402++Facilitating+the+transition+of+developing+nations+into+the+world+economy.

[|Download the original attachment] **__TAIMUN VIII Chair Report__** **Committee**: //Economic and Social Council (ECOSOC)// **Chair**: //Johnny Teng// **Issue**: //402 Facilitating the transition of developing nations into the world economy.//

**General Overview of the Topic** Starting from the late twentieth century, globalization has become a major impact on the global economy and international relations. It is important to understand that integrating developing nations into the world economy is often accomplished by the means of globalization. Through globalization, foreign investors and multinational corporations will go into these developing nations in search of profit. However, the only way for the success of these foreign investments is when the developing nations agree to integrate into the global economy through trade agreements and change in foreign economic policies. Although statistics show globalization has dramatically helped the increase of GDP and employment rate in developing nations, the development and welfare of the people have shown no significant increase, and in some nations there is even a decrease in the welfare of the people. Globalization has also caused the increase of national and international inequality. Moreover, globalization can cause massive privatization of national assets as well as the increase in corruption. Furthermore, globalization is a major cause for human rights problems and environmental problems in various parts of the world. It is imperative to understand that the negative aspects of globalization are the lack of strict national and international regulations. Therefore, developing nations should find solutions to take advantage of globalization, instead of the other way around.

**Definition of Key Terms**
 * 1) **Globalization**: The improvement of communication and transportation in our world has made the world more interdependent than ever. This allows Multinational and Transnational Corporations to sell and produce products in various parts of the world. Globalization not only results in the flow of money and material, but as well in the flow of culture and ideas around the world. This process allows laws, economies, ideas, politics, and culture to form at the international level. (Global Policy Forum)
 * 2) **Economic Globalization**: With the cause of international trade and the idea of free trade, economies in different regions of the world are linking into one big global economy. This process is usually facilitated by foreign investment and multinational corporations operating in different areas of the world. Moreover, economic globalization is achieved when more developed nations, foreign investors, and corporations help the developing or less developed nations to “integrate” with the global economy by reducing tariffs, privatizing national assets, and relaxing environmental and labor standards. Economic globalization is one of the main causes of environmental problems and human rights problems in areas around the world. (Global Policy Forum)
 * 3) **Developing Nations:** nations that are not as economically and socially advanced as the developed nations, who are highly industrialized and economically developed. Developing nations try to improve the national economy and social welfare thorough the means of industrialization. Agencies such as the World Bank and the International Monetary Fund classify a developing nation by statistical indexes such as the GDP, HDI, literacy rate, etc. However, the United Nations Statistics Division clarified that,

There is no established convention for the designation of "developed" and "developing" countries or areas in the United Nations system. In common practice, Japan in Asia, Canada and the United States in northern America, Australia and New Zealand in Oceania, and Europe are considered "developed" regions or areas. In international trade statistics, the Southern African Customs Union is also treated as a developed region and Israel as a developed country; countries emerging from the former Yugoslavia are treated as developing countries; and countries of eastern Europe and of the Commonwealth of Independent States (code 172) in Europe are not included under either developed or developing regions. (United Nations Statistic Division 2009)


 * 1) **Corporation**: A legitimate group consisting of individuals that are characterized by independent personality, rights, powers, privileges, and liabilities distinct from those of its members.
 * 2) **Multinational Corporations:** corporations headquartered in one country, but having business branches or assets in many other countries.
 * 3) **Transnational Corporations:** multinational corporations that do not have a national identified home base.
 * 4) **Free Trade:** international trade or business free from government interference. Usually, it is a trade free from regulations, tariffs, and complicated processes.
 * 5) **Customs Union:** a group of nations that have agreed to cut off or eliminate tariffs among themselves, but still requires tariffs from nations that are not part of the union.
 * 6) **Trade Barrier**: regulations that governments impose to restrict international trade. These barriers include high tariffs, import or export licenses, quotas, embargo, etc.
 * 7) **Capitalism**: economic system that allows the private ownership of property and economic gain of a certain individual or corporation. Capitalists believe that the job of the government is to protect and regulate but not to interfere in the business activities of individuals and corporations.
 * 8) **Communism**: economic and social system that does not allow the private ownership of property. Instead, communism proposes that property and resources would be owned by a classless society, but not individuals.
 * 9) **Protectionism**: economic policy by which governments impose tariffs, duties, quotas, and restrictions on imports to protect domestic industries from global competition.
 * 10) **Gross Domestic Product (GDP)**: the total market value of all goods and services that are produced in one country.
 * 11) **Human Development Index(HDI):** an index created by the United Nations Development Programme to see the comparisons of development levels between different nations.
 * 12) **World Trade Organization (WTO)**: an international agency that encourages and promotes trade between nations. It is also responsible for administering global trade agreements and resolving global trade disputes.
 * 13) **North American Free Trade Agreement (NAFTA):** Agreement signed in 1994 by Mexico, United States, and Canada to encourage free trade between these nations.
 * 14) **International Monetary Fund (IMF):** An agency set up in 1944 to reduce trade barriers and to stabilize currencies. It is also responsible for lending money to developing nations.
 * 15) **Economic Inequality:** the unequal distribution of resources, assets, and income in the international or national level.
 * 16) **Sweatshops:** harsh and unhealthy working conditions where workers usually work overtime for low wages and with few benefits or protections.

**Background to the Topic** Since the fall of the Berlin Wall, developing nations have become more actively involved in the transition into the global economy through economic globalization. Developing nations look forward to economic globalization to increase national economic growth with the increased arrival of foreign trade and investments. However, economic globalization does not benefit all developing nations due to the lack of policies to promote human development. According to the United Nations Development Programme, there are three major changes that are caused by globalization: shrinking space, shrinking time, and disappearing borders. Shrinking space means that people’s lives are affected by events and actions happening on the other side of the globe, which are often activities that people do not know of. In relation to shrinking space, shrinking time means that actions and events on the other side of the globe are impacting people’s lives at a faster and unpredicted speed. Disappearing borders means the breaking down of national borders for trade, money flow, information, and culture. Moreover, as more multinational corporations and trade agreements grow around the globe, national borders on economy are pressured and broken down due to competition in the global market. (UNDP 1999) The rules of globalization are written by players who wish to gain advantages by the transition of nations into the global economy. However, these players who wrote these rules ignore the needs and development of the people that markets cannot meet. One of the problems caused by the economic globalization is inequality between nations. In the late 1990’s, the fifth of the world’s living in the highest-income nations had 86% of the world’s GDP, 82% of world market exports, and 68% of foreign investment. Moreover, OECD countries only have 19% of the global population; have 71% of global trade and 58% of foreign investment. In 1998, the three richest billionaires had property and assets more than the combined GNP of all the least developed nations. In 1993, 80% of patents granted in developing nations belong to people residing in industrialized nations. In many developing nations, globalization has caused either a higher or lower per capita incomes. For example, the per capita income in East Asia has increased to three times what it was in 1980, but in Africa and other less developed nations per capita income is lower than what it was in 1970. (UNDP 1999) Other problems caused by economic globalization in some developing nations involve human rights. Some multinational corporations, in search of higher profits, often use child labor or forced labor. According to UNICEF, one in every 6 children is engaged in child labor. Moreover, according to ILO, 12.3 million people around the world are engaged in forced labor. On the other hand, a majority of the multinational corporations search for higher profits by paying “slave wages” to laborers and having them overwork, which causes the problems of sweatshops. According to other studies, women workers have lower wages than men, who are already paid low wages. Furthermore, women spent two third of their working hours on unpaid work, while men only spent one fourth of their working hours. Multinational corporations not only gain more profit by paying low wages, but also by ignoring the working conditions of laborers. The laborers used by multinational corporations often work in highly toxic, dangerous, and unsanitary environments, Another major impact of globalization is environmental degradation. Economic globalization has caused the increase of pollution and contamination, causing many health and global warming issues. In relation to global warming, studies have suggested that globalization is responsible for the increase of natural disasters and human tragedy. The negative aspects of globalization are caused by the lack of strict national and international regulations. If developing nations have better national governance, programs to reduce inequality, and stricter regulations on environmental standards and labor standards, globalization can in fact benefit developing nations. Moreover, developing nations should think of ways to prevent the vulnerabilities created by globalization and take advantage of globalization with appropriate policies. Korea is an example of a nation that took advantage of globalization with a good national governance, strong macroeconomic management, and social reforms for the welfare of the people. According to the UNDP, globalization should mean: ethics, development, equity, inclusion, human security, and sustainability. (UNDP 1999)

**Major Countries and Organizations Involved and Their Positions** **Organization for Economic Co-operation and Development (OECD)** is an organization that contains members of thirty nations with the goal of a free market that will bring economic growth and development in its member nations and developing nations. **International Monetary Fund (IMF)** is responsible for loaning money to nations and stabilizing currencies around the world. Another job of the IMF is to assist developing nations in the managing of the economy and the reforming of economic policies. The IMF’s position on this issue is the full support of developing nations to integrate with the global economy. **World Trade Organization (WTO** is an organization that deals with the rules of trade between nations and is responsible for negotiating trade agreements and disputes. The WTO has an objective of promoting trade liberalization and free trade around the world by removing trade barriers in various parts of the world. **ASEAN Plus Three** is the cooperation between Association of South East Asian Nations with China, Japan, and Korea. The economic goal of the ASEAN Plus Three is to promote economic cooperation and partnership, which resulted in the addition of ASEAN Free Trade Area in China and Japan. ASEAN has an objective of economic integration and is hoping for the establishment of the ASEAN Economic Community to promote the reduction of tariffs and free trade  **Timeline of Events**  -1870: First wave of globalization, advances in communication and transportation  -1914: Retreat of nationalism, limits in international economic developments and start of protectionism -1944: Bretton Wood Agreements, the creation of the World Bank and General Agreements of Tarriffs and Trade (GATT) -1945: Second wave of globalization, just after war, so there is a need for international Cooperation -1947: Cold War begins, the war between capitalism and communism -1970’s: Global assembly lines -1975: Advancement in computers, satellites, electronics and other technology -1980: Third wave of globalization, President Reagan of USA suggests free market and takes on powerful unions -1982: Third World Debt Crisis; nations around the world were unable to pay back their debts. -1986: World Bank and International Monetary Fund started to reform policies in developing nations to promote trade liberalization -1988: Free trade agreement signed between Canada and USA -1989: Fall of Berlin Wall ends the Cold War leaving capitalism the dominant economic system. Transnational Corporations enter former Soviet Bloc nations to push for privatization -1990’s: Regional and Bilateral Trade Agreements multiply around the world -1991: The invention of Worldwide Web enables instant communications around the world. -1992: North American Free Trade Agreement signed; Maastrichit Treaty in Europe creates the European Union -1994: USA proposes the Free Trade Area of the Americas -1997: $1.5 trillion USD per day of foreign exchange is traded worldwide, Asian Financial Crisis occurred and caused withdrawal of foreign investors. -2000: Wealthy nations agree to partial debt relief with terms of more privatization and free trade. -2005: USA congress passed the Central American Free Trade Agreement, allowing free trade in Central America except for Cuba. -2008: Worldwide financial crisis, corporations around the world start to go bankrupt

**Important Relevant Documents** Since 1999, globalization has become a major issue in the Economic and Finance Committee of the General Assembly. There are many reports of the Secretary-General on Globalization and Interdependence, including __A/63/333__which reports on the “Impact of globalization on the achievement of the internationally agreed development goals, including the Millennium Goals.” Another important document is the __A/60/322__ “Report of the Secretary-General on Globalization and Interdependence - Building Institutions for Achieving the Development Goals and Integrating in the Global Economy.” Other reports include __A/62/303__ and __A/50/312__ which are reports from the Secretary General on the issue of globalization and interdependence. The //Human Development Report 1999// published by the UNDP and the //World Sector Report-Globalization and the State 2001// published by the Economic and Social Affairs are important documents that tackle the problems caused by globalization and solutions to solve these problems. //The United Nations Global Compact// is a set of policies that was launched in the July of 2000 for businesses and corporations around the world. These policies hopes for business to voluntarily follow ten universally accepted regulations on the environment, human rights, labor, and anti-corruption. There are also many General Assembly resolutions including __A/62/199__ and __A/53/169__ that tackle the issue on “Role of the United Nations in promoting development in the context of globalization and interdependence.”

**Previous Attempted Solutions: Analysis of Their Failure/Success** There are many previous attempted or ongoing solutions related to the issue of “Facilitating the transition of developing nations in to the global economy.” The creation of The World Bank, the International Monetary Fund, and the World Trade Organization are past solutions to achieve the integration of nations into the global economy. These institutions still continue to help out developing nations to achieve trade liberalization by their pressure and advice to reform economic policies. However, many studies criticize these institutions for being led by the industrialized nations, mainly the Group of Seven, and having no responsibilities in creating policies for human development. The Doha Development Round was a series of negotiations launched in 2001with the objective of benefiting developing nations from the multilateral trading system through the lowering of trade barriers and integrating the developing nations into the global economy. These series of negotiations have failed many times. //The United Nations Global Compact,// launched in 2000, is a set of policies regarding the issues on the environment, human rights, labor standards, and anti-corruption. This compact calls for corporations and businesses around the world to voluntarily promote and implement these policies. Although many corporations voluntarily adapted this compact, critics criticized this compact for being an instrument for corporations to improve corporate images due to lack of accountability and effective mechanisms to ensure that the corporations are following the policies.

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Web. 14 Jan. 2010. <http://lexicon.ft.com/term. asp?t=human-development-index>. **Appendix (Useful Links)** -United Nations Economic and Social Council – __http://www.un.org/ecosoc/__ -United Nations Development Programme **-** __http://www.undp.org/__ -The United Nations Children's Fund**-** __http://www.unicef.com__ __/__ -United Nations Conference on Trade and Development. – __http://www.unctad.org__ __/__ -United Nations Department of Economic and Social Affairs – __http://www.un.org/esa/desa/__ -United Nations Global Compact – __http://www.unglobalcompact. org/__ -International Labour Organisation – __http://www.ilo.org/__ -Yale Global Online – __http://yaleglobal.yale.edu/__ -Global Policy Forum - __http://www.globalpolicy.org/__ -CorpWatch – __http://www.corpwatch.org/ index.php/__ -Friends of the Earth International – __http://www.foei.org/__ -International Forum of Globalisation – __http://www.ifg.org/__ -Global Justice Movement – __http://www. globaljusticemovement.org/__ -CIA The World Factbook – __http://www.cia.gov/library/ publications/the-world- factbook/__ -The World Bank – __http://www.worldbank.org/__ -International Monetary Fund – __http://www.imf.org/__ -World Trade Organisation – __http://www.wto.org/__ - Organisation for Economic Co-operation and Development – __http://www.oecd.org/__ -Association of Southeast Asian Nations – __http://www.aseansec.org/__