New UN report favours government intervention in world economy

The free market will not solve all of the world's economic ills, leaving a role for governments in promoting growth and income distribution, according to a new United Nations report released today.

Introducing the 2001 Report on the World Social Situation report at a press briefing in New York, Sergei Zelenev, Director of the Social Analysis and Policy Unit in the UN Department of Economic and Social Affairs, said the report argues that "there is still a need for government intervention in the global economy." The authors conclude that it would be "naïve and short-sighted to simply rely on the free hand of the world market, expecting that the tide will lift all boats at the same time," he added.

One of the authors, Maria Amparo Cruz-Saco, an Associate Professor of Connecticut College, said the report documented the global shortage of decent, productive employment. "The problem is that the likelihood that a worker can get a permanent job that has associated with it benefits that can help the person endure short-term and long-term risks is shrinking," she said.

While there had been some development successes, she said, in general policies over the last 10 years had not led to less poverty or increased economic growth. Levels of poverty remained high and inequality persisted. "On top of that, maybe the prospect for economic growth is slowing down," she added.

Another author, Giovani Andrea Cornia, a Professor at the University of Florence, said the report showed that progress in the global economy had been inadequate and unequally distributed. "Growth is increasingly less egalitarian," he said, noting that in two-thirds of all countries - both developed and developing - inequality had increased in recent years.

"This cocktail of slower growth, less stable growth, more unequal growth and conflict-ridden growth is unlikely to lead to massive improvement," he said.

The 300-page report, which was prepared by the UN Department of Economic and Social Affairs, assesses major trends in socio-economic development, covering such topics as institutional frameworks, living conditions, social protection, social disruptions and equity.