E C O N O M I C D E V E L O P M E N T AND UN R E F O R M TOWARDS A COMMON AGENDA FOR ACTION This page intentionally left blank E C O N O M I C D E V E L O P M E N T A N D U N R E F O R M TOWARDS A COMMON AGENDA FOR ACTION A PROPOSAL I N THE CONTEXT OF THE MILLENNIUM DEVELOPMENT GOALS by Carlos A , Magarit7os U N ITED N AT I 0 N S I N D U ST R I AL D EVEL 0 P M ENT 0 R G AN I2 AT I 0 N Vienna, 2005 The views expressed in this publication are those of the authors and do not necessarily reflect the views of the Secretariat of the United Nations Industrial Development Organization. The description and classifi- cation of countries and territories used, and the arrangements of the material, do not imply the expression of any opinion whatsoever on the part of the Secretariat concerning the legal status of any country, terri- tory, city or area, or of its authorities, or concerning the delimitation of its frontiers or boundaries, or regarding its economic system or degree of development. Designations such as “developed”, “industrial- ized” and “developing”a re intended for statistical convenience and do not necessarily express a judgment about the state reached by a particular country or area in the development process. Mention of firm names and commercial products does not imply the endorsement of the United Nations Industrial Development Organization. UNIDO Publication Sales No.: E.05.Il.BZ4 ISBN 92-1- 106431- 7 Copyright 0 2005 by the United Nations Industrial Development Organization (UNIDO) First published January 2005 All rights reserved. Except for the quotation of short passages for the purposes of criticism and review, no part of this publication may be reproduced, stored in a retrieval system, ir transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher. This book and the proposal contained in it are intended to pay homage to the many lives risked and lost and the generous energies invested by those men and women who still believe - in spite of the injustice and oppression that prevails in many quarters - that a better world is possible and that we all have a role to play in building it, to achieve the ideals of freedom, equity, peace and development for the generations to come. On a more personal note I would like to dedicate this work to my wife Bele'n, who supports me, and gives me the strength to continue believing and dedicating my best thoughts to those ideals while, at the same time, allowing me to recall the extraordinary importance of the simple miracle of every day life. Finally, my gratitude goes to the newcomer, Tomas, for bringing a new perspective to my life and my work. This page intentionally left blank CONTENTS Acronyms 10 Acknowledgements 13 Introduction by Carlos A. Magariiios 15 PART I 19 A PROPOSAL TO REINVIGORATE THE ECONOMIC DEVELOPMENT FUNCTIONS OF THE UNITED NATIONS SYSTEM IN THE CONTEXT OF THE MILLENNIUM DEVELOPMENT GOALS 1 Towards a business plan for joint action 21 Introduction 21 Diagnosis: dispersal and dilution 23 The challenge of coordination 24 Setting up a common agenda for action 27 Suggested menu of topics 29 1 Market efficiency and integration 29 2 Knowledge 33 3 Environment 34 4 Benchmarking and monitoring economic performance 34 The agenda at work 36 Conclusions 38 2 The UN in a changing global landscape 39 Emergence of a bipolar world 40 Decolonization 40 The oil crises of the 1970s 41 End of the Cold War and accelerating globalization 42 Global terrorism 43 Globalization and the role of the UN 44 The Private Sector 46 Civil Society Organizations 46 The UN’S role: normative vs operational 48 Evolution of the UN’sn ormative functions 48 Evolution of the UN’s operational functions 50 Conclusions 51 8 / CONTENTS 3 Reviewing UN reform proposals 53 The new focus on development (late 1960s and 1970s) 54 The Jackson study (1969) 54 The Gardner report (1975) 55 Improving efficiency and seeking financial reform ( 1980s) 56 The Heritage Foundation (1984) 56 The Bertrand report (1985) 57 Financial crises (1980s) 58 The Group of 18 (1986) 58 The Brundtland Commission: sustainable development ( 1987) 59 Reassessment of the UN’s role (1990s) 60 The South Commission: poverty & human needs 60 The Nordic Project (1991) 62 Boutros-Ghali’s agenda ( 1992) 63 The Commission on Global Governance (1994) 64 The Childers-Urquhart proposals ( 1995) 65 The Independent Working Group (1995) 66 The South Center (1996) 66 Nordic Project I1 and the European Union proposals (1997) 67 Moves towards programmatic reform 68 The Annan proposals (1997-2002) 68 + The Utstein Group Denmark, Sweden & Switzerland (2004) 72 Conclusions 74 4 Programmatic arguments 78 Interaction with social & humanitarian programmes 79 Contributions to post-conflict interventions 84 Distinguishing between crises 86 Understanding timing and type of assistance required 87 A new focus for the UN’se conomic development functions 89 Interaction with the Bretton Woods Institutions 91 Conclusions 94 5 lnsights from the evolution of thinking and practice in development economics 95 The evolution of thinking about economic growth 96 Lessons from the successful catching-up processes 98 Implications for the multilateral system 102 Conclusions 104 CONTENTS / 9 PART II 105 REFORM AT WORK: THE CASE OF THE UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION 6 UNIDO: from conception through crisis to survival and the Business Plan 107 Industrial development, the UN and UNIDO 1956-1985 107 UNIDO as a specialized Agency 1986-1992 110 Beginning of reforms and the looming crisis: 1993-1997 113 The motives behind the 1997 crisis 115 The Member States respond 118 The vital importance of the Danish assessment 124 Conclusions 125 7 Achieving stability: 1998-2000 127 The principles followed 128 Addressing the immediate challenges 129 Financial, administrative and management measures 130 Closeness to clients 133 Transformation of programmatic areas 135 Addressing UNIDO’dSu al role 137 Improving System-wide cooperation 138 Difficulties encountered 138 Conclusions 140 8 Revitalization and the way ahead 142 Revitalization (2 002-2004) 143 Management 151 Administrative and financial 158 Closeness to clients 160 Lessons of UNIDO’S transformation process 162 Independent confirmation of transformation 169 Independent assessment by a major donor 171 Conclusions 173 ANNEXES 175 1 Business plan on the future role and functions of UNIDO 176 2 The business plan as key players saw it 180 Author and subject index 187