions must have the capacity to accommodate regional arrangements in their structures. The challenge is to use both global and regional arrangements in a mutually supportive way.
. In implementing sectoral policies, particular attention should be given to the potential of such policies to generate employment and contribute towards the eradication of poverty. In this context, the important contribution of small and medium-sized enterprises should be recognized. It is also essential to facilitate women's equal access to resources, training, employment, market and trade and to strengthen their economic capacity and commercial networks, as well as their equal access to and equal opportunity to participate in scientific and technological areas.
86. The agricultural sector remains the main source of income for the majority of the population in developing countries. Its marginalization from the overall process of economic development should be avoided. Agricultural policies should particularly aim at increasing food production, improving access to food by low-income people and enhancing the income-generating potential of agriculture. Developing countries, with the support of the international community, should promote the development of small and medium-sized agro-industries and cooperatives and improve the processing, transportation, distribution and marketing of food and other agricultural products. Governments should enhance, at the national and local levels, rural women's income-generating potential by facilitating their equal access to and control over productive resources, land, credit, capital, property rights, development programmes and cooperative structures.
The industrial sector constitutes one of the key factors in sustained economic growth and in achieving social objectives. In order to promote industrial development, policies in this area should be geared towards ensuring the legal and institutional framework that fosters entrepreneurship and attracts foreign investment, protecting intellectual property rights and facilitating technology cooperation. Moreover, special support should be given to the promotion and development of environmentally sustainable industry and attention needs to be directed to rural industrial development, to industrialization programmes for marginalized segments and regions, and to enhancing the role of women in industrial development.
88. The services sector is of increasing importance for the economies of developing countries. Developing countries should continue to pursue policies to create conditions for the development of their national services sector through the modernization of the necessary infrastructures. Measures should include enhancing the efficiency of domestic sectors by encouraging human resource development and by ensuring appropriate investment policies.
All countries should enhance the efficiency of domestic service sectors through greater internal and external competition and by ensuring the transparency, effectiveness and non-discriminatory nature of domestic regulations, in accordance to each country's commitments, and with the provisions of GATT, including article IV on the increasing participation of developing countries. The developing countries face a major challenge of strengthening their domestic services' capabilities to derive full benefits from the implementation of the General Agreement on Trade in Services. In this context, as reaffirmed in the ninth session of UNCTAD, appropriate technical assistance should be extended to the developing countries to develop and strengthen their service sectors to help ensure that they reap the maximum benefits from liberalization of trade in services.
. The domestic sectoral policies elaborated by developing countries should be supported by a favourable international action. Trade liberalization should be pursued on a global basis. It should include the liberalization of market access in sectors and modes of supply of exports of interest to developing countries and should cover access to technology on a commercial basis, to distribution channels and to information networks. With the growing internationalization of the services sector, further action should be taken to facilitate the participation of developing countries in international service transactions.
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