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Statement by the Hon Joh Dawkins, MP



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PRESS N O TREASURER RELEASE EMBARGO

STATEMENT BY THE HON, JOHN DAWKINS, MP TREASURER, AUSTRALIA DEVELOPMENT COMMITTEE MEETING

MONDAY, 21 SEPTEMBER 1992

MR. CHAIRMAN:

EACH OF US IN THIS COMMITTEE ATTACHES PARTICULAR

IMPORTANCE TO RESOURCE FLOWS TO THE DEVELOPING COUNTRIES.

THE APPLICATION OF FOREIGN CAPITAL TO DEVELOPING

ECONOMIES HAS ALWAYS BEEN A SIGNIFICANT FACTOR HELPING TO

REALISE ECONOMIC POTENTIAL.

DESPITE PROGRESS IN MANY DEVELOPING COUNTRIES,

INVESTMENT NEEDS CONTINUE TO OUTSTRIP DOMESTIC SAVING.

EXTERNAL AID AND NON-CONCESSIONAL RESOURCE FLOWS

HELP TO BRIDGE THIS GAP.

WE NEED, HOWEVER, TO VIEW RESOURCE FLOWS TO

DEVELOPING COUNTRIES IN THE CONTEXT OF LONG-TERM

DEVELOPMENT.

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IF W E FOCUS TOO MUCH ON QUANTITY AND ON THE

SHORT-TERM, WE RISK LOSING SIGHT OF MORE IMPORTANT

OBJECTIVES.

THE ULTIMATE GOALS OF THE WORLD BANK GROUP AND OUR

OWN BILATERAL AID PROGRAMS ARE SUSTAINED DEVELOPMENT AND

POVERTY REDUCTION.

UNLESS RESOURCE FLOWS PRODUCE THESE RESULTS, WE

SHOULD NOT BE SATISFIED.

I AGREE WITH MR. PRESTON'S REMARK EARLIER THIS YEAR

THAT SUCCESSFUL IMPLEMENTATION OF AID PROGRAMS FAR

OUTWEIGHS NEW LENDING COMMITMENTS AS THE PRINCIPAL

INDICATOR OF DEVELOPMENT EFFECTIVENESS.

WE ALL RECOGNISE THE IMPORTANCE OF SOUND DOMESTIC

ECONOMIC POLICIES, ESPECIALLY ON THE FISCAL SIDE, IN

BORROWING COUNTRIES.

WASTEFUL PUBLIC EXPENDITURES NEED TO BE ELIMINATED.

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THIS IS ESSENTIAL TO THE GENERATION OF DOMESTIC SAVING

AS WELL AS TO THE ENCOURAGEMENT OF EXTERNAL RESOURCE

FLOWS.

OPENNESS TO THE WORLD ECONOMY AND THUS TO THE

BENEFICIAL IMPACTS OF TRADE AND FOREIGN INVESTMENT IS ALSO A

KEY FACTOR.

ANOTHER REQUIREMENT IS A SENSIBLE BOUNDARY BETWEEN

PUBLIC AND PRIVATE SECTORS, ONE THAT WILL ENSURE THAT

SCARCE PUBLIC RESOURCES ARE PUT TO BEST USE AND THAT THE

BENEFITS OF PRIVATE SECTOR DEVELOPMENT ARE CAPTURED AS

FULLY AS POSSIBLE.

THIS DOES NOT MEAN, OF COURSE, THAT DEVELOPING

COUNTRIES MUST SHOULDER ALONE THE BURDEN OF ESTABLISHING

THE CONDITIONS REQUIRED FOR INCREASED DOMESTIC SAVING AND

EXTERNAL RESOURCE FLOWS.

THE MAJOR DEVELOPED COUNTRIES MUST REMEDY THEIR

ECONOMIC IMBALANCES IN ORDER TO CONTRIBUTE TO GLOBAL

EXPANSION AND STABILITY.

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THE IMF AND THE WORLD BANK HAVE KEY ROLES TO PLAY.

THEY HAVE ASSISTED MANY DEVELOPING COUNTRIES TO

IMPLEMENT IMPRESSIVE ECONOMIC POLICY REFORMS IN RECENT

YEARS.

THE FUND AND THE BANK ARE WELL EQUIPPED TO SUPPORT

FURTHER CHANGE THROUGH POLICY DIALOGUE, FINANCIAL

OPERATIONS AND AID COORDINATION WITH BORROWERS.

THE SUCCESS RATE OF THE BANK’S OPERATIONS IS IMPORTANT.

I BELIEVE THAT WAYS AND MEANS OF IMPROVING THE

EFFECTIVENESS OF DEVELOPMENT ASSISTANCE IS A TOPIC OF REAL

IMPORTANCE WHICH OUR COMMITTEE SHOULD DISCUSS SOON.

I RAISE THIS POINT IN PART, MR. CHAIRMAN, BECAUSE THIS

CONSTITUENCY INCLUDES SEVERAL SMALL PACIFIC ISLAND NATIONS.

THEY FACE SPECIAL DIFFICULTIES IN TERMS OF EFFECTIVE

RESOURCE USE.

THEY REQUIRE PARTICULAR ATTENTION FROM THE BANK, IN

TERMS OF POLICY DIALOGUE AND AID COORDINATION, TECHNICAL

ASSISTANCE, AND IN THE PREPARATION OF PROJECTS "W HICH WILL BE

SMALL BY BANK STANDARDS BUT ARE NONETHELESS VERY

IMPORTANT TO THE COUNTRIES CONCERNED.

STRONGER EVIDENCE THAT DEVELOPMENT ASSISTANCE IS

SUCCESSFUL WOULD HELP TO REDUCE AID ’FATIGUE' IN DONOR

COUNTRIES.

FOR THE FORESEEABLE FUTURE, HOWEVER, ODA WILL BE

SCARCE.

THIS PUTS A PREMIUM ON INCREASING PRIVATE RESOURCE

FLOWS TO THE DEVELOPING WORLD.

THOSE FLOWS ARE A PARTICULARLY IMPORTANT PART OF THE

PROCESS BECAUSE PRIVATE INVESTORS ARE VIGOROUS IN

DEMANDING PROFIT, AND THUS DEVELOPMENT PERFORMANCE, FROM

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THEIR PROJECTS.

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SOME COUNTRIES HAVE DIFFICULTY IN ATTRACTING PRIVATE

CAPITAL FLOWS AND WILL CONTINUE TO RELY HEAVILY ON

CONCESSIONAL FLOWS.

FOR THEM, A SPEEDY AND SATISFACTORY RESOLUTION OF THE

IDA-10 REPLENISHMENT WILL BE VITAL.

SUBJECT TO DOMESTIC BUDGET CONSTRAINTS, THE DONOR

COUNTRIES IN THIS CONSTITUENCY STAND READY TO PROVIDE

APPROPRIATE SHARES IN THAT REPLENISHMENT.

INDUSTRIAL COUNTRIES HAVE A SPECIAL RESPONSIBILITY TO

BUILD A GLOBAL ECONOMIC ENVIRONMENT THAT IS CONDUCIVE TO

RESOURCE TRANSFERS AND ENCOURAGES DEVELOPMENT.

THE RICHER COUNTRIES, WHICH HAVE TRADITIONALLY BEEN

CAPITAL EXPORTERS, MUST NOT SHIRK THEIR RESPONSIBILITY IN

THAT REGARD.

IT ALSO MEANS THAT THE MAJOR COUNTRIES SHOULD

LIBERALISE TRADE POLICIES.

IT IS QUITE REMARKABLE THAT WHILE MANY DEVELOPING

COUNTRIES HAVE BEEN LIBERALISING TRADE UNILATERALLY, THE

MAJOR INDUSTRIAL COUNTR1ES-ESPECIALLY THE EUROPEAN

COMMUNITY AND THE UNITED STATES—HAVE BEEN IF ANYTHING

PUTTING UP NEW BARRIERS AGAINST EXPORTS FROM DEVELOPING

COUNTRIES.

IN THAT CONTEXT, A RAPID AND SATISFACTORY SOLUTION TO

THE URUGUAY ROUND NEGOTIATIONS IS CRUCIAL.

THE MAJOR NEGOTIATING INTERESTS HAVE FOR TOO LONG

FAILED TO EXERCISE THE NECESSARY POLITICAL WILL.

WE ALL KNOW THAT FREER WORLD TRADE AND ASSOCIATED

STRONGER ECONOMIC GROWTH WILL ASSIST DEVELOPING COUNTRIES

MUCH MORE THAN DEVELOPMENT ASSISTANCE CAN.

IF WE ARE SERIOUS ABOUT HELPING THOSE COUNTRIES TO

ADVANCE, TRADE FLOWS MUST NOT CONTINUE TO BE LIMITED AND

DISTORTED BY HARMFUL PROTECTIONIST MEASURES.

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A COMBINATION OP MARKEDLY FREER TRADE, ESPECIALLY FOR

MANY COUNTRIES IN AGRICULTURAL PRODUCTS, AND ECONOMIC

POLICIES THAT INCREASE DOMESTIC SAVING IN DEVELOPED AND

DEVELOPING COUNTRIES WOULD BE A POTENT FORCE FOR MORE

RAPID DEVELOPMENT.

IN SUCH A CONTEXT, RESOURCE FLOWS TO DEVELOPING

COUNTRIES ARE MOST LIKELY TO HAVE THEIR INTENDED EFFECT.

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