Crisis or No Crisis, Development Must Go On

Sources: IMF Survey, IMF Presses Donors to Maintain Aid Flows Amid Crisis; United Nations, International Conference on Financing for Development

In March 2002, 250 leaders from around the globe met in Monterrey, Mexico, to discuss international development. The meeting was sponsored by the United Nations (UN) and was the first time that a large number of international leaders met with representatives from the UN, the International Monetary Fund (IMF) and the World Bank (WB) to discuss development. The meeting produced the Monterrey Consensus, a document which is now referred to as the most comprehensive and authoritative statement of principles of international development that leaders from both the developing and the developed world have subscribed to. After the summit meeting, developing countries experienced an economic surge that some attribute to the unprecedented cooperation that took place in Monterrey.

The UN scheduled a Follow-Up Conference from November 19th to December 1st in Doha, Qatar, to review the Monterrey Consensus. In light of the ongoing global credit crisis, much of the meeting has focused on the financial aspect of international development. The meeting's program indicates that participants will discuss topics such as foreign direct investment, trade, mobilization of domestic resources, and other ways in which countries may work together to finance development.

Some fear, however, that the developed countries attending this meeting will feel that their hands are tied with the problems that their respective economies are facing as a result of the crisis. IMF Director Dominique Strauss-Kahn has voiced his concerns that fears resulting from the credit crisis will derail the progress that developing countries have made since the Monterrey summit. On December 1st, he issued a statement urging developed countries not to forget that there are other kinds of crises, like the food and fuel crises, that have for long threatened the health and safety of those who live in developing countries.

The key to the Doha conference, from the IMF's point of view, is that developed countries should resist the temptation to scale back on external assistance because of the strains that the credit crisis has caused on their budgets. Crisis or no crisis, the goal of this meeting is to reaffirm the international community's commitment to development. According to IMF leaders, the fact that the credit crisis has spread so quickly demonstrates just how inter-connected international economies are. Contributing to international development, they argue, is thus beneficial for all involved, because it will make the global economy stronger and better able to respond to other crises that may arise in the future.

Discussion Questions:

1- The Monterrey summit meeting took place six years ago. Do you think that this is the proper time to review the Monterrey Consensus? Do you think the UN should have set an earlier date for the Doha conference?

2- It's hard to tell, at this point, just what the long-term effects of the current financial crisis will be. If you were one of the leaders attending the conference, how would you weigh your uncertainty about the current crisis against the possible benefits of international development to the global economy?