Growth and Responsibility in the World Economy

Written on June 18, 2007 by Max Oliva in Development

J.Pozuelo-Monfort, MSc candidate in economic development at LSE.
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G8 SUMMIT 2007
The summit declaration incorporates 97 bullet points. Some of the more interesting points are quoted next.
* [08] We welcome the Financial Stability Forum’s update of its 2000 Report on Highly Leveraged Institutions and support is recommendations.
* [15] We call on the emerging economies to adopt the OECD Declaration on International Investment and Multinational Enterprises.
* [24] We call on private corporations and business organizations to adhere to the principles in the OECD Guidelines for Multinational Entreprises. We encourage the emerging economies as well as developing countries to associate themselves with the values and standards contained in these guidelines.
* [25] We stress in particular the UN Global Compact as an important CSR initiative.
* [29] Social protection systems contain some universal elements and should be based on values such as social equity, fairness, and justice in order to promote equal opportunities and participation.
* [34] We recognize the importance of streamlining and harmonizing the international patent system in order to improve the acquisition and protection of patent rights worldwide.
* [87] We welcome the fact that a number of large banks have already signed the United Nations Environmental Program Finance Initiative and the Equador Principles. We call on further major banks to follow suit to adopt the Equator Principles for project finance.
Based on the above excerpts I suggest the following brainstorming:
1. Highly Leveraged Institutions need to be more regulated. These include private equity shops and hedge funds.
2. Developed countries encourage emerging countries to adopt their standards, but they are unable to fulfill their own rules and eliminate subsidies to agriculture that damage to such a large extent agricultural exports from the developing world into the developed countries.

3. Developed countries encourage emerging countries to adopt their standards. They call on emerging countries to lessen corruption. But developed countries are unable to reform the international financial architecture, to eliminate tax havens, to homogeneously tax corporations eliminating the incentive to reduce corporate tax.
4. Social protection systems are mentioned and encouraged. But no commitment in any particular respect is done. But no engagement in any particular manner is undertaken. These are only plain words gone with the wind. Industrialized countries require that emerging countries adopt the Washington Consensus on the one hand, reducing budget on education and social protection, and on the other hand encourage emerging countries to enhance and foster social protection. It is a two-sided game that if well analyzed encounters a high degree of contradiction.
5. The international patent system has to be encouraged and enforced only in the developed world. Emerging countries, particularly the worse off, first need time to climb up the ladder of development. When Europe and the United States emerged to become the industrialized world, they did not have to bear the burden of a patent system that is now enforced on the shoulders of the poorest countries. We need to protect the right to innovate and receive the revenues from our thinking process. But there are priorities and first we need to protect the right of the Human Kind to access education, healthcare, water and sanitation. Only then can the patent system be enforced in the emerging world, as it is in the developed world.
6. Banks should fulfill the Equador Principles as they fulfill the Basel II framework. More emphasis should be given to the ethical and sustainable aspects of banking, that deserves the same level of attention as the more technical and market-oriented Basel II framework.


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