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Business News Wed, 30 Aug 2006

Free market system has not helped Ghana - Kyeremanten

Accra, Aug. 30, GNA - Over-reliance on market forces has not helped Ghana and developing countries in general to efficiently allocate resources for overall development, Mr Alan Keremanten, Ghana's Minister of Trade, Industry and President's Special Initiatives, said on Wednesday.


He said the belief that the free market system through liberalization and deregulation would improve the efficient allocation of resources did not and has not happened.


"It has rather resulted in de-industrialization and trade deficits in many cases and we in Ghana can testify to this," the Minister made these comments when he launched the 2006 United Nation Conference on Trade and Development (UNCTAD) Report in Accra.


This year's Trade and Development Report called for more flexibility in international trade rules and negotiations that would allow developing countries pilot their own growth and development paths. Launched under the theme; "Global Partnership and National Polices for Development" the Report also advocated international trade and financial systems for development that would take better account of the asymmetries between developed and developing countries.


Mr Keremanten lauded the Report's emphasis on the need to reorient policies or instituting complementary measures tailored to national specificities as opposed to the "one-size-fits-all prescriptions, underpinned by the so-called 'Washington Consensus'".

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Developing countries, he said must analyse the range of policies at their disposal to find alternatives to remedy existing constraints.


"Such analysis should take account of constraints imposed by multilateral rules and regulations, which may circumscribe or limit the use of certain domestic policies and this therefore requires additional policy instruments to be explored," he said.


The Report said developing countries export opportunities continued to be shaped by conditions imposed in the developed markets, Mr Kyerematen said, adding that even though the situation had improved a little it was still biased to the detriment of developing nations.


"Reduction in tariff barriers by developed countries has often been accompanied by an increase in the use of non-tariff measures such as anti-dumping.


"Trade preferences have generated limited benefits for developing countries because of the uncertainty surrounding the schemes; restrictive rules of origin; insufficient product coverage and more importantly supply capacity constraints," he said.

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Mr Kyeremanten said the Government would continue to support the growth of domestic businesses but indicated that any support given should be withdrawn when local manufacturers attained technological mastery or when their production became unprofitable at any internationally competitive level or when benefits from economies of scale got exhausted.


He said any policy that would be introduced to support local business should not be regarded as a return to import substitution and control economies.


Giving an overview, Mr Samuel Gayi, an Economist of UNCTAD, explained that the report did not call for inward-looking protectionist measures or policies to support industries and undermine multilateral trade rules of negotiations.


"This is because it argues that for policy flexibility to work for development, growing economic independence must be complemented by a well structured system of global economic governance," he said. Mr Gayi said self-serving national economic policies including mercantilist trade policies or beggar-thy-neighbour macroeconomic and exchange rate policies of some countries could harm the economic performance of others and must be checked by multilateral rules and disciplines.


He said the Report showed that expansion in world output continued in 2005 and was expected to maintain its pace.

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China and India were singled out as largely contributing to the fast pace of global growth.


Projected world GDP growth for 2006 is estimated at 3.6 per cent; for developed countries output growth would likely continue at 2.5 per cent to 3.0 per cent despite higher prices for oil ad industrial raw materials and the tendency towards more restrictive monetary policies. Mr Gayi noted that if the current momentum in the world economy was sustained, a significant progress could be made towards attaining the MDGs.


Mr Daouda Toure, UNDP Representative in Ghana, announced that discussions were far advanced for Ghana to host the 12th UNCTAD Conference in 2008, its highest policy making body. He said the country must take the opportunity to showcase its potential for developing and for becoming a real hub for the entire West Africa Sub-Region for industrial development.

Source: GNA