Sunday, 02nd November 2014
by Nimal Sanderatne
Dr Gamani Corea who passed away a year ago was undoubtedly the most illustrious Sri Lankan economist. His contributions to Sri Lanka and the international community have been captured succinctly by the former Prime Minister of India Dr Manmohan Singh:
"Gamani’s work and thinking in the arena of economic development were of immense significance, not only for Sri Lanka, but also for developing countries around the world. His contribution to the world of UNCTAD during his time as its Secretary General was particularly important in ensuring that the voice of developing countries was heard and that their developmental priorities were not lost sight of. He lent his influential voice in support of some of the most important international initiatives aimed at the welfare of developing countries, such as the Integrated Program for Commodities, and the Highly Indebted Poor Country Initiative."
Dr. Corea made an enormous contribution to development thinking in Sri Lanka and internationally. This article captures the genesis and transitions in his thinking from his early days, during his mission at UNCTAD and his later involvement with the South Commission. It summarises very briefly his career and contributions nationally and internationally: his contributions towards the New International Economic Order, the North-South Dialogue and the South Commission by reforming the existing commodity trading system to bring about a more just and equitable international economic order.
His Career
He began his career at the Central Bank of Sri Lanka where he became influential as Director of Economic Research and retired as its Deputy included being Governor (1970-1973). His career at the national level Director Planning Secretariat where he was the architect General of the of the TEN YEAR PLAN that chartered the course of economic transformation for the Sri Lankan economy. He played a key role in formulating economic policy in Sri Lanka during his tenure as Permanent Secretary to the Ministry of Planning and Economic Affairs during 1965-70.
He was the founder Chairman of the Marga Institute for Development Studies and the Institute of Policy Studies. He was Chancellor of the Open University of Sri Lanka. He played a key role in many associations and institutions in Sri Lanka.
In 1973, Dr. Corea was appointed Sri Lanka’s ambassador to the European Economic Community (EEC) and the Benelux countries (Belgium, Luxembourg and the Netherlands).
In 1963 he was invited by Raul Prebisch to be a member of the team for the preparation of the first UNCTAD Conference in 1964. He served as Secretary General of UNCTAD from 1974 to 1984. During his tenure, UNCTAD experienced one of the most active moments of its history that has been called the "Corea Decade." He was also instrumental in the establishment of the Group of 77. He served as a member of the South Commission (1987-1990) and was a member and chair of the Board of the South Centre (2002 to 2003).
Key contributions
Dr. Corea promoted international economic policies aimed at benefiting developing countries and reinforced unity among nations of the South and enhanced their position in multilateral negotiations. He introduced the Integrated Programme for Commodities, commonly known as the Corea Plan. He was the prime mover for the establishment of the Common Fund for Commodities.
Dr. Corea’s influence on the decision to establish the Highly Indebted Poor Countries (HIPC) initiative was another of his accomplishment having previously chaired the Expert Group of the Non-Aligned Movement on Third World Debt, which served as the basis for the HIPC initiative. He was a strong proponent of a New International Economic Order (NIEO).
Genesis of his thinking
Dr Gamani Corea’s driving force for changing the status quo of economic relations between the developed and developing worlds; the industrial and primary producing countries; the centre and the periphery; was derived from his initial concerns and convictions that were awakened during his post graduate studies and nurtured during his initial forays into research and planning in Sri Lanka.
The roots of his thinking on these issues goes back to his Oxford D.Phil. dissertation, "The Economic Structure of Ceylon in Relation to Fiscal Policy", written in 1951-52 and published by the Marga Institute as "The Instability of an Export Economy" in 1975.
A core conviction he derived from this study of Sri Lanka’s fiscal policy is that fluctuations in prices of the country’s primary commodity exports were the causes of economic instability and that the capacity of fiscal policy to stabilise the economy was limited. He was convinced that an economy so dependent on primary commodity exports was inevitably unstable and that the core issue in economic development was to change the structure of the economy.
He perceived that while an internal structural change was necessary, that it was insufficient and that international actions were needed to stabilise primary commodity prices on which developing economies depended heavily. The fluctuations in prices of the country’s primary exports and the deteriorating terms of trade formed an important aspect of the strategy of development in the Ten Year Plan (1958-68) that he was responsible for as head of the National Planning Secretariat.
In an international context of unstable export import prices and adverse terms of trade, he advocated, the diversification of the economy from agriculture to industries based on increasing exportable surpluses in agriculture. The Ten Year Plan stressed the need for structural changes in the economy through diversification of the economy as the means of coping with the deteriorating terms of trade of a primary producing country.
These were the underpinnings of his preoccupation with redressing the imbalances in trade that he addressed later in his international career. His subsequent thinking was a progression and transition in response to the emerging conditions, international realities and challenges.
UNCTAD 1974-1984
When Dr Gamani Corea was invited to head UNCTAD as its third Secretary General in 1974, he saw in it an opportunity to expand on the international scene his interests from his postgraduate days at Oxford and his experience in developing the Ten Year Plan. UNCTAD gave him the opportunity to work on a larger global canvas to redress an international system of unequal exchange.
New International Economic Order
The concept of the New International Economic Order (NIEO) was put forward by Dr Corea as Secretary General of UNCTAD in April 1979 at the Sixth Special Sessions of the General Assembly of the UN in the Declaration and Program of Action for the establishment of NIEO. According to Gamani Corea himself, it reflected two strands: "on the one hand, what has been called structural change and, on the other, insistence on collective action".
By now Dr Corea’s thinking had moved to a higher plane from that of commodity stabilisation to one of restructuring the world economy to reduce instability and improve the totality of economic relations between the developed and developing countries. NIEO was a development and extension of his concern for improving primary commodity price stabilization mooted by UNCTAD since its inception in 1964. It was however a more comprehensive approach to the problems of developing countries than the need to stabilise and give higher prices for primary commodities and strengthening the economic position of developing countries by a comprehensive programme of action.
The NIEO recognised that apart from the need to achieve better commodity prices, there were a wide array of deficiencies and biases in international economic relations that required correcting and changing. Dr. Corea was attempting to bring structural changes not only in commodity trade but the whole gamut of relations that were disadvantageous to developing countries.
NIEO envisaged change in all dimensions of international economic relations and embodied prescriptions for various ailments of the world economy, as well as provided a genuine basis for its future consolidation and development. It sought to restructure the pattern of international trade and flow of capital and technology to achieve more equitable distribution to developing countries.
The NIEO covered a wide range of international economic issues that included the orientation of the international monetary system toward the interests of the developing countries; production cartels along the lines of OPEC; commodity agreements to regulate prices and linkage of export prices in the developing countries to the prices in the developing countries by indexation; extension of preferential treatment in trade; and recognition of developing countries’ permanent sovereignty over their natural resources including the exploiting of the ocean floor and transfer of advanced technology to the developing countries on preferential terms.
The thrust of the NIEO strategy was dependent on North–South cooperation. It reflected Dr. Corea’s conviction, at this time, that North-South cooperation was necessary. He had implicit faith that the North would cooperate with the South as NIEO would stabilise the world economy and therefore benefit developed countries too.
However, most developed countries, especially the US, had major reservations. In their view, the NIEO implied dismantling of the market-based international economic system in which they had inherent confidence. While there was general recognition of the need for the restructuring of the world economy, little progress was made in the implementation of the NIEO proposals.
The reservations of the US mattered most. The US was of the view that the principal cause of developing countries poverty is not external but internal and that the drawbacks to adequate internal mobilization of resources for economic development were internal economic and political weaknesses. The reservations of the developed countries about its impact on the market economy resulted in little progress in the implementation of the NIEO proposals.
North South Cooperation
Dr Corea’s strategies were based on North South dialogue and co-operation between the developed and developing countries. He had faith in the international community co-operating to redress the inequities and imbalances in economic relations and their willingness to reform structures to establish a more just international economy. However the tardy progress on NIEO and the opposition of the developed countries, especially the US, appears to have shifted his thinking towards South-South cooperation after UNCTAD.
The South Commission
Dr Gamani Corea realized that the North South dialogue had reached its and was on the wane high point in the early years of the 1980s thereafter. During the Regan-Thatcher period, the thinking of developed countries and international institutions, veered towards the Washington Consensus, which viewed the problems of developing countries as being due to economic mismanagement and inappropriate non - market oriented macroeconomic policies.
Although Gamani Corea still remained a believer in the common interests of the North and the South, his thinking shifted to South-South cooperation and initiatives to strengthen cooperation among countries of the South. Dr. Corea had played a very active and central role in South-South cooperation earlier. He drafted the resolution which launched the Group of 77 at the conclusion of UNCTAD I in 1964. His interests and initiatives to strengthening South-South cooperation gained momentum, especially after he left UNCTAD in 1984.
He viewed South-South co-operation as an essential means of achieving an improvement in economic relations to benefit developing countries. He had a strong conviction that togetherness of the South was needed to redress weaknesses of the international economic system.
South Commission
The activities of the South Commission came to dominate his work after 1984. He was an active supporter of UNCTAD’s work in the establishment and of the South Centre. He played a very significant role in mobilising support for South-South Cooperation and the establishment of the South Commission under former President of Tanzania, Julius Nyerere.
Corea was a key member of the South Commission (1987-1990), a member of the Board of the South Centre (1995-1998), and Chairman of the South Centre’s Policy and Research Committee (1998-2001). He played an active role in directing and supervising the work of the South Centre that functioned under Dr Manmohan Singh as Secretary General. He chaired the South Centre’s Group of Experts on Financing for Development (2001). He chaired the Non Aligned Movement’s (NAM) Ad Hoc Advisory Group of Experts on Debt (1993-1994) and the NAM Ad Hoc Panel of Economists (1997-1998), that submitted its report to the XII Non-Aligned Movement Summit.
Conclusion
Gamani Corea sought relentlessly to establish a new economic order that would redress the injustices he perceived in the international terms of trade and economic relations. He sought to redress these to improve the poverty of nations. His commitment to UNCTAD and other initiatives and institutions to improve the economic conditions of developing countries was the defining character of his life.
From : http://www.island.lk/index.php?page_cat=article-details&page=article-details&code_title=113289
