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Since 2002, world economic expansion has had a strong positive impact on growth and helped support progress towards the United Nations Millennium Development Goals (MDGs).
Most developing countries have benefited from this growth momentum as a result of strong demand for their exports of primary commodities and, to an increasing extent, of manufactures. However, global economic imbalances continue to pose a risk to the outlook of the world economy.
A number of other changes in the external environment for development over the past 10 to 15 years have benefited individual developing countries in different ways, depending on their economic structure and state of development. These include some improvements in market access, provision of debt relief and commitments by donors to substantial increases in ODA, as well as new opportunities to benefit from FDI and increasing migrants´ remittances.
In order for all developing countries to reach the MDGs and to reduce the large gap in living standards with the more advanced economies, the global partnership for development, stipulated in Goal 8 of the MDGs, needs to be strengthened further. Much depends on the ability of developing countries to adopt more proactive policies in support of capital formation, structural change and technological upgrading, and on the latitude available to them in light of international rules and disciplines.
The Trade and Development Report 2006 offers relevant ideas and general principles for designing macroeconomic, sectoral and trade policies that can help developing countries to succeed in today´s global economic environment. Particular attention is given to policies that support the creative forces of markets and the entrepreneurial dimension of investment.
The Report also argues that a global partnership for development will be incomplete without and effective system of global economic governance. Such a system should take into account the specific needs of developing countries. At the same time it should ensure the right balance between sovereignty in national economic policy-making on the one hand, and multilateral disciplines and collective governance on the other.