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2.6 Lowest Capital Flow

The Institute of International Finance (IIF) said that the private sector capital flows to emerging market economies are estimated to drop to US$ 122.90 billions this year from US$ 126.00 billion last year (2001), which would be the lowest since 1992. In terms of GDP the level of private capital flows would be even lower, falling to just 2% of GDP, against 4% in 1992. Next year –2003 capital flows are forecast to be US$150.80 billion, still well below the annual average of US$187.00 billion over the past decade. The increase next year is predicted in Argentina, Brazil, Turkey, Uruguay and Venezuela due to successfully navigating the economic and political uncertainties. The decline in flows this year is mainly due to Latin America, which would see US$ 29.10 billion in net private capital inflows down from US$ 45.60 billion. Asia -Pacific emerging markets are forecast to see US$ 60.70 billion in net private investment this year, up from US$ 53.40 billion in 2001. Emerging European markets are seen attracting a net US$ 23.90 billion this yea, up from US$16.40 billion last year. The G-7 countries proposed a sum of US$ 750-800 million to be made available for the Heavily Indebted Poor Countries (HIPC). The HIPC program was initiated by World Bank and IMF in 1996 for the rescue of 26 countries in Africa out of 40 countries in the world. Under any consideration, the amount is absolutely meager compared to the need and ability leverage.

Two characteristic features of globalized finance are:

1) flows of foreign debt tend to be highly arbitrary and
2) recipients necessarily destined to face banking, currency and debt crisis at some point of time.

2.7 Global Growth Hurt by Financial Turmoil

In the latest World Economic Outlook, IMF depicted its gloomiest assessment of global
economic prospects in several years. The forecast for 2002 global growth remained at 2.80%, but the 2003 forecast is 3.70%. IMF reported that South Asian Economies are set for 5.50% growth for next year, where India and Pakistan are at risk due to security reasons. India is expected to grow by 5.00% this year and 5.70% next year, Pakistan 4.60 this year and 5.00% next year, while Bangladesh only 4.00% both for this year and next year. Of late India is contemplating to grow a 8% in 2003.


2.8 Counterfeit Medicine

WHO said although there is no proper statistics, about 5% of the medicines are counterfeit all over the world. Millions of people are dying due to this. In one estimate it has revealed that in Peru about 80% medicines are counterfeit. Another report said that in Russia about 12% medicines are counterfeit. A report in Thailand said about 33% of the malaria drugs in Southeast Asia do not have any ingredients for curing malaria, while about 50% of the drug samples in Nigeria was defective.

Pharmaceutical Industries in Bangladesh will face at least 17 serious problems after 2004 because of the imbalanced regulations of the Trade Related Aspects of Intellectual Property Rights (TRIPS) and the World Intellectual Property Organization (WIPO). In Bangladesh counterfeit medicines worth about Tk. 8 billion a year are comfortably traded. There are about 230 pharmaceutical companies in Bangladesh now, while only 180 are licensed. Out of the 180 licensed companies only 40-45 companies enjoy reputation in the market. Foreign medicines are mostly of counterfeit as virtually there is none to control it. The total medicine market size of the country is worth about Tk.30 billion a year.

2.9 Trade Barriers Eating up US$ 650 billion a year

Trade barriers mostly erected by rich countries are eating up US$ 650 billion that could otherwise be used to improve the livelihood around the world each year and limiting poor countries solely needed access to world markets, the World Bank and the IMF said. Subsidies and tariff slapped on agricultural products and textiles are doing the most harm. In Canada and the United States tariff peaks are concentrated in textiles and clothing, in the EU and Japan, it is in agriculture, food products and footwear. The effect of these tariffs is aggravated by the subsidization of agriculture in OECD countries, by remaining quotas in textiles and clothing trade, and by high barriers in inter developing country trade. Agricultural market is among the most distorted. The bank and fund officials repeatedly spoke out against the whopping agricultural subsidies put in place by the EU and USA. In May 2002 the US president signed a farm bill worth US$ 51.70 billion over 6 years. The main beneficiaries of the bill are US producers of corn, sorghum, barley, wheat, soybeans, oilseeds, cotton and rice. Complete elimination of US cotton subsidies would in the short run raise world prices by 25-30 % and export revenues in West and Central Africa by US $ 250 million. Rich country restrictions on trade in textiles and clothing’s have prevented the creation of over 20 million jobs in developing countries. The solution is considered to be liberalization of the world markets.
2.10 Global Poverty Reduction Goals off Track A set of ambitious goals to cut global poverty in half by 2015 are clearly off track and do not stand a chance of being met unless rich countries can fill a funding gap and agree to coordinate development policies better. Only 6 of a targeted 38 countries have completed the HIPC initiative since it was introduced in 1996, and when the next couple of countries in the line qualify to receive full debt relief, the trust fund will be out of cash. As many as 1.28 billion people of our planet are now living below the poverty line income. In 1992 in Rio conference rich countries promised to give 0.70 percent of their GDP as aid to the developing countries. But no country except a very few followed their promise. Developed nations gave only about a third of this amount or about US$ 67 from each person a year. Only Denmark.
Norway, and Luxembourg reached the 0.70 percent target. The USA is in the bottom of the list at 0.10 percent only. Almost 72% of the people below poverty line live in Asia and about half of the one billion Asian poor live in South Asia alone. Bangladesh is a low income poverty ridden country. Every man in two is considered to be poor in Bangladesh. The world will deteriorate into a grime home for 9 billion people, many of them impoverished, in 50 years time unless rich countries act now. Two thirds of the planet would live in cities, placing enormous demands on resources for energy, water, housing and education. The US$140 trillion world of five decades time simply can not be sustained on current production and consumption patterns. The average income in the richest 20 countries was already 37 times that of the poorest 20 nations. In the world 1.30 million people live on fragile lands. The gap between rich and poor countries has doubled in 40 years. Poor countries’ economies would have to grow at 3.60 percent per person to meet two year old internationally agreed millennium development goals including halving poverty by 2015. Asia is poised to replace United States as the global growth engine. Many economists say non-Japan Asia’s US$ 3 trillion economy is too small to be a global driver and that exports to the US is 25-30 percent of the region’s total, equivalent to about 10 percent of the region’s GDP- are vital to growth. Asia is a US$ 4.5-5.00 trillion economy growing at three percent in real terms.