Nora Lustig, Enrique V. Iglesias and Robert Devlin inaugurate seminar on Socially Responsive Globalization. Photo by W. Heinz

The quality of life has improved more in the past century than in the rest of history. Nevertheless, the gap between the poorest and the richest countries has doubled in the last twenty years, and inequality between individuals has also risen.

How to reduce this widening breech between the haves and the have-nots was the subject of the seminar "Socially Responsive Globalization," one of 16 such events held in conjunction with the IDB annual meeting in Santiago, Chile.

In his opening speech, IDB President Enrique V. Iglesias called on seminar participants to take strong action to redirect the course of globalization to achieve social objectives. He urged an examination of international rules governing the exchange of capital, goods and services, and labor, to make them more responsive to the needs of developing countries.

In an examination of the IDB view on this subject, Nora Lustig, senior advisor of the IDB Poverty and Inequality Unit and Robert Devlin, deputy manager of the IDB Integration and Regional Programs Department, called for an integration of the world economy in a context of expansion of opportunities for everybody, and particularly for the poor.

Among the measures they cited were unilateral liberalization of trade and more generous migration policies in the wealthier countries. In poorer countries they suggested the introduction of business codes of ethics to ensure adequate labor conditions and a more tolerant and gradual opening of capital investment.

A second panel of experts discussed the role of international rules, and a third panel discussed social protection, international public goods and development cooperation

Closing the gap between rich and poor will also require international, regional and national initiatives to enable the production of public goods, according to participants, adding that contributions from multilateral bodies and richer countries will be essential.

Participants also considered the issue of shared responsibility, where those who can contribute more do so in such areas as global public goods, one example being vaccines. Other issues discussed included the need to protect democracy and peace, environmental sustainability, global financial stability, and prompt responses to calamities.

Other issues debated included social protection mechanisms to cope with the transitional costs and changing circumstances of a more economically integrated world, with national governments assuming their own responsibilities and ensuring high-level professional representation in international and regional forums.

Meanwhile, another worrisome problem is the lagging economic growth in the region, affecting not just the poor but economies in general. What governments can do to step up growth was the subject of another seminar that will be reported on tomorrow.

Worries over lagging growth

A second seminar addressed the worrisome problem of the region’s lagging economic growth, which is affecting not only the poor but economies in general.

"Latin American leaders are very worried that growth will decrease again this year," said IDB President Enrique V. Iglesias in the opening speech of the seminar "What is Holding Back Growth in Latin America? What can Governments Do?" "In fact," he said, "the IDB and other institutions think that a 3.5 percent rate would be quite an achievement." He added that last year’s rate of slightly over 4 percent was insufficient to make a dent in the region’s poverty and unemployment levels.

While the IDB sees no signs of recession in the region and the economic fundamentals of most of its countries remain sound, Iglesias said, the new international conditions could hamper some Latin American economies.

The principal cause of the prevailing uncertainty is the slowing of the U.S. economy, which had been a locomotive for global growth in recent years.

The possible consequences of this drop were analyzed by the IDB’s chief economist designate, Guillermo Calvo, who argued that a recession in the United States would have disparate effects in the real and financial sectors of the region’s economies.

A one percent drop in the U.S. gross domestic product would imply an 0.4 percent decrease in Latin American output, on average, although countries with strong trade ties with the United States, such as Mexico, would fare worse than others. However, in the financial sector, a one percent reduction in U.S. interest rates would help Latin America boost its growth by 0.8 percent.

Also speaking were top officials from Argentina, Brazil, chile, Colombia, Jamaica and Mexico, as well as leading experts on Latin Amerian economic development.

New loans for Uruguay, Nicaragua, Bolivia, and Brazil

Last night, Uruguayan President Jorge Batlle and IDB President Iglesias signed documents for a $30 million loan to strengthen the country’s capabilities in the3 area of research, technological development, innovation, and business competitiveness. Uruguay’s Education and Culture Minister Antonio Mercader was the guest of honor.

Also signed was a $12 million concessional loan to support judicial reform and modernization in Nicaragua. Participating in the ceremony were Nicaraguan Foreign Affairs Minister Francisco Aguirre Sacasa and IDB President Iglesias.

For Brazil, a $750,000 grant was signed for an environmental management and fisheries program in the Lagoa dos Patos estuary in the state of Rio Grande do Sul. Participating were Milton Lafourcade Asmus, of the Federal University of Rio Grande Foundation, and IDB President Iglesias. Witness of honor was Koji Tanami, special advisor to Japan’s finance minister. Grant resources for the project will be provided by the Japan Special Fund.

Bolivian Finance Minister Jose Luis Lupo and IDB President Iglesias signed documents for a $47 million soft loan to strengthen public sector management at the municipal level and to fund local investment projects. This is the first stage in a two-part program for which the IDB will lend a total of $87 million.