Chapter

2 Global Perspectives on the Issues

Editor(s):
James Boughton, and K. Lateef
Published Date:
April 1995
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The opening session of the conference was designed to introduce the issues for discussion from the perspective of the institutions and major policymakers. The conference was convened by M. Saifur Rahman, the Minister of Finance of Bangladesh and the 1994 Chairman of the Boards of Governors of the Fund and the World Bank. His statement was followed by those of the heads of the two Bretton Woods institutions: Michel Camdessus, Managing Director of the IMF, and Lewis T. Preston, President of the World Bank Group. The conference was then officially opened by the Prime Minister of Spain, Felipe González.

M. Saifur Rahman

It is my pleasure as Chairman of the Boards of Governors to welcome all of you to this fiftieth anniversary conference to discuss the future of the IMF and the World Bank. Facing the future and meeting the new challenges call for a review of past experiences and the lessons learned.

Today, we look back over a 50-year period, starting from the point when the most destructive war of all time was just beginning to wind down. Unquestionably, there has been enormous progress. The United Nations Development Program has estimated that the developing countries as a whole achieved a pace of human development in this period three times that attained by the industrial countries a century ago (United Nations Development Program, 1994, p. 1). Significant progress has been achieved on key indicators like infant mortality, overall life expectancy, and adult literacy, with a steady growth in global GDP, which has increased sevenfold. Even though the world population has somewhat more than doubled, per capita GDP has trebled over the course of these 50 years.

Within that overall picture of progress, several aspects most clearly reflect the impact of the Bretton Woods institutions: coordinating management of economic crises, such as the oil shocks of 1973 and 1979 and the Latin American debt crisis of the early 1980s; the rapid spread of physical infrastructure and agricultural technology; the response to changing political environments; and the contributions to the much greater consensus on the merits of the market economy.

We must give great recognition to the wisdom of our forebears at Bretton Woods and our predecessors on the Boards of Governors over the last half century: to the former for establishing the basic principles of organization that have enabled the institutions to remain adaptable and flexible and thus to contribute positively to a world inevitably different from the one they expected, and to the latter for ensuring that the lessons of experience were continuously learned and that adjustments were made in the institutions’ policies and procedures.

Fully consistent with the original intent of our architects and illustrative of their success has been the progressive graduation of members from borrower status as they ceased to need direct support for their financial operations. The great expansion of private equity flows to a number of developing countries in recent years can also be seen as the eventual realization of a dream our founders had half a century ago.

Despite dramatic improvements in living standards throughout much of the world over the last 50 years, poverty continues to dominate the lives of more than a billion people. As Lewis Preston has so aptly observed, “the development agenda remains unfinished” (Preston, 1994). Thus, the task ahead is to contribute to the rapid reduction of poverty and to the gradual convergence of living standards and opportunities across the world by assisting lagging countries to meet their peoples’ aspirations to attain—and sustain—acceptable levels of human welfare. Accordingly, strategies to address poverty should have a central place in plans for the future of the Bretton Woods institutions.

Within this overriding objective there are of course several interrelated tasks: fulfillment of equal rights and welfare for women; successful management of the vast wave of urbanization that is in store for many of the poorer developing countries; modernization of inefficient systems of public administration to deliver good governance; prevention of Malthusian outcomes from the pressure of rising populations and economic activity on limited natural resources; and resolution of the interstate disputes that arise from increasing economic interdependence and pressure on common resources.

Success in these formidable tasks will demand much more than stock solutions. The history of the past generation has demonstrated dramatically the power and significance of ideas transmitted from one country to another but adapted to the particular situation of the recipient. The rising demand from people in all parts of the world for recognition and participation underscores that such adaptation to local circumstances will be even more important in the future.

From our institutions’ experience in helping member countries develop policies and institutions that make investments sustainable, promote growth, and reduce poverty, a number of broad guiding principles have emerged for the future. I would like to spell out a few of them, on which I believe convergence of views between the institutions and the member countries—and between the World Bank and the Fund—will contribute significantly to fulfilling their mandate successfully.

Both institutions should contribute substantially to the open economic debate that is ever more essential in member countries to develop implementable policies. The Bank and the Fund are in a unique position to help because they alone combine familiarity with both the problems that preoccupy us at any particular moment and the persons who have recently wrestled with similar problems in other countries.

Both institutions should give greater attention to local government systems and to legal systems to support member countries’ efforts to better protect the rights and interests of the poor and to better reflect them in the design and implementation of development programs. Strengthening local government is critical to the reduction of poverty and to the establishment of a system that is truly accountable to the local electorate. It is also necessary to develop better arrangements for consulting the people potentially affected by the design and impact of programs to be undertaken. I welcome efforts by both the Fund and the Bank in these directions.

As brought out by the recent debates on what has come to be called “ownership,” both institutions must always bear in mind the invaluable lessons of experience: that successful outside intervention in development involves moving at the pace of the people, responding to their needs as they understand them, and reflecting the degree of conviction generated. Also, the intervention should be designed in a manner that seems equitable to the people. The process of preparing such intervention has therefore to be flexibly phased and suited to the institutional, political, and cultural context of the people.

The fiftieth anniversary of the Bretton Woods institutions has generated widespread interest and has stimulated debates about their achievements and the tasks they have to face to meet the challenges of an increasingly integrated global economic order. These deliberations have spawned a number of useful ideas. Strengthening the governance of the Bretton Woods institutions, increasing their internal efficiency and effectiveness, streamlining the design and processing of projects and programs, emphasizing beneficiary participation, supporting environmentally sustainable development, and promoting private sector and market-oriented development are all desirable goals. We are happy to observe that both the Fund and the Bank have taken commendable steps in these directions.

As the world economy becomes more integrated, the global financial system is increasingly influenced by the economic policies of major industrial nations. Unsatisfactory international economic situations in the recent past can be attributed to weak policy coordination among the major industrial countries. I support the view that these countries should strengthen their fiscal and monetary policies, achieve greater macroeconomic convergence, and establish a more formal system of coordination. The IMF should undertake this coordination function by exercising effective surveillance over the macroeconomic policies of these countries (Bretton Woods Commission, 1994, p. A-1).

Although private equity flows to a number of developing countries have increased in recent years, the poorest among them have yet to benefit from such a resource flow. These countries continue to need official development assistance for investment in infrastructure and human resource development. I therefore strongly support the view that International Development Association resources should be solely devoted to the poorest and least developed countries with weak institutional and technical capabilities (Bretton Woods Commission, 1994, p. A-9).

The success of the programs and projects of both the World Bank and the Fund will largely depend on the commitment of the member country concerned to the pace of social and economic changes. Our vision of the future is inspired by our firm and unequivocal commitment to freeing the vast masses of humanity from the curse of poverty and the pains and indignity that it entails, and to preserving and indeed enriching the global environment to make our planet more habitable.

In conclusion, I would like to thank those who have organized this conference and congratulate them on the preparation of a stimulating agenda, which will, I hope, generate many new and bright ideas for the meaningful future of these remarkable institutions. I look forward very much to the outcome of these deliberations.

Michel Camdessus

It is my pleasure to welcome you to this conference on behalf of the IMF. We are commemorating an international economic conference that has proved to be of unrivalled importance because of both the agreement it produced and the benefits that the working out of that agreement have brought to the world. Mr. Rahman has mentioned the unprecedented economic progress of the past 50 years, and few would question that the multilateral economic cooperation born at Bretton Woods has contributed vitally to it. In fact, it now seems so obvious that the institutional structure created at Bretton Woods was needed by the world that it is difficult to comprehend, and easy to forget, the opposition the founders faced. A distinguished historian of the negotiations who is with us here today—Ambassador Gardner—has called the agreement a “miracle” because of the opposition to multilateral economic cooperation that was prevalent at the time on both sides of the Atlantic. As he has written, the agreement was made possible in part by leaders of vision “surrounded by dedicated internationalists of great intellectual ability.” Several of those dedicated internationalists are here with us this morning, and it is a privilege to salute them. The achievement of those who contributed to the Bretton Woods agreement is a continuing source of inspiration and encouragement for all of us working to advance the cause of international economic cooperation.

Over the past 50 years, the IMF’s role and activities have grown and changed dramatically. This is not because its purposes have changed: its statutory purposes, set out in the Articles, are the same as when they were formulated 50 years ago. We all know them well. In fact, some of us carry them around in our pockets! They remain equally valid today, and in fact they have become even more relevant as growing economic inter-dependence among nations has increased the need for international cooperation on economic and monetary issues. But for the fulfillment of these purposes, the IMF has had to adapt its operations to a changing world economy and in the light of lessons learned about economic policy.

In the world economy, we have seen, for example, the emergence and increasing role of developing countries; a trend toward greater symmetry in economic size among the industrial countries of North America, Europe, and Asia and an associated trend toward shared leadership among them; the emergence of a multicurrency system of reserve assets; increasing international integration of markets, especially financial markets; a trend toward regional integration in many parts of the world; and the integration of the former centrally planned economies into the world market economic system and the Fund itself. Dramatic changes indeed! Of course, some of these changes have been assisted by the work of the Fund and the World Bank, since by promoting an open, multilateral system of trade and payments and policies of adjustment and reform, the institutions have contributed to the international integration of markets, to postwar prosperity, and to the demonstrated success of market-oriented economic systems.

Then there are the lessons of five decades about economic policy: for example, that restrictions on capital movements are less useful and more damaging than they were viewed 50 years ago; that macroeconomic policies need to be conducted within a medium-term framework of monetary stability and fiscal discipline, and supported by structural policies, even for the most basic macroeconomic objectives (such as high levels of employment) to be attained; that the institutional capacity to design and implement policy is a major determinant of success; and finally, that although pegged exchange rate arrangements—albeit with some flexibility—do have distinct advantages, the requirements of maintaining such arrangements are demanding.

The Fund has had to adapt to these lessons and changes. First, it has adapted its role in the exchange rate system. Following the collapse of the par value system, the right of members to choose their own exchange arrangements was recognized by the Second Amendment of the Articles in 1978. The Fund was given responsibility for overseeing the international monetary system and the policies of members in order to promote a stable system of exchange rates. Surveillance, convergence, and cooperation became the building blocks on which exchange stability and the proper functioning of the international monetary system had to be established. Fund surveillance has thus become an even more challenging task.

Second, as the industrial countries have increased their reliance on growing private capital markets for balance of payments financing and been more willing to allow their exchange rates to change, the Fund’s financial assistance has become concentrated on developing countries and countries in transition. In addition, new financing facilities have been created to take account of the need for medium-term policy programs, structural reforms, concessionality for low-income countries, and special help for the economies in transition to shift to multilateral, market-based trade. These adaptations have enabled the Fund to continue providing balance of payments support as its membership has expanded and changed in composition, and as the world has evolved.

Third, technical assistance and training by the Fund in its areas of expertise began in earnest in the early 1960s with the burgeoning of newly independent developing countries and has grown dramatically in recent years, especially to help with institution building and policy implementation in the countries in transition.

These are some of the ways in which the Fund has had to adapt in order to continue serving its membership and its unchanged purposes.

I have been speaking about the past. But this conference is concerned with the future. At present, there are many black spots in the global picture, and, at times, when we see how difficult it is to put together an adequate response to new challenges, we could ask ourselves: Where is the spirit of Bretton Woods? What would our founders have said? What would our founders have said, in 1994, on seeing that unemployment in Europe is at its highest levels since the 1930s; on seeing the industrial countries’ hesitation in reciprocating the dismantling of trade barriers by developing countries? I will stop this list of impertinent questions here. Yes, we face many challenges as we enter our second half century. Let me mention a few of the questions we at the Fund face—perhaps they will enter into your deliberations over the next two days:

  • How can Fund surveillance be strengthened further, in order to promote greater stability in markets and ensure that the increased economic interdependence of countries is more effectively translated into a positive-sum game?
  • Should the Fund pursue more keenly a return to pegged exchange arrangements among the industrial countries?
  • Should the Fund encourage more actively the liberalization of capital account restrictions?
  • A number of countries that have been implementing strategies of adjustment and reform have yet to see much reward in terms of faster growth: how can the growth-generating effects of our programs be speeded up?
  • Do the Fund’s financing facilities need to be adapted to suit the needs of the membership in our new world of globalized markets?
  • How should the role of the SDR evolve, given the objective, stated in the Articles, of making it the world’s principal reserve asset?

Some of these questions will doubtless be addressed by the Governors in their meetings over the next week. I shall be most interested in the views expressed by the distinguished participants in this conference on these and other issues, before offering you my thoughts and reactions at the end of our work tomorrow.

Our fiftieth anniversary is providing an extremely productive stimulus to reflection on our past and our future. This conference is a central event in our celebrations, and I am sure it will be a rewarding experience for us all.

Lewis T. Preston

I would like to thank Prime Minister Felipe Gonzalez for being so generous with his time today and the Government and people of Spain for their warm hospitality. I would also like to join in welcoming all of you—many of whom have contributed so much to development—to this conference.

Importance of Flexibility

This is an occasion to praise the visionaries at Bretton Woods. Perhaps their greatest achievement was the flexibility they allowed the World Bank: to become global in its membership; to evolve into the World Bank “Group”—establishing the International Development Association (IDA), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA); to leverage about $10 billion in paid-in capital into more than $300 billion in loans and credits; and to support over 6,000 projects in over 140 countries with financing and—equally important—with objective advice.

This flexibility has enabled us to help our members respond to diverse challenges: from assisting postwar reconstruction in Europe and Japan to boosting food production in South Asia; from assisting the newly independent nations of Africa to helping Latin America overcome the debt crisis; from supporting China’s integration into the global economy to assisting the transition economies in Central and Eastern Europe and the former Soviet Union.

Flexibility has been the key to the World Bank Group’s effectiveness in the past. It is our most powerful asset as we think about how best to serve our members in the future.

Fifty Years of Development Experience

The delegates at Bretton Woods could not have predicted the speed or scope of development progress over the past 50 years. Life expectancy in the developing countries has improved more than during the entire previous span of human history; child mortality has been reduced by two thirds; a disease like smallpox, which was killing 5 million people a year in 1950, has been eradicated; average per capita incomes in the developing world have doubled; the GDPs of some economies have quintupled; the developing nations have become increasingly integrated into the global economy; and large numbers of people have been able to lift themselves out of poverty. In the process, the world has united as never before to support development. The Bretton Woods institutions played a major role in financing and coordinating this support.

The development effort has been a success. But it could have been even more effective had we known at the outset what we know today. Until relatively recently, there was excessive trust in the capacity of governments to manage activities that the private sector can undertake more efficiently; protectionism too often won out over competition; insufficient attention was paid to the environment; primary education was underrated; and women were not allowed enough access to development opportunities.

In the 1960s, many economists were more optimistic about sub-Saharan Africa than East Asia. Yet East Asia proved to be the “miracle” of the developing world—and sub-Saharan Africa its most daunting challenge. It is the only region where poverty is projected to increase by the end of this century. It is not, however, the only region where poverty remains pervasive. Over a billion people still struggle to survive on about a dollar a day.

Major Challenges

There are certain fundamental components that can help to achieve rapid and sustainable development. Applying these common elements across a range of increasingly diverse country circumstances is the great challenge facing us all.

First, we know that people are the means and the ends of development. Investment in human resources is linked to productivity and employment, as well as to slowing population growth rates and accelerating poverty reduction. Education is the building block. No nation has managed to take off economically with a literacy rate of less than 50 percent. Institutional strength and a country’s ability to compete in a rapidly changing world depend on its trained people.

Yet too many countries still invest far too little in their people. Almost one hundred million girls in the developing countries never get the chance to go to school. Early childhood development should be given much higher priority, and we must commit ourselves to the goal of universal primary education within the next generation.

Second, good policies are crucial: macroeconomic stability; openness to trade, investment, and technology; and adequate social and physical infrastructures. The critical role of good policies is encouraging, because it implies that countries that have not so far prospered can do so. Countries like Ghana, Uganda, and others in sub-Saharan Africa that have stayed the course of reform are seeing signs of success.

Liberalizing an economy, however, brings its own set of challenges. As markets expand, a country’s institutional capacities—legal, financial, and regulatory—need to keep up; safety nets must be in place to protect vulnerable groups; and the pace of reform has to be governed by a country’s own view of what is practical. Mexico and Poland, for example, have shown the benefits of speed. China, however, demonstrates that a more gradual approach can also be effective. But whatever the sequencing, a country’s commitment to continuous structural change is essential—as is the building of a consensus to support it.

Redefining the roles of state and market is the third challenge. Governments cannot do everything, so they must focus on what is essential. A healthy private sector reduces the burden on government; it broadens participation in the running of an economy; it attracts savings—domestic and foreign—to sound investment; and it promotes growth and jobs.

The revolution in economic management in the developing countries is well under way, but it is still far from complete. We must do more to nurture private sector growth, because that will enable more countries to become competitive and to integrate into the global economy. Experience tells us that this integration offers the best hope of prosperity. This places a premium on measures to open up world trade—particularly through speedy ratification of the Uruguay Round and by helping to bring the countries of Central and Eastern Europe and the former Soviet Union fully into the international trading system.

The fourth challenge is environmental sustainability. Two billion people in the developing world are without adequate sanitation; four million children died last year from acute respiratory diseases brought on by air pollution; almost another four million died from diarrheal diseases caused by dirty drinking water. These issues must be given priority on the environmental agenda.

We have learned that poverty reduction and environmental protection are mutually reinforcing. We must do more to act upon that knowledge.

It seems to me that another major lesson of development experience is that economics—by itself—is not enough. Good governance is imperative—accountability, transparency, and the rule of law. People must be allowed to participate in the decisions and actions that affect their lives. Resources must be allocated and used efficiently. For example, the developing countries currently spend as much on arms as they do on education. It should also be noted, of course, that the industrial countries spend ten times more on arms than they do on development assistance. This must change.

Ultimately, development can only come from within. Aid—when it is used efficiently—can help to supplement it. Twenty countries have now graduated from IDA. One of these is the Republic of Korea, extremely poor in the 1960s but today a vibrant economy, able to rely on its own savings and private capital for continued growth. This is an example of development assistance at its best. We should recognize, however, that without internal commitment neither external financing nor advice can transform economies.

Role of the World Bank

The task before the development community now is to implement what we have learned. The World Bank Group is well positioned to help. We have a long-term association with virtually every developing nation, a wealth of cross-country experience, and a service that combines finance—for public and private investment—and advice. We can tailor that service to individual country needs.

Like them, however, we too must adapt to change. Yes, the World Bank Group has been flexible in the past. But given the rapidly changing global environment—and the increasing diversity of our membership—we must be even more flexible in the future:

  • To strengthen our focus, we must be more selective in the tasks we undertake;
  • To enhance our impact—and that of others engaged in development—we must expand and deepen our partnerships;
  • To increase our responsiveness, we must be even more cost-efficient and dedicated to excellence.

A development institution can ensure its credibility only if it is effective where it matters most: by getting results on the ground.

Conclusion

On this fiftieth anniversary of Bretton Woods, we have a tremendous opportunity to make rapid and sustainable development progress. Global links between the rich and poor countries are much stronger than they were five decades ago; policymakers have a better understanding of the options for development; and there is more agreement about what needs to be done. Now we need to do it.

Felipe González

I would like to welcome you cordially to Spain on this first opportunity I have to meet with you all. I thank you on behalf of the Spanish Government for having chosen to hold this conference in our country, and I am personally grateful for your kindness in inviting me to open this commemorative conference on 50 years after Bretton Woods.

I think that commemorative sessions are of interest when they are an opportunity to reflect on the future through past experience. The purpose of my remarks today will be to take a look at the tasks that await us and the challenges of our societies to attain, through our financial, economic, and monetary institutions, the development and well-being of our peoples.

Please allow me, both as a Spaniard and as a repository of governmental responsibility granted to me by the people, to make a brief introduction. Fifty years ago, Spain was not at the Bretton Woods conference, nor was it at the birth of the United Nations. Fifty years ago, our country was enduring the pain of profound wounds from a cruel civil confrontation and was slipping along a path of authoritarianism and isolation.

Today, Spain welcomes the meetings of the International Monetary Fund and the World Bank; today, Spain is an active, decisive member of the European Union. Today, my country participates in solidarity with United Nations peace missions and sits on the Security Council. Today, Spain is a country that is growing and developing in liberty, a country that has made democracy and the protection of human rights the basic principles of its coexistence. It has opened windows to the world in efforts to modernize its economy, becoming part of global financial and trade flows.

The Spanish people have made a tremendous effort to get this far. Fifty years ago, we were not able to collaborate. Today, we want to contribute to designing the future with the conviction that the world is increasingly interdependent and that we need to cooperate intensively.

In the last five years, political changes have decisively altered the framework of international relations, making interdependence an obvious and daily phenomenon. Today, we have common challenges that we must face in a coordinated fashion. We have shared problems that require solutions negotiated by all; above all, we have the obligation to cooperate, to the extent of our possibilities, to bring about a future worthy of the men and women of our societies.

President Franklin D. Roosevelt, a few days before the Bretton Woods conference, said that the situation of each country should be of interest to all of its neighbors, from the closest to the most remote; no country could face on its own the economic, financial, and employment problems shared by all nations.

It is not strange, therefore, to see that the spirit of interrelationship is embodied in the Articles of Agreement that were the origins of the International Monetary Fund and the World Bank. If we take a jump forward in history to the present, we see that no one would argue with the need to coordinate our actions around institutions with proven efficacy in their performance, in the context of growing international interdependence. I would like to emphasize this point further.

The experience of Fund and Bank operations offers us, in general terms, a clearly positive balance sheet. There are, of course, concrete aspects that could be improved and others that have not shown sufficient progress in favor of the international community. However, let us imagine for a moment how international economic relations would have developed had there been no institutions born at Bretton Woods.

At the risk of appearing utopic, I daresay that our conclusion would probably be that, if these institutions did not now exist, they would have to be created. The transformations that have taken place have challenged the ability of the International Monetary Fund and the World Bank to adapt to changing circumstances. Once again, we can see light and shade, but on balance, the ability to react to resolve new problems that have arisen over the years seems to me to be positive as well.

If this fiftieth anniversary had been held only a few years ago, perhaps our reflections might have been very different from today’s. Perhaps at that time we might have had a debate with more ideological tones. Today, however, we can focus on how the institutions function, and we can discuss their various reforms and their capacity to adapt to a world situation very different from the one existing only seven or eight years ago.

If we take as an example the International Monetary Fund, we see that its role has been gradually evolving. It has essentially moved from being an institution fundamentally devoted to international financial order and for industrial countries to assuming a more active role with developing countries in general and with the middle-income countries in particular. Developing countries have found in the Fund an institution able to provide and sometimes impose economic criteria that have allowed them to overcome situations, such as external debt, which until very recently overwhelmed their economies, and the Fund has helped lead them to sustainable economic growth. Other developing countries have been able to find in the Fund a guide to obtain technical advice and support in correcting patterns of behavior that are detrimental to economic stability.

All this is occurring in a framework of greater transparency and information about financial institutions, a trend that must be continued, because it can only benefit nations that are cooperating in the search for stability and development.

The industrial countries have in recent years gone through a series of economic crises from which we are evolving slowly. New flows of assistance to the most needy areas are therefore required. In recent years, in Latin America, with democracy and freedom, we have seen the growth of economic viability and the development of regional integration, which is providing stability and a sense of a future for countries that were severely criticized in the 1980s.

Both the International Monetary Fund and the World Bank have helped in this process. They have contributed substantially to this improvement. The credibility of adjustment programs designed by the Fund and agreed to with governments enabled the confidence of financial markets to be restored. On its side, the World Bank has achieved efficiency in financing projects to modernize the basic infrastructure for development.

Spectacular economic growth in numerous Asian and Pacific countries should not allow us to lose sight of the need to pay attention to the overall economic and social development of these countries. They must be included in world trade flows and must be considered in the design of generally applied trade rules and related economic policies, to achieve more homogeneous societies and sustainable development.

In other areas of the world, poverty and underdevelopment persist. Despite the efforts of the Fund and the World Bank and the cooperation of the European Union and other institutions, per capita income is not only not increasing—it is declining. We must therefore be more demanding in our work. We must contribute to creating the conditions necessary for development.

Each country, according to its own responsibility, must understand that an effort in solidarity is needed. Some countries need to point their societies and their leaders in the right direction toward joint development and not the individual wealth of a few. Others must provide these societies with the access to resources needed on the longed-for path to development.

Exactly two years ago, speculation in foreign exchange markets in a few hours brought about capital flows of such magnitudes that they endangered or even exhausted the foreign exchange reserves of many countries. Simple market forces showed that a sovereign nation in isolation does not have sufficient resources to face the pressures of a worldwide economy. This must be, no doubt, a source of reflection at this fiftieth anniversary conference. The experience of the current European Union must be part of this reflection: we have decided, as a group of industrial countries, to embark on an ambitious project, based on principles of economic convergence and harmonized behavior.

If we in the European Union are able to achieve the objective that we have set for ourselves and create an economic, monetary, and political union, this will without doubt be a fundamental element in strengthening the shared leadership that is so necessary at this time. The European Union is certainly already providing an important pillar, but its role in the future may be extraordinarily strengthened when we achieve our objectives.

Since our integration into the European Community in 1986, Spain has played an active role in all European projects. Our intention is to continue along these lines and, to the degree that we can, strengthen our constructive attitude to be among those countries at the forefront. From the European Union, and along with other associates, we must find a way to reconcile multilateralism with protection of the environment. We must make flexible labor relations—and the very necessary creation of employment—compatible with the upkeep of welfare societies. We must find ways to stimulate the initiative of private enterprise while protecting the most needy and ensure that population growth is not an obstacle to development.

In all these challenges, and in many others that could be mentioned, the role of the institutions will be decisive. Fifty years ago, it was necessary to organize the postwar period. Today, we have to organize the world that resulted from the end of the Cold War. We have the experience of these 50 years behind us; we need now to add to it the spirit of cooperation and collaboration that existed among those who started the whole process of internationalization of the economy.

At this time of economic recovery, everyone is looking toward the work that this conference will be undertaking in the coming days. Your words, your analyses, and your conclusions will be an important incentive to responsible agents in economics and in politics, and to citizens in general. In the years I have been in government, I have learned that in economics, expectations are almost more important than the data. This is why I encourage you to carry out your task in such a way that at the end of your project we may know more about economic reality. That knowledge will enable us to make the best use of recovery opportunities, and, with cooperation from all countries, we may achieve a fairer world in solidarity.

References

    Bretton Woods CommissionBretton Woods: Looking to the Future Vol. 1 Commission Report Staff Review and Background Papers (Washington: Bretton Woods CommitteeJuly1994).

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    United Nations Development ProgramHuman Development Report 1994 (New York: Oxford University Press for the United Nations Development Program1994).

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    PrestonLewis T.President the World Bank Opening Remarks to Press Conference “Learning from the Past Embracing the Future” (July 191994).

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