Centre for Global Negotiations

The Brandt Equation: 21st Century Blueprint for a New Global Economy

2002 Report to Stakeholders: Global Wealth without Globalization of Benefits

The Brandt Reports called the world to a higher standard. Developed and developing nations were equally aware of the stakes. The incentive to meet Brandt's objectives was:

"that the North as well as the South gets much in return, both in straightforward economic benefits and in a reduction of uncertainties and instability. And there is not only the capturing of mutual gain to be considered, but also the avoidance of mutual loss. It is not difficult to envisage a world in which the measures we propose are not carried out; and in which the path of the future leads to reciprocal impoverishment" (N-S, 76-77).

The Brandt Proposals:
A Report Card
ISSUE
GRADE
Hunger
F
Poverty
F
Population
C
Women
D–
Aid
D–
Debt
D–
Armaments and Security
F
Energy and the Environment
C–
Technology and Corporations
D
Trade
D
Money and Finance
F
Global Negotiations
F

It's true that the Brandt Commission set difficult goals, but it's also true that societies have greatly underachieved in generating new levels of international cooperation to solve their most fundamental problems. After twenty years, we have fallen far short of Brandt's objectives for eliminating global poverty, getting the developing world out of debt, and transforming the international economy.

Indeed, the international debt crisis has not disappeared, but is increasingly visible. News about famine now makes headlines. Coverage of payments problems, devaluations, and bailouts has also gone from the business pages to the front page. Stories on recession are now reported in media across the world.

Conditions in many middle-income developing countries have improved in the past twenty years. East Africa, Mexico, Chile, Brazil, Malaysia, Thailand, Indonesia, China, Taiwan, South Korea, Hong Kong, and Singapore have all had reasonable success.

For most people in North Africa and sub-Saharan Africa, large regions of the Middle East, the former Soviet bloc, South Asia, Latin America, and the Caribbean basin, however, the global trade and investment boom of the last two decades has left them only in rubble.

The international debt crisis has changed in three major ways since the Brandt Reports were published. First, most nations have switched from Keynesian to Monetarist approaches – from demand-side to supply-side economics – to address their financial problems. With the phenomenal growth of world trade, foreign direct investment, and international capital mobility, the world's productive surplus has expanded, global consumer demand has leveled off, and developing country poverty and debt have multiplied substantially. Globalization has produced a vast new concentration of wealth, without a globalization of its benefits.

Second, the major engine of development finance is no longer international banks, but corporate, institutional, and stock market investments. As world production increased, the world money surplus also increased, and capital flowed into financial markets, which offered the highest returns. This diverted money away from domestic development, local investment, savings, social programs, labor, and the living wage. As a result, capital itself has been unhinged from the stimulation of international consumer demand.

Finally, the development of new technology, which has vastly increased the size, speed, and technical precision of the world's financial market, has also increased the volatility in exchange rates, foreign direct investment, and interest rates, while decreasing the capacity for debt repayment. At the same time, monetary, financial, and trade deregulation on a global scale has opened borders and encouraged liberalized business practices, but has also increased the exposure of local markets and poor people to the intense ebbs and flows of speculative capital. The world now runs a heightened risk of financial contagion.

These new conditions are the focus of Part II.

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