hdr 1992 en overview

7/28/2019 Hdr 1992 en Overview

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ITIOverviewThe world has a unique opportunity in thecurrent decade to use globalmarkets for thebenefit of all nations and all people.

Human Development Report 1992 looksat theworkings of these globalmarkets-athow theymeet, or fail to meet, the needs ofthe world's poorest people.

The global issues in this Report supplement the analysis of domestic policy issuesin the first two Reports, which stressed thatthe real causesof poverty and human deprivation lie deep in the national policy actionsof the developing countries. Improvementsin external environment can help greatly,but they can never substitute for domesticreforms.

This Report attempts to place globalmarkets in properperspective. Competitivemarkets are the best guarantee for efficientproduction. But thesemarketsmustbe opento all the people, they require a skilfullycraftedregulatoryframework, and theymustbe supplemented by judicious social policyaction. "It is not a quest ion of state ormarket: each has a large and irreplaceablerole", as World Bank's World DevelopmentReport 1991 aptly summed up.If global markets were truly open, theywould allow capital, labour and goods toflow freely round theworld-and helpequalize economic opportunities for all. But global markets are neither free nor efficient. Ata time when national markets are opening,global markets remain greatly restricted.The developing countrie , with some notable exceptions, are finding it difficult toexploit fully the potential of these markets.This reflects the weakness in their policiesand the restrictions on global markets.

ThisReport analysesglobalmarkets froma human perspective. Markets may be im-

pressive economicallyor technologically. Butthey are of little value if they do not servehumandevelopment. Marketsare themeans.Human development is the end.

The Report presents a disturbing newanalysis of the global distributionof incomeand opportunities-demonstrating that income disparities have in recent years widened dramatically.

In 1960, the richest 20% of the world'populat ion had incomes 30 times greaterthan the poorest 20%. By 1990, the richest20% were getting 60 times more. And thiscomparison is based on the distributionbetweenrich and poorcountries.Adding themaldistributionwithin countries, the richest20% of the world's people get a t least 150times more than the poorest 20%.

How can such disparities persist andeven widen? Why do world markets seemnot to have benefited the poorest? TheReport identifies two main reasons.

First, where world trade is completelyfree and open-as in financial markets-itgenerally works to the benefit of the strongest. Developing countries enter the marketas unequal partners-and leave with unequal rewards.

Second, in precisely those areas wheredeveloping countries may have a competitive edge-as in labour-intensive manufactures and the export of unskilled labourthe market rules are often changed to prevent free and open competition.

TheReportconcludes that ifdevelopingcountries are to trade on amore equal basis,they will need massive investment inpeople-becau e knowledge and the mastery of new technology are a country's bestcompetitive advantage today. The Reportalso argu.es for major changes to enable

Markets are themeans. Humandevelopment isthe end.


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The issue is notonly ho\ mucheconomic growth,but what kind ofgroUlth

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global markets to work more efficiently andequitably.The concept of human developmentPrevious Human Development Reports havedefined human development as the proce sof enlarging the rangeofpeople's choicesincreasing their opportunitie for education, health care, income and employment,and covering the full rangeofhuman choicesfrom a sound physical environment to economic and political freedoms.

While many of the policy messages ofhuman development arewidelyunderstood,some misunderstandings still exist. There isa real danger that the concept of humandevelopment may become more a fashionthan a practice, more a slogan than a blueprint for action.

Some analystshave incorrectlydescribedhuman development as antigrowth, arguingthat it focuses on tl1e distribution ratherthan the generation of income, that it is asocial rather than a developmental concern.In reality, nothing could be further from thetruth. Human development i concernedboth with developing human capabilitiesand withusingthem productively.The formerrequire investments in people, the latterthat people contribute to GNP growth andemployment. Both ide of the equation areessential.

Another misconception is tha[ humandevelopment is primarily sectoral--------concernedwithinvestment in education,healthand other ocial services. This is incorrect.Developmentalpeople is certainlyvital, butit i only one part of the picture. Humandevelopment also means development lorpeople, including the creation of economicopportunities for all. And it means development by people, requiring participatory approaches. Human development encompa e all three aspects, not just one.

Yet another misunder tanding is thathuman development strategies are valid onlyfor the poorest societies, with tl1e primarygoal of sati fying ba ic needs. It is true thathuman needs and goal are at the centre ofuch strategies. But these goals can range

from the most basic ones of human survivalto the most advanced human agenda of

modern cience and technology. People'schoices take centre tage but the choicesdiffer at different stages of development.

Human development is thus a broadand comprehensive concept. It covers allhuman choices in all societies at all stages ofdevelopment. It broadens the developmentdialogue from a discu sion of mere means(GNP growth) to a di cussion of the ultimate ends. It is as concerned with the generationof economic growth as with its distribution, as concerned with basic needs awith the entire spectrum of human aspirations, as concerned with the human dilemma of the North as with the human deprivation in the South. The concept of humandevelopment does not start with any predetermined model. It draws its inspirationfrom the long-term goals of a ociety. Itweaves development around people, notpeople around de elopment.This year's Report furthers the exploration of human development by consideringthe interaction between people and theirnatural environment. If the objective ofdevelopment is to improve people' choices,itmust do so not onlyfor the currentgeneration but also for future generations. In otherwords, development must be su tainable.

Global poverty is one of the greatestthreats to the su tainability of the phy icalenvironment and to the sustainability ofhuman life. Mostof the poorlive in the mostecologically vulnerable areas-80% of thepoor in LatinAmerica 60% inAsia and50%in Africa. They overuse their marginal landsfor fuel wood and for subsistence and cashcrop production, further endangering theirphysical environment, their health and tl1elives of their children. In developing countries, it is not the quality of life that is atrisk-it is life itself.

For these ocieties, there imply is nochoice between economic growth and environmental protection. Growth is not anoption-it is an imperative. The issue is notonly how much economic growth, but whatkind of growth. The growth models ofdeveloping andindustrialcountries mu t becomemodels of sustainable human development.

For industrial ocieties, ilie options arelarger. They can afford to slow down theirenergy-intensive material growth and nev-


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ertheless im prove theirwell-being. Theymu tadopt new technologie and comprehensivepolicies to reduce the pressures they put onthe carrying capacity of the earth.

Environmental concerns al 0 differ atdifferent stages of development. The industrial countries are preoccupied withthe destruction of the ozone layer and global warming-resulting from overcon umption of natural re ource . The concerns ofthe developing countries are more immediate: water and land. Polluted water is athreat to life, and eroded land i a threat tolivelihood.

The Report discusses many concretepolicies tomake development sustainableranging from national capacity buileLng topayments for ecological space to automaticource of finance to new institutions forsustainable development. It also offers proposals on how to integrate environmentalconcerns in the measurement of humandevelopment.The human development indexHuman Development Report 1990 introduced a new human development index(HDI), which combines ufe expectancy,educational attainment and income ineLcators to give a composite mea ure of humandevelopment. This Report updates the index with the latest available information.All the components of this year's index arebased on 1990 data.

The updating of HD I has altered therankings for many countries. In the rankingof industrialcountries, CanadahasdisplacedJapan at the top thoughRomania still lingersat thebottom.For the developingcountriesBarbados remains at the top, while Guineaha replaced Sierra Leone at the bottom.The HDI is an average for each country.It does not reveal disparities among different social, economic or regional groups.Butfor a selected group of countrie for whichdata are available, separateHDIs have beenprepared to account for gender, income,and regional differences. In addition HDIshave been prepared for a eries of earlieryears, 0 that changes in hwnan development can be tracked over time.

Human Development Report 1991 pro-

po ed a new human freedom index (HPI).Subsequent debate revealed thatmuch moreconceptual and methodological work is required for a quantification of freedom. Sothis year a new methodology is being uggested for the construct ion of a pouticalfreedom index (PH) to as ess the status ofhumanrights according to generallyacceptedconcept and values.

IneLces such as the HDI and the PHcannot hope to reflect the breadth andcomplexity of the questions they cover. Buttheycanhelp stimulate and clarify debate onsubjects whose difficult and frequentlycontroversial nature often permits them toescape full national and international attention. The debate on the nature and measurement of human development willcontinue in future Reports.

Each Report focuses on one importanttheme. Ear lier Reports looked at humandevelopment at the nationallevel. Thisyear,the Report reviews humandevelopment inaglobal context. It comes to five major conclusions.1. Economic growth does not automatically improve people's lives, either withinnations or internationally.Income eLsparitie within countries are considerable. The worst national disparity is inBrazil: 26 times between the richest 20% ofthe people and the poorest 20% accordingto their per capita income. But the international disparity is far greater: today, it is atleast 150 times-having doubled over thepast 30 years.

The link between economic growth andhuman development breaks down at theinternational level for many of the samereasons as it does at the national level.

The poor have limited acces to creeLt,capital, technology and other productioninputs in their countries. Not regarded ascreeLtworthy, they often turn to moneylenders and to the informal sector for theirneeds. The situation is similar, if not worse,at the international level. The poorest 20%of the world 's populat ion receives only0.2% of global commercial bank lending,1.3% of global investment, 1% of globaltrade and 1.4% of global income.

The richest20% of theworld's peopleare at least 150times richerthan thepoorest 20/r>

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countries in the early 1980s. But becausethey had neither the necessary re ources,nor the official mandate, to intervene inglobal markets in a meaningful way, theycould not sustain such policie . So, far fromdampening the swings, theyamplifiedthem.Between 1983 and 1987, when developingcountries faced a sudden exodus ofcommercial bank lending, net IMF transfers turned from plus $7.6 billion to minus$7.9 billion. NetWorld Bank transfer al 0turned negative-to minu $500 million in1991.

The market weakness of developingcountries is also evident in their inability toattract adequate amounts of direct foreigninvestment. Investors look for the highestreturn on their capital, and in recent yearsthis has con istently been found in industrial countrie . As a result 83% of directforeign investment goes to the industrialcountries.And thedevelopingcountries thatdo receive foreign investment tend to be thealready better off-68% of the annual lowto developing countries went to just ninecountries in. Latin America and East andSouth-East Asia.

This may seem strange, since capitalmight be thought to yield a higher return incapital- carcecountries that have abundantlabour. What seems to count just as much,however, is the quality and technologicalcapability of workers. Countrie that havemore educated and more highly skilledworkforces-aswell as investment climatesthat are politically and economically morestable-tend to offer better returns. Evennationalsofdevelopingcountriesinvesttheirfunds in indu trial countries, adding to theseemingly perverse low of funds from poorcountries to rich.

This weakness of developing countriesis neither inherent nor inevitable. They canimprove their prospects-through soundeconomic policies, management and majorinve tments in human capital. Some developing countr ies bave made impressivegains-in life expectancy, in chool enrolment, in adult literacy, in nutritional levelsand in gender equality. But if they are toimprovetheir competitive edge significantlyanJ strengthen their position in global markets, they will have to meet a dual chal-

lenge-broadening the ba ic level of humandevelopment and concentrating on moreadvanced areas.

The priority for meeting such essentialhuman needs as basic education and primary health care must remain unchallenged, as the first two Human Develop-ment Reports argued. No inverted pyramidof human capital formation can ever bestable. But the developing countries mustgo beyond ba ic concerns of human survival and invest heavily in all levels of humancapital formation-particularly in technical and managerial skills. Unless developing countries acquire greater control overthe expanding "knowledge industry", theywill languish forever in the backwaters oflow-value-added production.

The world is unlikely ever to have anequa] distribution of physical capital. Butimproving the distribution of knowledgeand skills is amuchmoremanageableproposition-and it can help equalize the distribution of development opportunities bothnationally and globally.

Several countries, industrial and developing, have shownjustwhatcan be achievedby clear trategies of human capital formation and market penetration.The indu trial"tigers" of East and South-East Asia-including the Republic of Korea, Thailandand Malaysia-are leapfrogging everal decades of development.

Determined national acti.on can thuspropel individual countries to much higherlevelsof human development and economicgrowth. But if the developing countries as awhole are to make progress, there will alsohave to be international reforms.3. Global markets do not operate freely.This, together with the unequal partnership, costs the developing countries $500billion ayear- l0times what they receivein foreign assistance.The re trictions are most evident for goodsand for labour. Tariffand non-tariffbarrierskeep out manymanufactures from developing countries, and immigration restrictionsprevent workers frommigrating in search ofhigher returns for their labour.

Trade barriers in industrial countries

Improlli1Zg thedistribution o fknow/edge andskills is a111anageableproposition

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Poverty needs It opassport to travelacrossintentationalfontiers

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protect national market fromimport froma whole range of countrie -rich and poor.Non-tariff mea ures, for example, are imposed mostly on products inwhich developing countries are more competitive-onlabour-intensive export such a textiles,clothing and footwear. And tariff levels, fora wide range of goods, increase with thelevel of processing. This is true for spice ,jute and vegetable oil as well as for tropicalfruits, vegetable and beverages. Such increase di courage developing countt iesfrom processing their primary commoditie - f rom making chocolate out of cocoaor carpet-backing out of jute.

According to aWorldBankstudy, traderestrictions reduce developing countrie 'GNPs by3%-an annual loss of $75 billion.Another e timate suggests that, for textilesand clothing alone, phasing out the MultiFibre Arrangement could increase the exports of developing countrie by about $24billion a year.

These barriers have actuaJJy been increasing. Twenty of 24 indu trial countriesnow are more protectionist than they were10 years ago. Almost 28% of all OEeDimports from developing countries are af-fected by non-tariff barriers. It is true thatdeveloping countrie u e protectionist policies to protect infant and other indu tries.But the real irony is that-when the level ofaverage protection in developing countriesis beginningto come down, partly as are ultof structural adju tment programmes-theprotectionist trends in the industrialnationsare gaining ground.

The General Agreement on Tariffs andTrade (GATT) was created 0 that uchbarriers could steadily be removed-to thebenefit of world trade as a whole. But itsinfluence has been very limited. Many areas-including agriculture, tropical products, textiles, services, intellectual propertyrights and investment flows-do not conform to its principle. In fact only 7% ofworld trade is in full conforrnitywith GATTprinciples.

Goods from developing countries cannot, therefore, move freely across nationalborders. Re trictions are even tighter on themigration of labour.

Anextra 38million people join the labour

force of developing countries each yearadding to themore than 700 million peopleunemployed or underemployed. I f job opportunities are not created for them manymore will be tempted to join the growingstream of international migrants, legally orillegally. About 75 million people from developing countries are on the move eachyear-a economic migrants, l ran ien tworkers, refugees or displaced per ons.

In response, the industrial countries arebecoming much more selective about theimmigrants they accept. Theyhave et higherand higher levels of qualification-givingpreferences to skilled workers, or to thosewho bring capital with them, or to politicalrefugees.

These policies are costly for developingcountries. Theylose highly skilled peoplescientists and professionals, in whose education they have inve ted many billion ofdollars. But in addition they lose remittance that unskilledmigrant workers mighthave sent home. Remittances are an important source of income for many developingcountries. They come not just from industrial countries, but also from migrants whohavemoved toother-often faster-growingor oil-producing-developing countries. In1989 alone, total remittances from industrial countries and the Gulf amounted to$25 billion.

It is clearly unreali tic to expect thatindustrial countries will greatly lower theirimmigrationbarriers. Instead, sufficienteconomic opportunities will have to be createdin the developingworld to reduce the pressures for migration.

Global market restriction and unequalpartnership cost the developing countriesabout $500 billion-around 20% of theirGNP and more than six times what theyspend on human development priorities,such as basic education, primary healthcare, safewater and the elimination of malnutrition. IT this $500 billion were availableto developing countrie -and used wellit could have a major impact on the reduction of poverty. It should never be forgotten that poverty needs no passport to travelacross international frontier - in the formof migration, environmental degradation,drugs, disease and political instability.


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Radical reform are needed for marketto work in the interests of poor countriesand poor people. But markets alone cannotprotect people against absolutepoverty.AI 0required are strong-and efficient-socialsafety nets, both globally and nationally.

4. The world community needs policiesin place to provide a social safety net forpoor nations and poor people.The free workings of markets often tend toincrease the disparities between rich andpoor. National governments try to offsetsuch tendencies by redistributing incomethrough systems of progressive income tax.They also supplement thiswith social afetynets to prevent people from falling intoabsolute destitution.

The United States, for example, "recycles" around 15% of its national incomethrough the public budget-to social ervices, unemployment benefits and welfarepayments. In Sweden, the figure is around30%, and even many developing countrieshave social policies that recycle between5%and 15% of GDP.

No such systems operate to redi tributeincome effectively at the global level. Somebeginnings are now being made at the regionallevel, within the European Community. But the closest the world comes to aglobal social safetynet-providing enablingsupport to poorer population group - i sthe current system of official developmentassistance (ODA), which is fatally flawed inmany respects: Quantity-ODA cWTently amounts toonly 0.35% of the combined GNP of theOECD countrie ,compared with the international target of 0.7%. This is clearly inadequate. Donor countries consider it necessary to recycle about 25%of their incomes tomeet the needs of their people, including100million of tho e who fall belowpovertyline incomes of around $5,000. But to helpmeet the needs of more than one billion ofthe absolute poor in developing countries,they allocate just 0.35%. Equity-ODA contribution do not in-crease progressively with the per capita incomes of the donors: some of the richestnations give a much smaller proportion of

their GNP t han the less wealthy count ries give. In fact, orne 80% of thecurren t hortfall of $51 billion [rom theoverall 0.7% target is the re ponsibilityof just two wealthy nations-the UnitedStates and Japan. Allocation-Aid is often unrelated tothe level of poverty. South A ia receives $5per person while aid-receiving countries intheMiddleEast (with more than three timesSouthAsia's per capita income) receive $55per per on. India has 34% of the world'sabsolute poor, yet receives only 3.5% oftotal aDA. Indeed, the 10 countries thattogether havemore than 70% of the world'spoorest people receive only a quarter ofglobal aid. The countries that get the mostaid are often those using their resourcesunwisely: highmilitary penders get roughlytwice as much aid per capita as moderatepender , and over 25% more than lowmilitary spenders. Nor is aid allocated towhat should be human priority concerns.Basic education, primary health care, safedrinking water and nutrition programmesget only 10%ofmultilateral aDA, and 6.5%of bilateral aDA. Since the prospects for amajor increase in the total volume of aDAare rather dim every opportunity must beseized to improve the quality of foreignassistance.I f aDA is genuinely to serve as a socialsafety net for the world' poor, it will have tobe based on a new framework-where comm.itments to the aid effort are treated as firmobligations, where annual flows move predictably, where the burden is di tributedprogressively, and where aid allocation aremade rationally and equitably in accord withagreed global goals. This aid should preferably be channelled through multilateral organizations, wruch can operate without thepolitical pressures that determine much bilateral aid. And tl1e disuibution of ODAhould be based on a new policy dialoguetressing that aid should be directed to human priority concerns and encouraging recipients to reduce their military pendingand respect human rights.

Such a fundamental restructuring ofODA can take place only if it is based oninternational agreements that permit bothrich and poor nations to protect their legiti-

I t is esselltialto combineglobalefficiency withglobal equity


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Failure of thepast should bea ouree ofinsl,'uetiol1Itut ofpolitical paraly IS

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mate intere ts. What needed is a newglobal compact.6. Industrial and developing countrieshave the oppor tuni ty to design a newglobal compact-and to ensure sustainablehuman development for all in a peaceful world.The du tbin of history is full of grand globaldesigns that were never implemented-asobering reflection before making yet another attempt. But the failure of the pastshould be a source of instruction, not ofpolitical paralysis. Pastproposalsoften cameto nothing for several reasons. Many wereunilateral-based on concessions by theNorth to the South, rather than on mutualinterest. Often theywere overlyambitiousdemanding from industrial countries substantial and politically unpopular increa ein foreign a i tance, r ather than offeringwell-considered reforms in global marketsfrom which everyone couldgain. Manywerenarrowly focused-on either an economicor political issue. And some proposals werejustmade atinappropriatemoments-whenthe time for change was no t ripe.

With the cold war over, military spending on the decline, economic and politicalfreedom expanding, and a growing publicawarenessofenvironmentalissue ,theworldnow has a unique opportunity to make asubstantialbreakwith the past.The timehascome for a new global compact on humandevelopment-an agreement to put peoplefirst in national policies and in internationaldevelopment cooperation.

But a realistic global compact must bevery clearly defined-in the objectives itplans to fulfil, in the resources it needs, inthe strategy for its implementation and inthe in titutional framework required tosupport it. And it would have to involve give andtake on all sides.

Such a compact would also have to beprepared through a process of worldwideconsultations. A world summit on humandevelopment should be convened to enlistthe support of the world's political leadersfor the objectives of the compact and theircommitment to the resource requirementsit will entail,

ObjectivesWhile the overallobjectiveof the newglobalcompact would be to improve levels of human development worldwide, developingand industrial countries may want to maketills objective more concrete.

DEVELOPING COUNTIliE might want tosee the compact help them acilleve at leastthe following: Essentialhumangoals-to be attained bythe year 2000, The e goals should includeuniversal basic education for men andwomen, primary health care and safe waterfor all, the elimination of serious malnutrition, and at least 80% access to family plannl11g. Employment-to create ufficient jobopportunities to absorb the new additionsto the labour force and reduce ab olutepoverty by 50%. CD?growth rate-to be accelerated ig-nificantly to implement the foregoingobjectives.

INDUSTRIAL COUNTIliES might want thecompact also to cover some of the sharedglobal objectives that are of immediate priority concern to them: Drug trafficking and pollution-to betackled by closecooperation amongall countries in the world. Immigration pressures-to be relievedthrough creating more job opportunitiewithin poor nations. Nuclear threats-to be eliminated as international tensions are defused and countries willingly accept reductions of nuclearweapons, including non-proliferation poliCles.

Certainly developing and indu trialcountries wouldjointly agree that the foregoing goals carmot be successfully pursuedwithout firm policy commitment to the following: Clobalpeace and dl:\'armament-besidesstrengthening global and regional peace arrangement ,military spending tobe reducedprogressively in both industrial and developing countries. Development secun'ty-to prevent theaccumulation of unmanageable debt burdens whether environmental, financial orsocial.


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Resource needsThe global human development compactwill have costs. And these will not only befinancial. First and foremost, the compactcalls for a firm policycommitment to the setobjectives. Only if policy-makers are committed to the ends will they agree on themeans.

But to reach agreementon the financialre ource requirements of the compact, it isimportant that its objectives are, as far aspossible, fully co ted and that there is a clearidentification of the funding sources to betapped. The e could include: The peace diVIdend-AIl countries, industrial and developing should committhemselves to reducing military expenditures during the 1990s by at lea t 3% a year.This reductionwould yield by the year 2000a total peace dividend of around $1.5 tril-lion-$l.2 trillion in theindu trial countriesand $279 billion in the developing countries. A reformed system ofofficialdevelopmentassIstance-The world need a new aDAsystem that i progressive, predictable andequitable. Since itwill take time to developsuch a comprehensive reform, the majorfocus should be on improving the quality ofcurrent aDA. At least two-third of aDAshould be channelled to the poorestnations (compared with the present onequarter) and at least 20% should go tohuman priorityexpenditure (comparedwiththe pre ent 7%). A global debt bargain-A new bargainmust be struck with the severely indebtednations to halt the current debt-related nettransfer of $50 billion a year from the developing to the industrial countries. This willinvolve a major write-down of debts byofficial donors and commercial banks aswell as by multilateral institutions. Open global markets-Global marketsshould be liberalized both in good andservices, to accelerate global growth and toensure much better distribution of thisgrowth. In particular, the existing restrictions on the export of textile clothing andagricultural, tropical and resomce-basedproducts should be eliminated. This shouldenable developingcountries to increa e their

exports by $40 billioD a year and thus gainnew employment and income earning opportunities for their people.StrategyTo ensure that the re ourCe mobilizationmeasure are linked to the attainment of theagreed-on objectives of the compact, it willbe necessary to base the design of the compact and its implementation on carefullycrafted strategies.The e are needed not justinternationally bu t withiD regions andcountries. Although the strategies will naturally differ from one country and one regionto another, there are likely to be commonelements.

DEVELOPLNG COUNTRIES should adoptimproved policies of national governance tomake them fully responsive to the needs oftheir people. This might include more opengovernment, based on respect for humanrights and on wide participation, both inpolitical life and in development planning.Publicadministrationshouldrunwithgreatertransparency and accountability. And public policy should provide a framework combining private initiative, energetic entrepreneurship and the efficient functioning ofnational and internationalmarketswithwelldefined policies and targets for human development.

INDUSTRIAL COUNTRIES will have to en-ure that their peace dividend is carefully

managed. The resomces released will beneeded for s tructura l adjustment programmes if industrial countries are toliberalize their markets in goods capital,technology and labom-a well as to fi-nance higher levels of human developmentat home and abroad.

ALL COUNTRIES will need to come together in joint action programmes to combat some of the most serious global problems-including poverty, hunger, illiteracy,drug trafficking and abuse, nuclear proliferation, international terrorism illegal migration, the depletion of non-renewable re-ource and the spread of pollution. These

must be based on a recognition that theworld cannot be made safe without the fullcollaboration of all-rich and poor, Northand South. Only through cooperation can

A peace dividendof arolmd$1.5' trillioncan be r e a l i ~ e dby the year 2000

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The global reforms in the years ahead shouldaim at improving the well-being of all theworld's more than five billion people. Hu-man Development Report 1992 analyses thefunctioning of global markets from this human perspective. And although the reformsemphasized in this Report are global, theyare intended as a complement to-not a

ties include creating new bond through aninternational investmentU'ust, and openinga new intermediate lendingwindow to meettlle need of countries that no longer qualifyfor conces ional funds fromIDA (theBank'ssoft-loan window) but are not yet ready tomeet the stiffer terms of the IBRD (theBank's commercial window).

TilE lNTERNA'nONAL MOl ETARY FUNDhould be strengthened to enable it to irn-po e adju tment progranunes not just ondeveloping countries but also on industrialnations. The IMP should, above all, movemuch more towards assuming the role of aglobal central bank-providingand managing global liquidity.

THE GLOBAL ENVIRONMENT FACLLITY,which UNDP, UNEP and theWorld Banknow manage jointly, hould also be restructured so tha t it can playa more ignilicantpart in global environmentalprotection andsupport for ecologically sustainable development. This would involve broadening theFacility's manag mem structure to give agreater voice to the developing nation ,focusingmore on the domestic environmentalpolicies of developing countries and enlarging tlle Facility' financial base. The UNConference on Environment and Development and its follow-up activities will offer aunique opportunity to achieve concreteprogress in these area .THE GE ERAL AGREEMENT ON TARIFFAND TRADE hould have it mandate enlarged to cover most international trade. Assugge ted by the ongoing Uruguay Roundofmultilateral trade negotiations, thiswouldmean applying GATT principle to agriculture tropical products, textiles and traderelatedaspect of services intellectual property rights and inve tmem flow. TheGATTSecretariatwould al 0 be more effective ifithad a small executive board--one that carried sufficient regulatory clout.

Glob It'efo1"111- m'ea complement to -not a substitutefor-determi1lednational action

to

the world achieve sustainable human development.

eeded today are a clear vision of human goals over the next decade and a newinstitutional franlework for their implementation. Human destiny is a choice, not achance.Institutional/ramework

The world needs a new vision of globalcooperation for the next century. Globalinstitution of the 21 t entury might include a global central bank, a y tern ofprogressive income tax, an internationaltrade organization and a strengthened UNsystem. In the meantin1e, reforms of theexisting institutions hould be examined asa transitional strategy.

TI IE U [fED NATIO should be greatlystrengthened-politically,manageriaJJyandfinanciaJJy. All nation large and small,should accept the collective umbrella anddiscipline of t he UN and pay a contributionassessed by income level and size, and morein line with existing development needs. Apermanent, multilateral p acekeepingforceshould be created under the umbrella of theUN. These reforms would enable theUN torespond quickly and effectively, both topolitical conflict and to development andhumanitarian need .The United Nations should also play anincreasingly important role in economic andsocial matters. Thi cou ld be achievedthrough the creation of a 22-memberDevelopment Security Council, with 11 permanent and 11 rotatingrnemb r .The Councilwould arrive at a political con en us ondevelopment policy-to be implementedby the appropriate agencies. It would con-ider all majorglobal i ues-includingpoverty eradication, human development, foodsecurity, trade negot ia tion commodityprices, debt, development assi tance, drugtrafficking, refugees and the managementof the global commons.

THE WORLD BANK hould re-establi hi trole a a sympathetic intermediary betweendeveloping countries and the global capitalmarkets. It might develop new lending instruments to recycle fund bet ter from industrial to developing countrie . Possibili-


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hdr 1992 en overview

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