Heather Hedges is the under-secretary-general for the General Assembly Main Committees (GA Mains) she is a member of the Legal Committee and in her first year on staff was the Assistant Director of the Disarmament and International Security Committee (DISEC) she is also the Assistant Director for the iraq and afghanistan sub-committee.
Heather Hedges is the under-secretary-general for the General Assembly Main Committees (GA Mains) she is a member of the Legal Committee and in her first year on staff was the Assistant Director of the Disarmament and International Security Committee (DISEC) she is also the Assistant Director for the iraq and afghanistan sub-committee.
Heather Hedges is the under-secretary-general for the General Assembly Main Committees (GA Mains) she is a member of the Legal Committee and in her first year on staff was the Assistant Director of the Disarmament and International Security Committee (DISEC) she is also the Assistant Director for the iraq and afghanistan sub-committee.
ECOF I N T HE E CONOMI C AND F I NANCI AL COMMI T T E E Nati onal Hi gh School Model Uni ted Nati ons March 6 - 9, 201 3 N H S M U N 201 3
Hannah Olliff Secretary-General Georgia Institute of Technology
Bonnie Pham Director-General Williams College
Delia Solomon Conference Director Emory University
Puja Dullabh Chief of Staff Georgia Institute of Technology
Elizabeth Kirschenbaum Chief of External Relations George Washington University
Charles Soll Director of Security Universit Paris-Sorbonne Abu Dhabi
Russell Pildes Chief of Administrative Affairs University of Illinois at Urbana-Champaign
Heather Hedges Under-Secretary-General Georgetown University
Maggie Lawrence Under-Secretary-General Trinity College
Ryan Youra Under-Secretary-General American University
Courtney LeNoir Under-Secretary-General New York University
CJ Stavrakos Under-Secretary-General University of Pittsburgh
NHSMUN is a project of the International Model United Nations Association, Incorporated (IMUNA). IMUNA, a not-for-profit, all volunteer organization, is dedicated to furthering global issues education at the secondary school level. NATIONAL HIGH SCHOOL MODEL UNITED NATIONS T h e 3 9 t h A n n u a l C o n f e r e n c e Ma r c h 6 9 , 2 0 1 3
November 2012 Dear Delegates,
It is my absolute pleasure to welcome you to NHSMUN 2013 and more importantly to the General Assembly! My name is Heather Hedges, and I am the Under-Secretary-General for the General Assembly Main Committees (GA Mains). I can honestly say that there is a special place in my heart for GA Mains, as this is my fourth year that I have spent with Mains at NHSMUN. As a delegate, I was a member of the Legal Committee and in my first year on staff I was the Assistant Director of the Disarmament and International Security Committee (DISEC). Most recently, I was the Director of DISEC for NHSMUN 2012.
Before I continue introducing NHSMUN and GA Mains, I would like to take this time to tell you a little bit more about myself. I am a proud alumna of Mira Costa High School Model UN in Manhattan Beach, where I served as Secretary-General of our intermediate conference during my senior year. I am now a junior at Georgetown University in Washington, D.C. studying International Political Economy and earning a certificate in Justice and Peace Studies in the Edmund A. Walsh School of Foreign Service. My particular interests within both these programs are human rights, international law, and development. Aside from academics, I am also involved in Model UN at Georgetown and have spent the last two years directing GA committees at both our high school and college conferences. In total, this will be my seventh year of Model UN experience. In my free time, I enjoy dancing with the Georgetown Irish Dance Team, running to the National Mall, baking, and cheering on the Georgetown basketball team with fellow Hoyas.
Back to NHSMUN, I would like to express how excited I am that you will all be a part of such an amazing experience this March. Your Director and Assistant Directors have been working tremendously for several months in order to craft unique and intriguing simulations in each of your committees, and I could not be more confident in their ability to guide you throughout the conference as you collaborate to solve these critical issues. In my time a delegate and staffer, NHSMUN has offered me the most incredible educational and personal experiences and I know that you will all be a part of yet another incredible year for me. I hope that you too will enjoy NHSMUN and leave the conference with some lasting memories and greater enthusiasm for international affairs.
On behalf of the entire GA Mains staff, I again welcome you to NHSMUN 2013 and ensure you that each and every one of us is eager to assist you in this exciting learning experience. Please do not hesitate to contact me, your Director, or your Assistant Directors, with any questions you may have. I am always available for you, and I do not exaggerate in saying that I excitedly anticipate meeting you all in March!
Happy researching!
Heather Hedges Under-Secretary-General, General Assembly Main Committees mains.nhsmun@imuna.org
Hannah Olliff Secretary-General Georgia Institute of Technology
Bonnie Pham Director-General Williams College
Delia Solomon Conference Director Emory University
Puja Dullabh Chief of Staff Georgia Institute of Technology
Elizabeth Kirschenbaum Chief of External Relations George Washington University
Charles Soll Director of Security Universit Paris-Sorbonne Abu Dhabi
Russell Pildes Chief of Administrative Affairs University of Illinois at Urbana-Champaign
Heather Hedges Under-Secretary-General Georgetown University
Maggie Lawrence Under-Secretary-General Trinity College
Ryan Youra Under-Secretary-General American University
Courtney LeNoir Under-Secretary-General New York University
CJ Stavrakos Under-Secretary-General University of Pittsburgh
NHSMUN is a project of the International Model United Nations Association, Incorporated (IMUNA). IMUNA, a not-for-profit, all volunteer organization, is dedicated to furthering global issues education at the secondary school level. NATIONAL HIGH SCHOOL MODEL UNITED NATIONS T h e 3 9 t h A n n u a l C o n f e r e n c e Ma r c h 6 9 , 2 0 1 3
November 2012 Dear Delegates,
I would like to take this opportunity to personally welcome you to NHSMUN 2013! My name is Amy Chou, and I will be your director for the Economic and Financial Committee, the second committee of the General Assembly. I am extremely excited for the opportunity to discuss two interesting and relevant topics for this upcoming session of ECOFIN. Both topics, Facilitating Infrastructure Development in the Developing World and Bridging the Income Gap, are highly relevant topics that are currently being highlighted within the United Nations and among the members of the international community. These topics have grandiose implications for the future of development in many countries, and I look forward to helping you develop ideas, research, and understand these topics.
A little more about my NHSMUN history: ECOFIN is very close to my heart, as it was my first committee as a high school delegate and my first staffing experience as an Assistant Director. Currently, I am a sophomore studying economics and political science at the University of Chicago. Besides NHSMUN, I am active with the Model United Nations at the University of Chicago, and am chairing ECOFIN there as well! In my down time, I enjoy keeping up with current events, rock climbing, designing clothes for the school fashion organization, and talking to anyone that will listen!
As a student of economics, I understand the nuances and difficulties of the topics at hand. I invite you to email me with any questions that may arise during your research. I would also recommend that you research basic economic terms and concepts prior to the conference. Having spent a little too much time researching and reading about both of these topics, I would love to be a resource for you during your own research. Be sure to keep up with the news, visit your local library, or google the topics frequently! If you cannot tell, I am extremely passionate about both these topics, but I understand the amount of research and preparation required to truly understand and debate these topics. I welcome questions and friendly emails all year long, and I cannot wait to meet you all in March!
Sincerely,
Amy Chou Director, Economic and Financial Committee 732.322.6998 ecofin.nhsmun@imuna.org
National High School Model United Nations 2013 Economic and Financial Committee
TABLE OF CONTENTS A Note On the NHSMUN Difference ................................................................................................... 2 A Note on Research and Preparation ..................................................................................................... 4 Committee History ................................................................................................................................. 5 Simulation ............................................................................................................................................... 6 Topic A: Facilitating Infrastructure Development in the Developing World ........................................ 8 Introduction .................................................................................................................................................................... 8 History and Description of the Issue .......................................................................................................................... 9 Current Status .............................................................................................................................................................. 24 Bloc Analysis ................................................................................................................................................................ 26 Committee Mission ..................................................................................................................................................... 29 Topic B: Bridging the Income Gap ...................................................................................................... 31 Introduction ................................................................................................................................................................. 31 History and Description of the Issue ....................................................................................................................... 31 Current Status .............................................................................................................................................................. 40 Bloc Analysis ................................................................................................................................................................ 42 Committee Mission ..................................................................................................................................................... 47 Appendix A: Figures for Topic B ......................................................................................................... 48 Figure 1: The Lorenz Curve ....................................................................................................................................... 48 Figure 2: Gini Coefficients and Levels of Income Inequality .............................................................................. 49 Research and Preparation Questions ................................................................................................... 50 Topic A ......................................................................................................................................................................... 50 Topic B .......................................................................................................................................................................... 50 Important Documents .......................................................................................................................... 52 Topic A ......................................................................................................................................................................... 52 Topic B .......................................................................................................................................................................... 53 Bibliography ......................................................................................................................................... 55 Committee History ...................................................................................................................................................... 55 Topic A ......................................................................................................................................................................... 55 Topic B .......................................................................................................................................................................... 63 National High School Model United Nations 2013 Economic and Financial Committee
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A NOTE ON THE NHSMUN DIFFERENCE Esteemed Faculty and Delegates,
Hello and welcome to NHSMUN 2013! My name is Bonnie Pham, and I am the Director-General of NHSMUN 2013. I hope you are as excited as I am to experience this years conference. Our staff has been working all year to ensure that you have an engaging, substantially accurate, and rewarding experience in committee. NHSMUN strives to assure that the quality of our debate and in- committee interaction is unmatched. In order to fulfill this mission, our conference has adopted some practices that may seem unorthodox, but we feel that they are key to the continued tradition of excellence in our committees and the NHSMUN difference.
A Note on the NHSMUN Difference
NHSMUN prohibits the usage of personal electronics during committee in order to ensure that delegates do not gain an unfair advantage in debate. We feel strongly that the interpersonal connections made during debate are enhanced by face-to-face communication. Enforcing a strict no laptops policy also helps us to ensure that all our delegates have an equal opportunity to succeed in committee. While many delegates have laptops or tablets at home, NHSMUN serves students from a diverse range of backgrounds, some of whom cannot afford the technology that many students have become accustomed to.
The Dais is permitted a laptop for the purposes of communicating with respective Under-Secretary- Generals and other Senior Staff Members as well as attending to administrative needs. The Dais will only be limited to using their laptops for NHSMUN purposes, and the majority of their focus will be on the needs of the committee. In addition, we staff a dedicated team in our office to assist in typing and formatting draft resolutions and working papers so that committee time can be focused on discussion and compromise.
An additional difference that delegates may notice about NHSMUN is the committee pacing. While each BG contains two topic selections, NHSMUN committees will strive to have a fruitful discussion on and produce resolutions on a single topic; prioritizing the quality of discussion over quantity of topics addressed. In order to respect the gravity of the issues being discussed at our conference as well as the intellect of our delegates, NHSMUN committees will focus on addressing one topic in-depth. BGs contain two topics in order to allow delegates to decide what problem ought to be prioritized, a valuable discussion in and of itself, and to safeguard against the possibility that an issue will be independently resolved before conference.
NHSMUN uses a set of the Rules of Procedure that is standardized across all IMUNA-brand conferences. These rules provide a standardized system of operation that is easily translated across committee or conference lines. While the general structure and flow of committee will be familiar to any delegate who has previously participated in Model UN, there may be slight procedural differences from other conferences. All delegates are encouraged to review the Rules of Procedure before attending the conference in the Delegate Preparation Guide and are welcome to direct questions to any member of NHSMUN Staff. National High School Model United Nations 2013 Economic and Financial Committee
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While NHSMUN does distribute awards, we feel that it is crucial to de-emphasize their importance in comparison to the educational value of Model UN as an activity. NHSMUN seeks to reward delegations that excel in the arts of compromise and diplomacy. We always prioritize a dedication to teamwork over solitary achievement. Directors will judge delegates on their ability and willingness to cooperate with their peers while always maintaining an accurate representation of country policy.
At the core of the NHSMUN philosophy is an emphasis on education and compromise. As such, we do not distribute awards to individual delegates, with the exception of committees where students represent their own separate delegation (ICJ and UNSC, for example). Rather, awards will be distributed to delegations that exhibit excellence across all committees. The awards system is standardized so as to give equal weight to delegations of all sizes. Awards will also be offered for schools that demonstrate excellence in research and preparation based on the position papers submitted by their delegates. Detailed information on the determination of awards at NHSMUN will be available in Faculty Preparation Guide and online in November.
As always, I welcome any questions or concerns about the Substantive Program at NHSMUN 2013 and would be happy to discuss NHSMUN pedagogy with faculty or delegates. It is my sincerest hope that your experience at NHSMUN 2013 will be challenging and thought provoking.
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A NOTE ON RESEARCH AND PREPARATION Delegate preparation is paramount to a successful and exciting National High School Model United Nations 2013 Conference. We have provided this Background Guide to introduce the topics that will be discussed in your committee; these papers are designed to give you a description of the topics and the committee. However, this Guide is not intended to represent exhaustive research on every facet of the topics. We encourage and expect each delegate to fully explore the topics and be able to identify and analyze the intricacies of the issues. Delegates must be prepared to intelligently utilize their knowledge and apply it to their own countrys policy. You will find that your state has a unique position on the topics that cannot be substituted for or with the opinions of another state.
The task of preparing and researching for the conference is challenging, but it can be interesting and rewarding. We have provided each school with a copy of the Delegation Preparation Guide. The Guide contains detailed instructions on how to write a position paper and how to effectively participate in committee sessions. The Guide also gives a synopsis of the types of research materials and resources available to you and where they can be found.
An essential part of representing a state in an international body is the ability to articulate that states views in writing. Accordingly, it is the policy of NHSMUN to require each delegate (or double- delegation team) to write position papers. The position papers should clearly outline the countrys policies on the topic areas to be discussed and what factors contribute to these policies. In addition, each paper must address the Research and Preparation questions at the end of the committee Background Guide. Most importantly, the paper must be written from the point of view of the country you are representing at NHSMUN 2013 and should articulate the policies you will espouse at the conference. All papers should be typed and double-spaced. The papers will be read by the director of each committee and returned at the start of the conference with brief comments and constructive advice.
Each delegation is responsible for sending a copy of their papers to the committee directors via our online upload process on or before January 24, 2013. Complete instructions for online submissions may be found in the Delegate Preparation Guide. If delegations are unable to submit an online version of their position papers, they should contact the Director-General (dg.nhsmun@imuna.org) as soon as possible to find an alternative form of submission.
Del egat i ons t hat do not submi t posi t i on papers t o di rec t ors or summary st at ement s t o t he Di rec t or- General wi l l be i nel i gi bl e f or awards.
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COMMITTEE HISTORY The second of the six General Assembly Mains Committees, the Economic and Financial Committee is the primary economic body of the United Nations (UN). Founded as a standing committee of the General Assembly by the UN Charter of 26 June 1945, it is purposed to promote international co-operation in the economic field. 1 Its mandate is to consider all relevant international economic issues such as macroeconomic policy, trade statute, sustainable development, globalization, poverty eradication, and technological progress. 2 Chaired by H.E. Mr. Abulkalam Abdul Momen of Bangladesh, ECOFIN has devoted its past few sessions to groups of countries in special situations, including specific classes of countries such as Least Developed Countries (LDCs) and Landlocked Developing Countries (LLDC), and, along with the entire General Assembly, consider the Palestinian peoples claim to permanent sovereignty in the Occupied Palestinian Territories, including East Jerusalem, with a specific focus on the use and distribution of resources. In its past session, ECOFIN finalized 44 resolutions in several unprecedented areas, including a stance on external national debt and addressing key trade and developmental issues. 3 While most experts consider UN resolutions to be recommendatory and non-binding in nature, some key economic decisions are included in Resolution 55/56, which created the Kimberly Process Certification Scheme to certify diamonds as non-conflict, and Resolution 1962, which laid the groundwork for the landmark Outer Space Treaty. Both of these examples illustrate that economic resolutions work best when they specify a broad-based regulatory or advisory framework that can be implemented successfully by member states or non-governmental organizations.
ECOFIN is part of the larger General Assembly, the main deliberative organ of the United Nations, 4 and as such, resolutions passed in this committee have the support of a far greater bloc of nations than in other international financial organizations such as the International Monetary Fund (IMF), the World Trade Organization (WTO), and the World Bank. While these organizations certainly play a large and more active role than ECOFIN in the global economy, their voting constituencies are both substantially smaller than that of the General Assembly and either cater to specific interests, or utilize special voting systems. In ECOFIN however, each of the 192 member states of the UN General Assembly has one vote, giving an equal voice to each sovereign entity, large or small, developed or developing. Despite the lack of monetary leverage, given the weight behind each resolution, decisions made in this forum dictate the policies of other more active organizations such as the International Monetary Fund, World Bank, and World Trade Organization. It is for this reason that decisions made at ECOFIN have such wide-ranging effects.
1 Charter of the United Nations, United Nations, accessed 27 May 2011, www.un.org/aboutun/charter/. 2 Second Committee, Second Committee, accessed 27 May 2011, http://www.un.org/en/ga/second/. 3 ibid. 4 General Assembly of the United Nations, United Nations, accessed 11 27 May 2011, http://unclef.com/en/ga/about/index.shtml.
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SIMULATION As members of the Economic and Financial Committee (ECOFIN), delegates will represent the views of their respective countries throughout the duration of our debate on both Bridging the Income Gap and Facilitating Infrastructure Development. Delegates will be responsible for collaborating to develop resolutions for these two issues while remaining within the mandate of ECOFIN. While these topics are new to ECOFIN, all resolutions created will need bear in mind that the goal of ECOFIN is to promote international peace and security. The beauty of the NHSMUN conference is its ability to offer delegates a hands-on global education and to allow them to experience a real work environment they would be unable to experience elsewhere.
Upon arriving in committee, delegates will be introduced to the members of the dais the Director and two Assistant Directors. After spending the past year writing the background guide and update papers, the Director and both Assistant Directors are substantive experts on all matters ECOFIN, and delegates should use them as knowledgeable resources throughout the conference. As veterans of parliamentary procedure and committee simulation, the role of the dais is to ensure that delegates have a realistic, educational, and enjoyable experience at NHSMUN. Should delegates have any questions on either procedural or substantive matters, they should not hesitate to approach any member of the three members of the dais for assistance.
After delegates have been introduced to the dais, they will first debate the setting of the agenda and then progress to substantive debate, which will deepen and progress throughout the following sessions. In a committee of this size, collaboration and decorum are essential for each and every session. Formal debate consists of delegates adding themselves to the Speakers' List to be formally recognized before the rest of the committee for a specified length of time. When delegates appear before the committee, it is their opportunity to give an overview of their countrys position as well as accept questions from other delegates for clarification on policy or solutions. It is imperative that delegates remain respectful of others during this time and observe all procedural rules in order for delegates to be heard and for the speakers list to flow smoothly.
While formal debate is a key portion of our simulation, the majority of debate in ECOFIN will take place in caucus format. Caucusing can be done in one of two ways moderated or unmoderated. Moderated caucuses flow similarly to formal debate. Delegates' speaking times are often shorter, and each caucus has a specific topic delegates must discuss in their comments. Unmoderated caucuses suspend formal rules of debate for a designated period of time during which delegates are free to move around the room and informally discuss policy and potential solutions directly with other delegates. The majority of writing for working papers and resolutions will occur during these unmoderated caucuses.
Another unique feature of ECOFIN as a committee of the General Assembly is the process by which its working papers and resolutions are created. Solutions start out as a set of ideas, are formatted into a working paper, then voted upon as draft resolutions, and finally presented as resolutions in plenary if passed in committee. Delegates will be given more details about the resolution process through an online blog closer to the conference date, but they should keep in National High School Model United Nations 2013 Economic and Financial Committee
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mind that there is this specific structure they must follow. The length of the resolution-writing process, the number of delegates in ECOFIN, and the capabilities of NHSMUN Admin will limit the number of resolutions that can be introduced, making collaboration and compromise essential. The two most important things for delegates to keep in mind throughout debate are decorum and country policy. As a committee of the General Assembly, ECOFIN includes delegates from each member state of the United Nations; hence, it is one of the largest committees. Each delegate will be given equal opportunity to speak before the committee and granted each members undivided attention. Parliamentary procedure and decorum will be respected at all times, without exception. The alteration or suspension of rules may occur at the discretion of the dais in order to maintain control of the committee and to preserve decorum and respect for all delegates. Additionally, delegates are to keep in mind that country policy is the anchor for all proposals both presented and supported by the delegate. Although collaboration is the goal, it is always secondary to the integrity of a delegates country policy. The desire to compromise should never supersede ones ability to uphold his or her countrys stance on the issue. With this in mind, apt preparation for committee on policy, background, and potential solutions is imperative in order for all delegates to maintain quality debate and to remain on task at all times.
Debate in ECOFIN will culminate in a plenary meeting at the final session during which time ECOFIN delegates will meet with their counterparts in the other committees of the General Assembly to vote. Only working papers that have passed in each individual committee will be presented as resolutions in plenary and voted upon by the entire body. This plenary session simulates the workings of the real UN in that delegates see how ECOFIN is able to make recommendations that unite the entire membership of the UN when resolutions are adopted. Like in the UN, the quality of resolutions presented before the plenary body is a direct reflection of the delegates work inside and outside of the committee. These resolutions rely heavily upon the delegates ability to work diligently and to collaborate respectfully on proposals for the topics at hand, and will help to make NHSMUN 2013 a great year for ECOFIN and NHSMUN as a whole.
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TOPIC A: FACILITATING INFRASTRUCTURE DEVELOPMENT IN THE DEVELOPING WORLD INTRODUCTION In 2012, the Group of 20 (G-20) countries met in Los Cabos, Mexico and affirmed their commitment to development, stating that, investment in infrastructure is critical for sustained economic growth, poverty reduction, and job creation. 5 Infrastructure provides the basis for growth by providing the fundamental supports for it. Oftentimes, infrastructure is a capital good, or a means of production, which provides the means to which money is made and goods and services are produced. 6 In essence, the infrastructure acts as the tools to economic growth, providing the physical and institutional framework for production and markets.
Though the international community has recognized the importance of infrastructure development in the developing world, it is necessary to continue this commitment and increase the funding towards different projects. The United Nations (UN) has acted as an international forum in facilitating infrastructure development, but many exchanges still occur through bilateral or multilateral processes. Both the public and private sectors including government entities from developed and developing countries as well as private companies and individual organizations assist the recipients with infrastructure transfer and thus can help them to sustainable development strategies. The recipients, who include any of the above listed entities, must utilize the assistance effectively. It is important to recognize that though the developing countries are the recipients of capital and technical infrastructure, the benefits of the transaction reach far beyond the two individual parties and can improve conditions for a larger part of society. This, in economic terms, is the idea of a positive externality. A positive externality occurs when a firm or household outside of the direct transaction benefits from the production or consumption of something. 7 In this instance, infrastructure has the ability to help those that may not directly use it. For example, if the government chooses to build a new road, while not everyone will use that road to transport themselves, goods may be transported via that new road and that increases productivity and helps the economy overall. Thus, people that are not directly impacted by the project may feel a positive impact elsewhere. Hence, investing in infrastructure can have a large positive externality effect and thus offers a justification for the private costs that may be accrued in the process.
The international community agrees that infrastructure development would benefit the entire world. However, inadequate funding, undesirable host countries, and risky investments plague the process. While it would be ideal to donate infrastructure to all parts of the developing world, some countries are unable to sustain infrastructure, either technically or intellectually. Additionally, many developing countries are risky investments; deterring possible public and private funds that can help them come up from their slow growth state. As the Economic and Financial committee (ECOFIN),
5 G20 Leaders Declaration (Los Cabos: G20, 2012) , 5. 6 Prudhomme, Remy, Infrastructure and Development (Paris: University of Paris, 2004). 7 Johnson, Paul M., Externality, Auburn University, accessed 5 September 2012, http://www.auburn.edu/~johnspm/gloss/externality. National High School Model United Nations 2013 Economic and Financial Committee
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it is important to weigh the costs and benefits of infrastructure development in the developing world. In considering the issue, realizing the initial costs and projected short-term and long-term benefits is essential. Because of varying groups high versus low social discount rate, meaning differences in how long they are willing to wait for returns, the projects may or may not be a smart investment for the individual, entity, or government. In economic terms, the social discount rate, whether high and low, describes how a person would like to see the result of their investment materialize, high discount meaning they value results immediately, while low meaning they place a value on the future. 8 Discount rate matters in that if a country needs immediate results to boost their dire situation, then long-term projects and investments may not be the best solution because of their high discount. A country would have low discount when they are stable and have cash flow to support long term investment in projects. Green industry and energy is often considered low discount because the effects of global warming are not necessarily glaring, and the impact of helping the environment requires immediate investment without immediate evident results. Countries must be cognizant of their discount to gauge the type of investment to use. Countries with immediate concerns such as hunger or health issues should clearly spend more time and money on alleviating those high discount problems, before taking action against something low discount, such as global warming. Regardless, countries should have both long and short-term investment plans to become sustainable economies.
Finally, the committee must also consider what type of assistance, private or public, should be the main source of capital in these projects. Because the infrastructure itself will vary with region, the committee should develop an idea of how to raise funds, install and maintain infrastructure, and generate viable returns, regardless of region and type of infrastructure. Determining the right type of investment and investor is integral to the success of the project. Certain projects require a large output of money without much profitability, thus an organization or a government should be the investor, considering that private entities desire to profit from their ventures. Along the same lines, investors must be reliable. Thus, by carefully deciding which type of investment to make followed by which type of investor to consult, one can create the most stable and lucrative situation. HISTORY AND DESCRIPTION OF THE ISSUE Types of Infrastructure and Their Importance
Infrastructure can be defined as the basic underlying framework (something theoretical and not necessarily physical), public works, or resources required for an activity. 9 There are many different types of infrastructure including physical infrastructure, government structure, economic infrastructure, social infrastructure, and intellectual infrastructure, all of which funnel into two categories: soft and hard infrastructure. 10 Hard infrastructure includes physical structures and facilities that help to spur and support economic development and a society through transportation, energy, telecommunications, and basic utilities. Soft infrastructure is less physical and more
8 Romm, Joe, Dont Discount the Stern Review, Think Progress, accessed 5 September 2012, http://thinkprogress.org/climate/2007/06/18/201428/dont-discount-the-stern-review/?mobile=nc. 9 Infrastructure, Merriam-Webster, accessed 6 September 2012, http://www.merriam- webster.com/dictionary/infrastructure. 10 Infrastructure for Economic Development and Poverty Reduction in Africa (Nariobi: UN Habitat, 2011), 5. National High School Model United Nations 2013 Economic and Financial Committee
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intangible in that it supports the continued and efficient operation of the hard infrastructure. Thus, soft infrastructure includes policy, regulations, institutional framework, governance mechanisms, systems, procedures, social networks, transparency, accountability, and financial systems. 11
Both hard and soft infrastructure development are key to maintaining constant economic growth, and thus, remain vital to ECOFINs debate. Hard infrastructure accounts for the physical aspects of the economy and of daily life. Without hard infrastructure, people would lack the physical constructs to conduct business and be productive. For example, transportation is extremely important to the production process. While a company may have the means to produce a product, it would not be able to turn a profit unless the product can somehow be transported to a center of business and be exchanged. Soft infrastructure is important for the logistical and intellectual side of production. Without human capital and stable soft infrastructure, production and the business cycle could not progress. Good governance is an example of soft infrastructure that helps to facilitate development and business. Government is the foundation for copyright and patents, protection from robbery, and as an investor. When governments have proper structure and motives, it can often help business and protect them at the same time. Infrastructure is integral to the business cycle and economic growth in general, thus, facilitating infrastructure to the developing world should be at the forefront of international concerns.
Key Factors Influencing Infrastructure Development
Natural disasters have destructive tendencies that destroy large amounts of infrastructure, especially in developing states. Because of the nature of resource, income, and wealth distribution in the international community, certain countries have been impacted by slowed growth and continued civil conflict. The World Bank estimated that most developing countries have enough infrastructure to sustain their development, but because of natural disasters, an inability to support infrastructure, civil disruption, and lack of proper maintenance. 12 Natural disasters often cause civil strife and physically destroy infrastructure, and without proper funding, there would be no way for a developing state to sustain its new and developing structures. Moreover, natural disasters are more prone to strike the same area multiple times, leaving the highly affected countries extremely vulnerable at all times. For example, the March 2011 earthquake and tsunami that hit Japans northeastern coast has severe effects on the industrial and productive infrastructure of that area. 13
The disaster resulted in over USD 300 billion in costs and will have continued negative effects on the productive capabilities of the country. 14 Japan is one of the most developed countries in the world, with a GDP of 5.87 trillion dollars, giving it the third highest GDP amongst countries. 15 As one of the wealthiest countries in the international community, its level of preparedness and secure financial situation enabled it to reconstruct more quickly than most other member states would have had the capacity to do in a similar situation. However, this level of development is not consistent
11 Ibid, 5. 12 Freeman, Paul K., Infrastructure in Developing Countries: Risk and Protection. International Institute for Applied Systems, 1999. 13 The Cost of Calamity, The Economist, accessed 26 August 2012, http://www.economist.com/node/18387016. 14 Official: Quake, Tsunami Could Cost Japan USD300 Billion, CNN New, accessed 26 August 2012, http://articles.cnn.com/2011-03-31/world/japan.disaster.budget_1_tsunami-quake-yen?_s=PM:WORLD. 15 Field Listing: GDP (Official Exchange Rate), CIA World Fact Book, accessed 6 September 2012, https://www.cia.gov/library/publications/the-world-factbook/fields/2195.html.
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worldwide, and it would nearly be impossible for many developing countries to repair their infrastructure in such a way because of their limited access to funding and lack of pre-existing structures, such as good governance or roads to deliver assistance. Natural disasters can burden the infrastructure process by either hindering the effectiveness of infrastructure by damaging it or making it inaccessible or by proving that the current infrastructure is inadequate. It is easy to see the physical damage done to infrastructure as a result of a natural disaster; however, natural disasters can also show that current structures are not effective. An example of showing inadequate structures would be a post disaster situation, which makes it evident that the government cannot function correctly to facilitate aid. This would emphasize that the pre-existing structure, the government, is ineffective. As the climate change phenomenon continues, natural disasters will be more prominent and frequent, thus, forcing the issue of infrastructure development and maintenance at the forefront of the United Nations debate. 16
Case Study: Haiti Earthquake Reconstruction
A 7.0 magnitude earthquake hit Haiti on 12 January 2010, causing immense damage and creating a dire situation for the developing state. 17 With its epicenter only 25 kilometers from Haitis capital, Port-au-Prince, the earthquake affected an area with dense population and concentrated infrastructure. The damage caused by the natural disaster is estimated at USD 7.804 billion with the private sector bearing most of the loss, USD 5.722 billion versus the public sector loss at USD 2.081 billion. 18 Infrastructure damage has hindered many reconstruction efforts because without roads, water, and sanitation systems in place, much of the aid is difficult to transport or execute. Even though it has been over two years since the earthquake has devastated the area, corruption and lack of existing soft infrastructure, such as leadership, has hindered its ability to recover. Even though the international community has pledged USD 4.5 billion to the reconstruction efforts, most of this aid has been directed through non-governmental organizations (NGOs) because of government corruption. 19 While the NGOs and donor nations have been helpful in implanting relief, the fact that the government cannot facilitate or be trusted with assisting their own people creates tension between the people and their leaders. Furthermore, the United States of America has pledged USD 1.36 billion in aid to the region, with an emphasis on building a stronger and more reliable government. 20 The sheer volume of this pledge is a testament to the importance of having both hard and soft infrastructure at all times.
As stated, natural disasters remain one of the reasons that infrastructure development is hindered within the developing world. But even beyond that, low human capital and civil unrest plague much of the developing world. Conflict and infrastructure are often related as civil strife can hinder the allure of investment in a region and thus prevent infrastructure transfer or development from occurring. An example of this would be in Sierra Leone and the implications of their civil conflict. During their conflict, factions attempted to comprise the movement of the other side through
16 Holt, Richard, UN Agreement on Severity of Climate Change, The Telegraph, accessed 3 September 2012, http://www.telegraph.co.uk/news/worldnews/1547769/UN-agreement-on-severity-of-climate-change.html. 17 Magnitude 7.0 Haiti Region. USGS, accessed 3 Sept. 2012, http://earthquake.usgs.gov/earthquakes/eqinthenews/2010/us2010rja6/. 18 Haiti Earthquake Reconstruction (Washington, DC: The World Bank, 2010), 6. 19 Leger, Donna L., Haitis Slow Recovery Leading to Discontent, USA Today, accessed 26 August 2012, http://www.usatoday.com/news/world/story/2012-02-09/haiti-slow-recovery/53033900/1. 20 Ibid. National High School Model United Nations 2013 Economic and Financial Committee
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blockading roads, which choked trade within the country. Similarly, transportation became impossible because of the blockades and rampant violence. 21 As a result, local markets failed and other infrastructure, such as healthcare clinics and schools were destroyed. 22 This hinders foreign direct investment because the country is not stable enough to sustain growth and productive elements of business. Overall, civil strife is devastating to the existing infrastructure and the prospect of investment in the future.
Government stability is a third a key component of infrastructure development. In order to maintain much public infrastructure, such as roads, water and sanitation, a capable government must be able to regulate the public works to a certain degree. Because of the presence of many unstable governments, it is often difficult to maintain infrastructure. In order to attract foreign direct investment or private companies, good governments are necessary to promote lawfulness and create a promising environment for economic growth. For example, the African Development Bank recognizes the lack of social and economic infrastructure in Africa as a primary reason for the regions inability to keep up in international trade. 23 Sudan has consistently ranked at the top of the Failed States Index, indicating its vulnerability and instability. 24 Because of the civil conflict and subsequent genocide, the legitimacy of its government and the president has been called into question by many international organizations. The International Criminal Court has even issued a warrant for President Omar al-Bashirs arrest for wartime crimes. Subsequently, without good governance coupled with civil conflict, Sudan has been unable to sustain economic growth and its economy stands to contract by 7 % because of South Sudans independence. 25 Overall, lack of governance not only exacerbated social and political issues, but contributed to stalled economic growth.
To illustrate this, consider the many states categorized as Land Locked Developing Countries (LLDCs). Being a LLDC means a state lacks direct territorial access to seas and has high transport costs, which limit its economic growth. 26 There is a direct correlation between distance and transportation costs because the more modes of transport and the greater the distance, the greater the costs become. Fifteen of a total 31 LLDCs are located on the African continent, making it the continent with the greatest concentration of LLDCs. 27 In terms of transportation infrastructure, only nine of the 31 total LLDCs have over 50 % of their roads paved, and only nine LLDCs have 1,000 or more kilometers of railways for trade purposes. 28 This lack of transportation makes it difficult to
21 Humphreys, Macartan and Paul Richards, Prospects and Opportunities for Achieving the MDGs in Post-conflict Countries: A Case Study of Sierra Leone and Liberia (New York: Columbia University, 2005), 10. 22 Ibid, 10. 23 Ncube, Mthuli, Africa: Governance and Infrastructure in the Continent, All Africa, accessed 6 September 2012, http://allafrica.com/stories/201010040506.html. 24 The Failed States Index 2011, Foreign Policy, accessed 3 September 2012, http://www.foreignpolicy.com/failedstates. 25 Riley, Charles, The Worlds Worst Economies, CNN Money, accessed 6 Sept. 2012, http://money.cnn.com/gallery/news/economy/2012/08/07/worlds-worst-economies/index.html. 26 Landlocked Developing Countries, United Nations Office of the High Representative for the LDC, LDC, and Small Island Developing States, accessed 8 September 2012, http://www.un.org/special- rep/ohrlls/lldc/default.htm. 27 List of LDCs, LLDCs and SIDS by Regions (Office of the High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States, 28 Landlocked Developing Countries (LLDCs). National High School Model United Nations 2013 Economic and Financial Committee
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access global markets and transport goods from point to point. Thus, many LLDCs remain impoverished, with ten of the twenty lowest ranked countries in the human development index being LLDCs. Because of their natural territorial isolation from the sea and global markets, infrastructure is needed to make trade more affordable and communication possible. However, with many of these states in their early development phases, it is difficult to become fully engaged in international trade, thus showing how a lack of infrastructure hinders a countrys economic advancement severely.
In facilitating infrastructure development in the developing world, one must also consider the type of investment desired in certain areas. In order for countries to sustain growing economies, it is necessary to have the basic framework and technology for water and sanitation, power, transportation, and telecommunications. These four categories are integral to the growth of a healthy population, markets, and businesses alike. Typically, governments and state-owned enterprises (SOE) are in charge of funding and executing these large projects to ensure that they would be completed, because of their great benefits to society. In addition to having positive externalities as previously mentioned, there is such thing as a public goods effect associated with these projects whereby the economic transaction provides a large benefit to a wide range of people with low marginal cost. 29 Due to the lack of resources and experience with these large projects, developing countries simply are not able to provide adequate infrastructure for their regions, resulting in the push to privatization. Privatization is the transfer of ownership of state assets, operations, or businesses over to a private entity or investor. 30 The World Bank notes that after the drive to privatize, in 2001 developing countries received over USD 755 billion in private investment and foreign direct investment for over 2,500 infrastructure-building projects. 31 This trend is continuing to rise as the private sector gains a larger role within development schemes. Privatization has both positive and negative effects, which is dependent upon the type of business or sector and the private entity. At times, governments are able to provide certain services or investments better than a private entity would because its motivations are different from the profit driven motives of the private sector. However, the private sector can be more innovative and seek to use market forces to provide the best service at the optimal price as determined by the supply and demand schedule.
However, the challenges that exist with private sector involvement include the worry that it will become too powerful in the future. 32 This fear is that private sector investment, through various methods, such as buying out and controlling large public works can lead abuse or exploit the situation. For example, as many public works and entities, such as water purification, become privatized, the owners of the industries may become too powerful and monopolize their control. Beyond that, a positive relationship does exist between good governance and the quality of infrastructure. This relationship exists because good governance promotes economic and political
29 Kirkpatrick, Colin, Foreign Direct Investment in Infrastructure in Developing Countries: Does Regulation Make a Difference (Geneva: United Nations Conference on Trade and Development, 2006), 144 30 Privatisation, Organisation for Economic Co-Operation and Development, accessed 3 September 2012, http://stats.oecd.org/glossary/detail.asp?ID=3287. 31 Kirkpatrick, Foreign Direct Investment. 32 Shkolnikov, Aleksandra, The Private Sector: A Problem or A Solution? Center for International Private Enterprise, accessed 6 September 2012, http://www.cipe.org/blog/2009/03/20/the-private-sector-a- problem-or-a-solution/#.UEv1k6RYtv1. National High School Model United Nations 2013 Economic and Financial Committee
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stability and reduces the private risks in investment. 33 Thus, both the private and public sector are willing to invest large sums of money to create viable projects to help promote economic growth, but the project must be lucrative before any party will be willing to invest.
The private sector has the ability to choose its investments and also to leave a project. The UN and member states cannot force any private sector entity to invest in a project if the entity decides against it. Similarly, the private sector could cease operations on a project or conduct them recklessly, which could leave the situation direr than before their involvement. In some cases, multinational corporations (MNCs) abuse child labor, tax policies, and degrade the environment as a result of their investment in certain projects. Many of these concerns can be mitigated through careful government oversight and clear legal framework. Soft and hard infrastructure is needed to not only promote private sector investment, but to ensure that the private sector remains law abiding and contributing to economic success.
A final aspect of infrastructure development is determining the role of the international community and individual countries in regards to facilitating infrastructure development. Even more developed states still struggle on some levels. To illustrate, it is important to note that while developed countries may have the means to support infrastructure, some countries are still lacking in the most advanced technology because of the lack of interest in investment and the inability to acquire funds to support these projects. An example of infrastructure this is in Sub-Saharan Africa, where IMF estimates indicate that if these countries had base infrastructure equivalent to a medium income country, the growth per capita would increase by about 2.6 % each year. 34 Clearly, infrastructure is attributed to lower productivity and subsequent economic growth. It is also difficult for these countries to attract investment, thus, exacerbating the problem of the infrastructure deficit. Although the issue at hand centered on the developing world, an area with even fewer financial resources than developed countries, this issue of developed countries lacking advanced technology due to limited infrastructure is of course still relevant.
Regional Infrastructure
Because of similar needs shared among countries and close borders between them, a lot of infrastructure can only be successful if it is implemented on a multi-state basis. For example, transportation infrastructure including roads, canals, and bridges connect different states together and are most effective if they can cross borders and connect greater areas. However, maintenance of the infrastructure must be done on a multi-state basis, with each state bearing certain responsibilities. Because of the conflicts of the past and that may arise between neighboring states and regional groups, much of the donated infrastructure may not have been successfully implemented in an entire area because of the lack of cooperation between states. For example, in Africa, the 53 states act as individual entities, each with their own transportation, telecommunication, legal, standards, and documentation systems. 35 Compared with the European
33 Ncube, Africa: Governance and Infrastructure in the Continent. 34 Redifer, Laure, New Financing Sources for Africas Infrastructure Deficit, IMF Survey Magazine, accessed 6 September 2012, http://www.imf.org/external/pubs/ft/survey/so/2010/car072110b.htm. 35 Simuyemba, Shemmy, Linking Africa Through Regional Infrastructure (Tunisia: African Development Bank, 2000), 7. National High School Model United Nations 2013 Economic and Financial Committee
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Union, which is of similar size and state count, Africa is extremely uncoordinated, thus making trade and cooperation among states difficult. 36
To compare the state of regional integration, looking at the European Union versus the African states highlights stark differences between the two regions. The European Union (EU) has an extremely coordinated approach to trade. Not only does the European Zone utilize the same Euro currency, but also the countries have a history of cooperation through trade groups, such as the European Coal and Steel Community and European Economic Community. Through the cooperation of states, the EU has been able to flourish in economic growth and through shared communication and transportation services. On the contrary, the African Union (AU) is not as integrated as the EU, and conflicts still exist between neighboring states and on the continent as a whole. This limits the regional cooperation efforts and leaves Africa at a disadvantage in trading and conducting business even though they have a wealth of natural resources. An example of European integration is the Euro, which in spite of the European Debt Crisis, is still one of the worlds strongest market currencies. 37 The Euro has allowed the countries within the Eurozone to easily complete transactions without having to convert currencies, greater stability because of its wide circulation, and convenience benefits to consumers and travellers. 38 This type of cooperation is facilitated by soft infrastructure, or the ability for these states to unify and govern something together. On the contrary, many African states lack this unity and thus, coordination amongst African states is very difficult. The World Bank released a report on the status of trade barriers and notes that greater regional integration could result in billions of dollars in potential trade earnings. 39
Comparatively regional goods trade only accounts for 5% in Common Market for East and Southern Africa (COMESA), 10 % in Economic Community of West African States (ECOWAS), and 8 % in West African Economic and Monetary Union (UEMOA). 40 Whereas in more regionally integrated areas, regional trade comprises a greater percentage of overall trade; this includes 20% in ASEAN states, 35 % in North American Free Trade Agreement states, and over 60 % in the European Union states. 41 Regional trade is integral in Africas economic development because it can help to bring staple foods to places with deficits, raise incomes, potential to create larger conglomerate multi-national corporations that can rival large chains in Asia or more established areas of the world, and for goods and services to reach a wider audience and thus drive up demand. 42
Regional trade has been unsuccessful in Africa because of the high transaction costs, or costs to conduct business, resulting from a lack of both hard and soft infrastructure to connect the region. Examples of such hard infrastructure include roads, affordable transportation, ineffective border management, and a well connected telecommunications network. 43 In regards to soft infrastructure,
36 Ibid . 37 Ydstie, John, Euro Currency Still Faring Well For Now, NPR, accessed 3 September 2012, http://www.npr.org/2012/07/11/156557152/euro-currency-still-faring-well-for-now. 38 Special Report EMU: The Advantages, BBC News, accessed 3 September 2012, http://news.bbc.co.uk/2/hi/special_report/single_currency/66473.stm. 39 DeCapua, Joe, World Bank: Break Down African Trade Barriers, Voice of America News, accessed 3 September 2012, http://www.voanews.com/content/decapua-africa-trade-barriers-9feb12- 139001854/159574.html. 40 Ibid., 1. 41 Ibid. 42 Ibid 10. 43 Ibid 10. National High School Model United Nations 2013 Economic and Financial Committee
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Africa is lacking fundamental tariff and tax policies, and has a highly bureaucratic trade process that results in incoherent trade and extra fees. 44 Overall, Africa lacks regional infrastructure that could help to develop the country while providing countless economic benefits. ECOFIN should understand the importance of regional integration and help facilitate infrastructure to promote regional cooperation.
Case Study: Association of South East Asian Nations (ASEAN) Infrastructure Fund (AIF)
The Association of South East Asian States is comprised of ten countries in Southeast Asia, including Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore, Thailand, and Vietnam. 45 It was created with the aims to accelerate economic growth, social progress, and cultural development. 46 Beyond this, ASEANs major goal remains regional integration and stability. ASEAN recently launched the ASEAN Infrastructure Fund (AIF) with an initial equity of USD 485 million towards regional infrastructure projects. 47 The AIF will work in coordination with the Asian Development Bank (ADB) to finance projects that will boost trade and economic growth in the region. 48 The funding will contribute to the completion of six different development projects over the next year, with private-public partnerships (PPP) being the primary driving force behind them. Each project, with varying infrastructure development goals, qualifies for USD 75 million in funding per year. 49 PPP is a partnership between a private entity, usually an investor or business, and the government to complete a given goal. 50 These PPPs are usually used to complete development projects, such as transportation, water utilities, telecommunications, and other infrastructure. 51
Essentially, this fund will be open to those sponsors looking to develop infrastructure in South East Asia. However, current estimates state that South East Asia will need about USD 60 billion a year to bridge the infrastructure deficits in that area, which far exceeds the current capacity of the fund. 52
Still, the area is confident that the additional funding will help to provide the region with greater foreign direct investment (FDI), because of the increased incentives and funding. FDI will help to fuel economic growth by providing liquid funding, or funding that is accessible now for the purposes of development. For example, in 2009, the investment in the region equaled USD 37.8 billion; this value nearly doubled in 2010 with investment reaching USD 75.8 billion in 2010. 53 The AIF hopes to continue these growing trends in investment by providing funding whilst ensuring investors that the countries themselves are supporting any investments made in the region. This type of regional cooperation not only creates an environment hospitable to FDI, but also allows
44 Ibid 10. 45 Overview, Association of Southeast Asian Nations, accessed 6 September 2012, http://www.aseansec.org/64.htm. 46 ibid, 1. 47 ASEAN Launches Regional Fund for Critical Infrastructure Needs, The Economic Times, accessed 26 August 2012, http://articles.economictimes.indiatimes.com/2012-05-03/news/31559145_1_adb-rajat-nag-asian- development-bank. 48 Ibid. 49 Ibid. 50 Ibid. 51 Ibid. 52 ASEAN Infrastructure Fund Targets USUSD13 billion towards ASEAN Connectivity, Association for South East Asian Nations, accessed 6 September 2012, http://www.aseansec.org/26643.htm. 53 Ibid. National High School Model United Nations 2013 Economic and Financial Committee
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infrastructure to be shared within the region. FDI is essential to continued economic growth because it is through investment that projects can be completed and capital can be generated. Overall, deficit spending, or spending money that one does not have, can create an environment that is hostile to future investment. Deficit spending has a crowding out effect meaning that interest rates will rise and firms will be less likely to borrow. 54 Beyond the effect on interest rates, if a government borrows too much and fails to satisfy debt payments, it may be forced to default on loans or print currency to repay the loans, causing inflation or hyperinflation, or devaluation in currency. 55
North-South Cooperation and Triangular Cooperation
North-South Cooperation (NSC) refers to the relationship between the north, developed countries, and the global south, developing countries, in the attempt to develop the southern region, or developing countries. NSC is thus the traditional economic, political, and social cooperation between the North and the South. 56 While North-South Cooperation mainly involves two parties, developing and developed countries, triangular cooperation exists between three different entities: a traditional donor from the Organization for Economic Cooperation and Development OECDs Development Assistance Committee (DAC) or a developed country, an emerging donor in the south, and a beneficiary country in the south. 57 A notable aspect of triangular cooperation is that it is combination of both NSC and SSC, making it a new approach to development investment. In these agreements all three major groups are represented, the developed countries, emerging economies, and developing countries, allowing three different perspectives on development issues.
An example of Triangular Cooperation would be the United Nations Educational, Scientific, and Cultural Organization (UNESCO) and its establishment of the International Centre for South-South Cooperation for Science, Technology, and Innovation (ISTC) in Malaysia. The ISTC was created using funds from developed countries and serves to train those in developing states through the dissemination of information. This database is available to all developing countries and serves as a means to assisting in development. Similar programs can be adopted through other UN organizations or on a multilateral basis. Essentially, triangular cooperation involves three parties, donor, recipient, and an intermediary. In this example, the donors are the countries that financed the project; the intermediary is UNESCO; and the recipient is Malaysia and the other countries utilizing the resource. Triangular cooperation has potential to provide valuable development assistance and should be used as a means to acquiring knowledge and investments. 58
54 Thoma, Mark, Government Deficits: The Good, The Bad, and the Ugly, CBS News, accessed 3 September 2012, http://www.cbsnews.com/8301-505123_162-39741324/government-deficits-the-good-the-bad-and- the-ugly/. 55 Ibid. 56 Strand II North/South Co-Operation, Ireland Department of Foreign Affairs, accessed 6 September 2012, http://www.dfa.ie/home/index.aspx?id=337. 57 Triangular Cooperation: Opportunities, Risks, and Conditions for Effectiveness, The World Bank Group, accessed 6 September 2012, http://wbi.worldbank.org/wbi/devoutreach/article/531/triangular-cooperation- opportunties-risks-and-conditions-effectiveness. 58 Enhancing South-South and Triangular Cooperation (New York: United Nations Development Programme, 2009), 148. National High School Model United Nations 2013 Economic and Financial Committee
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South-South Cooperation
In 1974, the United Nations General Assembly decided to create a special unit within the United Nations Development Organization to promote technical cooperation between developing states. 59
In accordance with the 1978 resolution adopted by the General Assembly, the Buenos Aires Plan of Action for Promoting and Implementing Technical Cooperation among Developing Countries (BAPA), the special unit strengthened its mandate to improve the coordination of South-South and triangular cooperation. 60 Different from North-South Cooperation, South-South Cooperation (SSC) is the exchange of information, technology, and resources strictly between countries of the developing world, including emerging states, developing states, Highly Impoverished Poor Countries (HPIC), Least Developed Countries (LDC), and other indicators of not reaching full development. Thus, these countries work together to formulate effective development strategies to benefit themselves and their partner countries in the south. The UN works closely with developing countries in both the United Nations Development Programme (UNDP) and the United Nations Environment Programme (UNEP) to facilitate infrastructure transfer and carry out programs for development.
Illustrating the idea of SSC is the partnership between the African Development Bank Group and Brazil to create the South-South Cooperation Trust Fund (SSCTF), which will be used to help African countries support development. 61 The SSCTF, created in 2011, will be used to support the following sectors: agriculture and agri-business, private sector development, clean energy, environmental issues, governance, health, and social development. 62 It will do this through technical assistance, capacity building, human capital development, technical training, and by sponsoring innovative projects to help the region. 63 Brazil is helping to provide technical and financial assistance to the African Development Bank, to ensure that the project has enough resources to be successful. Because the partnership and the fund is still developing, there has not been much activity with the fund, however, it will have the capabilities to support economic growth and human capital formation. The idea of a fund should be explored as options for regional bodies or the international community to help develop infrastructure in the developing world. Looking to trust funds, such as the one established by the African Development Bank Group can be vital in financing development, but can also be applied in committee as a means to getting investment and capital for projects. The feasibility of a global fund as a beginning source of funding for infrastructure projects may be considered by ECOFIN, regional bodies, and individual states.
The South-South Initiative on Cotton is another example of SSC between emerging economies, India and China, with eleven cotton-producing states. In 2003, several African states, Benin,
59 Background, Special Unit for South South Cooperation, accessed 6 September 2012, http://ssc.undp.org/content/ssc/about/Background.html. 60 A/RES/57/263, Economic and Technical Cooperation Among Developing Countries (Geneva: United Nations General Assembly, 2003). 61 Santi, Emanuele, et al., Unlocking North Africas Potential through Regional Integration: Challenges and Opportunities (Tunisia: The African Development Bank Group, 2012). 62 Ibid. 63 The South-South Cooperation Trust Fund will Support African Countries, South-to-South Cooperation on Land and Environment, accessed 6 September 2012, http://www.scopeacp.net/news/a-new-fund-to-support- african-countries-the-south-south-cooperation-trust-fund. National High School Model United Nations 2013 Economic and Financial Committee
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Burkina Faso, Cameroon, Chad, Cote dIviore, Mali, Nigeria, Senegal, Uganda, United Republic of Tanzania, and Zambia were all struggling to maintain competitive cotton prices and markets because of their outdated technology and small markets. 64 Furthermore, when the World Trade Organization (WTO) cancelled the quota set by its own organization, or in other words, limitations, placed on cotton production, African countries struggled even more to keep up with the textile and raw material production occurring in more developed states. 65 Many of the common problems included trade distorting subsidies of more developed states, low quality products, low productivity, lack of modern technology, lack of human capital and knowledge, lack of foreign direct investment, and lack of regional bodies with experience. Trade distorting incentives means anything that makes trade less efficient, including tariffs and taxes, which may hinder firms and households from participating in the business cycle. An example of this would be a sales tax, if high enough, would distort incentives, meaning that a customer would be less likely to make purchases because of the additional tax on their purchase. In the case of cotton, trade-distorting subsidies describe developed states giving their cotton farmers large amounts of money to lower the price of cotton to make their crop more desirable on the free market. In response, the Cotton Initiative, an alliance between India, China, and cotton producing states as listed above was created by the WTO in 2003 to assist the Asian and African small-scale farmers in maintaining competition and providing technical assistance. 66 The overall goal of the Cotton Initiative is to have more advanced developing states, the emerging states, assist in maintaining a competitive Cotton-Textile-Garment sector in Africa. The goals of the program included improving the capacity building, or ability to produce efficiently, in cotton processing. 67 Because China and India have more developed and advanced cotton and textile industries, they are able to provide African countries with both technical and intellectual assistance in building up their emerging markets. Through the transfer of cotton producing technology and greater technical skill building, the hope is to create a situation in Africa that fostered the cotton and related sectors. These countries have been producing cotton at a more efficient level because of the lack of quota and more advanced infrastructure. 68 The lack of quota encourages countries to produce as much cotton as they can; and even though this may cause overproduction, it actually allows for African states to take advantage of their absolute advantage, or producing more cotton with less inputs such as labor, land or capital than other states, and earn more money. 69 Thus, SSC can be instrumental in assisting with development or providing aid because of the similar concerns of developing countries. Countries with similar problems can generate collective solutions and make themselves and their fellow developing states better off in the process. The committee should consider the impact of developing nations upon development and how to best utilize SSC to generate the most amount of infrastructure development.
Role of the Private Sector
While many infrastructure projects are financed by the public sector, including governments and international organizations, a financing gap has developed, which may require private aid. The
64 South-South Initiative on Cotton, United Nations Industrial Development Organization, accessed 6 September 2012, http://www.unido.org/index.php?id=o84840. 65 Ibid. 66 Ibid. 67 Ibid. 68 Ibid. 69 Johnson, Paul M., Absolute Advantage, Auburn University, accessed 3 September 2012, http://www.auburn.edu/~johnspm/gloss/absolute_advantage. National High School Model United Nations 2013 Economic and Financial Committee
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International Monetary Fund (IMF) has estimated that maintaining infrastructure over the next few decades in critical areas, such as telecommunications, power, transportation, water, and sanitation, will cost USD 1.800 trillion a year. 70 The Organization for Economic Cooperation and Development (OCED) has cited that it would be impossible to meet these demands without private sector involvement to bridge the funding gap. Other international organizations, such as the Millennium Challenge Organization and the United Nations, have also recognized the important role that the private sector can and should be able to play in the future. 71 The African Progress Panel, an organization dedicated to researching and supporting African Development, states, African governments must also make every effort to develop Public-Private Partnerships (PPPs) to attract capital for the funding of infrastructure projects. 72 The United Kingdoms Department for International Development (DFID) has recognized that developing countries, especially impoverished ones, have infrastructure demands that far exceed the capacity of governments and donors. Through leveraging private sector involvement, services can be adequately provided. 73
Considering this, it is important to further explore the role of the private sector in developing infrastructure.
The private sector has four primary methods to involve itself with infrastructure development in foreign countries: management and lease contracts, concession agreements, Greenfield projects, and divestiture. 74 Management and lease contracts are temporary agreements where the private entity assumes primary operation of a state-owned enterprise (SOE), such as state controlled water, electricity, telecommunications, and postage services with the state still maintaining actual ownership of the enterprise. 75 This category can be split into management contracts, where the government hires a company or private entity to manage the facility and thus the government still maintains the risk; or lease contracts where the government can lease their facility to a private entity, which then assumes the risk. 76 An example of this would be a government owned railroad. If the government were to hire a private company to run and operate the railroad, it would be a management contract. Conversely, if the government leases the assets to a private company, then it is a lease agreement. In both cases, the government still ultimately owns the railroads during and after the contracts expire. Concession agreements are similar to management and lease contracts, but have significantly more risk and a less active public entity. Essentially, with concession agreements, the government will not provide much support for the private entity, and they could lose their entire investment if the business conducts the work poorly. Using the same railroad example, if the railroad owned by the government were run down and inoperable, but a company decided to lease the railroad and fix it to earn profits during the lease period, they would sign a concession agreement. Because of the greater risk (the company may not ever earn back the investment required to rehabilitate the railroad),
70 Christiansen, Hans, The OECD Principles for Private Sector Participation in Infrastructure (Washington, DC: Monetary Fund, 2007). 71 Millennium Challenge Corporation, Private Sector Initiatives, accessed 7 September 2012, http://www.mcc.gov/pages/business/psi. 72 Bayliss, Kate, Private Sector Participation in African Infrastructure: Is it Worth The Risk? (International Policy Centre, 2009), 5. 73 Ibid., 5. 74 Kirkpatrick, Foreign Direct Investment, 147. 75 Ibid. 76 Glossary, Private Participation in Infrastructure Database, accessed 3 Sept. 2012, http://ppi.worldbank.org/resources/ppi_glossary.aspx. National High School Model United Nations 2013 Economic and Financial Committee
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concession agreements distinguish itself from the management and lease contracts. Greenfield projects are the most common form of private sector involvement. They include the private entity working either alone or with a public entity to build and operate a new venture. An example of this type of venture would be a public-private partnership developing water filtration capabilities through funding and contributions from both the private and public sector. Referring back to the railroad example, a Greenfield project would exist if the railroad project has not been started and a private company would like to invest in the creation and operation of a brand new railroad. Governments can be involved in this project by declaring a joint venture project and helping to provide funds. Divestiture is when the private entity purchases a stake of an SOE through a desire for the government to privatize that industry. Thus, the former SOE is completely free of public control and is owned by the private entity. 77 If the government decides that they no longer wish to run and operate the railroad, or bear any burden in regards to it, it may decide to sell the railroad to a private investor or owner. In this case, the railroad is completely separate from the government and all risk and future operations are assumed by the private entity with no relationship to the government that once owned it.
For the purposes of debate, the focus of the role of the private sector should be limited to how it can contribute to infrastructure development, and not on economic growth overall. With this, different agreements, such as the management and lease contracts or concession agreements, allow for the private entity to take over a utility or government operated business and implement their own changes, including technology improvements and framework changes, to make it more productive and efficient. Beyond that, Greenfield projects, work in the same way in that the private sector determines what type of business to create and does so through providing the capital and thus the infrastructure to do so. It is integral to remember that the government does not always regulate the private sector and any infrastructural changes it wants to implement will need to be profitable for the business, adding another element of complexity to the situation.
Case Study: Public-Private Partnerships for Water Utilities
Beginning in the 1990s, water Public-Private Partnerships (PPPs) have become more popular in developing regions for implementing water infrastructure more efficiently. 78 Specifically, the UN PPP for Water Utilities has become a driving force for developing infrastructure necessary for clean and potable water in developing regions. During the decade between 1990 and 2000, the portion of the world population serviced by private operators soared from six million to 94 million, and the number of water PPP projects grew from four to 38 all over the world. 79 The significant rise of PPP projects is directly correlated with continued success of the ventures, such as with the water infrastructure development projects. On a greater level, PPPs can be extended to other fields, such as electricity, transportation maintenance, and other infrastructure.
77 Ibid. 78 Marin, Philippe, Public-Private Partnerships for Urban Water Utilities: A Review of Experiences in Developing Countries (Washington, DC: The World Bank and the Public-Private Infrastructure Advisory Facility, 2009). 79 Ibid., 2. National High School Model United Nations 2013 Economic and Financial Committee
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PPPs, or the private entity, be it an individual, company, or group, is introduced into the area and will subsequently build, operate, and maintain the facility. Thus, in privatizing such a venture, companies and individuals can profit while society benefits from greater infrastructure distribution. Most importantly, these PPPs improve access; the number of people with greater access to potable water has increased substantially, by over 24 million since 1990. 80 Additionally, water service quality has increased substantially because of the large reduction in water rationing. Water rationing occurs when the pressure distribution in traditional pipelines cannot service all areas equally. This means that areas in typically low-pressure regions will frequently be short of piped water. The PPPs have been able to provide more continuous water service in regions such as Western Africa, Colombia, and the Philippines. 81 In evaluating the effectiveness and efficiency of these water PPPs, its important to consider the way they impact water losses, bill collections, and labor productivity. In cutting water losses, private entities have had varied success, with some companies reaching 15 % water loss, while others remained at high levels of up to 50 %. 82 Because of the private incentive to collect money for their services, bill collection has been much more effective with the integration of PPP, versus the typical public approach. Labor is more productive under private management, as shown by a reduction in number of employees despite a growing customer base. Tariff levels are inconclusive because in some areas, a rising tariff on water is correlated with better service and continued sources, whereas, in some areas, the lowered tariffs helped to increase availability to the poor. Overall, the water PPP experience in the developing world helped to stimulate water allocation in areas where potable water was scarce, showing the benefits of private sector involvement in providing valuable infrastructure. In evaluating the efficiency of the water PPPs, access, quality, operational efficiency, and tariff levels are important caveats to consider.
Case Study: Fiji Islands and Fiji Water
While some private-public partnerships are beneficial to the international community, there are instances where private sector involvement negatively effects the region overall. Fiji Water is a Los Angeles based water-bottling company that has bottled and shipped directly from the Fiji Islands since 1996. As a business, Fiji Water has been able to bring additional employment to the area and contributes to the natives through its factories and bottled water market. In the Fiji Islands, Fiji Water accounts for about 400 native workers and remains the fourth largest exchange earner behind tourism, sugar, and remittances. 83 The government of Fiji and the Water Authority of Fiji has pledged to remain committed to the MDGs and sought to increase access to clean water to at least 60 % of the population by 2014. Fiji Water claims that its philanthropic projects in Fiji contribute to the MDG goal of increasing access to basic necessities such as water, and that it has helped over 40,000 attain access to potable water since its establishment. 84
80 Ibid. 81 Ibid 82 Ibid. 83 Fiji Water Reserves Decision to Leave Pacific Island Nation: Report, Fox News, accessed 26 Aug. 2012, http://www.foxbusiness.com/markets/2010/12/01/fiji-water-reverses-decision-leave-pacific-island-nation- report/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed %3A+foxbusiness %2Flatest+(Internal+-+Latest+News+-+Text). 84 Preston, Clean Water for Fiji, State of the Planet, accessed 6 Sept. 2012, http://blogs.ei.columbia.edu/2011/06/24/clean-water-for-fiji/. National High School Model United Nations 2013 Economic and Financial Committee
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Despite this commitment to increasing access to potable water for the native populations, however, Fiji Water exports over 180 million bottles of water per year, which is about 15 % of the required water needed to satisfy the Fijian population. 85 Fiji Water has also struggled to cooperate with the Fijian government. In 2006, a military coup forcibly took control of the island and since 2009 has been subjecting the islands inhabitants under martial law. 86 Despite the newly instituted government, Fiji water continued its operations and what some saw as silent support for the regime, turning over USD 141 million in profit in 2008 and USD 85 million in 2009. 87 Profit aside, during its years of operation Fiji Water had been operating essentially tax-free on the islands, paying less than one million dollars in two years despite their earnings being in the hundreds of millions. 88 So, in 2010, the Fijian government announced it would introduce a 15 cent per liter tax on bottled water in bottling locations where more than 925,000 gallons of water are extracted per month. 89 This is a stark increase from the previous 0.33 cent per liter that the company has been accustomed to paying since the beginning of its operations on the islands. Over the last two years, the government and the company conducted negotiations regarding the proposed tax hike, which resulted in the government lowering its taxation rate while the company agreed to keep its operations in Fiji. 90 This is an example of the types of disputes that can arise and thus hinder the private sector from entering or continuing business in certain regions. Disparities in laws regarding taxation, copyright/patents, and labor may be points of contention between the private and public sector. And most importantly, it is difficult to measure whether the benefits of Fiji Water to the inhabitants of Fiji are grand enough to justify the monopolization of the water resources and the indifference towards a military dictatorship. While Fiji Water was able to develop water infrastructure and spur economic growth, the private sector is often motivated by their own profit seeking desires, making them a difficult entity to work with. It is difficult to measure whether the benefits of Fiji Water to the inhabitants of Fiji are grand enough to justify the monopolization of the water resources and the indifference towards a military dictatorship.
Maintenance of Aid and Governance
A large part of ECOFINs discussion should focus on the after-effects of foreign direct investment (FDI) and infrastructure donation. With the recent focus on PPPs, it is clear that the private sector has great influence on the future of FDI and other forms of investment. Many countries need the basic framework on how to best regulate and operate the new equipment. In terms of regulation, because of private sector involvement in development and operating in foreign countries, governments will need to build regulation frameworks to prevent abuses and continued prosperity. If the private sector chooses to enter a country on the basis of building up an industry, monopoly pricing and exploitation may result. 91 It is especially dangerous if a corporation or single business has control over a necessary natural resource, thus allowing them to charge higher prices than fair
85 Ibid. 86 Gleick, Fiji Water: When Environment, Politics, and Economics Collide Over Bottled Water, Huffington Post, accessed 26 Aug 2012, http://www.huffingtonpost.com/peter-h-gleick/fiji-water-when- environme_b_789503.html. 87 Schuker, Islands Tax Increase Gives Fiji Water a Bitter Taste. 88 Gleick, Fiji Water: When Environment, Politics, and Economics Collide Over Bottled Water. 89 Schuker, Islands Tax Increase Gives Fiji Water a Bitter Taste. 90 ibid. 91 Kirkpatrick, Foreign Direct Investment. National High School Model United Nations 2013 Economic and Financial Committee
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market equilibrium. Subsequently, governments need to create credible regulations and procedures to not only promote investment but to limit certain practices to protect their citizens and the competitive industry. For example, in Liberia, rubber has been extracted by private businesses because of how lucrative the industry is and the large amounts of capital investments needed to sustain operations. In 2003, the UN Security Council established the United Nations Mission in Liberia (UNAMIL) with a mandate to promote future economic development in Liberia aimed at achieving long-term stability in Liberia and improving the welfare of its people. 92 UNAMIL, like other un peacekeeping missions, has the basic goals of security for the area alongside developmental assistance that mimic the targets of the MDGs. In 2006, UNAMIL released a report on the status of human rights in Liberia and the contributing factors for the gross violations of rights on rubber plantations. It states that the agreements forged between corporations, namely Firestone, and the host government, in regards to workers rights were extremely vague and nonbinding, resulting in living and working conditions on plantations to violate fundamental human rights standards. 93
This resulted in child labor abuses, hindered access to primary education, poorly equipped health care facilities, and environmental concerns, which exacerbated health problems. 94 The practices of private rubber corporations hinder the achievement of all the MDGs. As with many countries rich with natural resources, the profit generated from the sale of rubber is not redistributed to improve the conditions on the plantations, 95 and instead, has only benefited the private corporations at the expense of the country and the native populations.
Another concern is that once there is a transfer of infrastructure, from developed countries to developing or developing to developing, the developing country will not have the means to maintain and operate the facility at its fullest extent. Many road and transportation projects have deteriorated as a result of either lack of oversight or civil conflict. An example of this is the Rwandan Civil War, which resulted in the destruction of most of the countrys major economic infrastructure including utilities, roads, and hospitals. 96 After the civil war, it was necessary for the country to rebuild much of the original infrastructure, which has been made possible with international donations and Rwandas Vision 2020 program, which fosters private sector involvement in the reconstruction efforts. 97 Despite the efforts made by developing countries, such as Rwanda, it may not be possible for its 20/20 program or even private aid to sustain the expensive infrastructure and harbor the human capital needed to sustain its use. CURRENT STATUS The United Nations General Assembly has addressed the issue of infrastructure development on many different levels and with many different organizations. A notable UN commitment to development is in the Millennium Development Goals (MDGs), which are due to be completed by
92 S/RES/1509, United Nations Mission in Liberia (Geneva: United Nations Security Council, 2003). 93 Human Rights on Liberias rubber plantation: Tapping into the future (Geneva: United Nations Mission in Liberia (UNAMIL), 2006), 5. 94 Ibid. 95 Ibid. 96 Rwanda Civil War, Global Security, accessed 6 September 2012, http://www.globalsecurity.org/military/world/war/rwanda.htm. 97 Private solutions for Infrastructure in Rwanda: A Country Framework Report (Washington, DC: The World Bank, 2005), 5. National High School Model United Nations 2013 Economic and Financial Committee
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2015. 98 The eight goals include: eliminating extreme poverty and hunger, achieving universal primary education, promoting gender equality and empowering women, reducing child mortality, improving maternal health, combatting HIV/AIDS and other diseases, ensuring environmental sustainability, and developing a global partnership for development. 99 The most relevant MDGs to this topic are the final two, ensuring environmental sustainability and developing a global partnership for development, though all the goals are related in one way or another. Millennium Development Goal number eight, to develop global partnerships, focuses on the amount of aid disbursements that have been acquired and transferred to the developing world. In 2011, the aid amounted to USD 133.5 billion. 100 While this number does remain higher than that of previous years, when adjusted for inflation, the amount of aid to debt relief, humanitarian aid, and development aid has actually dropped 2.7 %. 101 Of course, aid in some regions has gone up, while aid to other regions has gone down depending on circumstances such as natural disasters, civil conflict, stability, and attractiveness to investment. Aid is essential to building infrastructure, as the initial investment can help to create the facilities or create a hospitable environment for infrastructure development and economic growth.
South-South Cooperation (SSC) is currently being debated in the United Nations General Assembly as a forum for the developing world to facilitate infrastructure transfer. General Assembly Resolution 64/222 (2009), strengthens the commitment to SSC as a viable means to development. This resolution discusses greater regional commitments and supports the mutual fund for the sake of development. It recognizes that SSC has multiple mobiles including intellectual transfer, technology transfer, and financial transfer. 102 This resolution emphasizes the role of the developing countries, especially the recipient, in that the receiving entity will have greater say and control over how the infrastructure transfer and development assistance will be carried out.
With the rise of the private sector as a viable investor in developing countries, the public and private sector have begun to redefine their relationship with one another and with investment in infrastructure. The United States Treasury notes that studies have shown a direct correlation between growth in the private sector with public sector investment in infrastructure. 103 Thus, governments, in accordance with the MDGs and other development schemes may decide to invest heavily into public goods in an attempt to boost private sector development as well.
There have been multiple conferences on the subject of infrastructure development in specific regions and the international community overall. In 2010, twenty-seven states located in Eastern and Southern Africa, known collectively as ESA, met in Nairobi, Kenya for the purpose of preparing for the 2011 investment conference and to discuss areas in which infrastructure
98 The Millennium Development Goals: Eight Goals, United Nations Development Programme, accessed 6 September 2012, http://www.undp.org/content/undp/en/home/mdgoverview.html. 99 Ibid. 100 Ibid. 101 Ibid. 102 A/RES/64/222, Nairobi Outcome document of the High-level United Nations Conference on South-South Cooperation (Geneva: United Nations General Assembly, 2009). 103 A New Economic Analysis of Infrastructure Investment: A Report Prepared by the Department of the Treasury with the Council of Economic Advisers, (Washington, DC: The United States Department of the Treasury, 2012), 5. National High School Model United Nations 2013 Economic and Financial Committee
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improvement is vital to the progressing economies. 104 At this conference, the countries and international organizations, such as Citadel Capital, identified the five major infrastructure improvements including transportation, ICT, energy, water, and sanitation. 105 In transportation, ESA hopes to improve roads, railroads, ports, water transport, and to rehabilitate existing infrastructure to make it more accessible. ICT refers to any communication link (telecommunications, postal, broadcasting), and ESA hopes to upgrade the current systems and provide a more accountable systems. 106 The International Conference on Infrastructure Economics and Development was held in January 2010 in Toulouse, France to discuss the impact of infrastructure on the global economy. This conference, hosted by the World Bank, Toulouse School of Economics, the French Agency on Development, and the Public-Private Infrastructure Advisory Facility (PPIAF) to understand the economic impacts of infrastructure in the developing world. These conferences have helped to update the international community on the goals for development and solidify a commitment to infrastructure development. BLOC ANALYSIS Emerging States
The emerging states have a pivotal role within the present and future financing of infrastructure development in the developing world. With South-South Cooperation gaining more support and funding, emerging states will have the opportunity to play a vital role in shaping the infrastructure development in lesser-developed countries. These states choose to invest in developing countries to create influence for themselves in that specific country and to get returns on their investments. What differentiate the developing states from developed states are their levels of growth right now. Currently, the BRIC countries have the highest rate of growths in their economies. People are more mobile with their money and have the means to invest in different ventures, whereas some of the developed world is struggling to maintain their current gross domestic product (GDP) growth rates or how to balance their large amounts of external national debt.
Emerging states are already fairly active with South-South Cooperation, by bilateral or multilateral agreements with developing countries. An example of this would be the India, Brazil, and South Africa (IBSA) forum that was created to distribute infrastructure and contribute to global issues trilaterally. 107 China has also proven to be an active contributor to the South-South movement through its plentiful investments in Africa and abroad. 108 Common Chinese contributions are made through large-scale infrastructure projects such as hydropower and railways. 109 FDI to Sub-Saharan Africa (SSA) grew four fold between the years of 2001-2005 as a result of the partnership between
104 Infrastructure Development Conference: Linking up Eastern and Southern Africa Sustainable Economic Development (Nairobi: COMESA-EAC-SADC, 2010), 2. 105 Ibid. 106 Ibid. 107 India-Brazil-South Africa Trilateral. The India-Brazil-South Africa Dialogue Forum. Accessed 6 September 2012. http://www.ibsa-trilateral.org/. 108 Foster, Vivien, et al, Building Bridges: Chinas Growing Role as Infrastructure Financier for Africa (Washington, DC: The World Bank, 2008), V. 109 Ibid. National High School Model United Nations 2013 Economic and Financial Committee
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China and Africa. 110 Chinese workers and companies, alongside increased trade, have helped boost real GDP in the region. 111 As the emerging economies grow and require greater resources to fuel their growth, richly endowed African countries have become able to supply greater amounts to their South-South partners.
Specifically, China has become extremely involved in the African region through debt relief assistance and infrastructure transfer. Secretary General Ban Ki Moon notes that China has cancelled significant amounts of African debtAnd China continues to provide much-needed financing to meet the very large demands for capital investment, especially for infrastructure. Africa, for its part, is investing in China, on a smaller scale. 112 In essence, Chinas investment in infrastructure and development within Africa has contributed to a mutualistic relationship where both parties benefit economically. China has increased influence in Africa and greater access to its dearth of resources and markets. Emerging economies should continue to utilize their own fast growing economies to help stimulate growth in other states while benefiting at the same time.
In Latin America, Brazil is an important contributor to SSC by assisting not only Central American states, but also Africa and East Timor in Asia. Brazil focuses on capacity building in developing countries and strives to help their SSC partners strengthen their institutions and human resources; or in other words, build soft infrastructure. It does this by sending experts to help build human capital and improve specific sectors of the economy or country, such as energy, sanitation, and transportation. These projects are all grouped under the Brazilian Cooperation Agency (ABC), which is an arm of the government and has carried over well over 250 projects in the developing world in a variety of fields including but not limited to health, agriculture, energy, urban development, electoral support, and information technology. Brazil is active in many Portuguese- speaking states, as its official language is Portuguese. This allows for Brazilian experts and assistance to be the more comprehensive and understandable. Brazilian support of SSC has helped to extend the borders of infrastructure development to soft infrastructure, an area that may become overlooked. 113
Developed States
The developed states have a large concentration of the worlds wealth, and subsequently, have the means to support many large infrastructure projects in the developing world. The wealth of these states is not limited to monetary and financial means, but rather, they have the intelligence and means to implement successful infrastructure in developing areas. In the United States and the European Union external national debt has hindered, to a certain degree, the amount of funding it can contribute to the development of other states infrastructure. North South Cooperation (NSC) is a large role that the developed world can assist with. UN General Assembly resolution 64/222 emphasizes that South-South cooperation is not a substitute for, but rather a complement to,
110 Ibid., vi. 111 Ibid., vi. 112 At China-Africa meeting, Ban highlights role of South-South cooperation, United Nations, accessed 3 September 2012, http://www.un.org/apps/news/story.asp?NewsID=42512&Cr=south- south&Cr1=#.UEgBG6RYtv0. 113 Trends in Development Cooperation: South-South and Triangular Cooperation and Aid Effectiveness (Federative Republic of Brazil, 2008), 4. National High School Model United Nations 2013 Economic and Financial Committee
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North-South cooperation and recognizes the value of the developed countries and their contribution to the development efforts of the south. 114 The developed states should understand their role as the financier of development projects in the developing world, and how their private entities can invest and benefit from positive relationships in infrastructure development.
Many developed countries, the United States, many EU member states, Japan, Israel, and others, are part of the Organization for Economic Co-Operation and Development (OECD) and have agreed on fundamental macroeconomic commitments to infrastructure development in their own countries and abroad. The OECD states would like to focus on innovative approaches to financing development and encourages PPPs, institutions (such as pension programs, social security, and other entitlement programs), and expanding traditional revenue raising sources (such as through lease contracts, Greenfield projects, and more). Beyond that, the OECD recommends reevaluating current institutions to make sure they are the most effective and conducive to infrastructure investment and development. 115 The OECD states hope to continue to develop infrastructure in their own countries while expanding financial assistance abroad through adhering to certain macroeconomic standards to promote smart investing.
Developing States
As the primary recipient of infrastructure, the developing country has a large role in guaranteeing that the investment is carried out and used to its fullest extent. As a large part of the general assembly, the developing world has more say on a topic such as investment in development here than it would in other bodies such as the World Trade Organization (WTO). Developing states will want to create an environment hospitable to acquiring more FDI and investment overall. In committee, the developing countries will have a greater say in defining their own role within development, either emphasizing more private sector versus public sector involvement or vice versa. Essentially, these states will need to focus on their avenues of acquiring infrastructure and how they can promote development in their regions. This is not to say that the developing countries will be at the whim of their financiers, but rather, that the developing world can serve an important role as fellow facilitators of development assistance.
African states have been the recipients of international development assistance, specifically for infrastructure investment. The IMF has estimated that Sub-Saharan Africa (SSA) has the largest infrastructure gap out of all developing regions in the world and that nontraditional methods of financing will need to be used in order to sustain infrastructure development in the area. Mozambique, Rwanda, Tanzania, and Uganda have teamed up with the IMF to bridge the infrastructure gap though increasing public investment spending with the Policy Support Instrument (PSI). PSI is basically an IMF public loan that comes with certain policy mandates to help guide the infrastructure development process. The IMF will help to gear development programs to the region and create the most sustainable growth situation. The goal of PSI is to not only provide investment for nations, but to implement sound policies to support the aid given. Overall, African developing
114 A/RES/64/222. 115 Infrastructure to 2030, OECD Observer, accessed 6 Sept. 2012, http://www.imf.org/external/pubs/ft/survey/so/2010/car072110b.htm. National High School Model United Nations 2013 Economic and Financial Committee
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states need to focus on building hard and soft infrastructure through creating and harboring policies that promote investment. 116
Southeast Asia has been developing regional infrastructure and is coming more self-sustainable because of the Association for South East Asian States (ASEAN) and regional cooperation. Because of the funds set up by ASEAN and the Asian Development Bank, Southeast Asia has been able to fund its own infrastructure development and has been improving regional and individual countries infrastructure throughout the past decade. However, estimates by the Asian Development Bank state that the region will need to invest over USD 8 trillion in national infrastructure and USD 290 billion in regional infrastructure to sustain growth rates between 2010 and 2020. Thus, Asian countries must find new sources of financing or make their region more attractive to outside investors. Attracting large amounts of investment will be vital to their continued growth and the future of their state and regional infrastructure projects. 117
COMMITTEE MISSION The mandate of the Economic and Financial Committee (ECOFIN) dictates a fundamental commitment to engaging in sustainable development and encouraging economic growth through a macroeconomic lens. As ECOFIN, it is important to keep these larger goals in mind and not be overly concerned with the specific technology or industries that the infrastructure is from, but rather, to consider the economic benefits of the topic overall. Delegates should be wary of crafting solutions that focus too heavily upon the technical aspects of infrastructure transfer but rather, how to make it economically viable. The committee should focus on creating policies and recommendations for encouraging investment in regions that may either need greater infrastructure development or have a difficult time attaining it. In order to accomplish this, delegates should be aware of current practices and which tactics have been the most successful overtime.
The committee should be cognizant of a few major players in the infrastructure building process: the private sector, governments/the public sector, and outside organizations. While ECOFIN cannot mandate that a country implement a specific form of infrastructure or require another country aid them in the process, it is ECOFINs main role to help put countries in dialogue with one another to forge these bi-lateral and multi-lateral discussions. ECOFIN cannot mandate that the private sector act in one way or another, and thus, the committee has the task of deciding what the role of the private sector should be and provide incentives for the private sector to act in a certain way. Guidelines and structures could be created to facilitate specific types of partnerships and foster cooperation amongst the different contributing parties.
Another major concern is how to make countries into stable and safe investment locations for infrastructure. As noted earlier, many developing countries lack vital soft infrastructure, are embroiled in civil conflict, or face other challenges that may make it an unappealing investment. The committee should attempt to make recommendations for countries to implement to either
116 Redifer, Laure, New Financing Sources for Africas Infrastructure Deficit. 117 Erquiaga, Philip, For a Better Road to Development, Asia Must Attract Private Partners, Jakarta Globe, accessed 6 September 2012, http://www.thejakartaglobe.com/opinion/for-a-better-road-to-development- asia-must-attract-private-partners/515673. National High School Model United Nations 2013 Economic and Financial Committee
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become more hospitable for investment or somehow improve their internal infrastructure. While the focus of the committee should not shift to preventing conflict or to social or political problems, it is important for ECOFIN to consider the aspects of a country or region that can attract investors. Then, after defining or understanding these factors, ECOFIN can best decide on a plan of action to help regions that may be lacking in some of the attractive investment traits. Overall, investment is the foundation for infrastructure development and it is vital that countries can attract foreign direct investment or acquire funding for development purposes.
ECOFIN should also utilize existing structures and partnerships, such as South-South Cooperation, North-South Cooperation, and Triangular Cooperation to further development aims and infrastructure transfer. The committee should understand how these mechanisms and partnerships work and how they can be improved for even greater purposes. Beyond the public sector partnerships, public-private partnerships are another facet of the existing structures that can be utilized in this process. There are many pros/cons with each form of cooperation and one uniform solution is not comprehensive, thus, ECOFIN must consider each type of structure and how to best exploit the benefits of each.
Overall, the issue of infrastructure development is integral in completing the Millennium Development Goals and to the economic health of the developing world and international community. ECOFIN has many different aspects of the issue to continue. The foremost is deciding whether or not infrastructure development is needed and what type of infrastructure. Then, who will manage the project, fund it, and continue to maintain it. Within the latter, there are sub-issues that include how to promote investment and what types of ventures to pursue. Infrastructure development is a multifaceted issue that requires immediate attention and action as to promote and continue economic growth in developing regions.
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TOPIC B: BRIDGING THE INCOME GAP INTRODUCTION Every member state of the United Nations (UN) experiences income inequality to varying degrees. The income gap is calculated through the distribution of income between different groups of people within a state. While on the surface, other economic measures such as gross domestic product (GDP) and purchasing power may present more accurate means to measuring a countrys progress, measures of income inequality shed a light on the contrast between the richest and the poorest within a country. Gross domestic product (GDP) is the value of all the goods and services produced in a countrys borders within a year. 118 While a countrys GDP is adequate in creating a figure to compare overall output, purchasing power parity (PPP) is better when comparing relatively between countries. PPP sums up all the goods and services produced in a country measured at United States prices to adjust for differences in currency. Essentially, PPP helps to compare apples and oranges, by converting different exchange rates, standard of livings, and other economic variables into something comparable. 119
A country can have an overall high GDP with steady growth each year. However, if most of the money in the country is concentrated in an elite group, then the countrys overall economic health will be affected. The Economic and Financial committee should consider the implications of the income gap, decide whether to address the issue directly or indirectly, and overall, how to decrease the disparity.
Income inequality is an indicator of how material resources are distributed across society. 120 In order to understand the disparity that exists between the incomes of different people, populations, and states, one must first understand the concept of income. When discussing the inter-state income gap a useful measure is the mean income or the Gross Domestic Income (GDI), which is essentially the per capita, or per person, GDP. 121 When dealing with individual countries, the term income will describe personal income. Personal income, as defined by the Bureau of Economic Analysis (BEA), is income received from participation in the production process, social benefits, and any money made from government interest. 122
HISTORY AND DESCRIPTION OF THE ISSUE The income gap has long existed, but recent coverage and media exposure has increased the awareness of this problem over the past decade. There are two forms of inequality, constructive income inequality and destructive inequality. Constructive income inequality rewards those that are
118 Field Listing: GDP (Official Exchange Rate), CIA World Fact Book, accessed 6 September 2012. https://www.cia.gov/library/publications/the-world-factbook/fields/2195.html. 119 Ibid. 120 Income Inequality, Society at a Glance 2011: OECD Social Indicators (Paris: OECD, 2011), 66-69. 121 Milanovic, Branko, Global Income Inequality: What it is and Why it Matters? (Geneva: United Nations, 2006). 122 Ruser, John et al, Alternative Measures of Household Income: BEA Personal Income, CPA Money Income, and Beyond (Washington, DC: Federal Economic Statistics Advisory Committee (FESAC), 2004), 1. National High School Model United Nations 2013 Economic and Financial Committee
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the most productive and encourages people to work harder, whereas, deconstructive inequality undermines economic growth and reduces social mobility, thereby reducing the incentive to work, save, innovate, and invest. 123 Destructive inequalities results from injustice and unfairness, and often, corrupt political systems. 124 The existence of a large disparity between the rich and the poor contributes to developmental problems and slow market growth. Growing disparities are often indicators of lack of government oversight and the existence of an elite ruling party that controls most of the commerce and income within a state.
Global Income Inequality
Global income inequality and state income inequality are two different aspects of the topic of bridging the income gap. Global income inequality exists because the global GDP is not distributed equally amongst states. 125 As of 2006, the wealthiest 1 % of the world received as much income as the bottom 5 % of the worlds population. 126 In comparing the incomes of the worlds citizens, values must be adjusted according to the purchasing power parity (PPP) that allows economists and scholars to compare countries with different currencies and standards of living. 127 Essentially, to make numbers more comparable despite these currency exchange differences, it adjusts to calculate the value of purchasing the same goods and services in two different countries instead of relying on exchange rates directly. 128 Through PPP, it is possible to compare the mean incomes of two states and gauge global income inequality by figuring out how much can be purchased in different countries. Measuring global income inequality and establishing an understanding of the economic differences between the members of the international community is one of the first steps towards addressing the income gap.
Internal Country Income Distribution
Domestic income distribution is another aspect of income inequality that is slightly different from global income inequality. Rather than comparing countries and their overall purchasing power or GDP, the internal income distribution shows the differences between citizens within a state. This measure is important because whether a country is considered wealthy or poor overall, there are still different socioeconomic divides between the citizens themselves. The internal comparison of income distribution in one state is easier to make because the purchasing power between individuals will not differ much. Specifically, in the United States, where the issue of income inequality has gained traction in the last year, some argue that income inequality actually is insignificant because of how similar consumption patterns are between the wealthiest and the poorest. 129 For example, 62 % of households with an income less than USD 20,000 owned between two and four televisions compared to 68 % of households earning USD 120,000 or more owning the same amount of
123 Birdsall, Nancy, Globalization and the Developing Countries: The Inequality Risk (Washington, DC: Overseas Development Council Conference, 1999). 124 .Ibid. 125 Wade, Robert Hunter, The Rising Inequality of World Income Distribution, Finance and Development 38 No. 4 (2001). 126 Income Inequality, UC Atlas of Global Inequality, accessed 3 Sept 2012, http://ucatlas.ucsc.edu/income.php. 127 Purchasing Power Parity, Saunder. Accessed 3 Sept. 2012. http://fx.sauder.ubc.ca/PPP.html. 128 ibid. 129 Luhby, Tami, Are you Poor if you have a Flat Screen TV? CNN Money, accessed 3 Sept 2012, http://money.cnn.com/2012/08/01/news/economy/poor-income/. National High School Model United Nations 2013 Economic and Financial Committee
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televisions. 130 Thus, rather than consumer goods acting as an accurate determinant of income inequality within a state, it may actually produce more equality than actually exists.
Another issue with the use of consumer goods as an accurate determinant of wealth or income level is the fact that different countries have varying levels of consumer good infiltration. For example, in America 99.9% of households have refrigerators, 99.7% have some sort of cooking appliance, and 98.9% have color television regardless of income level. 131 While these appliances are fairly standard in American households, both poor and rich, in other countries, especially developing, the infiltration of standard household appliances may be a better barometer of income equality. Furthermore, consumer goods may be more or less important depending on the given situation. Income inequality within a state is an important issue because of the implications it has on development.
Similarly, wealth versus income is another important distinction in economics. It is a stock versus flow debate, wealth would be stock, which either gets built up or depleted, while income is flow which changes and moves around the economy. 132 Income is ever moving in an economy, so it would be theoretically easier to bridge an income gap versus a wealth gap, which is more unevenly distributed than income. Both large income and wealth disparities impact an economy negatively because each hinders economic growth and contributes to a hostile business environment. When different countries have economic disparities between them, as is the case of global income inequality, certain richer countries become more hospitable for business whereas the poorer countries become havens for exploitation of cheap labor and resources. 133 Within individual countries, income inequality contributes to social divides, slow human capital formation, and stagnated economic growth.
Implications of Income Inequality
The consequences of income inequality affect all of society through a lack of social cohesion, high levels of corruption, hindering economic growth, and limiting the countrys development. 134 Issues with social cohesion arise as a result of the disparity between the rich and the poor and the inability of the poor to attain basic needs. Explicitly stated, income inequality is one of the main causes of social fragmentation in that it emphasizes how unequal different groups of people are. The term social exclusion has gained significance in the last 30 years, following its inclusion in the Preamble of the European Social Charter and the 1995 UN World Summit for Social Development. 135 To explain, social exclusion means a relational process of declining participation, solidarity, and access, and thus works in conjunction with poverty to describe a limiting condition within
130 ibid. 131 The Effect of Income on Appliances in the U.S. Households, EIA, accessed 3 Sept. 2012, http://www.eia.gov/emeu/recs/appliances/appliances.html. 132 Baker, Sam, Stocks and Flows, accessed 15 Sept. 2012, http://hspm.sph.sc.edu/courses/econ/classes/Stocksandflows/Stocksandflows.html. 133 Bernasek, Anna, Income Inequality, and its Cost, New York Times, Accessed 20 September 2012, http://www.nytimes.com/2006/06/25/business/yourmoney/25view.html. 134 ibid. 135 Nel, Philip. The Politics of Economic Inequality in Developing Countries. Hampshire: Palgrave Macmillan, 2008. National High School Model United Nations 2013 Economic and Financial Committee
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society. 136 As a result, the Agreement from this 1995 World Summit in Copenhagen declared that social integration would become a goal of the UN and the international community, striving to counter the negative implications such as social polarization and fragmentation; widening disparities and inequalities of income and wealth within and among nationsmarginalization of people, families, social groups, communities, and even entire countries. 137
Corruption
The World Bank has eloquently defined corruption in accordance with the definition put forth by the Banks General Counsel Ibrahim Shihata, such that corruption is the abuse of public power for private gain. Corruption usually occurs in one of six major methods, either through bribery, theft, political and bureaucratic corruption, isolated and systemic corruption, or corruption in the private sector. 138 Very basically, it can include bribes the use of private funds to purchase certain things provided by governments to secure government contacts, benefits, tax incentives, licenses, time, or to ensure certain legal outcomes. Theft is defined as stealing from the public or government funds. Political and bureaucratic corruption is simply using the law to ones benefit or not creating or enforcing certain laws for private gain. Isolated and systemic corruption describes whether the corruption is an isolated or individual act of corruption, or a more systemic corruption, which is more widespread throughout society. Lastly, corruption in the private sector describes unregulated financial systems where fraud occurs and FDI is hindered. Many of these corruption tactics are used in conjunction to secure private desires. 139
It has been hypothesized that corruption is almost directly correlated to an uneven distribution of income. Jong-sung You and Sanjeev Khagram of Harvard University argue that because the rich have more private property to protect and have more to lose as a result of fair political, administrative, and judicial processes, they can use their increased gains in resources to protect their interests. 140 The findings of their research and studies have determined that corruption may actually exacerbate the existence of inequality. The International Monetary Fund (IMF) reports that income inequality can be exacerbated by continued corruption, and that corruption will be accelerated by income inequality. Corruption leads to hindered growth, biased tax systems, the misallocation of social programs, concentrated asset ownership, lack of human capital formation, greater education inequality, poor social spending, and greater uncertainty and risks. 141 While it is possible to debate theoretical connection between corruption and income inequality, proving this connection will not be ECOFINs primary goal. Still, corruption and income equality are inextricably linked and
136 Hilary Silver and S.M. Miller, Social Exclusion: The European Approach to Social Disadvantage Indicators (2009): 3. 137 A/CONF.166/9, Report of the World Summit For Social Development ( Copenhagen: World Summit for Social Development, 1995), 2. 138 Corruption and Economic Development, The World Bank Group, accessed 3 September 2012, http://www1.worldbank.org/publicsector/anticorrupt/corruptn/cor02.htm. 139 Ibid. 140 You Jong-sung and Sanjeev Khagram, A Comparative Study of Inequality and Corruption, American Sociological Review 70 no. 136-137 (2005): 190. 141 Gupta, Sanjeev, et al, Does Corruption Affect Income Inequality and Poverty? (Washington, DC: International Monetary Fund, 1998), 8. National High School Model United Nations 2013 Economic and Financial Committee
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ECOFIN will explore how income equality causes corruption, and vice versa, and how to address this issue effectively.
Case Study: African Corruption and Income Inequality
Studies have shown that the African income gap is caused by the lack of government oversight and an ineffective taxation structure. 142 African countries use a capital-intensive development strategy versus a labor-intensive development strategy. The difference between the two is that capital- intensive development means money and machinery are the primary methods of development. Because Africa is rich in resources, capital-intensive equipment is needed to extract these valuable natural resources and profit. Many subsides exist for capital-intensive development, and thus, because labor is not required, wages are often unfair and the tax scheme heavily favors the wealthy. Because the rich are those that can support capital-intensive projects, they can potentially invest their savings and extra money into capital-intensive development and earn returns on their investments. This inherently helps to make the rich, richer and exacerbate the income gap. Corruption and inequality are inexplicitly linked because of the connection between money and power. In cases where a large income disparity exists between rich and poor, the rich often utilize their money to continue to stay wealthy, while the poor do not have the means to do so. As well, when a system is corrupt, typically, the rich benefit because corrupt systems use money as the basis for its dealings.
Economic Development
Economic development is the cornerstone of poverty reduction and progress. Income inequality hinders economic development in multiple ways. The previous section on corruption describes how income inequality has led to more corruption, and how corruption has sustained income inequality. As noted earlier, corruption can hinder economic growth by creating unfriendly environments for investments and create unstable political and social systems. Furthermore, the income gap can hinder growth by limiting opportunity, hindering investment, and creating a hostile environment towards industry.
Income inequality also hinders economic development; if a countrys wealth is based on the continued poverty of most of its citizens through internal income inequality, its growth will stagnate. 143 The term human capital defines the value of the intangible resources such as education, training, and medical care possessed by individuals that will eventually contribute to income earnings in the future. 144 Human capital adds to your value as a productive unit of society. For example, a college degree is a form of human capital in that it helps to build skills and educates a student to be more productive. Thus, human capital and the access to resources to build human capital are important to the debate on inequality. Inequality is exacerbated when there is unequal access to opportunity to build human capital. Furthermore, the major problem with a growing
142 Gyimah, Brempong, Kwabena, Corruption, Economic Growth, and Income Inequality in Africa Economics of Governance (2002): 183-209. 143 Andrew G. Berg and Jonathan D. Ostry, Equality and Efficiency, Finance and Development (2011): 14. 144 Becker, Gary S., Human Capital, Library of Economics and Liberty, accessed 3 September 2012, http://www.econlib.org/library/Enc/HumanCapital.html. National High School Model United Nations 2013 Economic and Financial Committee
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disparity in income is the continued prevalence of poverty. Though the Millennium Development Goals (MDGs) have encouraged concrete action on a variety of topics such as eradicating extreme poverty, providing education, forging gender equality, promoting environmental sustainability, and addressing health concerns, they never explicitly address the widening income gap as a problem, either internally or internationally. While each of these issues are somewhat related to the income gap, either as a cause or a result of the gaps size and existence, bridging the income gap is not the explicit concern of the MDGs. Because it is not an explicit concern covered by the MDGs, none of the UN and international communitys MDG action plan specifically aims to bridge the income gap. If there were an explicit commitment to bridging the income gap, the international community would be more inclined to enact certain programs or actions that will lower the disparity in income. Delegates must take this into account when considering the most appropriate mechanisms for addressing the income gap head on.
A large income gap creates a situation that discourages investment, thus, hindering economic growth. Investments help to bolster economic growth by having money exchanges occur on multiple levels, facilitating the purchase of capital goods and necessities that otherwise would not occur. This results in the multiplier effect, which means that those with excess money can put it to use in the economy rather than letting it sit there. To clarify the idea of the multiplier effect, there is a simple example of a bank. If a businessman has extra money from his paycheck and puts USD 200 into the bank, the bank will then loan the money to someone that needs it. Therefore, the farmer, that needs to buy more capital goods, such as a tractor, can apply and receive a loan for USD 200. He can then buy the tractor from the salesman, who is now USD 200 richer. This idea continues to multiply the original USD 200 sum. 145 Because income inequality concentrates the wealth and income to a certain group of individuals, the poor have a lesser means to invest and borrow. There is also a lack of investment to further economic prosperity and growth if money does not undergo the multiplier effect and reach multiple groups of people. This is an explanation for how inequality reduces the effectiveness of economic growth in reducing poverty, because the poor are excluded from investment processes and are less likely to invest and reap the benefits. It is important then to realize that a reduction in income inequality today has a double dividend: it is likely to make future growth reduce poverty faster in addition to securing the benefits of more economically balanced societies. 146
Case Study: Indias Caste System as a Cause of Income Inequality
Oftentimes, income inequality exists as a result of governments and their policies. Internal income inequality within a state can be arbitrated through government intervention and effective social policies. The Indian Caste system is an extreme example of government marginalization and an artificial system of social inequality that has manifested into economic inequality within India. The caste was a rank created in India, which included the varnas or divisions, Brahmans (priests and learned class), Kshatriyas (rulers and warriors), Vaishyas (commercial livelihoods), Shudras (laborers). Outside of the varna was the untouchable class, those that occupied the lowest rung of society and
145 The Multiplier Effect, Economics Online, accessed 3 September 2012, http://economicsonline.co.uk/Managing_the_economy/The_multiplier_effect.html. 146 World Development Report 2006 (Washington, DC: World Bank, 2006), 87. National High School Model United Nations 2013 Economic and Financial Committee
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were deemed untouchable because of their low social standing. Though this system has been outlawed, there are still many reminders of the caste system in modern India. 147
In an attempt to mitigate the effects of the caste system and have a more socially integrated society, India has been implementing quotas and programs of affirmative action to help the lower classes such as the Scheduled Castes or the Other Backward Classes (OBCs). Since 1950, 22.5 % of government jobs have been reserved for tribal people, with these lower classes comprising 27 % of the government workforce by 1993. 148 The Indian government has also introduced scholarships, loans, and basic training for those that qualify because of their once branded social status. Though government can be the cause of social and economic inequality, oftentimes there are methods to increase income distribution and opportunity to bridge the disparity between different social groups.
Lorenz Curve and Gini Coefficient
In measuring income inequality, it is important to understand a few general economic terms such as the Gini coefficient and its accompanying Lorenz Curve. The Gini coefficient is a commonly used measure of inequality. Its value ranges from 0, indicating perfect equality, to 1, indicating perfect inequality. A common application of the Gini coefficient is for describing income situations and the division of income over a population. Thus, a Gini coefficient of 0 denotes a perfectly equal distribution of income where everyone essentially has the same amount of money or material resources. A coefficient of 1 describes a situation when one person in the country has all of the material resources and the rest of the population is without a share. Gini coefficients of 0 and 1 are both theoretical and these situations, because perfect equality and perfect inequality do not exist within the current economic framework of the international community. 149 Instead, all countries fall somewhere between 0 and 1 to indicate their relative internal distribution.
The Lorenz Curve (Figure 1 in Appendix A) is the graphic representation of the Gini coefficient. 150
The x and y axes represent percent of population and percent of income, respectively. The positive sloping line, the perfect equality reference line, represents perfect income distribution when every person in a population has the same amount of income. This is the ideal distribution because it is perfectly proportional. The top 1 % of the population earns 1 % of the income, the bottom 10 % of the population earn 10 % of the income, and so forth. Graph 1 below shows this condition along the upward-sloping solid black line. The curved line between section A and B is the Lorenz curve that measures the inequality within a given situation.
Thus, the value of the Gini coefficient is derived from the graphic representation of the Lorenz curve shown above. After plotting cumulative percent of population against cumulative percent of income for a given country, the curve will divide the region below the perfect equality reference line
147 History of the Caste System, Mount Holyoke College, accessed 3 September 2012, http://www.mtholyoke.edu/~epandit/page2.html. 148 With Reservations, The Economist, accessed 3 September 2012, http://www.economist.com/node/9909319. 149 Country Comparison: Distribution of Family IncomeGini Index, CIA World Factbook, accessed 3 September 2012, https://www.cia.gov/library/publications/the-world-factbook/rankorder/2172rank.html. 150 Byrns, Ralph, Lorenz Curves and Gini Coefficients, The University of North Carolina, accessed 3 September 2012, http://www.unc.edu/depts/econ/byrns_web/Economicae/Figures/Lorenz.htm. National High School Model United Nations 2013 Economic and Financial Committee
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into areas A and B. While an explicit understanding of the graph is not needed, it should be easy to see that the areas A and B represent inequality. Clearly, A+B is the entire area under the perfect equality line. Dividing A/(A+B) will give you a number between 0 and 1, and this is the Gini coefficient. The area A represents how unequal it is; the larger the area of A, the more unequal society is. Whereas, the smaller the A area is, the more equal the country is.
Figure 2 (see Appendix A) more precisely displays the idea of how specific Gini coefficients can indicate different levels of income inequality. The perfect equality line (green), 50 % of the population earns 50 % of the income and so forth, whereas the other two lines are drastically different. Curve 1, the blue line, indicates a situation that is less equal than perfect but more equal than the situation described in Curve 2 (red line). By looking at the dotted lines, one can see this represented graphically. In Curve 1, 50 % of the population holds about 25 % of the total income; on Curve 2, 50 % of the population holds only 5 % of the total income. While there are other ways to measure income inequality, both the Gini coefficient and the Lorenz curve are the most commonly used system to compare income distributions against population. 151
The importance of the Gini coefficient is that it allows for a baseline comparison of income inequality according to population distribution of income within a country. According to the CIA World Factbooks Gini Index on the distribution of household income, Namibia is one of the most unequal, with a coefficient of .070 and Sweden is one of the most equal countries, with a coefficient of .230. 152 By comparing Namibia and Sweden, evaluating income inequality becomes more concrete and understandable. Sweden has one of the lowest Gini coefficients in the entire world, meaning that is one of the most equal countries in terms of income. Income is spread out between the different groups of people; the top 1 % owns a more proportional amount of national income than in other states. One particular reason why there is more equality in Sweden, a developed country, is the government redistribution of income in the form of transfer payments or social services. 153 On the other hand, Namibia is one of the most unequal countries, as indicated by its high Gini coefficient. The richest 5.4 % of the population own 52 % of the countrys GDP while the poorest 33.3 % of the population only own about 4.2 % of the countrys GDP. 154 The uneven income distribution coupled with other developmental failures cause over 23 % of Namibias population remains poor. 155 Evidently, the Gini coefficient is helpful in showing how equal or unequal a country is, and also in making comparisons between states with very different economic situations.
Global income inequality, or income inequality that exists between states, is another part of the income gap debate. Within the international community, there are many different levels of development to categorize countries: the developed world, developing world, the Least Developed Countries (LDC), the Highly Impoverished Developing Countries (HIPC), and more. Each country has its own GDP per capita ratio. Within the entire world, countries have radically different standards of living and incomes. In a world where the richest quintile (top 20 % of the population) has 83 % of global income and the poorest quintile (bottom 20 % of population) has 1 % of global income, the global income gap is a glaring situation that needs to be addressed either through
151 Ibid. 152 Country Comparison: Distribution of Family IncomeGini Index. 153 Palme, Joakim, Income Distribution in Sweden, The Japanese Journal of Social Security Policy (2006): 17. 154 Namibia Overview, US Aid, accessed 3 September 2012, http://transition.usaid.gov/na/overview2.htm. 155 A Review of Poverty and Inequality in Namibia, Republic of Namibia Central Bureau of Statistics (2008): 6. National High School Model United Nations 2013 Economic and Financial Committee
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addressing developmental issues, bridging the income gap in individual countries, or through other forms of economic assistance. 156 Overall, the international community is plagued with vagrant inequality especially towards the poor, children, and women. Global income inequality is a concern for the international community because it has adverse effects on states, such as causing health and social problems. When the poor do not have substantial income to sustain even the most basic health services, entire countries cannot progress and improve. 157 Because the UN has already adopted poverty alleviation and development as major goals, income distribution is integral in accomplishing these goals. 158
Calculating Costs and the Cost-Benefit Analysis
When making any decision, there exists a fundamental trade-off between possible outcomes, meaning accepting less of something in exchange for more of something else. 159 There are two very important factors in this decision-making process of bridging the income gap, and in fact these factors are trade-offs and opportunity costs. In economics, this trade-off is between achieving efficiency and equity, also referred to as equality. An opportunity cost is the measured value of any alternative decision, including all of its benefits, which must be sacrificed in order to attain a certain want or desire. 160 In weighing opportunity costs and trade-offs of any decision made by the Committee, we enter into a cost-benefit analysis situation, meaning that the ratio comparing the measured costs and the measured benefits of a certain project or decision is actually significant. 161
The first concept of a trade-off focuses on the choice between efficiency and equity. The most efficient solution to the problem of bridging the income gap would be leave the issue alone and not address it, leaving the market to naturally resolve the problem. This would avoid the problems of achieving equity such as possible deadweight losses, problems of reallocating resources, and the possibility that the costs of poverty reduction outweigh the benefits. However, this excludes the external costs or benefits imposed on third parties that have not been accounted for in the cost- benefit analysis. Poverty is a negative externality of ignoring the income gap in that poverty can contribute to low national literacy rates and hinder development.
The debate over the developing sources of global energy also properly illustrates the idea of a trade- off. On the one hand, there is a desire to use less-environmentally friendly sources of fuel because they are the most inexpensive energy methods. On the other hand, the environmental damage that results from these practices encourages the use of more expensive, but cleaner technologies. In balancing both of these desires, one must weigh the costs and then decide what to do. Because the world cannot have both inexpensive fossil fuel energy and a clean environment, a balance must be
156 Ortiz, Isabel and Matthew Cummins, Global Inequality: Beyond the Bottom billion: A Rapid Review of Income Distribution in 141 Countries, New York: United Nations Childrens Fund, 2011, VII. 157 Ortiz and Cummins, Global Inequality, 34. 158 Ibid. 159 Johnson, Paul M, Trade-Off, Auburn University, accessed 3 September 2012, http://www.auburn.edu/~johnspm/gloss/trade-off. 160 Johnson, Paul M, Cost, Auburn University, accessed 3 September 2012, http://www.auburn.edu/~johnspm/gloss/cost. 161 Hofstra University, Cost Benefit Analysis, accessed 3 September 2012, http://people.hofstra.edu/geotrans/eng/ch9en/meth9en/ch9m1en.html. National High School Model United Nations 2013 Economic and Financial Committee
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struck that maximizes societal benefit from cleaner energy while minimizing the costs associated with these methods of generating fuel.
To conclude, these terms trade-offs, opportunity cost, and cost-benefit analysis are important to our debate in ECOFIN because they explain why certain decisions are made versus others. The committee may choose to address this topic from different angles based solely upon the costs and benefits of each solution. The United Nations does not have an unlimited pool of funds, nor can it pursue all of the solutions that have been crafted. Thus, it is necessary to choose the most efficient solution, taking into account other options and associated costs. While it is not completely necessary to utilize these terms specifically, it is important to understand these concepts when crafting the best economic solution to address the income gap. CURRENT STATUS Currently, this problem is being addressed through greater international awareness, increased focus on this issue by independent organizations, through the Millennium Development Goals (MDGs) and similar UN initiatives. Poverty alleviation programs have been the major foundation of the work of the development organizations and the MDGs in the past decade. Many of the MDGs directly address the problems that arise from income inequality. The most relevant goals include the eradication of extreme poverty and hunger, universal primary education, and a global partnership for development. 162
The MDGs directly address bridging economic and social status of the most impoverished of the international community. Goal number ones ambitious agenda to eliminate extreme poverty and hunger inadvertently addresses the income gap issue. The extremely impoverished make up the bottom X % in each country; therefore, by increasing their income and wealth, this bottom X % gains a larger percentage of the total national income. Goal number two, achieving universal primary education, addresses one of the major causes and implications of the income gap. By increasing human capital development through universal education, the most impoverished can improve their skills and potentially progress socially and economically. Goal number eight expresses the need to forge a global partnership amongst countries for development. This goal addresses the global income gap in that it connects both higher and lower income countries to work together and solve development issues. When lower income countries have more sustainable economies and develop, the disparity in income between the richest and poorest states should shrink. While none of the MDGs explicitly address bridging the income gap, many developmental assistance programs can actually increase income or economic stability; which in turn can actually help to bridge the income gap. However, one shortcoming of using the MDGs as a method for bridging the income gap is that because it does not explicitly cite shrinking the disparity of income between people or states, and it may end up blindly increasing GDP and actually exacerbating the income gap by making the wealthy richer.
162 The Millennium Development Goals: Eight Goals, United Nations Development Programme, accessed 8 September 2012, http://www.undp.org/content/undp/en/home/mdgoverview.html. National High School Model United Nations 2013 Economic and Financial Committee
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Case Study: United States Occupy Movement
The recent Occupy Movement in the United States has truly put the issue of the income gap at the forefront of the news and political concerns as of 2011. 163 The Occupy Movement is a response to internal income distribution inequality. Before delving into the specifics regarding Occupy, there are a few fundamental notes about the income distribution in the United States. The debate about the growing income gap has been a contentious point for the 2012 election. The Congressional Budget Office (CBO) is a nonpartisan organization that assesses the congressional budget and thus, issues such as the income inequality that exists within the U.S. 164 The CBO released a report in 2011 that confirmed the top 1 % has doubled their share of the states income during the last three decades. 165
This change resulted from a shift in government transfer payments which makes income distribution more equal, with the CBO citing that the equalizing effect of federal taxes was smaller in 2007 than in 1979, as the composition of federal revenues shifted away from progressive income taxes to less-progressive payroll taxes. In other words, because the taxation system became less progressive, meaning that the tax rate did not increase as quickly based on increased earnings, less tax revenue was collected and thus could not be transferred. Furthermore, the after tax incomes for the top 1 % grew 275 %. This growing income gap has contributed to the rise in movements fueled by the middle and lower classes, some calling upon a higher tax rate on the wealthiest.
The Occupy movement began on 17 September 2011 with the widely televised Occupy Wall Street protest. 166 The motivating factors behind the protest, which started in Zuccotti Park and ended with police eviction, included the widening U.S. income gap, the close relationship between money and politics, and Wall Streets influence over the lives of the masses. 167 With mottos such as We Are the 99 % were created in response to a widening income gap, where the top 1 % of the American population accounted for 17 % of the states income in 2009. 168 Occupy Wall Street was the beginning of a movement that would introduce protests such as Occupy Chicago, Occupy Seattle, Occupy Oakland, and many other American cities, a few of which erupted in violence and police confrontation. 169
While the Occupy movements have been mostly contained to the United States, they are relevant in that it is one of the first instances of a televised and heavily followed movement to bridge the income gap. The messages and what the Occupy movement represents should be fundamental in showcasing the effects of income inequality on the citizens themselves. The social stratification caused by the class system and different levels of wealth and income contribute to a lack of social cohesion between levels. Delegates should be cognizant of the existence of this divide and devise a way to address this issue during debate.
163 Occupy Movement (Occupy Wall Street), The New York Times, accessed 3 September 2012, http://topics.nytimes.com/top/reference/timestopics/organizations/o/occupy_wall_street/index.html. 164 Our Work, Congressional Budget Office, accessed 3 September 2012, http://www.cbo.gov/about/our-work. 165 Income Inequality, The New York Times, 22 March 2012, accessed 3 September 2012, http://topics.nytimes.com/top/reference/timestopics/subjects/i/income/income_inequality/index.html. 166 ibid. 167 Stewart, James, Occupy Wall Street Has Plenty of Potential, The New York Times, accessed 3 September 2012, http://www.nytimes.com/2011/11/19/business/occupy-wall-street-has-plenty-of-potential.html. 168 Luhby, Tami, Who Are the 1 %?. 169 Stewart, James, Occupy Wall Street Has Plenty of Potential. National High School Model United Nations 2013 Economic and Financial Committee
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Case Study: French Tax Policies
In many developed countries, the income gap issue is addressed through government transfer payments and redistribution programs. Newly elected French President Francois Hollande proposed a 75 % income tax on those making more than EUR1 million or about USD 1.24 million a year. 170
This proposed tax will be discussed by parliament in September 2012, even though new taxation hikes have already been installed by the previous administration. Half of Frances population makes less than 19,000 euros a year, while only 10 % of the population makes more than 60,000 euros a year, starkly different from Americans or other European counterparts.
Frances Gini coefficient is 32.7, which is still on the lower end towards being more equal. 171
Though their salary distribution may be very high, the French government has an intricate system of transfer payments that helps to even out the income distribution overall, contributing to its Gini. While tax policies are not necessarily directly related to the income gap, level of education and overall government size and involvement can affect the income disparity. With greater tax rate and tax revenue, more government-funded programs exist for social services and other programs, or in other words, transfer payments. National taxes are usually equalizing factors that contribute to decreasing the income gap, however, the French situation is an extreme case of this attempt to equalize income and bridge the gap. BLOC ANALYSIS The topic of income inequality affects all states within the UN, however, rather than being truly divided regionally or geographically, the countries or citizens wealth statuses are far more relevant to the debate. Delegates should try to evaluate the economic status of their country to place it into the appropriate bloc. However, it is important to note that even if a country is categorized as poor or wealthy, there are still wealthy and poor citizens, respectively, and their existence must be reconciled in some way.
Organization for Economic Co-Operation and Development (OECD) member states
The Organization for Economic and Co-Operation and Development (OCED) is an organization comprised of 34 states and based in Paris, France that attempts to promote economic development and improve the well being of the entire international community. 172 The member-states come from Asia, Europe, Americas, Oceania, and the Middle East notably including Australia, Japan, France, Germany, Japan, Mexico, United Kingdom, United States, Israel, and other states. 173 Despite half of the members being from states of high level of human capital and the immense amount of income
170 Alderman, Liz, Frances Les Riches Vow to Leave if 75 % tax rate is passed, The New York Times, accessed 3 September 2012, http://www.nytimes.com/2012/08/08/business/global/frances-les-riches-vow-to-leave-if- 75-tax-rate-is-passed.html?pagewanted=all. 171 Country Comparison: Distribution of Family IncomeGini Index. 172 The Organisation for Economic Co-Operation and Development (OECD), The Organization for Economic Cooperation and Development, accessed 3 September 2012, http://www.oecd.org/about/. 173 Members and Partners, Organization for Economic and Development Cooperation, accessed 3 September 2012, http://www.oecd.org/about/membersandpartners. National High School Model United Nations 2013 Economic and Financial Committee
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and wealth, there currently exists a growing income divide developing within OECD nations. This resulted from wage distribution as the educated and skilled workers within the OECD states command the most amount of the countrys income. 174 Because these countries are autonomous in their governmental conduct, these states have existing policies that favor and protect skilled workers, increasing the income of the top percentages. 175 Despite the fact that the OECD are developed and highly skilled, these states have recognized the importance of the income gap and the severity of their current social structures.
After recent scrutiny by the Occupy Movement and backlash against the proposed Hollande French income tax on the wealthy, many OECD states are discussing the issue of income inequality with policies and different strategies. However, the desire to bridge the income gap is countered by adversity from the rich elite, which Professor Andrew Clare of Cass Business School in London notes that, the ruling elite of such economies, usually supported by a compliant middle class, generally see no advantage to themselves in enacting the necessary policies. 176 Thus, to enact changes that will alter the income gap is far more difficult than simply government policies and enforcement. Groups of people within states also have different goals and desires, and some may want to keep the income gap as is. However, the OECD as a whole has decided that income inequality is not a natural occurrence and can be altered through government intervention and good governance in regards to reforming tax and benefit policies, keeping people in labor force, and ensuring good wages. 177
In regards to global income inequality, OECD states it would prefer to lower income inequality between different parts of the world. The four goals of OECD states include: restoring confidence in markets, institutions, and companies involved in the market economy; creating healthy public finances and sustainable economic growth; supporting growth through innovation, green technologies, and engaging emerging economies; and increasing human capital development. 178 In order to accomplish these goals, it is necessary to address the income gap as a whole.
Developed World
Developed countries often face the same situation encountered by the OCED states and their policies and view towards the issue of the income gap are very similar. However, not all of the developed world is part of the OECD, and thus, some may differ greatly from the aims of the OECD. Overall, the developed world has more capacity to address their internal income gaps because of their stable government and taxation structures. With the OECD reporting a general rise
174 Fletcher, Michael A., OECD Report Cites Rising Income Inequality, accessed 3 September 2012, http://www.washingtonpost.com/business/economy/oecd-report-cites-rising-income- inequality/2011/12/05/gIQAWrwZXO_story.html. 175 ibid. 176 de Chaumont, Marguerite, Studies Agree a Vast Income Gap is Bad for Business, The Financial Times, accessed 3 September 2012, http://www.ft.com/cms/s/0/3545b130-b56f-11e1-ab92- 00144feabdc0.html#axzz23qYtzTAs. 177 An Overview of Growing Income Inequalities In OCED Countries: Main Findings, Divided We Stand: Why Inequality Keeps Rising (2011): 21-45. 178 The Organisation for Economic Co-Operation and Development (OECD), The Organization for Economic Cooperation and Development, accessed 3 September 2012, http://www.oecd.org/about/. National High School Model United Nations 2013 Economic and Financial Committee
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in inequality, citizens of developed states are calling upon their governments to address the situation with prescriptive policies. This disparity is caused by the wage gap between skilled and unskilled labor, which has been exacerbated by the technology boom of the recent decade. 179 Within the developed world, the United States of America, Turkey, and Israel have the largest disparities, which has a ratio of fourteen to one between highest and lowest earners. The lowest ratio, at six to one, exists in Germany, Denmark, and Sweden.
These ratios have gone up since 1980, citing the growing wage disparity, failing benefits system, and tax cuts for the wealthy, as the main causes for these gaps. 180 The benefits system, or transfer payments for medical care, elderly assistance, social security, and other entitlements, was created to help redistribute income reduce market driven inequality. However, as populations age and the benefits side becomes more restrictive, it is less able to impact the economy and keep pace with the highest incomes, result in the widening gap. 181 Thus, the developed world should pursue policies that allow their government structures to be more efficient and effective at reducing the income gap.
Developing World
Income inequality in the developing world is different from the gap that exists within the developed and emerging states. The developing world, more than others, is impacted by the policies of other countries and increasing globalization. 182 Overall, development is a key goal of the developing world. In order to raise the productivity and overall economic health of countries, the international community has focused on boosting GDP, but not on how the income and benefits are distributed. Much of the current focus has been on poverty reduction, but not on how income distribution can both improve the overall health of the developing world and alleviate poverty.
With developing countries, income inequality and development sometimes come in conflict with each other. Many methods of promoting growth in the developing world may actually increase the income gap within society. Privatization, capital-intensive investments, and greater access to capital have actually increased the gap and inequality, despite increasing the GDP and productivity of the developing world. With recent public-private partnerships and the push to privatize as a means to development, wealth becomes concentrated in the controlling group. 183
In all African countries, income distribution favors the wealthy in that their share of national income is highly disproportionate with their size. 184 Overall, the poor, those living under USD 2 a day, account for 60.8 % of the population whereas they only hold 36.5 % of Africas income. The rich,
179 Strachan, Maxwell, Income Inequality Has Risen in Vast Majority Of Developed CountriesEven in Sweden, The Huffington Post, accessed 3 September 2012, http://www.huffingtonpost.com/2011/05/03/income- inequality-oecd-report-rising_n_857057.html. 180 Society: Governments Must Tackle Record Gap Between Rich and Poor, says OECD, Organization for Economic and Development Cooperation, accessed 3 September 2012, http://www.oecd.org/newsroom/societygovernmentsmusttacklerecordgapbetweenrichandpoorsaysoecd.htm 181 Fletcher, Michael A. OCED Report Cites Rising Income Inequality. 182 Birdsall, Nancy, Globalization and the Developing Countries: The Inequality Risk. 183 ibid. 184 African Development Bank Group, Income Inequality in Africa, Briefing Notes for AFDBs Long-Term Strategy, 7 March 2011, 1. National High School Model United Nations 2013 Economic and Financial Committee
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those living on greater than USD 20 a day, comprise 4.8 % of the population, yet 18.8 % of the total income. The middle income households are the most equitable in that households living on USD 4 to USD 10 a day, or about 8.7 % of the population, accounts for 9.9 % of Africas income. 185
Because these inequalities exist, the regional bank and bodies have been working to reduce poverty while also bridging the gap in income. 186 By investing in infrastructure and more inclusive growth strategies, the African region hopes to continue sustainable growth with greater equality.
Latin America is the most inequitable region in the world, boasting largest income gap in the world. The UN Agency for Human Settlements notes that the richest 20 % earns twenty times more income than the poorest 20 % in Latin America, with Guatemala and Venezuela being the most and least unequal, respectively. 187 The rural-urban divide does not cause the disparity as it is in Asia, but rather, the inequality exists within the cities themselves. Because most of the population, about 80 %, lives in cities, urban job deficit and labor informality has caused most of the income inequality in the region. Latin American governments have been responsive to the growing threat of the income gap, and have tried to balance budgets and keep inflation stable by balancing their budgets and by redistributing income to create a more egalitarian society. 188
Up until the 1990s equitable economic growth was a priority for Asian governments. While Asia is still enjoying rapid periods of growth, the wealthy have certainly enjoyed a greater percentage of this wealth, thereby increasing the income gap. The Asian Development Bank estimates that the inequality from 2000 to present has grown in fifteen of the 21 countries in its study, with the largest increases in China, Nepal, and Cambodia. One of the main reasons for growing inequality in Asia is the recent boom in manufacturing and productivity in urban households, while rural and agricultural sectors have experienced slow growth over the years. The education gap is another contributing factor to the growing income gap. Greater globalization allows for those with skills and greater human capital to earn significantly higher incomes that are on par with other international standards. Subsequently, the poor remain in the same economic condition while the richer and skilled become wealthier. 189
Emerging States
The OCED recently released a report detailing the growth of income inequality within emerging economies (EE). 190 Emerging states include Argentina, Brazil, China, India, Indonesia, the Russian Federation, and South Africa. 191 These states are pivotal to the global economy and international
185 Ibid., 3. 186 Ibid., 5. 187 UN study says wealth gap in Latin America Increases, BBC News, accessed 3 September 2012. http://www.bbc.co.uk/news/world-latin-america-19339636. 188 Hahn, Robert and Peter Passell, Lessons from Latin America: Antipoverty Efforts can Promote Growth, U.S. News, accessed 3 Sept. 2012, http://www.usnews.com/opinion/blogs/economic- intelligence/2012/04/20/lessons-from-latin-america-antipoverty-efforts-can-promote-growth. 189 For Whosoever hath, to him shall be given, and he shall have more: Income Inequality in Emerging Asia is Heading Towards Latin American Levels, The Economist, accessed 3 September 2012. http://www.economist.com/node/9616888. 190 Special Focus: Inequality in Emerging Economies. Divided We Stand: Why Inequality Keeps Rising (2011):48. 191 Ibid., 28. National High School Model United Nations 2013 Economic and Financial Committee
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community because they comprise about one fifth of the global GDP and contain half of the worlds population. During the recent recessionary years and periods of slow growth in the developed world, the EEs were able to sustain economic growth and help to pull the international community out of the Great Recession through continued economic growth. Because of this spectacular growth, many EEs were able to reduce and even eradicate the most extreme forms of poverty. Despite the economic successes, all EEs have levels of income inequality that are much higher than the OCED average, with China, India, the Russian Federation, and South Africa becoming less equal in recent years. The causes have been cited to be the existence of the black market, regional divides such as that between rural and urban areas, unequal access to education, and employment barriers. As well, tax systems are ineffective at bridging income gaps caused by market forces because of low social spending, tax evasion, administrative problems, and the black market.
Subsequently, the EEs should address the issue of the income gap through a multifaceted plan of structural and prescriptive changes. These countries should promote employment in white market occupations, to promote tax revenue, and repair existing taxation structures. There should be a focus on effective distribution of opportunity and social programs. In order to bridge the gap between rural and urban workers, government intervention is necessary to make rural occupations and dwelling more viable.
Specifically, China is one of the fastest growing economies within the international community and presents an interesting insight into the income gap and determining inequality. Because of Chinas large gray economy, or untaxed and unaccounted for exchanges in the business sector, it has been difficult to calculate the Gini coefficient for this emerging economy. 192 Even though Chinas GDP is rapidly growing, with a 9 % increase in growth in 2011, Chinas income inequality remains a problem within its modern society. President Hu Jintao and his government have implemented policies to help mitigate the effects of and shrink the income gap. Such policies include the abolishment of the agricultural tax, a tax mainly levied on the rural poor farmers, free education, improved health care, and low-income housing. 193 Though the estimates for income inequality in China are high, indicating inequality, Chinas government is addressing the income gap in attempting to alleviate poverty and lessen the burden on the poorest, to facilitate and foster their inclusion in the economy.
Emerging markets elsewhere, such as in Latin America, have pledged their devotion to become more active in promoting equality during periods of rapid growth. The Organization of American States (OAS) with United Nations Development Programmes Administrator Kemal Dervis convened in 2007 to discuss sustainable equality and growth within the emerging markets and the Americas specifically. 194 Kemal underscores the importance of state involvement in fighting inequality and creating a sustainable growth model within emerging states. An example of this
192 Tatlow, Didi K, Chinas Hidden Wealth Feeds an Income Gap, The New York Times, accessed 3 September 2012, http://www.nytimes.com/2012/01/26/world/asia/26iht-letter26.html?pagewanted=all. 193 Roberts, Dexter, Chinas Growing Income Gap, Bloomberg Businessweek Magazine, accessed 3 September 2012, http://www.businessweek.com/magazine/content/11_06/b4214013648109.htm. 194 At OAS, UNDP Administrator Underscores Challenges Facing Emerging Markets, The Organization of American States, accessed 3 September 2012, http://www.oas.org/en/media_center/press_release.asp?sCodigo=E-264/07. National High School Model United Nations 2013 Economic and Financial Committee
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commitment is Brazils government policy towards inequality. While income inequality still exists, with 25 % of the population living on a monthly per capita income of USD 106, the middle class is on the rise and the real value of the incomes of the lowest earners are more substantial in providing for basic necessities, such as housing and food. 195 The government helped to curb inflation, which contributed to tremendously devaluing the incomes of the lowest earners, while increasing access to healthcare and education to bridge existing social gaps. 196
COMMITTEE MISSION The object of the Economic and Financial committee is to address each topic through a macroeconomic lens and create solutions that promote growth and development. 197 In considering this topic of Bridging the Income Gap, one must first consider whether to address the topic directly or address it through dealing with the causes of the income gap instead. In addressing the causes, the focus of the committee would be on corruption, poverty, and economic growth rather than explicitly on bridging the income gap. Furthermore, the committee may decide that focusing on bridging the income gap is too economically inefficient to justify solutions, and direct its attention to other subtopics of the issue to indirectly solve the problem. It is within the jurisdiction of the Economic and Financial committee to take either a direct or indirect approach to addressing the issue of the income gap.
As well, it is important to determine which aspect of the income gap the committee wants to focus on. Both global income inequality and the income gap within individual states are topics of concern for the international community. Thus, it is important to determine whether the applied solutions will address both topics, individual problems with the income gap, or indirectly solve both issues. It is important to note that depending on the Committees choice to bridge the global or internal income gaps, the recommendations will be targeted to different audiences. When dealing with the international income gap, solutions will be targeted to helping certain nations and states raise their GDP or develop whereas in addressing internal income inequality, there will be a greater focus on distribution and allocation of resources. This is but one of the many choices delegates of ECOFIN must make while developing solutions to this issue. It is vital that these decisions resulting from ECOFIN take into account all the implications of income inequality in addition to the programs enacted to address it.
195 Leahy, Joe, 2010 Census Shows Brazils Inequalities Remain, The Financial Times, accessed 3 September 2012. http://www.ft.com/intl/cms/s/0/71352352-112c-11e1-ad22-00144feabdc0.html#axzz25QU7IV8Y. 196 Ibid. 197 The Second Committee, United Nations, accessed 3 September 2012, http://www.un.org/en/ga/second/index.shtml. National High School Model United Nations 2013 Economic and Financial Committee
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APPENDIX A: FIGURES FOR TOPIC B FIGURE 1: THE LORENZ CURVE
Source: Byrns, Ralph. Lorenz Curves and Gini Coefficients. The University of North Carolina. Accessed 3 September 2012. http://www.unc.edu/depts/econ/byrns_web/Economicae/Figures/Lorenz.htm.
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FIGURE 2: GINI COEFFICIENTS AND LEVELS OF INCOME INEQUALITY
Figure 2 more precisely displays the idea of how specific Gini coefficients can indicate different levels of income inequality. The perfect equality line (green), 50 % of the population earns 50 % of the income and so forth, whereas the other two lines are drastically different. Curve 1, the blue line, indicates a situation that is less equal than perfect but more equal than the situation described in Curve 2 (red line). By looking at the dotted lines, one can see this represented graphically. In Curve 1, 50 % of the population holds about 25 % of the total income; on Curve 2, 50 % of the population holds only 5 % of the total income.
Source: Byrns, Ralph. Lorenz Curves and Gini Coefficients. The University of North Carolina. Accessed 3 September 2012. http://www.unc.edu/depts/econ/byrns_web/Economicae/Figures/Lorenz.htm.
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RESEARCH AND PREPARATION QUESTIONS As mentioned in the Note on Research and Preparation, delegates must answer each of these questions in their position papers. TOPIC A 1. What infrastructure is lacking in your country? What type of assistant does your country need or can afford to give to contribute to infrastructure development in developing states?
2. Is hard or soft infrastructure more vital for development? Which type would be harder to implement or transfer in a state?
3. Because soft infrastructure is not a physical construct, how can one determine the success of ones investment in soft infrastructure is successful? Is soft infrastructure too subjective?
4. Are short-term or long-term solutions more important towards infrastructure development? How can you determine what type of solution to focus on?
5. Is your state participating in South-South Cooperation, North-South Cooperation, or Triangular Cooperation? Which do you think the committee should focus on?
6. What should be the role of different types of states? Should developed states and emerging states bear the responsibility of financing development in the developing world?
7. How can states maintain regional infrastructure? What should be the role of each state within a regional commitment? What guidelines can ECOFIN provide for regional or multi-state infrastructure? TOPIC B 1. What is your countrys income gap and how has your country attempted to either bridge the gap or address the causes of the gap?
2. Is the income gap a feasible problem to tackle or should it be addressed through fixing or focusing on the subtopics of the problem? Through what lens should ECOFIN and states address the income gap?
3. How can effective income redistribution be determined? Should states be required to redistribute income if it can bridge the income gap?
4. Who benefits from the existence of an income gap? What should be the role of those that are benefiting from the income gap (rich nations/rich individuals)? How will they react to a redistribution of wealth that helps to make society more equal?
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5. Is equality something that the international community should strive for? Is income equality possible in a state or global setting?
6. Should the income gap become an explicit problem addressed by United Nations programs and organizations? Should the income gap remain a secondary issue that is solved by addressing developmental and poverty concerns?
7. Is income equality a concern for the UN at all? To what extent should states be able to evoke national sovereignty and not address the income gap problem?
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IMPORTANT DOCUMENTS The following documents have been hand- selected by Directors to further aid in delegate preparation. Please make a concerted effort to read and analyze these documents prior to the conference. TOPIC A A/RES/64/222. Nairobi Outcome document of the High-level United Nations Conference on South-South Cooperation. Geneva: United Nations General Assembly, 2009. This document released as a result of the Nairobi conference on the status of South-South Cooperation.
Bayliss, Kate. Private Sector Participation in African Infrastructure: Is it Worth The Risk? International Policy Centre, 2009. This policy paper discusses private sector investment in African infrastructure through weighing the costs and benefits of the investment.
Brenton, Paul and Gozde Isik. De-Fragmenting Africa: Deepening Regional Trade Integration in Goods and Services. Washington, DC: The World Bank, 2012. This paper discusses the African regional trade problems and the barriers against trade within the states.
Christiansen, Hans. The OECD Principles for Private Sector Participation in Infrastructure. Washington, DC: International Monetary Fund, 2007. This report discusses the Organisation for Economic Co-Operation and Developments member states opinions on private sector investment in infrastructure.
Enhancing South-South and Triangular Cooperation. Nairobi: South-South Conference, 2009. This study conducted by the United Nations Environment Programme discusses South-South Cooperation and Triangular Cooperation and how to improve both.
Foster, Vivien, et al. Building Bridges: Chinas Growing Role as Infrastructure Financier for Africa. Washington, DC: The World Bank, 2008. This report discusses Chinas role in South-South Cooperation in building African infrastructure.
Foster, Vivien and Nataliya Pushak. Liberias Infrastructure: A Continental Perspective. The World Bank. Accessed 21 Sept. 2012. http://elibrary.worldbank.org/content/workingpaper/10.1596/1813-9450-5597. This report discuses Liberias infrastructure and discusses the correlation between the civil war and strife and their current development status.
Kirkpatrick, Colin. Foreign Direct Investment in Infrastructure in Developing Countries: Does Regulation Make a Difference. Geneva: United Nations Conference on Trade and Development, 2006. National High School Model United Nations 2013 Economic and Financial Committee
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This report released by the United Nations Conference on Trade and Development discusses how governance and government regulation relates to successful infrastructure development.
Organisation for Economic Co-Operation and Development. Infrastructure to 2030. 2008. OECD Observer. Accessed 6 Sept. 2012. http://www.imf.org/external/pubs/ft/survey/so/2010/car072110b.htm. This publication estimates infrastructure demands in 2030 and the resources needed to sustain successful development.
Private solutions for Infrastructure in Rwanda: A Country Framework Report. Washington, DC: The World Bank, 2005. This report discusses infrastructure in Rwanda and the role of the private sector in securing this infrastructure development.
Triangular Cooperation: Opportunities, Risks, and Conditions for Effectiveness. Development Outreach. Accessed 6 September 2012. http://wbi.worldbank.org/wbi/devoutreach/article/531/triangular-cooperation- opportunties-risks-and-conditions-effectiveness. This article discusses the benefits and possible risks behind utilizing triangular cooperation as a development investment tactic.
TOPIC B A/CONF.166/9. Report of the World Summit For Social Development. Copenhagen: World Summit for Social Development, 1995. This report discusses the Copenhagen World Summit and summarizes its commitments and accomplishments.
Atkinson A.B. and A. Brandolini. On Data: A case study of the evolution of income inequality across time and across countries. Cambridge Journal of Economics (2009): 381-404. This article addresses income inequality through time and different places with data to link globalization and the income gap.
Berg, Andrew G. and Jonathan D. Ostry. Equality and Efficiency: Is there a trade-off between the two or do they go hand in hand? Finance and Development (2011): 12-15. This publication by the International Monetary Fund addresses the classic question of whether or not a trade-off between efficiency and equality exists, with a focus on income inequality.
Corruption and Economic Development. The World Bank Group. Accessed 3 September 2012. http://www1.worldbank.org/publicsector/anticorrupt/corruptn/cor02.htm. This webpage discusses the relationship between corruption and the income gap.
Gupta, Sanjeev et al. Does Corruption Affect Income Inequality and Poverty. Washington, DC: International Monetary Fund, 1998. This working paper discusses the correlation between corruption and income equality.
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Wade, Robert Hunter, The Rising Inequality of World Income Distribution. Finance and Development 38 no. 4 (2001).
This article discusses the world income distribution and the gap that exists between countries and within countries.
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BIBLIOGRAPHY COMMITTEE HISTORY Charter of the United Nations. United Nations. Accessed 27 May 2011. www.un.org/aboutun/charter/. Original treaty that established the rules governing the United Nations
Second Committee. Second Committee. Accessed 27 May 2011. http://www.un.org/en/ga/second/. This source is the main webpage of ECOFIN.
General Assembly of the United Nations. United Nations. Accessed 27 May 2011. http://unclef.com/en/ga/about/index.shtml. This source is the main page for the UN General Assembly. TOPIC A UN Sources
A/RES/57/263. Economic and Technical Cooperation Among Developing Countries. Geneva: United Nations General Assembly, 2003.
A/RES/64/222. Nairobi Outcome document of the High-level United Nations Conference on South-South Cooperation. Geneva: United Nations General Assembly, 2009. This document released as a result of the Nairobi conference on the status of South-South Cooperation.
At China-Africa meeting, Ban highlights role of South-South cooperation. United Nations. Accessed 3 September 2012. http://www.un.org/apps/news/story.asp?NewsID=42512&Cr=south- south&Cr1=#.UEgBG6RYtv0. This news report released by the United Nations discusses the importance of South-South Cooperation and the opinion of the UN on the programs.
Brenton, Paul and Gozde Isik. De-Fragmenting Africa: Deepening Regional Trade Integration in Goods and Services. Washington, DC: The World Bank, 2012. This paper discusses the African regional trade problems and the barriers against trade within the states.
Christiansen, Hans. The OECD Principles for Private Sector Participation in Infrastructure. Washington, DC: International Monetary Fund, 2007. This report discusses the Organisation for Economic Co-Operation and Developments member states opinions on private sector investment in infrastructure.
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Enhancing South-South and Triangular Cooperation. New York: United Nations Development Programme, 2009. This study conducted by the United Nations Environment Programme discusses South-South Cooperation and Triangular Cooperation and how to improve both.
Foster, Vivien, et al. Building Bridges: Chinas Growing Role as Infrastructure Financier for Africa. Washington, DC: The World Bank, 2008. This report discusses Chinas role in South-South Cooperation in building African infrastructure.
Foster, Vivien and Nataliya Pushak. Liberias Infrastructure: A Continental Perspective. World Bank. Accessed 6 Sept. 2012. http://elibrary.worldbank.org/content/workingpaper/10.1596/1813-9450-5597. This report discuses Liberias infrastructure and discusses the correlation between the civil war and strife and their current development status.
Glossary. The World Bank Group. Accessed 5 September 2012. http://ppi.worldbank.org/resources/ppi_glossary.aspx. This website discusses the different types of infrastructure investment projects that exist and explain sub categories of these investment types.
Human Rights on Liberias rubber plantations: Tapping into the Future (Geneva: United NATIONS Mission in Liberia (UNAMIL), 2006), 5. This PDF extensively investigates the human rights violations on Liberias rubber plantations.
Infrastructure for Economic Development and Poverty Reduction in Africa. Nairobi: UN- HABITAT, 2011. This report covers infrastructure development in Africa and discusses the relationship between infrastructure and poverty alleviation.
Infrastructure to 2030. OECD Observer. Accessed 6 Sept. 2012. http://www.imf.org/external/pubs/ft/survey/so/2010/car072110b.htm. This publication estimates infrastructure demands in 2030 and the resources needed to sustain successful development.
Kirkpatrick, Colin. Foreign Direct Investment in Infrastructure in Developing Countries: Does Regulation Make a Difference. Geneva: United Nations Conference on Trade and Development, 2006. This report released by the United Nations Conference on Trade and Development discusses how governance and government regulation relates to successful infrastructure development.
List of LDCs, LLDCs and SIDS by Regions. Office of the High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States, 2011. This website provides a comprehensive listing of all the states within the categories of Least Developed Countries, Landlocked Developing Countries, and Small Island Developing States.
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Landlocked Developing Countries (LLDCs). Office of the High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States, 2011. This report summarizes the plight of Landlocked Developing Countries in regards to development and infrastructure.
Landlocked Developing Countries. Office of the High Representative for the Least Developed Countries, Landlocked Developing Countries, and Small Island Developing States. Accessed 8 September 2012. http://www.un.org/special-rep/ohrlls/lldc/default.htm. This website discusses the status of Landlocked Developing Countries.
The Millennium Development Goals: Eight Goals. United Nations Development Programme. Accessed 6 September 2012. http://www.undp.org/content/undp/en/home/mdgoverview.html. This website discusses the Millennium Development Goals and gives basic background on each goal.
Private solutions for Infrastructure in Rwanda: A Country Framework Report. Washington DC: The World Bank, 2005. This report discusses infrastructure in Rwanda and the role of the private sector in securing this infrastructure development.
Trends in Development Cooperation: South-South and Triangular Cooperation and Aid Effectiveness. Federative Republic of Brazil, 2008. This report released by the Brazilian government discusses Brazilian activity with South-South Cooperation and triangular aid.
S/RES/1509. United Nations Mission in Liberia. Geneva: United Nations Security Council, 2003. United Nations Resolution that describes the functions of the United Nations Mission in Liberia.
South-South Initiative on Cotton. United Nations Industrial Development Organization. Accessed 6 September 2012. http://www.unido.org/index.php?id=o84840. This website discusses the South South Initiative on Cotton, an example of South-South Cooperation.
Triangular Cooperation: Opportunities, Risks, and Conditions for Effectiveness. The World Bank Group. Accessed 6 September 2012. http://wbi.worldbank.org/wbi/devoutreach/article/531/triangular-cooperation- opportunties-risks-and-conditions-effectiveness. This article discusses the benefits and possible risks behind utilizing triangular cooperation as a development investment tactic.
Non-UN Sources
ASEAN Launches Regional Fund for Critical Infrastructure Needs. The Economic Times. Accessed 26 August 2012. http://articles.economictimes.indiatimes.com/2012-05- 03/news/31559145_1_adb-rajat-nag-asian-development-bank. This article discusses the ASEAN infrastructure fund and its role within development.
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ASEAN Infrastructure Fund Targets USUSD13 billion towards ASEAN Connectivity. Association for South East Asian Nations. Accessed 6 September 2012. http://www.aseansec.org/26643.htm. This website discusses the future of regional infrastructure development in Southeast Asia and the commitment needed to continue the target growth over the next decade.
Background. Special Unit for South South Cooperation. Accessed 6 September 2012. http://ssc.undp.org/content/ssc/about/Background.html. This website gives basic background on South South Cooperation and what it is.
Bayliss, Kate. Private Sector Participation in African Infrastructure: Is it Worth The Risk? International Policy Centre, 2009. This policy paper discusses private sector investment in African infrastructure through weighing the costs and benefits of the investment.
The Cost of Calamity. The Economist. Accessed 26 August 2012. http://www.economist.com/node/18387016 This article discusses the Japanese earthquake and the action taken post conflict and the repercussions of the damage.
DeCapua, Joe. World Bank: Break Down African Trade Barriers. Voice of America News. Accessed 6 September 2012. http://www.voanews.com/content/decapua-africa-trade-barriers- 9feb12-139001854/159574.html. This article discusses the effects of African trade barriers and what the World Bank recommends to counter these effects.
Erqulaga, Philip. For a Better Road to Development, Asia Must Attract Private Partners. Jakarta Globe. Accessed 6 September 2012. http://www.thejakartaglobe.com/opinion/for-a-better- road-to-development-asia-must-attract-private-partners/515673. This article discusses the future of Asian infrastructure growth and how to finance it through private sector partners.
The Failed States Index 2011. Foreign Policy. Accessed 3 September 2012. http://www.foreignpolicy.com/failedstates. This article introduces the failed state index of 2011.
Field Listing: GDP (Official Exchange Rate). CIA World Fact Book. Accessed 6 September 2012. https://www.cia.gov/library/publications/the-world-factbook/fields/2195.html This website lists the official gross domestic product figures for the international community with released data.
Fiji Water Reserves Decision to Leave Pacific Island Nation: Report. Fox News. Accessed 26 August 2012. http://www.foxbusiness.com/markets/2010/12/01/fiji-water-reverses- decision-leave-pacific-island-nation- report/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed %3A+foxbusiness %2Flatest+(Internal+-+Latest+News+-+Text. This article discusses the Fiji Water crisis in the Fiji Islands and the role of the private sector in certain businesses in the developing world. National High School Model United Nations 2013 Economic and Financial Committee
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Freeman, Paul K. Infrastructure in Developing Countries: Risk and Protection. International Institute for Applied Systems, 1999. This paper discusses infrastructure development in developing countries through weighing the costs and benefits.
G20 Leaders Declaration. Los Cabos: G20, 2012. This declaration, presented as a result of the G20 declaration to development.
Gleick, Peter. Fiji Water: When Environment, Politics, and Economics Collide Over Bottled Water. Huffington Post. Accessed 26 August 2012. http://www.huffingtonpost.com/peter- h-gleick/fiji-water-when-environme_b_789503.html. This article covers the Fiji Water decision to stay in the Fiji Islands regardless of the political change and its ability to sway public policy.
Rwanda Civil War. Global Security. Accessed 6 September 2012. http://www.globalsecurity.org/military/world/war/rwanda.htm. This website discusses the Rwandan Civil War and the implications of the civil war upon the population, economy, and development.
Haiti Earthquake Reconstruction. Washington, DC: The World Bank, 2010. This report composed by the DRM Global Expert Team evaluates the destruction caused by the earthquake and the money and resources needed to reconstruct the country.
Holt, Richard. UN Agreement on Severity of Climate Change. The Telegraph. Accessed 3 September 2012. http://www.telegraph.co.uk/news/worldnews/1547769/UN-agreement- on-severity-of-climate-change.html. This article discusses the ramifications of climate change and the United Nations opinion on it.
Humphreys, Macartan and Paul Richards. Prospects and Opportunities for Achieving the MDGs in Post- conflict Countries: A Case Study of Sierra Leone and Liberia. New York: Columbia University, 2005. This report discusses the Millennium Development Goals and the status of their completion in post conflict regions.
India-Brazil-South Africa Trilateral. The India-Brazil-South Africa Dialogue Forum. Accessed 6 September 2012. http://www.ibsa-trilateral.org/. This website discusses the role of emerging economies within trilateral and multilateral development agreements.
Infrastructure. Merriam-Webster. Accessed 6 September 2012. http://www.merriam- webster.com/dictionary/infrastructure. This website provides a basic definition of infrastructure.
Infrastructure Development Conference: Linking up Eastern and Southern Africa Sustainable Economic Development. Nairobi: COMESA-EAC-SADC, 2010. 1-51. This assessment evaluates the effectiveness of the infrastructure development conference in Africa.
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Infrastructure to 2030. OECD Observer. Accessed 6 Sept. 2012. http://www.imf.org/external/pubs/ft/survey/so/2010/car072110b.htm. This publication estimates infrastructure demands in 2030 and the resources needed to sustain successful development.
Johnson, Paul M. Absolute Advantage. Auburn University. Accessed 3 September 2012. http://www.auburn.edu/~johnspm/gloss/absolute_advantage.
This website provides definitions and easy to understand analogies for political economic terms.
Johnson, Paul M. Externality. Accessed 5 September 2012. http://www.auburn.edu/~johnspm/gloss/externality. This website provides definitions and easy to understand analogies for political economy terms.
Leger, Donna L. Haitis Slow Recovery Leading to Discontent. USA Today. Accessed 26 August 2012. http://www.huffingtonpost.com/2012/01/11/haiti-earthquake- recovery_n_1197730.html This article covers the basic problems behind Haitis slow recovery.
Leger, Donna L. Haitis Slow Recovery Leading to Discontent. USA Today. Accessed August 26, 2012. http://www.usatoday.com/news/world/story/2012-02-09/haiti-slow- recovery/53033900/1. This article covers the problems with Haitis reconstruction after the 2010 earthquake.
Magnitude 7.0 Haiti Region. USGS. Accessed 3 Sept. 2012. http://earthquake.usgs.gov/earthquakes/eqinthenews/2010/us2010rja6/ This website discusses the technical aspects of the Haiti Earthquake of 2010.
Marin, Philippe. Public-Private Partnerships for Urban Water Utilities: A Review of Experiences in Developing Countries. Washington, DC: The World Bank and the Public-Private Infrastructure Advisory Facility, 2009. This report discusses public private partnerships and their ability to develop an country using water utilities as a focal point.
Private Sector Initiatives. Millennium Challenge Corporation. Accessed 7 September 2012. http://www.mcc.gov/pages/business/psi. This website discusses the private sector goals for development.
Ncube, Mthuli. Africa: Governance and Infrastructure in the Continent. All Africa. Accessed 6 September 2012. http://allafrica.com/stories/201010040506.html. This article discusses the status of infrastructure development in Africa and how governance effects the overall process.
Official: Quake, Tsunami Could Cost Japan USD300 Billion. CNN News. Accessed 26 August 2012. http://articles.cnn.com/2011-03-31/world/japan.disaster.budget_1_tsunami-quake- yen?_s=PM:WORLD This article discusses the post conflict rebuilding of Japan. National High School Model United Nations 2013 Economic and Financial Committee
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Overview. Association of Southeast Asian Nations. Accessed 6 September 2012. http://www.aseansec.org/64.htm. This website gives basic overview and background of the Association of Southeast Asian Nations.
Preston. Clean Water for Fiji. State of the Planet. Accessed 6 September 2012. http://blogs.ei.columbia.edu/2011/06/24/clean-water-for-fiji/. This post discusses Fiji Water and its controversial role in the development of industry in the Fiji Islands.
Privatisation. OECD. Accessed 4 September 2012. http://www.oecd.org/dataoecd/8/61/2376087.pdf. This webpage discusses privatization and provides examples with a comprehensive definiti
Q&A: Sudans Darfur Conflict. BBC News. Accessed 3 September 2012. http://news.bbc.co.uk/2/hi/africa/3496731.stm. This article gives basic background information on the conflict in Darfur, Sudan.
Redifer, Laure. New Financing Sources for Africas Infrastructure Deficit. IMF Survey Magazine. Accessed 6 September 2012. http://www.imf.org/external/pubs/ft/survey/so/2010/car072110b.htm. This report discusses finding finances for developing infrastructure in Africa.
Riley, Charles. The Worlds Worst Economies. CNN Money. Accessed 6 September 2012. http://money.cnn.com/gallery/news/economy/2012/08/07/worlds-worst- economies/index.html. This article discusses the worst economies as noted by the status of economic growth and poor governance.
Romm, Joe. Dont Discount the Stern Review. Accessed 5 September 2012. http://thinkprogress.org/climate/2007/06/18/201428/dont-discount-the-stern- review/?mobile=nc. This website discusses the Stern Review, a review on the environment and the economics of climate change.
Santi, Emanuele, et al. Unlocking North Africas Potential through Regional Integration: Challenges and Opportunities. Tunisia: The African Development Bank Group, 2012. This report discusses the benefits of regional integration in North Africa and the finances required for these projects.
Schindall, Julie. To Recover, Haiti Needs Leaders. CNN News. Accessed August 16, 2012. http://articles.cnn.com/2011-01-12/opinion/schindall.haiti.year.later_1_haiti-earthquake- interim-haiti-recovery-commission-haitians/2?_s=PM:OPINION. This article discusses Haitis lack of governance and the crises that have evolved from that problem and its recovery post disaster.
Schuker, Lauren. Islands Tax Increase Gives Fiji Water a Bitter Taste. Wall Street Journal. Accessed 26 August 2012. http://online.wsj.com/article/SB10001424052748704584804575644011109095480.html#. This article discusses the effect of policy on the Fiji Water company. National High School Model United Nations 2013 Economic and Financial Committee
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Shkolnikov, Aleksandr. The Private Sector: A Problem or A Solution? Center for International Private Enterprise. Accessed 6 September 2012. http://www.cipe.org/blog/2009/03/20/the- private-sector-a-problem-or-a-solution/#.UEv1k6RYtv1. This article discusses the pros and cons of the private sector and their involvement in infrastructure development.
Simuyemba, Shemmy. Linking Africa Through Regional Infrastructure. Tunisia: African Development Bank, 2000. This publication discusses how to link Africa through regional infrastructure and what projects are needed to complete integration.
The South-South Cooperation Trust Fund will Support African Countries. South-to-South Cooperation on Land and Environment. Accessed 6 September 2012. http://www.scopeacp.net/news/a-new-fund-to-support-african-countries-the-south-south- cooperation-trust-fund. This website discusses the South-South Cooperation Trust Fund and how it will benefit African regional integration and infrastructure development.
South-South Cooperation Trust Fund. African Development Bank Group. Accessed 6 September 2012. http://www.afdb.org/en/topics-and-sectors/initiatives-partnerships/south-south- cooperation-trust-fund/. This website discusses the South South Cooperation Trust Fund that is used by the African Development Bank Group to promote development and investment in infrastructure.
Special Report EMU: The Advantages. BBC News. Accessed 4 September 2012. http://news.bbc.co.uk/2/hi/special_report/single_currency/66473.stm. This article discusses the European Union and Eurozone at the beginning, before the European Debt Crisis, and how the union integrated the entire region.
Strand II North/South Co-Operation. Ireland Department of Foreign Affairs. Accessed 6 September 2012. http://www.dfa.ie/home/index.aspx?id=337. This website discusses North South Cooperation as implemented by Ireland.
Thoma, Mark. Government Deficits: The Good, The Bad, and the Ugly. CBS News. Accessed 5 September 2012. http://www.cbsnews.com/8301-505123_162-39741324/government- deficits-the-good-the-bad-and-the-ugly/. This article discusses the concept of a government deficit and discuses the pros and cons of having and running a deficit.
A New Economic Analysis of Infrastructure Investment: A Report Prepared by the Department of the Treasury with the Council of Economic Advisers. Washington DC: The United States Department of the Treasury, 2012. This report discusses the future of infrastructure investment in the United States and abroad.
Ydstie, John. Euro Currency Still Faring Well, For Now. NPR. Accessed 4 September 2012. http://www.npr.org/2012/07/11/156557152/euro-currency-still-faring-well-for-now. This article discusses the current status of the Euro currency and European market and currency integration. National High School Model United Nations 2013 Economic and Financial Committee
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TOPIC B UN Sources
A/CONF.166/9. Report of the World Summit For Social Development. Copenhagen: World Summit for Social Development, 1995. This report discusses the Copenhagen World Summit and summarizes its commitments and accomplishments.
Corruption and Economic Development. The World Bank Group. Accessed 3 September 2012. http://www1.worldbank.org/publicsector/anticorrupt/corruptn/cor02.htm. This webpage discusses the relationship between corruption and the income gap.
Gupta, Sanjeev et al. Does Corruption Affect Income Inequality and Poverty. Washington, DC: International Monetary Fund, 1998. This working paper discusses the correlation between corruption and income equality.
Ortiz, Isabel and Matthew Cummins. Global Inequality: Beyond the Bottom Billion. New York: UNICEF, 2011. This working paper discusses the concept of global income inequality and how it effects every person in the international community.
The Second Committee. United Nations. Accessed 3 September 2012. http://www.un.org/en/ga/second/index.shtml. This webpage discusses the goals of the Economic and Financial committee, otherwise known as the Second Committee of the United Nations.
World Development Report 2006:Equity and Development. Washington, DC: the World Bank, 2006. 1-320. This World Development Report discusses the status of equity and development in 2005-2006.
Non-UN Sources
Alderman, Liz. Indigestion for les Riches in a Plan for Higher Taxes. The New York TimesAccessed 3 September 2012. http://www.nytimes.com/2012/08/08/business/global/frances-les-riches-vow-to-leave-if- 75-tax-rate-is-passed.html?pagewanted=all. This article discusses French President Hollandes proposal to parliament to raise taxes on Frances richest.
An Overview of Growing Income Inequalities In OCED Countries: Main Findings. Divided We Stand: Why Inequality Keeps Rising (2011): 21-45. This report is the Organization for Economic Cooperation and Developments (OCED) findings on income inequality in OCED states. It evaluates data and gini coefficients to derive conclusions as to why inequalities exist and summarizing the state of inequality.
Atkinson A.B. and A. Brandolini. On Data: A case study of the evolution of income inequality across time and across countries. Cambridge Journal of Economics (2009): 381-404. National High School Model United Nations 2013 Economic and Financial Committee
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This article addresses income inequality through time and different places with data to link globalization and the income gap.
At OAS, UNDEP Administrator Underscores Challenges Facing Emerging Markets. The Organization of American States. Accessed 2 September 2012. http://www.oas.org/en/media_center/press_release.asp?sCodigo=E-264/07. This press release discusses the OAS conference on the status of income inequality.
Baker, Sam. Stocks and Flows. Accessed 15 Sept. 2012. http://hspm.sph.sc.edu/courses/econ/classes/Stocksandflows/Stocksandflows.html. Webpage that discusses stocks and flows.
Becker, Gary S. Human Capital. The Library of Economics and Liberty. Accessed 3 September 2012. http://www.econlib.org/library/Enc/HumanCapital.html#abouttheauthor. This website discusses basic economic terms, such as human capital.
Berg, Andrew G. and Jonathan D. Ostry. Equality and Efficiency: Is there a trade-off between the two or do they go hand in hand? Finance and Development (2011): 12-15. This publication by the International Monetary Fund addresses the classic question of whether or not a trade-off between efficiency and equality exists, with a focus on income inequality.
Bernasek, Anna. Income Inequality, and Its Cost. The New York Times. Accessed 20 August 2012. http://www.nytimes.com/2006/06/25/business/yourmoney/25view.html This article discusses income inequality and the effects of unchecked inequality in the United States and other countries
Birdsall, Nancy. Globalization and the Developing Countries: The Inequality Risk. Washington, DC: Overseas Development Council Conference, 1999. This paper describes the state of income inequality in developing countries and the reasons for it.
Bradford, Harry. 10 Countries With the Worst Income Inequality: OCED. Huffington Post. Accessed 20 August 2012. http://www.huffingtonpost.com/2011/05/23/10-countries- with-worst-income-inequality_n_865869.html#s278234&title=10_New_Zealand This article evaluates the OCED report on income inequality within its states and complies the top 10 most unequal countries.
Briefing Notes for AfDBs Long-Term Strategy. Tunisia: African Development Bank Group, 2012. This report discusses the African Development Banks plan for development and preventing the income gap from growing wider.
Bryns, Ralph. Lorenz Curve and Gini Coefficients. University of North Carolina. Accessed 3 September 2012. http://www.unc.edu/depts/econ/byrns_web/Economicae/Figures/Lorenz.htm. This webpage describes how to calculate the Gini Coefficient and how to derive the curve to graphically show income inequality.
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Field Listing: Distribution of Family Income Gini Index. CIA Factbook. Accessed 3 September 2012. https://www.cia.gov/library/publications/the-world-factbook/fields/2172.html. This is a listing of the Gini coefficients for each state with data.
Our Work. Congressional Budget Office. Accessed 2 September 2012. http://www.cbo.gov/about/our-work. This webpage discusses the CBO and what they do.
De Chaumont, Marguerite. Studies Agree A Vast Income Gap is Bad for Business. The Financial Times. Accessed 20 August 2012. http://www.ft.com/cms/s/0/3545b130-b56f-11e1-ab92- 00144feabdc0.html#axzz23qYtzTAs This article discusses how the income gap has effects on the economy and other aspects of society.
The Effect of Income on Appliances in the U.S. Households. EI. Accessed 3 Sept. 2012. http://www.eia.gov/emeu/recs/appliances/appliances.html.
This webpage article discusses effects of income on appliance in the U.S. Households.
Fletcher, Michael A. OCED Report Cites Rising Income Inequality. Washington Post. Accessed 30 August 2012. http://www.washingtonpost.com/business/economy/oecd-report-cites- rising-income-inequality/2011/12/05/gIQAWrwZXO_story.html This article discusses the Organization for Economic Cooperation and Developments report on the status of income inequality.
For Whosoever Hath, to Him Shall be Given, and He Shall Have More. The Economist. Accessed 3 September 2012. http://www.economist.com/node/9616888. This article discusses the income inequality in Asia and the implications of it.
Gyimah-Brempong, Kwabena. Corruption, Economic Growth, and Income Inequality in Africa. Economics of Governance (2002): 183-209. This article discusses African corruption and income inequality. It relates income inequality to the idea of corruption with a backdrop of Sub Saharan Africa.
Hofstra University. Cost Benefit Analysis. Accessed 3 September 2012. http://people.hofstra.edu/geotrans/eng/ch9en/meth9en/ch9m1en.html. This website discusses what a cost benefit analysis is and how to apply it to everyday situations.
Hahn, Robert and Peter Passell. Lessons from Latin America: Antipoverty Efforts Can Promote Growth. U.S. News. Accessed 3 September 2012. http://www.usnews.com/opinion/blogs/economic-intelligence/2012/04/20/lessons-from- latin-america-antipoverty-efforts-can-promote-growth. This article discusses what actions can be taken to decrease the income gap in Latin America.
History of the Caste System in India. Mount Holyoke College. Accessed 3 September 2012. http://www.mtholyoke.edu/~epandit/page2.html. This website discusses the basic background of the Caste system in India. National High School Model United Nations 2013 Economic and Financial Committee
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Jong-sung, You and Sanjeev Khagram. A Comparative Study of Inequality and Corruption. American Sociological Review (2005): 190. A Journal article discussing a comparative study done on inequality and corruption.
Income Inequality. Society at a Glance 2011: OECD Social Indicators. Paris: OECD, 2011. 66-69. This PDF file discusses income inequality by the OECD.
Income Inequality. UC Atlas of Global Inequality. Accessed 3 Sept 2012. http://ucatlas.ucsc.edu/income.php. A webpage that discusses the income inequality around the world.
Income Inequality. The New York Times. Accessed 3 September 2012. http://topics.nytimes.com/top/reference/timestopics/subjects/i/income/income_inequalit y/index.html. This article discuses the concept of income inequality and gives some basic background and recent developments on the issue.
Johnson, Paul M. Cost. Last modified 2005. Accessed 3 September 2012. http://www.auburn .edu/~johnspm/gloss/cost. This webpage explains political economic terms, such as cost.
Kavoussi, Bonnie. Widening Income Inequality Bad for Economic Growth: IMF Report. Huffington Post. Accessed 20 August 2012. http://www.huffingtonpost.com/2011/09/20/income-inequality-economic- growth_n_969933.html This article examines a report issued by the International Monetary Fund in 2011 regarding the widening income gap and its effects on economic growth.
Latin America Rich Poor Gap Widens. BBC News. Accessed 3 September 2012. http://news.bbc.co.uk/2/hi/business/3172962.stm. This article discusses the widening income gap in Latin America and its implications. It also covers the policy needed to reverse this trend.
Leahy, Joe. 2010 Census Shows Brazils Inequalities Remain. The Financial Times. Accessed 3 September 2012. http://www.ft.com/intl/cms/s/0/71352352-112c-11e1-ad22- 00144feabdc0.html#axzz25QU7IV8Y. This article discusses Brazils income inequalities and how its economic growth has changed the economic equality.
Luhby, Tami. Who are the 1 %? CNN Money. Accessed 3 September 2012. http://money.cnn.com/2011/10/20/news/economy/occupy_wall_street_income/index.ht m. This article discusses the American Occupy movement and the concept of the 1 %.
Milanovic, Branko. Global Income Inequality: What it is and Why it Matters? Geneva: United Nations, 2006. National High School Model United Nations 2013 Economic and Financial Committee
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This PDF is a UN Findings on Income Inequality and the impacts it has globally.
The Multiplier Effect. Economics Online. Accessed 3 September 2012. http://economicsonline.co.uk/Managing_the_economy/The_multiplier_effect.html. This website discusses the multiplier effect and explains how it is used in economics and applies it to the income gap.
Namibia Overview. USAID. Accessed 3 September 2012. http://transition.usaid.gov/na/overview2.htm. This webpage gives basic statistics on Namibia, specifically on the income gap.
Nel, Philip. The Politics of Economic Inequality in Developing Countries. Hampshire Palgrave MacMillian, 2008. A book that discusses the politics behind the economic inequality in developing countries.
Our Mission. Organisation for Economic Co-Operation and Development. Accessed 3 September 2012. http://www.oecd.org/about/. This website discusses the OECD and their basic mission and background.
Palme, Joakim. Income Distribution in Sweden. Japanese Journal of Social Security Policy (2006): 16- 26. This article discusses Sweden, one of the most equitable countries in the world, and its growing income gap and wealth distribution.
Plumer, Brad. IMF: Income Inequality is Bad for Economic Growth. Washington Post. Accessed 20 August 2012. http://www.washingtonpost.com/blogs/ezra-klein/post/imf-income- inequality-is-bad-for-growth/2011/10/06/gIQAjYADQL_blog.html. This article discusses a report issued by the International Monetary Fund (IMF), which establishes the correlation between income inequality and negative economic growth.
Purchasing Power Parity. Saunder. Accessed 3 Sept. 2012. http://fx.sauder.ubc.ca/PPP.html. A webpage that discusses power parity.
A Review of Poverty and Inequality in Namibia. Center Bureau of Statistics and National Planning Commission, 2008. This report discusses poverty and income inequality in the state of Namibia.
Roberts, Dexter. Chinas Growing Income Gap. Businessweek. Accessed 3 September 2012. http://www.businessweek.com/magazine/content/11_06/b4214013648109.htm. This article discusses the trends of Chinas income gap and how its emerging markets and black markets effect equality within the state.
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Ruser, John et al. Alternative Measures of Household Income: BEA Personal Income, CPA Money Income, and Beyond. Washington, DC: Federal Economic Statistics Advisory Committee, 2004. 1-22. This is a report describing the concept of income and how that relates to measuring inequality.
Silver, Hilary and S.M. Miller, Social Exclusion: The European Approach to Social Disadvantage, Indicators (2003): 1-7. Journal article that discusses social exclusion and social disadvantages in Europe.
Society: Governments Must Tackle Record Gap Between Rich and Poor, says OECD. Organisation for Economic Co-Operation and Development. Accessed 3 September 2012. http://www.oecd.org/newsroom/societygovernmentsmusttacklerecordgapbetweenrichandp oorsaysoecd.htm. This article discusses the OECD stance on the income gap and the actions it will implement to shrink the gap.
Special Focus: Inequality in Emerging Economies. Divided We Stand: Why Inequality Keeps Rising (2011): 47-82. This report is the Organization for Economic Cooperation and Developments (OCED) findings on income inequality in emerging states. It evaluates data derived from the main emerging states and gives reasoning as to why inequality exists in these regions despite their continued economic growth.
Stewart, James B. An Uprising With Plenty of Potential. The New York Times. Accessed 3 September 2012. http://www.nytimes.com/2011/11/19/business/occupy-wall-street-has- plenty-of-potential.html?_r=1. This article covers the Occupy movement and the background of the income gap in America.
Strachan, Maxwell. Income Inequality Has Risen in the Vast Majority of Developed Countries Even In Sweden. Huffington Post. Accessed 30 August 2012. http://www.huffingtonpost.com/2011/05/03/income-inequality-oecd-report- rising_n_857057.html This article examines the rising income gap in developed countries, even those typically deemed more socially and economically equal.
Tatlow, Didi K. Chinas Hidden Wealth Feeds an Income Gap. The New York Times. Accessed 3 September 2012. http://www.nytimes.com/2012/01/26/world/asia/26iht- letter26.html?pagewanted=all. This article discusses the black market/gray market effects on Chinas income gap.
Thorat, Sukhadeo and Katherine Newman. Caste and Economic Discrimination: Causes, Consequences, and Remedies. Economic and Political Weekly (2007): 4121-24. This article discusses the relationship between the Indian Caste System and the income gap that exists today.
UN Study Says Wealth Gap in Latin America Increases. BBC News. Accessed 3 September 2012. http://www.bbc.co.uk/news/world-latin-america-19339636. This article discusses the effects of the rising income gap in Latin America. National High School Model United Nations 2013 Economic and Financial Committee
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Wade, Robert Hunter, The Rising Inequality of World Income Distribution. Finance and Development 38 no. 4 (2001).
This article discusses the world income distribution and the gap that exists between countries and within countries.
With Reservations. The Economist. Accessed 3 September 2012. http://www.economist.com/node/9909319. This article discusses the effects of the Indian Caste system on todays society and the policy used to reverse the stigma.
You, Jong-sung and Sanjeev Khagram. A Comparative Study of Inequality and Corruption. American Sociological Review 70 no. 136-137 (2005):190. This article relates corruption and inequality and discusses the connection between these two ideas.