Posted on 09/25/2006 8:00:32 PM PDT by hedgetrimmer
The development of emerging market economies continues to be held back by corruption and poor governance in spite of their increasing influence on the global stage and growing foreign direct investment in other countries.
That was the most striking message from a two-day meeting of current and former central bankers, development experts, finance ministers, investors, and presidents of countries such as Brazil, India, and Tanzania.
ADVERTISEMENT Chaired by Michel Camdessus, the former International Monetary Fund managing director, and Fidel Ramos, ex-president of the Philippines, the roving Emerging Markets Forum is seeking to place itself as a Davos for emerging markets.
The forum – following the IMF and World Bank’s annual meetings in Singapore – set about celebrating trends such as “south to south” foreign direct investment between developing countries, which now amounts to well over a third of global FDI flows.
It also considered the likely impact of a “hard landing” of global imbalances and the stalling of the Doha trade round.
The issue of governance was not formally on the agenda and therefore got only a mention in a closing statement declaring a “need to build institutions to take on the challenge of change”.
But it dominated closed-door discussions, attended by the Financial Times on condition that comments were not attributed to individuals.
In a paper presented on Friday by Haruhiko Kuroda, Asian Development Bank president, experts warned that each year about $300bn of badly needed infrastructure investment in Asia was being held up by governments’ inability to produce “bankable projects” for investors.
A senior executive for a leading multinational company complained of what was “clearly a mismatch between corporate governance and government governance” in emerging economies.
Worse, it was hindering his company’s plans for aggressive investment in emerging markets to meet an internal target of increasing sales by $2bn a year.
Dropping by for a brief visit at the end of last week, Paul Volcker, former chairman of the Federal Reserve, sought an answer to the question of how Paul Wolfowitz’s World Bank could fight corruption without undermining its development agenda.
The answers that followed were often defensive. “For every single corrupt public servant there is a corrupt [multinational] business executive somewhere who is willing to pay a bribe,” responded one participant.
When a former central bank governor from one big emerging Asian economy insisted the World Bank should keep out of the issue of corruption, Mr Volcker, who reported widespread corruption in his probe of the United Nations’ oil-for-food programme, pointed to his hearing problems.
“All I heard was the beginning, when you said ‘I agree with you . . . ,” he said.
Well, were it not for the endemic corruption and other forms of baboonery, these markets would have been called not emerging but emerged. And the way the things are, it comes with territory.
Shocking! Who knew?
This appears to be a call to get the US taxpayer involved in straightening out the problem for global (that is, no loyalty to America) businessmen.
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