• Poverty is the number one challenge for human development. The number of people living in severe poverty is estimated to increase to 1.8 billion by 2025.
• The global rate of economic growth has been slower in the current era of "accelerated globalization" than in the "golden age" of the 1960s. For LDCs to achieve and sustain the levels of growth required to make a substantial reduction in poverty, the global rate of growth will need to be improved. This will particularly require reform in the rich countries as well as co-ordinated international action.
• There has been a massive divergence in development outcomes. While the lives of some 1.5 billion people have been greatly improved by the dramatic economic growth in 15 Asian countries, the quality of life for another 1.6 billion in 100 countries has steadily declined. In 70 of these countries, average incomes are lower today than in 1980.

• Global inequality has risen during the last three decades. For the majority of the developing and transitional economies, the income gap was bigger in the late 1990s than in 1980 or 1960. The assets of the top three billionaires are more than the combined GNP of the 600 million people in the LDCs.
• Inequality within countries is also increasing. Recent UNU work indicates inequality is rising in 45 out of 77 countries studied (i.e. in 58 per cent of the cases) but these countries accounted for 79 per cent of the population. While inequality fell in 16 countries, these include mainly small and medium size nations whose total populations comprise only 16 per cent of the total sample. It is important to note here that "horizontal inequality" – inequality between groups – is a major contributing factor to internal conflicts.
• The situation is improving but gender inequality remains too high in many countries. Seventy percent of the world's 1.3 billion poor are female. It is estimated that violence against females between 15 and 44 years old causes more death and disability than cancer, malaria, traffic accidents, and even war. Greater gender equality is an important goal in itself as well as a key contributor to broader development. Improving the status of women could be the most cost-effective strategy for addressing most of the challenges we face at the millennium.

• There is increased marginalization of many developing countries. To gain a better share of the benefits of globalization there is a need for better integration of developing countries into the world economic system and better representation for them in the international institutions such as the WTO.
• There is increasing concern with the widening technology gap. This refers to the digital information and communications technology (ICT) and the "digital divide" in particular, but biotechnology also has incredible potential to transform economy and society.
• In addition, there is a need to reduce instability and insecurity at the international level and the national level. Increasingly, it appears that countries need to cope with a more unstable global economic system while at the same time individuals and families have to deal with the resulting unstable national social and economic systems.

• Progress in human development is being further inhibited by the emergence of new health problems in particular, HIV/AIDS. It is now the number one overall cause of death in Africa, and has moved up to fourth place among all causes of death worldwide. In nine Southern African countries, HIV/AIDS will erase 17 years of potential gains in life expectancy.

• To foster broad-based human development as well as to prepare for future globalization, many parts of the world will need to deal with the inadequacy of human capital formation. There are nearly one billion illiterate people, two thirds of whom are women. Yet, the cost of attaining Universal Primary Education in the next ten years ($7-8 billion) is less than the amount Europeans spend on mineral water in one year or, more tragically perhaps, equivalent to 1% of the annual income of the top 3 richest persons in the world.

The livelihoods of people in the 21^st Century will be shaped by the development decisions made today. The next century could become the era in which humankind attains unprecedented improvement in the quality of life for people everywhere. Success is within reach of national governments and their internal/external partners if they take effective actions to develop policies and institutions that promote growth while at the same time reducing inequality and poverty.

Primary responsibility and accountability for poverty reduction and human development rests with the nation state. Peoples and governments must write their own destiny and self-determination is key to effective human development. There must be the vision and political will to design and implement the policies needed to establish the foundations for economic growth and reduce poverty, promote good governance and the rule of law. Such actions should involve establishing strategic partnerships with all stakeholders.

Issues where more emphasis is needed include:

Addressing Human Needs Directly. Human development and economic growth are mutually reinforcing. Markets must, therefore, be supplemented with investment in social policies and human capital at four levels. First in order to build secure foundations for growth and development, countries need to complete the unfinished agenda of the 20^th Century by accelerating expansion of equitable, broad-based and quality basic services: education, especially of girls, primary health care, adequate food, clean water and sanitation. Secondly, countries will need to simultaneously address the agenda of the 21^st Century in order to become competitive participants in a global economy and to bridge the digital divide. They will need to develop policies and institutions that promote science, technology, and enterprise, actions which encourage high levels of private and public investment as a means of creating jobs, encouraging entrepreneurship and stimulating economic growth. Thirdly, the poor need to be active participants in the design and implementation of development programmes. This is not just important for the construction of social capital but it also ensures that resources benefit the most in need. Finally, these actions must be grounded in approaches that are socially inclusive and responsive to changing circumstances and which work in the interest of the poor.

Focus on Institutions (dismiss the fallacies that one size fits all, that a blanket approach works best, or that the rising tide raises all boats). There is growing recognition that institutions (the formal and informal rules that govern the interaction between the private sector, the public sector and society) are critical for good development. Strong empirical research has highlighted the detrimental effects of a dysfunctional institutional infrastructure (poor rule of law, lack of credibility and corruption) on investment and growth. Economies cannot be adequately understood if they are studied as if they were not heavily shaped by social and political circumstances and as if they have no historical dimension. Rather than as an abstraction, markets should be seen more as a social construction or a set of institutions, interacting with non-economic institutions and driven by variable incentive structures. Conditions will vary around the world and such specificities must be taken into account in formulating and implementing economic development programmes.

Growth, Inequality and Poverty. Rapid and sustained growth is vital for reducing poverty in the long term. The impact of growth on poverty depends very much, however, on the pattern of such growth and on the extent of inequality. Unfortunately, as indicated above, there has been a surge in levels of inequality in many countries around the world, which has had a negative impact on growth and poverty alleviation. One of the major causes of this inequality has been the Washington Consensus and the drive to promote a neoliberal economic policy package. This has led to ill-designed and ideologically driven agenda to promote privatization and premature financial- and capital- account liberalization (when regulatory capacity is weak). In the future, policies to promote growth must incorporate alternative structural, macroeconomic and redistributive goals.

Aim for Strategic Integration with the Global Economy. The forces of globalization are perhaps the most important factors that affect the current environment for economic development, providing immense opportunities but also entailing significant risks. If economies are to grow and societies are to reduce poverty, they will need to strengthen their participation in the global economy in ways that bring widespread and sustainable benefits to their peoples. Economic liberalization is not enough - successful participation requires a strategic approach that is actively pursued. This should cover the pace, sequencing and timing of reform in different areas and should cover social as well as economic policies.

Leverage the Power of Modern Research and Information Technology. Information technology and research provide possibilities for quantum leaps in human development. Technological advances can have an enormous impact on development. It would be a giant step forward to make the information revolution truly universal - to bridge the growing knowledge gap, to connect all developing and transitional economies to the world and to each other, to be a vehicle for sharing and learning via satellite and the Internet. Combining the power of modern research and information technology could democratize health and welfare provision. The majority of communicable diseases, for example, can be prevented with existing cost-effective strategies: bednets can prevent 50 percent of all malaria deaths while strategies such as condom promotion, sex education and treatment of sexually transmitted diseases have been proved to reduce the spread of HIV/AIDS. Well harnessed, information technology can enable countries to "leapfrog", share experiences, and promote cross-fertilization of ideas.

From the above list it is clear that there is a great deal that individual nation states can do in order to enhance their human development potential. Focusing our attention next on the role of the international community, it is possible to argue that there already exists a comprehensive and appropriate institutional architecture that if directed could act as an effective catalyst for change. This could involve promoting the sharing international experiences on what works and what does not work, and supporting countries to bridge transition of global knowledge into local situations, and vice versa. It could also work to create enabling conditions for all economies to compete fairly in the global economy. Issues where more emphasis is needed include:

Ungoverned Globalization - While some problems can be solved at the domestic level, for others integrated solutions at a higher level will need to be found. It is worrying that "private economic actors" are essentially driving the globalization process. This potentially creates a bias against collective institutions and public action at the international level. As a result, there is an increasing gap between the global challenges and the capacity of ‘global institutions’ to deal with them. As Ted Turner eloquently put stated, "It is as if globalization is in fast forward, and the world’s ability to understand and react to it is in slow motion". More than ever, perhaps, there is a need for a stronger, accountable and participatory global governance system - one that balances the private gains with the maintenance of world peace, human development and the sustainable management of the world's resources. One that provides "global public goods" such as financial stability and environmental security, and fights "global public bads" such as organised crime, terrorism, and illegal trade.

Radically transforming aid. Overall aid has not worked in promoting development and will have to be substantially transformed if it is to serve as a useful instrument to promote broader human development goals. Six issues were highlighted in the discussions (these refer to funds for development assistance rather than humanitarian emergencies). First, targeting projects has not worked due to fungibility and funding should be shifted towards programmes identified by recipient governments. Second, aid has been highly effective in poor countries with sound human development policies and institutional frameworks. Aid, therefore, should predominantly be provided to such countries. Third, in countries without such policy and institutional infrastructures in place, the priority should be towards transferring knowledge on institution building as well as in providing aid for basic health and education so that countries are ready to respond once the incentive structures do shift. Four, aid is extraordinarily fragmented in many countries. This fragmentation needs to be countered by clear national strategies and effective co-ordinated by recipient governments. Five, the allocation of bilateral foreign aid has been dictated by the strategic and political interests of donors rather than to countries with negative outcomes in many cases. There is arguable a case for multilateral organizations to take the lead in directing aid resources to countries where it would have the greatest impact on development outcomes. However, the track record of multilateral organizations in this area is far from perfect. The problems vary according to the organization, however, with the lack of accountability a key issue for the IMF and WTO for example, whereas the UN is seen as overly bureaucratic and inflexible. Six, the impact of aid is constrained by procurement restrictions and conditions unrelated to development - these should be substantially reduced.

Reducing the debt burden. There is widespread recognition that high levels of debt act as a serious brake to sustainable development and that significant reductions for debt-burdened countries would improve growth prospects, particularly if the resources provided are additional. A dollar of reduced debt is therefore likely to be more valuable than an additional dollar of conventional aid. The Heavily Indebted Poor Countries (HIPC) initiative arose out of this understanding and was expanded as a follow up to the Cologne Summit in June 1999 to provide more debt relief to more countries faster and redesigned to link debt relief to poverty reduction. The key issue now is how to accelerate the implementation of the programme and to get the donor community to contribute more comprehensively and more quickly.

Guaranteeing open markets. One effective mechanism to better integrate developing countries into the global economy would be for OECD countries to guarantee open markets for their exports and commit themselves to help reintegrate developing countries into the world economy. This is particularly important for key sectors such as agriculture and labour intensive manufacturing sectors.

Partnership is a buzzword of the later 20^th Century and has been increasingly linked with the notion of good governance. Building more effective partnerships could have positive impact on human development. A useful approach to this issue was presented in the "Comprehensive Development Framework" proposed by World Bank President James Wolfensohn. In order to promote development, he argues for partnership between four main groups of actors:

1. Government. Government includes not only national authorities, but provincial and state, city and municipal governments to the extent that they are relevant.
2. Civil Society. In all its diverse forms, Civil Society is probably one of the most influential factors shaping the development process in terms of human resources, experience and historical perspectives.
3. Private Sector. It is absolutely clear that domestic and foreign private investment is the key to economic growth and development as well as essential for the creation of employment opportunities.
4. Multilateral and Bilateral Organizations. There are a great number of international programmes (including the UN system, regional groups, bilateral agencies, etc.) promoting peace and development.

In many areas the activities of the UN hold great promise in averting conflict, in responding to humanitarian crises, in promoting development and in building consensus around key global issues. However, multilateralism is under threat and regionalism appears to be gaining increased support. The high hopes of a greater role for the UN and multilateralism after the end of the Cold War have not come true. Nevertheless, the role of the UN is important in the following respects:

Global Community. The UN is the only universal body in the world in a real sense. The UN is unique as the world’s sole organ in which all countries have the opportunity to lend their voice to ongoing discussions concerning common human endeavours.

Legitimacy. For many, the UN has a legitimacy and is not seen as ideologically tainted nor representative certain economic or political groups.

Global Goals. The UN can particularly have an impact by monitoring, interpreting and positively harnessing the current private sector dominated globalization and giving a strong message to the international community about the importance of human development and social as well as economic policies. However, the UN is not the moral conscience of the world but can be the global voice.

Forum for International Discussions and Global Standards. The UN system has a definite comparative advantage in streamlining, organizing and supervising international governmental discussions and standard setting of economic, social and other policies (including consumer protection standards, environmental standards and so on). Firstly, no government can do that on its own and secondly, there is a very real need to create synergies between the economic, social and the political elements of the international negotiations which the UN may be well placed to promote. In addition, the UN could play a role in monitoring the activities of trans-national corporations. The objective, however, would not be to alienate the TNCs but to constructively incorporate them within the human development debate. The latter objective could be more effectively attained through cooperation with the media at all levels. It is also important to acknowledge that increased attention needs to be focused on the activities of the global financial markets and investment programmes with some commentators calling for the establishment of a World Financial Authority.

Solving Global Problems. In an era of globalization, with the increase in global problems requiring cooperative international solutions, the need for the UN would seem to be greater than ever. The UN has an advantage in focusing on global problems and issues of concern to many countries. This is likely to increase in the future as globalization brings new types of global problems to the fore.

1. Prioritize poverty. As indicated above, there is a need for the many countries and the UN system to focus strongly on eradicating poverty. This could also provide a theme around which to make the work of the UN more coherent.
2. Convene a major UN Conference on Globalization. The forces of globalization are perhaps the most important factors that affects development and are an issue of widespread global concern. There remains a lack of understanding about many of the economic social, political and environmental implications of globalization and the most appropriate ways to reap the benefits and negotiate the challenges. The UN is well placed to convene such a meeting to address the issue in a holistic manner. It is an objective forum to bring together international agencies, national governments, private sector actors and NGOs. It also has the expertise in the different areas that would need to be addressed in such a meeting. Within this context, the UNU should play an important role in constructing a better conceptual apparatus for understanding globalization and challenging many of the existing assumptions that underpin this process.
3. Convene a major UN Conference on Migration. In the context of increasing globalisation, international migration requires more attention. This would world explore the benefits and costs for both the sending and receiving countries. The UNU could play an important role in providing an objective assessment of the current situation as well as a framework for such a conference.
4. Establish an international "technology bank". There is an ever-widening technology gap between the rich and poor countries. Scientific advance is progressing much faster than people realize. However, utilization of advances occurs much more slowly than people expect. The opportunity exists for the UN to act as a catalyst in this area - bridging the gap between technology advance and technology utilization for reducing poverty. The UN is the appropriate organization to establish an international "technology bank" that could acquire information on as well as rights to valuable technologies and make them available to less developed countries. It could also support and award local innovation while at the same time building capacity for developing local strategies. Perhaps this could all be achieved through a Global Science and Technology Facility (similar to the Global Environment Facility).
5. Technological forecasting and assessment agency. New technologies have the potential to help solve pressing global problems. They may also have hidden dangers and consequences. Despite this, the current approach to technological development throughout the world is much more reactive than proactive. It may therefore be very appropriate to consider setting up a UN agency that could act as a clearing house for technological forecasting and assessment, one that looks to the future and assesses the potential and dangers of different technologies that are emerging.
6. Internet Supersite. The power of information technology could be used to provide state of the art information on the key issues that affect human development. The UNU, in particular, could utilize a web-based approach to create a public realm for the discussion of globalization and the implications for human and institutional development.
7. Dramatically transform aid (see previous discussion regarding institution building and channelling more funds through multilateral agencies).
8. Accelerate Debt Relief. (see previous discussion)
9. Institutionalize follow-up to global conferences. Given the progress made through the international conferences of the 1990s it would be valuable to institutionalize the follow-up to these in a coherent manner. In particular, greater integration of environment and population conference would appear to be an important first step.
10. Accelerate Reform on the UN. While recognising that at present reform fatigue exists in many quarters, as a matter of credibility and accountability, it is essential that the reform programme continues with increased vigour and transparency. The UN needs to improve its functioning with respect to: (i) systemic and cohesive coverage of issues while at the same time avoiding the current overlap and duplications, (ii) mobilization of support around issue-specific problems - the UN is often functions best when galvanized around an issue- and (iii) to cut back on bureaucracy and enhance effectiveness.
11. Enhance Public Accountability and Legitimacy. The UN seems too dominated by member states not necessarily acting in the interest of the global community. In terms of legitimacy it must try to move much closer to the "people" as implied in the UN Charter. Inclusion of civil society in other UN organizations seems therefore to be warranted (e.g. ILO type arrangement including non-governmental groups in decision making) or have totally separate meetings of parliamentarians. Specific agencies are also centralized and unaccountable (e.g. the IMF and WTO) and seem to be on a collision course with popular sentiment.
12. Emphasize the Importance of Knowledge. In trying to resolve the many and serious global challenges, from poverty to bad governance to humanitarian emergencies, there is growing emphasis on the critical contribution of knowledge. This is increasingly the case at a time of great change in a globalizing world and as we shift towards a knowledge-based global economy. There needs to be better integration of the developing economies into the science and technology development process as well as the promotion of economies for the developing world. Knowledge is also important for the UN system. Without the results of research, many development and peacekeeping interventions would be much less successful. The UN should put more emphasis on the generation and sharing of knowledge and good ideas to reduce poverty and increase equality.

Conclusion. There are going to be few simple solutions. The way forward would best be based on the principle of subsidiarity with collaboration and partnerships between levels of government (international, national, local), civil society, the private sector and international institutions. An emphasis on (economic) self-determination should be balanced with collective international action where helpful. The existing international institutional architecture, though far from perfect, can be reoriented to more effectively moderate the existing tendencies that allow poverty and inequality to increase. This institutional framework needs to monitor and interpret the globalization process, prioritize and focus on the weakest regions, reward governments for strong performance, celebrate success rather than punish bad performance and, finally, focus on results.

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Appendix 1

A. Driving Forces and Economic Outcomes of Globalization
Walden Bello, University of Philippines

Overview and Challenges - This paper looks at the international institutions and the management of the global economy, particularly focusing on the International Monetary Fund (IMF) the World Trade Organization (WTO). It argues that it is not surprising that both the WTO and the IMF are currently mired in a severe crisis of legitimacy. For both are highly centralized, highly unaccountable, highly non-transparent global institutions that seek to subjugate, control, or harness vast swathes of global economic, social, political, and environmental processes to the needs and interests of a global minority of states, elites, and TNCs. The dynamics of such institutions clash with the burgeoning democratic aspirations of peoples, countries, and communities in both the North and the South.

Recommendations - The need is for the deconcentration and decentralization of institutional power and the creation of a pluralistic system of institutions and organizations interacting with one another amidst broadly defined and flexible agreements and understandings. In particular, what developing countries and international civil society should aim at is not to reform the WTO and IMF but, through a combination of passive and active measures, to radically reduce their power and to make them simply another pair of international institutions coexisting with and being checked by other international organizations, agreements, and regional groupings. It is in such a more fluid, less structured, more pluralistic world with multiple checks and balances that the nations and communities of the South will be able to carve out the space to develop based on their values, their rhythms, and the strategies of their choice.

B. Social, Political and Environmental Impacts of Globalisation
Rolph van der Hoeven, International Labour Organization

Overview and Challenges - The end of the 20^th century is marked by a process of globalization that is posing serious challenges and opportunities for economic and social progress. The paper indicates some important economic and social challenges that, if continuing at the current pace, warrant political solutions at national and international level. The paper distinguishes seven of these social and political challenges that unless properly dealt with, groups in the world might find it difficult to accept continued globalization. Firstly, the need for better integration of developing countries into the world economic system as a precondition for a better distribution between North and South of the benefits of globalization. Secondly, there is a need to deal with the inadequacy of growth in order for developing countries to achieve a socially necessary growth rate. Thirdly, the need to contain growing informalization of economies in developing countries and developed countries leading to increased duality in the labour markets. Fourthly, the need to reduce growing inequality between different groups in society and especially between those who are able to profit from globalization and those who are negatively affected by globalization. Fifthly, the need to deal with the inadequacy of human capital formation to be prepared for future globalization in many parts of the world. Sixthly and seventhly, the need to reduce increased instability and insecurity at the international level and the national level; countries have to face more unstable economic systems while persons and families have to face a more unstable social and economic system.

Recommendations - It is important for national governments and the international community jointly to address these issues, as these issues often transgress national borders. One of the problems, which one notices with the current processes of globalization is that partial solutions to economic and social problems of globalization are not sufficient. One needs an integrated approach to dealing with economic, social and political concerns simultaneously. The UN system has a definite comparative advantage in streamlining, organizing and supervising these international governmental discussions and standard setting of economic and social policy since firstly, no government can do that on its own and secondly, a strong linkage between the economic, social and the political elements of the negotiations between the national governments is warranted. But, the UN system in the 21^st century must therefore acknowledge the role of other groups in society than governments in finding new solutions and in monitoring the outcome of the globalization process. Inclusion of civil society in other UN organizations seems therefore to be warranted.

C. Conceptual Challenges of a Globalizing Economy
Karel van Wolferen, University of Amsterdam

Overview - This paper distinguishes between two aspects of the term globalization - (i) increasing economic integration, and (ii) a political mission aimed at altering the relationship between states and large business organizations. As a result of the mix-up in the two meanings of globalization, widespread confusion, contention and controversy have characterized reactions to it so far. UN organizations are ideally positioned to improve the conceptual apparatus so as to better understand globalization.

Challenges -

• To dismiss the fallacy that a rising tide raises all boats - that deregulation, globalization and growth help all people. UN agencies are well placed to provide alternative views to the assertions about the benefits of unfettered markets.
• To dismiss the fallacy that one size fits all - that a blanket approach works best. There is a need for an institutional approach. Conditions vary around the world and such specificities must be taken into account in formulating and implementing economic development programmes.

Recommendations -

• Aim to foster an economically strong and politically significant middle class
• Maximize conditions for economic self determination
• Address the challenges formed by international corporate power to the independence of states
• Reverse the trend of minimizing the importance of the state

D. Institutional / Structural Issues
Beatrice Weder, University of Basel

Overview and Challenges - This presentation isolated seven lessons from the experience with international development cooperation focusing on the role of institutions and of corruption in development. The first lessons is that the institutional infrastructure of a country is key to successful development. The second lesson is that corruption is one of the most important obstacles to successful development, and the, closely related third lesson, states that corruption undermines economic performance by leading to misallocation of resources, lower investment and growth. The overall lesson (four) that emerges from the studies of the effectiveness of foreign aid, is that on average it has not improved development or the quality of life. Furthermore it has been shown (lesson five), that efforts to improve effectiveness of foreign aid by targeting projects are undermined the by the fungibility of aid receipts. However, aid has been highly effective in countries that had a good institutional infrastructure and policy framework (lesson six). Unfortunately in the allocation of foreign aid priority was not given to countries with good preconditions, rather, it has been dictated by the strategic and political interests of donors (lesson seven).

Recommendations - The conclusion from these lessons is quite straightforward: The international community can be more effective in fostering development provided that (i) foreign aid helps the process of institution building and (ii) foreign aid is targeted to those countries which are willing to implement good policies and institutions. It follows that multilateral organizations are in a better position to direct the development agenda in the direction described above. Ideally, a multilateral body would channel most aid resources, or at least coordinate most donors' efforts to make sure that aid is allocated to countries where it is effective. This might be a formidable task for the United Nations, but one well worth taking on.

E. Technology and Society
Jerome Glenn, American Council for UNU

Overview - The paper distills the Millennium Project’s research relevant to the future of technology, potential social impacts, and impactions for the UN. It focuses on the globalization of science and technology, space technology, nanotechnology, biotechnology, information technology, educational technology, controversial futuristic technology, noting both risks and benefits for human development over the next ten to fifty years..

Challenges - The global challenges identified and explored by the Millennium Project are: sustainable development; clean water; balancing population growth and resources; democracy; encouraging long-term, global perspectives in policy-making; making globalization and ICT work for everyone; ethical market economies; new and reemerging diseases; improving decision making; shared values and new security strategies; gender; organized crime; energy; science and technology; ethical considerations in global decisions.

Recommendations -

• Bridging the S&T gap should be a central UN role for the future
• Establish an international "technology bank". Perhaps this could all be achieved through a Global Science and Technology Facility (similar to the Global Environment Facility).
• Technological forecasting and assessment agency.
• Internet Supersite.
• Cyber UN or Tele-UN collaboratories
• Focal point for development and dissemination of more environmentally friendly technology
• World Technology Report (World Science Conference)
• Create UNU information kiosks of all UN systems’ knowledge

• Upgrade the UN drug program to counter organized crime from becoming a more sophisticated global enterprise

F. Poverty and Inequality
Andrea Cornia, UNU/WIDER

Overview - Since the late 1980s, the international community has increasingly made the eradication of poverty its foremost development objective. Simultaneously, the 'Washington Consensus', has emphasised macroeconomic stability, market liberalization, privatization and the use of market solutions in the provision of public goods. The new poverty focus, together with the Washington Consensus, makes large claims. Liberalization will promote the convergence of the living standards of the poorer countries with those of the most advanced, thereby reducing world poverty. Moreover, it is claimed that the policies are, by and large, distributionally neutral, that the distribution of income is broadly stable over the long run, and that there is only a weak link between inequality and growth. Recent UNU/WIDER research challenges these clamins.

Challenges - Rising Inequality: Inequality is rising inequality in 45 out of 77 countries. If one weighs these results by population size and GDP-PPP, these conclusions are strengthened, as inequality rose or stopped declining in nations accounting for 79 per cent of the population and 77 per cent of the GDP-PPP of the sample countries. While inequality fell in 16 countries, these include mainly small and medium size nations whose total population and GDP-PPP comprise only 16 and 20 per cent of the total sample. In summary, while inequality tended to decline in the 'golden-age' of post-war growth, it started to rise from 1980 onwards. The rise was universal in Eastern Europe and the Former Soviet Union, almost universal in Latin America, common in the OECD countries, and frequent in Asia. Certainly, rising income inequality makes it more difficult to achieve poverty reduction through growth alone.

The analysis of the data finds that the traditional causes of inequality (land concentration, urban bias, inequality in education) explain an important part of the variation in cross-country inequality. The presentation suggests that the increase over time is generated by new factors. It argues that, in its rush to promote ill-designed privatization and premature financial- and capital account liberalization (when regulatory capacity is weak), the Washington Consensus has contributed to rising inequality. Pro-poor growth must be complemented by alternative structural, macroeconomic and redistributive policies. Moreover, the decline in aid budgets is hardly conducive to the reduction of poverty and inequality.

Recommendations -

Policies to reduce inequality would be:

• land reform - can dramatically affect inequality
• pro-poor growth (particularly promoting the agricultural sector)
• progressive taxation and pro-poor expenditure (improve poor’s access to health, education, transport and financial services)
• keep wage inequality down

(i.e. Making the Washington Consensus more Distributionally Favourable)

• avoid severe adjustment policies - recession inducing shocks have major impact on poor
• including distributional concerns in design and regulation of privatisation
• policies (including capital controls) to reduce the output volatility caused by financial shocks

G. Education and Health
Ruth Kagia, The World Bank

Overview - On the threshold of the new millennium, human development is at a major crossroad. Globalization presents tantalizing prospects for shared global prosperity but it could also lead to a widening of the economic and social gap between the rich and the poor. While the lives of some 1.5 billion people have been greatly improved by the dramatic economic growth in 15 Asian countries, the quality of life for another 1.6 billion in 100 countries has steadily declined. In 70 of these countries, average incomes are lower today than in 1980. The 21^st century will be shaped by the development choices we make today. Those choices will either lead to enabling conditions for the eradication of poverty or for deepening it. Such actions include creating enabling conditions for all economies to compete fairly in the global economy; establishing strategic partnerships with all stakeholders and supporting national governments to design and implement human-centred, equitable and participatory programs. The international community, led by the UN family, should spearhead these efforts in order to assist countries unleash the positive forces of the global market, attract private capital, accelerate the momentum for poverty reduction and reduce the risk of increased marginalization and inequality.

Challenges -

• The absolute number of poor people in developing countries is growing.
• The gains in information technology have not benefited most of the world's poor.
• A young child dies every three seconds, in most cases from an infectious disease; every day 3,000 people die from malaria.
• There are nearly one billion people who cannot read or write two thirds of whom are women.

• Address Human Needs Directly.
• Enable weak economies to participate in the global economy.
• Recognize the Interdependence of Nations.
• Cooperation of all the Players
• Development Policies are Interdependent.
• Commitment to International Development Goals:
• Leverage the Power of Modern Research and Information Technology:
• Giving National Governments Room for Manoeuvre:
• Enabling Countries to take Charge of their Development Agenda:

H. Population
Wolfgang Lutz, International Institute for Applied Systems Analysis

Overview and Challenges - The presentation and paper dealt with the dramatic changes in demographic patterns that have taken place over the past several decades, particularly in developing countries. Projected trends in population growth and ageing over the next century were discussed. Although population growth is slowing down, total world population is still likely to increase from near 6 billion today to 7.5 billion in 2025 but is likely to stabilize between the middle and end of 21^st Century. In developing countries, the rapid demographic transition from high to low fertility and mortality is not yet complete. Much of the population increase will take place in developing countries, altering the distribution of the world's population. With falling fertility rates, the world as a whole, and industrialized countries in particular, will continue to shift towards ageing societies.

Recommendations -

First, there is a very real need for the United Nations System to consolidate its work and institutional structures related to the environment and population paradigms. Ever since the first conference on the Human Environment held in Stockholm in 1972, there appears to have been tendency for the issues of environment and population to be dealt with through separate fora which may been detrimental to the ultimate goal of promoting sustainable human development. There is great potential for win-win measures in the areas of population and environment, such as educating girls.

Second, existing data and trends indicate that international migration will become a key issue for the future and hence it would be very worthwhile holding a world migration conference that would explore the benefits and costs for both the sending and receiving countries.

Third, ageing is emerging as an issue of global importance. According to existing trends, the UN has a 20 year grace period with which it can promote effective measures to deal with matter and better support the ageing societies. It is recommended that the UN take the lead in promoting international research, policy and other measures in other to fully comprehend the potential implications of the ageing society.

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