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DISCLAIMER: Delegates, as your chair in this topic I believe it is my job to help and facilitate
information to achieve constructive debate. Therefore, I s​ trongly
​
suggest you access the
links in the Works Cited section, since they include valuable videos and more in-depth
explanations on what I have written on. I hope you are able to understand the topic, I am
able to be emailed at [email protected]
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Introduction to Topic
The world has just come out of the Great Recession. Millions of dollars have been
lost due to the 2008 crisis. Political instability (Brexit, American election, Middle Eastern
conflicts) have caused major challenges during 2016. Still, 2016 was a good year for the
global economy, all things considered. The global economy is still growing, although at a
slower pace than before. Renewable energy is gaining ground, with major nations pledging
to invest more than 350 billion USD. Life expectancy is at an all-time high, causing growth in
emerging markets.
The economic future looks uncertain. A surprise raise of interest rates by the
American Federal Reserve can cause unexpected consequences. The election of Donald
Trump and the growth of the alt-right has completely changed the politico-economical
landscape. Millions of refugees flee from their homes. Many nations have used the tools they
had to prevent economical crisis in 2008, and the global economy is unlikely to be able to
handle another recession. Due to the banking crisis, the way companies and organizations
get funding has radically changed with the rise of new ways of financing such as
crowdfunding and grassroot initiatives (see the yesmagazine and forbes links in the works
cited for more detail).
As the “United Nations’ central platform for reflection, debate, and innovative thinking
on sustainable development.”, it is your job as delegates to come up with resolutions that will
come up with a new approach to global financing and investments, and to guide the world’s
economy towards the right path.
Key Terms
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Ethical Banking
- It is the term that “encompasses any banking system that embraces
environmentally and socially conscious practices. While the banks still try to
earn profits, they try to do it in the way that's consistent with their practices.”
These practices may include community involvement, sustainable practices,
and ethics.
- Even though banks provide a wide-variety of services, since they are for-profit
companies, they generally don’t provide loans to clients with a chance of
-
-
-
defaulting (this applies to international banks and developing countries). The
result is that lower-income people have less opportunities to save and borrow
money.
Proponents of ethical banking argue that normal banking practices trap
lower-income neighborhoods and countries in a cycle of poverty since they
don’t have the funds to exit said poverty. The development of these
communities would benefit both governments (through tax), companies (since
more products are bought), and citizens.
The finweb link in the Works Cited goes into great detail about this important
issue.
Investing
-
-
“Investing is the act of committing money or capital to an endeavor (a
business, project, real estate, etc.) with the expectation of obtaining an
additional income or profit”
Synonyms: backing, depositing,
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Financing
- It is the act of “providing funds for business activities, making purchases or
investing. Financial institutions and banks are in the business of financing as
they provide capital to businesses, consumers and investors to help them
achieve their goals. The use of financing is vital in any economic system, as it
allows companies to purchase products out of their immediate reach.” Investopedia
-
LEDC
Least Economically Developed Countries, or LEDCs, are nations with the lowest
socioeconomic development. They must meet 3 criteria to be an LEDC:
1. Poverty - They must have a Gross National Income (GNI) lower than 1,035
USD to be put on the LEDC list, and must surpass a GNI of 1,242 USD to
“graduate” and to be removed from the list. GNI measures the output of
citizens of a nation, how a nation’s resources are used and the strength of an
economy
2. Human Resource Weakness - Based on national literacy, nutrition, health,
and education.
3. Economic Vulnerability - Calculated based on the instability of agricultural
production, instability of exports of goods and services, economic importance
of non-traditional activities, merchandise export concentration, handicap of
economic smallness, and the percentage of population displaced by natural
disasters. It measures how stable an economy is.
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GDP
Gross Domestic Product, or GDP, is a measure of a nation or region’s economic
performance, and is used to make international comparisons. It calculates the market
value of all final products and services produced within a timeframe (monthly or
yearly).
Major Organizations Involved
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UN Department of Economic and Social Affairs (UNDESA)
According to their website, UNDESA performs various tasks central to a global
economy. They:
1. Facilitate the organization of summits and conferences for both the GA and
ECOSOC in order to find common ground
2. Organizes consultations with major stakeholders (both the public sector and
civil society), mainly to “promote progress toward and increase accountability
in achieving the Sustainable Development Goals.
3. As main “author” of the Department of the UN Secretariat, it creates, analyzes
and compiles data in a wide variety of issues in order to guide governments in
decisions and global policy decisions.
4. Helps governments implement policies and programmes from UN resolutions.
UNDESA is a valuable tool when using information, and will gladly provide their
data to any initiative taken by the ECOSOC committee.
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UNEP Finance Initiative
The UNEP Finance Initiative, or UNEPFI, is a partnership between the UN and the
global financial sector (with the cooperation of more than 200 financial institutions) to
promote sustainable financing. Every 2 years they come together to foment by dialogue
between finance practitioners, supervisors, regulators and policy-makers at a national level,
and, at the international level, they promote financial sector involvement in processes such
as the global climate negotiations.
The Finance Initiative is crucial in making sure that financing at any scale takes the
climate into account, and with the recent pledges from China and other nations, climate will
take an even bigger role on the economic world.
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World Bank
It is one of the most important organizations in relation to LEDCs, providing
low-interest loans and helping development in LEDCs, with a focus on reducing
poverty. Any approach that will create programs or fund activities in LEDCs should
consider assistance from the World Bank. There is also criticism concerning the
World Bank, since it makes the borrowers accept loan conditionalities, which may
cause a problem if the WB doesn’t take into account the countries needs.
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AIIP (Asian Infrastructure Investment Bank)
Created on 2014 by China and 20 other Asian nations, the AIIP is the Asian
equivalent of the World Bank, and even though it is very similar to the Asian Development
Bank (ADB), the AIIP has a strong focus on infrastructure. Still though, it has been boicoted
by the USA and ​the Economist warns that “a China-led bank may fail to live up to the
environmental, labour and procurement standards that are essential to the mission of
development lenders.” Still, it is rises against the power that Japan holds in the ADB and the
delays in the IMF reforms to give China more power. It also hopes to address the demands
of the Asian continent’s infrastructure. As stated by Straits Times “countries in Asia need
US$8 trillion (S$10 trillion) to cover their national infrastructure needs for the period 2010 to
2020. This works out to an average of US$800 billion a year. Currently, ADB lends only
about 1.5 per cent of this amount annually.”
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UNPRI
According to its website the UNPRI “works to understand the investment
implications of environmental, social and governance (ESG) factors and to support its
signatories in incorporating these factors into their investment and ownership decisions.
The PRI acts in the long-term interests of its signatories, of the financial markets
and economies in which they operate and ultimately of the environment and society as a
whole.”
It has over 1,500 signatories, and is a major organization in investment supervision. It
is also a partner of the UNEPFI
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IMF
The IMF, or International Monetary Fund, was created alongside the World Bank
after WW2 to guarantee economic stability
Major Nations Involved
United States of America
The United States of America is the world’s largest economy in nominal terms (which
means when not adjusted for inflation). Its currency, the US Dollar (commonly referred to as
dollar or USD), is the world’s biggest reserve currency, used by governments to save money
as it is a very stable economy. It also holds the world’s largest stock exchange, the NYSE,
which takes a very important world in the global economy.
As one of the world’s economic powers, the US and its government’s actions will
greatly affect how global financing will develop in the future.
The European Union, China, Japan, UK, other “BRICS” nations
Alongside the US, they are the biggest economic powers, as of 2016. They
perform major roles in the global economy, and will surely bear most of the responsibility.
They also hold the rest of the nations in the SC with veto power, so they will play an
important part in the diplomatic side of this issue.
Overview
Growth is stagnating globally. The 2008 crisis hasn’t been properly solved. Debt is
still very high, with nations such as the US, China, or Japan having more debt than their
GDPs can pay back. If this isn’t fixed, it can lead to a bigger crisis than the Great Recession,
and even the Great Depression, that led to the second World War.
Technologies and societies are evolving at an incredible pace. The economy, and the
way we approach economical problems, is not evolving at all. The Great Recession was
caused by overconfidence on banks and the price of housing skyrocketing. Banks are still
being rescued all the time, maintaining an economic status quo. The new generation still
can’t afford housing. If this doesn’t change, the global economy will never recover.
A new approach to global financing and investments is needed. It has been proven
time and time again that new times call for new measures. Companies are still getting
funding the same way they did in the 1950s. We, as the ECOSOC committee, need to push
change in order to fulfill our objective, to think innovatively on the economical problems of e
world.
Past solutions
Since 2008, the solutions offered have been to maintain status quo by gaining debt and not
letting companies go bankrupt. No major steps have been taken to tackle the issues that
caused the financial crisis.
Possible Solutions
All solutions have to concentrate on a radical change on investment priorities. Since
2008, all the resources available have been transferred to financial institutions, states (public
debt), and the elder (pensions). This has been an enormous waste of resources. We need to
refocus on investing on the future. This could involve many possible actions:
1. Let financial institutions fail, so new ways of financing are created.
2. Restructure public debt to the older generations and invest in the youth, in education,
and in research.
3. Focus in productivity to increase growth
4. Increase foreign direct investment (keeping in mind foreign direct investments fell 5%
in 2016)1
5. Stop/limit the indebtment of a generation by an older generation, especially since
governments are reducing investments on the future.
1
OECD
​www.oecd.org/corporate/mne/statistics.htm
6. Encourage competitivity and reduce monopolies or double-monopolies (See the
famous Time Warner - Comcast internet monopoly. See the new yorker link for more
info. A brief example is this graph
(​http://upw-prod-images.global.ssl.fastly.net/nugget/53ece3532667ed5cf6000024/att
achments/NoOptions-cb50a685dac606a902cbb7e53132c0f7.png​) .
Works Cited
(Website)
​https://www.un.org/development/desa/en/about/what-we-do.html
http://www.reuters.com/article/us-china-energy-renewables-idUSKBN14P06P
http://www.economist.com/news/finance-and-economics/21709355-clean-energy-surges-sodoes-price-coal-wind-and-solar-advance-power
http://dictionary.cambridge.org/dictionary/english/invest
http://www.investopedia.com/terms/i/investing.as
https://russellinvestments.com/us/insights/articles/2017-global-market-outlook-video
http://www.worldbank.org/en/about/what-we-do
http://www.worldbank.org/en/about
http://ec.europa.eu/eurostat/statistics-explained/index.php/Glossary:Gross_national_income
_%28GNI%29
http://data.worldbank.org/indicator/NY.GNP.ATLS.CD
http://www.investopedia.com/terms/f/financing.asp
https://www.merriam-webster.com/dictionary/financing
http://www.finweb.com/banking-credit/what-is-ethical-banking.html#axzz4S4hnf2eC
http://www.imf.org/external/pubs/ft/weo/2016/02/weodata/weorept.aspx?pr.x=25&pr.y=9&sy=
2015&ey=2020&scsm=1&ssd=1&sort=country&ds=.&br=1&c=111&s=NGDPD%2CNGDPDP
C%2CPPPGDP%2CPPPPC&grp=0&a=
http://www.investopedia.com/articles/forex/072915/how-petrodollars-affect-us-dollar.asp
"The Implementation of Monetary Policy – The Federal Reserve in the International Sphere"
https://www.adb.org/about/policies-and-strategies
http://www.economist.com/blogs/economist-explains/2014/11/economist-explains-6
http://www.finweb.com/banking-credit/what-is-ethical-banking.html#axzz4S4hnf2eC
http://www.newyorker.com/news/daily-comment/we-need-real-competition-not-a-cable-intern
et-monopoly
Personal Interview to Pablo Baroja