Development assistance now a scarce resource
-- UNDP official tells Foreign Service Institute

Guyana Chronicle
November 8, 1999

DEVELOPMENT assistance to Third World countries can no longer be seen as an entitlement, but rather as a scarce resource. This is the view of Ms Elena Martinez Assistant Administrator of the United Nations Development Programme (UNDP), and Director for the Regional Bureau of Latin America and the Caribbean (RBLAC).

Ms Martinez made this observation last Thursday in a lecture delivered to the Foreign Service Institute. At this forum, the UNDP official spoke of the changing environment of globalisation and liberalisation and the changes the UNDP is continuing to make to meet the challenges of aiding poor countries and at the same time to respond to the demands of peace-building and emergency relief for victims of natural disasters and wars.

The following are excerpts from the presentation made by Ms Martinez:

"In these brief remarks, I wish to highlight some of the important changes of direction, indeed nothing less than a full transformation, of how the United Nations pursues its mission in today's changing environment. I shall then move on to the effect this sea-change in international development cooperation has had on the United Nations development arm - UNDP. Finally, I shall propose certain elements of a strategy for our cooperation with Guyana.

The United Nations in a

Changing Global Environment

In the past two years, the United Nations had witnessed two important changes that bear directly on its capacity to pursue development operations. The first of these is political. The first years of the decade of the 1990s had witnessed a gradual decrease in conflicts where the United Nations has a mandate to intervene. The Secretary-General has noted in his Annual Report for this year that the incidence of violent conflict, which had declined by about a third during the 1990s, is once more on the upswing since 1998. One need only think of recent interventions in Kosovo and East Timor, with all that they imply in terms of transfer of human and capital resources to rebuild war-torn societies, to understand that, in a world of finite resources, more money for peace-keeping and for emergency humanitarian relief means less money for development. In the 1990s, the world has experienced three times as many great natural disasters as in the 1960s while emergency aid funds have declined by 40 per cent in the past five years alone, according to the International Federation of Red Cross and Red Crescent Societies.

The second important development is related to the process of globalisation. In the past five years, there has been a continuing decrease in amounts available for Official Development Assistance, which is now close to historic low levels. ODA is now just hovering under forty billion US dollars, inclusive of bilateral and multilateral aid. At the same time, Foreign Direct Investment is as high as 250 billion US dollars annually. The vast movement of capital and technology that characterises globalisation is thus leading to a situation where developing countries stand to benefit far more from private sector investment than they do from Official Development Assistance, But the fact is that this Foreign Direct Investment is not equally distributed among all developing countries. Indeed, the bulk of FDI goes to a limited number of high growth developing countries, while the majority of countries in the Third World have to make do with only some three per cent of the total. In fact, 80 per cent of FDI is concentrated in 12 developing countries. The focus of international cooperation has shifted dramatically to mutual gains, away from solidarity. The term "solidarity" as you know, describes the foreign aid that countries provided, after World War Two, as part of their foreign policy objectives. And there are no prospects for a change in this dynamic. This has to be clearly understood, this dynamic will be with us for some time to come.

These are hard truths to accept, yet they are the features of our world of tomorrow: less money for development, and more money for Foreign Direct Investment - but only for those who can offer an attractive investment climate. It is in the context of this changing world environment, that the United Nations is positioning itself to continue to be a strong force for peace and for development in the coming years."

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