Topics: A. Financing Developing Countries and                   Integrating Economies
            B. Urbanization

Michael Perl
Chairperson
YUNMUN X

Dear Delegates,

My name is Michael Perl, and I am currently a senior at Yeshiva University, completing a major in Finance and a minor in Political Science. My academic background in business, finance and political science provides me with a solid basis on which to chair the ECOFIN committee at the Model UN Conference. The objective of the ECOFIN committee is to explore the financial, political, and economic issues affecting developing and developed nations. These issues will be analyzed both independently and collectively.

In addition, I hope that my background in these areas will allow me to effectively guide you in your research and assist you during the committee sessions at the conference. Due to my participation in last year’s conference, I am now familiar with the procedures and requirements. I will be able to address any aspects of Model UN unclear to you. Please do not hesitate to contact me if you have any questions. I can be reached at (201) 862-0419 or via e-mail at mpcoke@aol.com. Good luck with your research and I will see you at the conference.

I would like to start by pointing out a few issues you should keep in mind when doing research for your position papers and for the conference itself. There are two distinct roles that each of you must play as a representative of your country.

The first role is to formulate your position paper. You must remember that as delegates you are representing your particular country. Your position paper should focus on the specific views of your country on the topic of discussion. Your paper is a statement of your country's beliefs and should not be influenced by the need to compromise at this initial stage. For example, one of our committee's topics will be urbanization. Within this broad issue, the role of immigration on a country's demographic composition will be examined. If your country currently has a high rate of immigration, your views would vary from a country in which immigration is not common.

The second role involves your participation at the committee sessions. During these sessions the delegates representing various countries will discuss and debate the topics. At the final stage of passing the resolution, some sort of compromise must be reached. The key to a successful compromise is for each country to work together with the interests of other countries to the effectual and fair resolution.

I would like to present brief descriptions of the main topic of discussions: first, financing developing countries and integrating economies and second, urbanization.

When one thinks about power, dominance, and control between countries, military strength is often the first concept that comes to mind. However, in today's world where military strife is unlikely between the dominant world powers, economic strength and capabilities have emerged as a more accurate measure of power and dominance. While no one will argue that a country cannot survive without an army, an army cannot exist without proper financing. The more emphasis the dominant world powers put on economic performance and growth opportunities, the more developing countries must improve their economic status. With this in mind, we can understand how achieving relative self-sustainability through a process of financing its economy is an important factor for a developing country to consider.

Since the end of World War II, developing countries have undertaken various strategies to limit their dependence on other countries, in their aim to become increasingly independent. These countries have participated in finance, trade, and investment activities within the international economic system, in an attempt to reap the financial benefits. On the one hand, developing countries sought to offset the advantages of the advanced industrial economies. On the other hand, they recognized the necessity to change their ways and adopt the preexisting system.

During the 1950's and 1960's developing countries attempted to modify the international economic system. Increased emphasis on imports became their primary development strategy. The countries protected their local economies through tariffs and exchange rates, in order to favor production for local consumption rather than for export. Nevertheless, these trade barriers that were supposed to be temporary started to become permanent. Developed countries that were able to afford the tariffs raised a number of concerns for developing countries, in terms of achieving goals of independence and economic development. As developing countries gained prominence in the world, they began to work together to try and change the international economic system. The developing countries hoped to convince the developed countries to adopt a new modified international economic system. In the 1960's, developing countries collectively formed the Group of Seventy-Seven (G-77), which soon grew to over 100 members, representing the interests of developing countries in the United Nations.

During the 1970's, the idea of reforming the international economic system reached its peak. The developing countries called for a New International Economic Order (NIEO). The combination of food shortages, the rapid increase in the price of oil, and a recession in developed countries caused concern for economic growth in developing countries. By the 1980's, the recession in developed countries and debt problems of developing countries made wealthy nations even less willing to distribute aid and promote major structural changes. The failure of the NIEO to bring about reform caused developing countries to seek other strategies for economic development. Countries had to develop new sources of exports to help pay for the accumulated debt. The export-oriented development of the 1980's was a complete transformation from the import-based ideology of the 1950's and 1960's. Currently, the main problems facing developing countries has not changed significantly since the end of World War II.

There are several theories regarding economic development that must be considered when discussing this topic of financing developing countries and integrating economies. Three distinct theories exist that discuss important issues to be addressed in order to ensure economic growth in developing countries.

(i) Liberal Theory. This theory claims that the existing international market structure provides the best framework for economic growth in developing countries. Assuming that there are appropriate internal economic policies in the developing country, the international economic system would provide a strong basis for rapid economic growth and development in the country. This form of economic growth can come through increased level of trade, foreign investment, and foreign aid flows.

(ii) Marxist and Neo-Marxist Theory. This theory opposes the Liberal theory of the international market system. Since primarily the developed countries dominate the international system, developing countries are considered subordinate members of the international economic system. Unlike the liberals who believe that the free flow of trade and investment is desirable for both the developed and underdeveloped countries, this theory argues that developed countries will make use of any wealth that may exist among the developing countries for their own economic purposes. This, in turn, will leave the underdeveloped countries severely poor in desperate need of economic assistance. Therefore, the Marxists and neo-Marxists believe that the only strategy for economic development in developing countries to be successful is to eliminate the international economic system and create a completely new system.

(iii) Structural Theory. This theory falls somewhere in between the Liberal theory and the Marxist theory. This theory is similar to the Marxist theory because Structuralists believe that promoting trade and foreign investment in the international system for developing countries widens the gap between the developing countries and the developed countries. However, the Structural theory differs from the Marxist theory because the Structuralists believe that the international system can be modified so that developing countries can prosper from it.

From the history of financing developing countries and the various theories of economic development, we can learn a lot about developing countries in the world today. There are various approaches that cover all sides of the spectrum. You must examine the various issues and determine which approach is best suited for your country. Three central topics to address are outlined below:

1) Multilateral or bilateral aid:

At what point does a country offer aid to developing countries and at what point does a country stop providing financial assistance? Is it better for the International Monetary Fund or World Bank to promote multilateral lending rather than individual donors? Is it appropriate to require recipients to restructure their economies, e.g. by initiating unpopular austerity programs? Are there any signs to look for in developing countries that may be signals of successful or failing economic growth?

2) Debt Relief:

How careful must a country be about getting into debt so that there is not another crisis like there was in the 1980's? What lessons may be learned from the Mexican currency crisis of 1994? Should rich countries be willing to forgive debt in order to help poor countries develop?

3) Trade expansion:

Urbanization is the process of changing from a rural or country setting to a town or city environment within a country. As countries and populations begin to urbanize, there are various issues that must be considered to ensure a successful transition. Demographic, ecological, political, and economic factors must be carefully considered, whether the issues are internal or external to the country or population.

Due to the rapid growth of population in poverty-stricken countries, there are many areas of insecurity and stress caused by urbanization which countries must cope with. The first problem to be addressed is the limited availability of resources. It is estimated that about 60 percent of the world's most indigent people are living in areas with poor ecological living conditions. One of the major problems associated with living in an unsatisfactory ecological environment is deforestation. For instance, there is an excess demand for firewood and an associated limit in its supply. Furthermore, cutting down trees prematurely leads to soil erosion and flooding.

A second issue to consider in the rapid growth of population is the increase in birth rates as well as the increased prevalence of immigration. Both legal and illegal immigrants live in various countries and utilize the country's limited resources. By doing so, immigrants may be taking necessities away from those who were born and lived in the country for many years. While legal immigrants have a right to live in the county they moved to, illegal immigrants are very difficult to monitor.

A third ecological consideration that must be addressed is the shortage of water, especially in the Middle East. Countries accuse each other of stealing from their water supply. In addition, urbanization can cause there to be a lack of food leading to malnutrition and starvation. While the world food production is increasing at a slightly faster pace than the world population, food production per person actually declined between 1992-1994 in at least seventy countries.

A fourth issue dealing with urbanization is the role that cities play. A significant number of people are migrating into cities due to greater economic opportunities. In fact, from 1965 to 1990 the number of people living in cities in developed countries increased from 36% to 50%. During the same time period, the population living in cities in developing countries more than doubled, rising from 18% to 38%. This demographic transition requires the cities to have adequate resources like food and water. Certain resources such as food can be imported from other countries to help feed the people in the cities. However, other resources such as water cannot be imported as easily. This is a significant problem for growing cities because water is a necessity for drinking and for sewage treatment. A shortage or lack of water can pose many problems for cities.

Finally, political considerations also contribute significantly to the process of urbanization. Political instability within countries has made people living in such circumstances realize the importance of economic stability. Historically, people tend to migrate to larger cities for job opportunities and for stable economic conditions. However, contemporary migration consists of many refugees fleeing military conflict, ethnic violence, and the collapse of various states. Any country or city that acquires immigrants must be aware that some may be illegal regardless of their reason for immigration. As mentioned earlier, illegal immigrants may threaten the limited resources of the city or country.

As we look ahead to the future, it will be quite difficult to supply housing, sanitation, transportation, jobs, security, and other amenities for the rapidly growing number of new urban dwellers. Countries and cities must determine a method to retain the new urban dwellers so that they do not detract from those who live in these places already. If countries and cities cannot develop such a method then perhaps the focus should be on limiting the number of new urban dwellers. If there is an increase in urban dwellers, how should your country address the problem of limited resources? Food and other resources may be available to import, but what about other resources such as water, which is difficult to import? Are there ways that your country can accommodate more urban dwellers without taking away jobs, security, housing, and other amenities from those people already living there? Are there any methods your country can use to limit the number of illegal immigrants?

Klare, Michael T. and Yogesh Chandrani. World Security Challenges for a New Century. 3rd ed. New York: St. Martin's Press, 1998.