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Post-Rio Sustainable Development and the Summit

Maurice F. Strong

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Redefining the Global Economy

These are all hopeful signs, but they are not enough. The evidence produced for the Earth Summit made it clear that what is needed is fundamental change in the dynamics and direction of economic life based on changes in economic behaviour at every level of society. The changes called for at Rio are fundamental in nature, and fundamental change does not come quickly or easily. And certainly that is true in the present climate. It is therefore not surprising, though nonetheless disappointing, that a basic change of course has not yet occurred. Until it does, despite rhetoric and good intentions, the world will continue to move in a direction that is simply not sustainable.

Meanwhile, there have been some profoundly important changes in the dynamics of the global economy which are reshaping the economic and political geography of our industrial civilization and defining its future. Prospects for achievement of the goals set at Rio, and for the implementation of Agenda 21, are inextricably linked to the complex issues through which these changes are occurring.

One of the most important dimensions of these changes is the dramatic shift in the configuration of economic and political power now taking place between the developing countries and the traditional industrialized countries. There will be setbacks, as the institutional structures of these rapidly growing countries are, in most cases, simply not adequate to maintain the present momentum of their growth.

Nevertheless, today developing countries are leading the revitalization of the global economy. Developing countries are growing. Not all of them, to be sure, for the economic growth of many of the poorest, as well as some of the most conflictridden countries of Africa, has been stalled or has declined. But in Africa, too, notably in Uganda and Ghana, some economies are on the move again, and with the historic transformation to multiracial democracy in South Africa, that country is expected to lead southern African into a new era of economic progress. But most of the new growth in the developing world is occurring in Asia and Latin America, although one of the most dynamically growing economies is that of India.

A recent World Bank report points out that even in the two decades (1974-1993), developing countries as a whole grew at a rate slightly higher (3%) than the rich industrial countries (2.7%) and are expected to grow by almost 5% per year in the next decade, compared to 2.7% in the traditional industrial countries.

On this basis, as noted in The Economist's survey of the global economy in January 1995, China would replace the United States as the world's largest economy by the year 2020, and nine of the top l5 economies of the world would be, in aggregate (not per capita) terms, what are considered developing countries today; for example, India would replace Germany as the fourth largest economy. The same survey projects that developing countries' share of world output will grow to 62% by the year 2020, while that of the rich industrial countries will decline to 37%. Although projections are always somewhat dubious in terms of their reliability, there is little doubt that these numbers are identifying a trend.

The G7 today does not include a single developing country. This does not mean that it is unimportant, merely that it has limitations. The current "world order" continues to be rooted in the past, particularly our notions as to NorthSouth relationships, and the G7 can no longer take decisions that will simply be accepted as binding on the rest of the world.

The major economic growth to the South is evoking mixed feelings and responses from the traditional industrialized countries. On the one hand, export industries in OECD countries have welcomed, and been quick to exploit, the opportunities that have opened up in the rapidly growing economies of the developing world. A recent OECD report postulates that if China, India, and Indonesia continue to grow at current rates, without changing current patterns of income distribution, some 700 million people in these three countries alone (more than the combined populations of America, the European Union and Japan) will, by the year 2010, have an average income equivalent to the median of the European Union countries. This compares with only 100 million today, and is evidence of the profound change that is now taking place.

On the other hand, OECD countries are increasingly looking on developing countries as competitors. Low labour costs and rising productivity are making southern manufactured products highly competitive in northern markets, helping to keep consumer prices down but evoking strong and growing resistance from those in the industrial countries who see their investments and jobs at risk.

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