Barcelona Development Agenda

Background

The 2004 Universal Forum of Cultures met in Barcelona, Spain from May 9 to September 26, 2004 to promote human rights, diversity, peace, and sustainable development. On the last two days of the Forum, economists from organizations around the world met to discuss the impacts of economic policies, especially global policies, on developing countries. The opening statement of the agenda laid out the discussion of the meeting:

We, a group of economists from developing and developed countries, met in Barcelona on September 24 and 25, 2004 to consider the prospects for growth and development around the world. We discussed the effect of economic reforms adopted by many developing nations over the last two decades, the lessons for economic policymaking that emerge from this experience, and the performance of the international economic system into which poor and middle-income countries are increasingly integrated.

Based on trends and concerns the participants noted in international development policy, the agenda outlined principles for policy implementation that reflected both widely accepted principles of macroeconomics, such as the importance of market development, and improved understanding of challenges and solutions in developing markets, such as capital inequity and environmental impacts.

Three encouraging trends

Three reasons for concern

Seven Lessons and Priorities for Reform Proposed by the Agenda

1. Institutional quality and market orientation matter: For successful development to occur, institutions such as property rights and the rule of law must be established and improved, though the exact form of these is heavily dependent on historical and cultural context. Additionally, markets should be balanced by state regulation, as assumptions involving a pure market economy are rarely met in developing countries. Lastly, though the mechanics are not provided for, equitable distribution of income is stated as an additional basis of successful development strategies.
2. Poor financial policies are barriers to development: Weak and maladjusted fiscal policy tends to inhibit development, and disproportionally affects low-income households upon failure. Large public debt can burden governments with debt service obligations that consume a significant proportion of the GDP. Large amounts of private debt can inhibit innovation and expansion in private sector industry. Poorly regulated financial institutions, such as some banks, and loose monetary policies, such as expanded money supply and credit are serious barriers to development.
3. Sustained growth cannot be guaranteed by a single set of policies: Development solutions that can trigger sustained growth will vary depending on the historical, cultural, and social attributes of a particular country. The primary impact of this is that states should have the flexibility to experiment with different economic policies that suit their specific context. Experimentation with different bundles of industrialization, technology development and acquisition, import/export, and other policies should be encouraged. Constraints to growth should be identified and addressed through both macro and microeconomic policies.
4. Multilateral trade negotiations should proceed in a manner that promotes development: Whereas protectionism in developed countries creates obstacles for market entry and expansion in developing countries, trade negotiations should include stakeholders from impacted states. Additionally, trade policies in developing countries should be examined to identify and correct those that limit growth. (Note: at the time of the BDA, it was hoped that the Doha Round would reduce trade barriers between and among developed and developing countries. Though currently stalled, there have been recent calls to restart negotiations.)
5. Current international financial relationships are faulty: Financial arrangements between developed and developing countries are often defective, insufficient, and detrimental to the recipients. This is largely due to missing or malfunctioning markets within the countries, and a lack of mechanisms to share risk between lenders and recipients. As such, financial capital flows tend to be volatile, and are underregulated by international lending institutions. Additionally, aid levels tend to be inadequate to address some financial problems in developing markets. Both unbalanced risk and shortage of aid are likely the result of lack of representation of recipient countries in decision-making processes regarding financial arrangements.
6. Labor and financial capital are not treated equally: Movement of different types of capital across international boundaries is not balanced. Current policies, especially in developed nations, favor the transfer of financial capital, but often discourage the movement of labor capital across borders. Increased migration of workers along with sufficient protection (e.g. workers rights, market integration) of labor has the potential to increase both equity and efficiency in production and service provision. Improved labor capital mobility can also increase financial capital exchange through remittances.
7. National and global sustainable development policies are necessary to address growing environmental problems: Whereas previous models on development ignored, misunderstood, or underestimated the environmental impact of growth policy, updated models must internalize and address the environmental impacts of development. As impacts including soil degradation, climate change, and reduced water quality and availability disproportionately impact developing countries and low-income families, sustainable development policies must address these impacts, whether through prevention or alleviation. However, economic policies in developed countries must also address domestic environmental impacts, some of which are exported to developing economies.

Application

Though no initiatives have been directly undertaken as a result of the Barcelona Development Agenda, the Center for International Relations and Development Studies (CIDOB, Centre d’Investigació de Relacions Internacionals i Desenvolupament) has been working to implement some of the BDA principles into the Ibero-American Development Agenda (ADI, Agenda de Desarrollo Iberoamericana). The ADI has a goal of

facilitating policy recommendations that permit countries to attain sustainable economic growth as a way of reducing poverty and inequality, thus augmenting the quality of life of the Latin American people. In order to do this, the ADI Seminar promotes discussion and dialogue between prominent economists, sociologists and political scientists based on the rigorous analysis of the economic, social and institutional situation in the region.

A collaboration between Latin American governments, economics, sociologists, and political scientists, principles stated in the BDA are being implemented through collaborative policy decision-making in the ADI.