Singapore, 2010

Although the global

economic situation has improved considerably, it is

still fragile. Much of the relief has come from the

massive liquidity that has been pumped into the global

financial system by national Governments. That bought

us time to restructure our economies and correct the

underlying imbalances that led to the crisis in the first

place.

Whether the restructuring is happening fast

enough is, however, still an open question. The

economist Joseph Schumpeter viewed economic

downturns as the system renewing itself, a process he

described as creative destruction. In theory, that sounds

good. In practice, it is difficult for political leaders to

stand idly by when companies go bust and jobs are

lost. Everyone likes the creative part. Destruction,

however, can mean losing an election, which

politicians invariably try to avoid.

The repricing of production factors such as real

estate and labour is politically sensitive in any country,

and Governments get blamed for it. Adjusting relative

factor costs through the exchange rate is usually easier

to achieve, although currency devaluation can create

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other problems such as inflation. The argument over

fair exchange rates in the world today reflects

competing domestic pressures to ease the pain of

restructuring in different countries. Thus the United

States wants China to revalue the yuan renminbi, while

China protests that it is being blamed for the economic

weaknesses of other countries.

Of course, if the whole world were to use the

same currency, the only way countries would be able to

adjust would be through improved productivity and

repricing. Exchange rate adjustments can facilitate

structural adjustment, provided that the deeper

economic problems are also tackled. With the world

becoming multipolar, global macroeconomic

coordination has become more complicated.

Recognizing the inability of the Group of Seven or the

Group of Eight to achieve such coordination, the

Group of 20 (G-20) was formed two years ago when

the global economy stared into an abyss after the

collapse of Lehman Brothers. Without the G-20 acting

in concert, the economic crisis could well have led to a

global depression. The G-20 — the members of which

collectively account for some 85 per cent of total

global gross domestic product — is therefore a vital

grouping in the community of nations.

Going forward, the G-20 has to go beyond the

reform of international financial institutions and better

coordination of fiscal, monetary and exchange rate

policies. Without fundamental restructuring of the real

economy, we may experience a double dip. Without

fundamental restructuring, increased liquidity in the

global system will end up creating new asset bubbles,

some of which we already see forming in Asia. For this

restructuring to take place, the international trading

system must be kept open. Only then can markets make

adjustments and prices find their right levels. In

fighting protectionism in all its forms, the leadership of

the G-20 is critical. If, for lack of political will, the

G-20 is unable to avert the crisis of a second dip, crisis

will in the end force it to act, and by then it will be at

much greater human cost to all of us.

For precisely that reason, we must not allow

interest in the Doha Development Agenda to flag.

When the Doha Round was launched in November

2001, a key consideration was development. For many

of us who were in Doha during the negotiations, the

Millennium Development Goals were uppermost in our

minds. I remember Tanzanian trade minister Iddi

Simba insisting, on behalf of the African, Caribbean

and Pacific countries, that the word “development” be

explicitly incorporated into the name of the new round.

It has been 10 years since the Millennium

Development Goals were launched. While some

countries have done well, many others have not. The

G-20 countries must take into account, in their

deliberations, the interest of all countries, not only of

their own. The G-20, which together accounts for

80 per cent of international trade, has to play a

leadership role in breaking the current impasse in the

Doha negotiations. In particular, we must ensure that

the needs of developing countries, especially the needs

of the least developed countries (LDCs), are met.

Freeing up agricultural trade, for example, will make a

huge difference to their welfare.

With those concerns in mind, a loose grouping of

countries calling itself the Global Governance Group,

or 3G, was established more than a year ago. Its

objectives were spelled out in a document circulated to

the Members of the United Nations on 1 March. The

basic stance of the Group is to support the work of the

G-20 and hold it accountable to the general

membership of the United Nations. Permanent

Representatives within the 3G Group meet regularly in

New York, including before and after G-20 meetings,

to present views and make suggestions, which are

circulated to everyone at the United Nations.

Depending on the subjects discussed, we invite

individual members of the G-20 to join us at our

meetings. For example, in preparation for the coming

G-20 Summit in Seoul, the 3G Group had several

meetings with senior Korean officials, including their

G-20 “Sherpa”, to convey some of our views and

concerns.

A major concern of the countries of the Group is

development. In this regard, we have prepared inputs

to be submitted to the G-20 working group on

development. It is good that both Korea as the current

Chair of the G-20 and France as the incoming Chair are

pushing development on the agenda.

Let us be clear at the outset that development is

not principally about aid. Whether a people is able to

lift itself from the depths of poverty depends more on

internal than external factors. Good governance is, of

course, paramount. Investing in the inherent potential

of citizens and creating a favourable environment for

that potential to be realized are central to good

governance. We would like to commend President

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Deiss on his decision to make “Reaffirming the central

role of the United Nations in global governance” the

theme of this General Assembly. It is most timely.

A critical element in good governance is

education. With education, individuals are able to

acquire the information and knowledge they need to

add value to the world. Aid that helps a people to build

up its internal strength is valuable. Aid that creates

dependency is harmful. With education, a citizenry is

more able to insist on democratic safeguards against

the abuse of power and corruption. Taking full

advantage of globalization and information technology,

we can now spread education into remote corners of

the world.

One of the most important developments in the

world today is the widespread availability of cheap

mobile phones, often with built-in cameras. Mobile

phones have altered traditional power relationships

everywhere where they are available. No longer can

individuals be kept ignorant and exploited for long,

because they have alternatives. As smart phones fall in

price — which they are bound to do — social

networking infrastructures like Facebook, which

already has half a billion users in the world, will

radically change the world we live in. Without being

planned for or financed by any national Government,

Facebook is arguably the most important social

infrastructure in the world today. It is an astonishing

phenomenon. Yet, it is only one wave of many more

waves to come.

Whether we like it or not, the revolution in

technology — not only information technology but also

in genetics, material science and other fields — will

cause the creative destruction that many politicians

dread. Communities and Governments that work with

technological change will surge ahead, while those

fighting change will be left behind. In this new age,

those who are wedded to dogma and ideology become

stuck in the past. Therefore, when we talk about

development, the key is education.

We must make sure that basic conditions are met,

that children are fed and healthy and that no group is

discriminated against on the basis of ethnicity, religion

or gender. The knowledge needed for development is

already available in the world, and delivery systems

can be readily put into place.

Unfortunately, there are many obstacles impeding

the flow of knowledge. Protectionism is a major

obstacle. It slows the spread of education and

knowledge. Throughout history, every time a new trade

route is established, knowledge flows along it, enabling

the relatively backward to catch up. Our inability to

move the Doha Development Agenda forward is

particularly injurious to LDCs.

An important way to help communities acquire

more knowledge and use information better is to foster

the growth of liveable cities. To develop, countries

have to urbanize, and in the coming decades large parts

of the world will be urbanized on every continent.

China during Mao Zedong’s time was 20 per cent

urban. Today, it is almost half urban. In 20 years’ time

it will reach the same level of urbanization as Taiwan

or countries like Korea and Japan, which are over 90

per cent urban.

Urbanization as an organic process of

development can be healthy or unhealthy. Cities can be

energy-efficient, knowledge-intensive centres of

production, education and sustainable living, or they

can be hellholes festering with poor education,

unemployment, inequality, crime and pollution.

Because of the specific challenges that we had to

overcome in our own development, Singapore has been

promoting the sharing of urban developmental

experiences as a practical way to help countries

develop in areas such as public administration,

low-cost housing, water management, transportation

planning and better logistics. Developing countries that

are urbanizing rapidly — and they have to do so in

order to develop — should not have to repeat the

mistakes of those who have gone before them.

All of us have a vested interest in the growth of

liveable cities in the third world. For example, carbon

emissions cannot be reduced without healthy

urbanization. We hope that fostering liveable cities will

become a major objective of the G-20 countries. The

best form of aid we can provide is knowledge and

training. Two years ago, Singapore signed an

agreement with the World Bank to establish an urban

hub for the dissemination of knowledge about liveable

cities.

A basic requirement for healthy urban

development is good water management, which has

become a major challenge in various parts of the

world. We should do much more to learn from one

another’s experiences, especially in the face of growing

weather volatility. Last Friday, Slovenia convened a

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Green Group meeting involving a small group of

countries to discuss the subject of water management,

which we hope will be given more attention in the

future.

Despite the concerns about the global economy,

never before have the prospects of bringing

development into every continent been so promising.

This is not to say that outcomes will be equalized.

Human beings as individuals and in groups are

competitive by nature, and we must expect that some

will do better than others at any point in time. Indeed,

by learning from the successes and mistakes of front-

runners, human communities often leapfrog over one

another, and this is a historical process. Competition,

however, should be conducted in a civilized way and

within an overall global framework and value system

that recognizes our global humanity and destiny.