Joseluis samaniego

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Conferência Ethos 2012

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Joseluis samaniego

  1. 1. Succeeding in the present and losing the future? ETHOS International Conference 2012 June 12th 2012 Joseluis SamaniegoChief, Sustainable Development and Human Settlements Division
  2. 2. The international economy is becoming increasingly fragile• The euro zone is possibly facing a “lost decade” with a bleak economic outlook• The crisis in the euro zone has contributed to the stagnating of global demand and to the increase of uncertainty in financial markets (1.6% to 0.5% between 2011 and 2012)• The United States will grow 1.5%-2% in 2012• China’s economic growth slows from 9.5% to 7.5% in 2012.• Developing countries increase their weight in the global economy but they still are not the engine of global growth.• Global coordination (monetary and fiscal), which was crucial during the 2009-2009 crisis, is now weaker.
  3. 3. The global economy continues to show two-tier growth, with developed countries expanding more slowly than emerging economies World Economic Growth, 2009-2012 (Percentages)Source: Economic Commission for Latin America and the Caribbean (ECLAC) on the basis of World Bank Data.e Estimates.P Projections.
  4. 4. The economic power is shifting from the Atlantic to Pacific and from North to South… with a realignment of political power at the global level• In the last decade, economic ties with China and Asia- Pacific in general were strengthened and South-South links are growing • Growth in developing countries is increasingly dependent on china and India • South-South trade could surpass North-North trade in 2017 • South-South investments also continue to deploy quickly • A growing number of trans-Latin and trans-Asian firms with operations at the global scale• Two thirds of the world’s middle class will be in the BRICS• Global Economy governance requires major adjustments in its main operating mechanisms• Four years after the onset of the subprime crisis, financial normalcy can not be restored and the reformist momentum of the G-20 is diluting
  5. 5. Current global governance does not reflect the growing relative importance of emerging economies in the world economy RELATIVE SHARE OF ADVANCED AND EMERGING GLOBAL EXPORTS BY REGION, 1985-2020a ECONOMIES IN GLOBAL GDP, 1996-2016 (Percentages of world trade) (Percentages) Source: Economic Commission for Latin America and theSource: Economic Commission for Latin America and the Caribbean Caribbean (ECLAC), on the basis of official figures.(ECLAC), on the basis of IMF (2011). a The figures for the period 2011-2020 are projections based on long-term linear trends.
  6. 6. The challenges of the new international scenario• New global equilibrium: The changing role of China and the rest of Asia-Pacific in world production, trade and foreign direct investment• Increased demand for competitiveness and innovation for participating in global value chains and the intensity of technological change• New patterns of production and consumption with a low- carbon/ecological footprint are required to tackle climate change/environmental pressures.• More selective conditions of access to external financing and possible restructuring of national and international financial architecture• Need for new forms of governance and a redefinition of the State-market-society relationship to ensure sustainable development
  7. 7. GLOBAL CONTRASTSIn the 1990s, the world moved along two parallel tracks. A private economic track: a globalized economy, financial capitalism. speculative economy, high above the real economy. Trade and financial openness. Reduced role of the State. A global normative track: UN world summits towards a development decade: sustainable development, women, population, social development, education, and financing for development, and the Millennium Summit.Results: two decades of light and shadows: commitments but without clearfinancial support or effective transfer of technology. Principle 7 of the Rio Declaration relating to common but differentiatedresponsibilities became watered down internationally within the framework oftrade negotiations and is now limited to non‐binding, environmental agreements. Twenty years later, we are more acutely aware but in a weaker and moreworrying position because time is reducing the margins.
  8. 8. Where is Latin America and the Caribbean today?• Learning from the past• More prudent in macroeconomic terms• Progressive in social terms• With economic growth in 2010 but decelerating in 2011 and 2012• Urgent to rethink a new development agenda centered in equality and contemplating environmental sustainability • This requires closing productive and social gaps • It involves facing the region’s historical and recent debts The regions is aiming at a structural change
  9. 9. The regional context: the situation todayis very different from what it was in 1992 LATIN AMERICA AND THE CARIBBEAN: PER CAPITA GDP GROWTH, CURRENT ACCOUNT BALANCE AND OVERALL FISCAL BALANCE (Annual growth rates and percentages of GDP) In 1992, the region was emerging from a "lost decade" of low growth, high inflation and external debt constraints. Currently, despite the recent global economic crisis, the region has enjoyed nearly a decade of relatively high growth; inflation is under control in nearly all countries and, inFuente: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of general, stableofficial figures. economic conditions prevail.
  10. 10. Main gaps to be closed Inequality Investment Productivity Taxation International Environ- For the first time Investment, at Closing the Regressive linkages mental in recent history 23% of GDP, is external gap (with tax Risk of sustainabi- there have been insufficient for the technological systems; “reprimarization” lity advances in development frontier) and the weak non- of the export Move towards combating internal gap contributory structure, with low sustainable inequality (between sectors pillar value added and production and and actors) little investment in consumption technology patterns• In order to move towards productive convergence, policymakers must look beyond the price boom: economic policies based on a relevant, long-term, sustainable vision at the macroeconomic, productive and territorial levels.• To take advantage of the opportunities provided by the international context, exports must have a higher value added and knowledge content, with the focus on diversification of production, integration of sustainable production processes, re-evaluation of global and regional partnerships and strengthening open regionalism.• Consensus on priorities and respective financing: a fiscal covenant with a redistributive impact – with access to innovation, job security and internalization of externalities.• New equation: State-market-society.
  11. 11. Two factors that breed inequality: the skills gap and the productivity gap LATIN AMERICA AND THE CARIBBEAN (9 COUNTRIES) ANDOECD AVERAGE: DISTRIBUTION OF LEVELS OF PERFORMANCE IN THE PISA READING ASSESSMENT, BASED ON THEHOUSEHOLD SOCIOECONOMIC AND CULTURAL INDEX, 2009 LATIN AMERICA: PRODUCTIVITY BY SEGMENT, (Percentages) 1990-2008 (Dollars at 2000 prices) Source: Economic Commission for Latin America and the Caribbean Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special processing of microdata from the (ECLAC), on the basis of official figures,. PISA Assessments, 2009.
  12. 12. Opportunities for Latin America and theCaribbean: closing the infrastructure gap INVESTMENT NECESSARY TO CLOSE THE INFRASTRUCTURE GAP: 5.7% OF GDP Water and sanitation 4% Energy 33% Transport 22% Communications 41% … But to reach the levels ofSoutheast Asian, it is necessary to invest 8.1% of GDP
  13. 13. Productivity growth and structural change LATIN AMERICA (SELECTED COUNTRIES) AND THE REPUBLIC OF KOREA: PRODUCTIVITY AND BREAKDOWN OF INDUSTRIAL VALUE ADDED (Percentages of industrial GDP in United States dollars at constant 1985 prices)Source: Economic Commission for Latin America and the Caribbean (ECLAC), Industrial Performance Analysis Program (PADI) on the basis of officialfigures.
  14. 14. Innovation: Latin America and the Caribbean invests less in R&D, with a small participation of the private sector INVESTMENT IN RESEARCH AND INVESTMENT (R&D) BY THE PRIVATE SECTOR (Percentages of GDP) Latin America and Caribbean OECD Other emerging economies 5 R&D investment ( % of GDP) 4 Ko rea 3 2 China Federació n Rusa 1 India So uth A frica 0 0 10 20 30 40 50 60 70 80 90 R&D investment financed by private sector (%)
  15. 15. Serious public finance challenges persist• The tax system delivers low level of revenue and is poorly designed • The tax structure is regressive • Most countries have a low tax burden • High level of evasion • Widespread exemptions • No environmental friendly incentives• Social spending with little redistributive impact • A weak non contributory pillar • In terms of production, minimum support to SMEs and segmented access to financing• Insufficient investment for development: • In infrastructure • In research, science and innovation • In development banking institutions: inclusive financing • In cleaner environmental matrices
  16. 16. The average tax burden of the Latin American countries is almost half that of the OECD countries and the tax structure is angled towards non-progressive, indirect taxation INTERNATIONAL COMPARISON OF THE LEVEL AND STRUCTURE OF THE TAX BURDEN (Percentages of GDP)Source: CEPALSTAT for Latin American countries; IMF for Sub-Saharan African countries and developing Asia; OECDStat for OECDcountries.
  17. 17. Subsidies on fossil fuels, high correlation between economic growth and energy use, and low price- elasticities prevent a low carbon structural change LATIN AMERICA (SELECTED COUNTRIES): SUBSIDIES ON FOSSIL FUELS AND PUBLIC SPENDING ON HEALTH CARE, 2008-2010 (Billions of dollars and percentages of GDP) Public spending Subsidies on fossil fuels on health (billions of dollars) (percentages of GDP) (percentages of GDP) 2008 2009 2010 2008 2009 2010Argentina 18.1 5.9 6.5 5.5 1.9 1.8 5.3 (2008)Colombia 1.0 0.3 0.5 0.4 0.1 0.2 1.9 (2009)Ecuador 4.6 1.6 3.7 8.4 3.1 6.7 1.3 (2006)El Salvador 0.0 0.0 1.2 0.0 0.0 5.6 3.4 (2007)Mexico 22.5 3.4 9.5 2.1 0.4 0.9 2.8 (2008)Peru 0.6 0.0 0.0 0.5 0.0 0.0 1.2 (2008)Venezuela(Bolivarian Republic of) 24.2 14.1 20.0 7.8 4.3 5.1 1.8 (2006)Source: Prepared by author on the basis of the subsidies on fossil fuels published in International Energy Agency (IEA), World Energy Outlook 2011 [online] http://www.iea.org/subsidy/index.html; Economic Commission for Latin America and the Caribbean (ECLAC), Official figures of GDP and social expenditure database for public health-care spending.
  18. 18. Unlike Asia, the region’s participation in value chains, even at the intraregional level, is very limited LATIN AMERICA AND THE CARIBBEAN: INTRAREGIONAL EXPORTS OF PARTS AND COMPONENTS a A. Regional total, 2000-2009 B. Selected groupings, 2009 (Millions of dollars and percentages of intraregional total) (Percentages of intraregional total) Grouping Percentage Latin America and the 8.1 Caribbean ASEAN+3 b 27.9 North American Free Trade Agreement 17.4 (NAFTA) European Union 14,7Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of information from the United NationsCommodity Trade Statistics Database (COMTRADE).a Relates to subcategories 42 and 53 of the Classification by Broad Economic Category.b Includes the 10 members of ASEAN plus China, Japan and the Republic of Korea.
  19. 19. Intra-subregional trade remains below its historical peaks, with the highest rate in the Central American Common MarketLATIN AMERICA AND THE CARIBBEAN: EXPORTS BETWEEN MEMBERS OF LATIN AMERICA AND THE CARIBBEAN: REGIONAL GROUPINGS, 1986-2010 VOLUME OF INTRAREGIONAL (Percentages of the total exports of each grouping) MANUFACTURING EXPORTS, 2010 (Percentages of total manufactures) Grouping Percentage Andean Community 13.5 CARICOM a 23.0 Central American 34.7 Common Market MERCOSUR 23.0 Source: ECLAC, on the basis of United Nations Commodity Trade Database (COMTRADE). a Data for Barbados, Dominica, Grenada, Saint Kitts and Nevis, Saint Lucia, Suriname, and Trinidad and Tobago correspond to 2009.Source: ECLAC, on the basis of official information from the regional integration schemes.a Does not include Bolivarian Republic of Venezuela.b Does not include Bahamas or Haiti.
  20. 20. Energy intensity has been declining much more slowly in Latin America and the Caribbean than in other regions ENERGY INTENSITY OF THE ECONOMY (Kg of petroleum equivalent per US$ 1,000 of GDP at constant 2005 PPP prices) This is attributable to the region’s production patterns, the fact that environmental and health costs are not factored into policy decisions, the use of hydrocarbon consumption and production subsidies, and the low priority that policymakers have assigned to energy efficiency, among other factors.Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of World Bank, World DevelopmentIndicators [online] http://data.worldbank.org/data-catalog/world-development-indicators [date of reference: December 2011].
  21. 21. Strong correlation among GDP per capita, energy use and CO2 emissionsNote: The size of the circles is related to the per capita emissions of each country. The colors refer to the region:Blue, South America; Red, Central America; and Orange, The Caribbean.Source: ECLAC on the basis of World Bank (World Develoment Indicators).
  22. 22. In summary…• Current patterns of economic growth in LAC are not consistent with a sustainable development• Green technology and taxes are two key elements to change BAU scenario• However, they are not enough in LAC under the present framework• The magnitude of the effort implies significant modifications in the current patterns of production, consumption, distribution, the technological paradigm and the existing relative price structure• Cooperation is crucial to accelerate that transition• Natural resource governance is key to achieve sustainable development in the LAC region
  23. 23. Why talk about governance of natural resources?• The “governance” of natural resources refers to all countries sovereign policies on the ownership of natural resources and the appropriation and distribution of profits from the exploitation of these resources to maximize their contribution to sustainable development.• The mechanisms and strategies for such governance require public policies involving institutional, regulatory, tax, strategic planning, management and environmental conflicts management.• In addition, this governance demands long-term institutional innovation that provides maximum social benefits to both present and future generations.• Some instruments that are of use to States include: public funds for savings, special purpose investment (education, innovation) or macro-stabilization funds that are counter- cyclical.
  24. 24. The region has remarkable assets, but also weaknessesAssets• Abundant natural resources: – One third of the world’s freshwater reserves and 12% of the arable land – A third of world production of ethanol, around 25% of the production of biofuels and 13% of oil production – Reserves: 65% of lithium, 49% of silver, 44% of copper, 33% of tin, 32% of molybdenum, 26% of bauxite, 23% of nickel, 22% of iron and 22% of zinc – 48% of world output of soybean – 21% of the global area of ​natural forest and rich biodiversityWeaknesses• Productive and export structure based on static comparative advantages: • In many cases (South America): linked to natural resources • In others, linked to low-wage, labour-intensive manufacturing or services • Still very few dynamic competitive advantages• Low investment and lags in innovation, science and technology, education and infrastructure• Labour market informality• High cost of violence (7.7% of GDP in Central America )• Asymmetric vulnerability to climate change
  25. 25. Trends and developments of the decade• Thirteen countries in the region are among the 15 largest world producers• Chile and Peru are at the top• Chile, since 1982 is the largest producer of copper Brazil, until 2006 was the largest producer of iron, displaced by China in 2007 and Australia in 2008• Brazil is among the three largest producers of iron• Mexico is the largest producer of silver and fifth in molybdenum and lead in mine• Bolivia is the fourth largest producer of tin and the sixth for silver• Colombia is the seventh largest producer of refined nickel and Cuba is the eight for nickel mine• Jamaica is the seventh largest producer of bauxite
  26. 26. The rise in prices of metals and hydrocarbons began in 2003 and continued in 2010-11 after correction for the global financial crisis PRICE INDEX OF RAW MATERIALS , 2003-2011 (Index January 2003=1) 500 450 400 350 300 250 200 150 100 50 0 Petróleo, gas natural y carbón Metales This rapid recuperation and persistence points to the importance of structural factors (Asian demand) in the actual price cyclesSource: Econoic Commissions for Latin America and the Caribbean (ECLAC), on the basis of information from the International Monetary Fund.
  27. 27. The price increase also leads to an increase in economic profit of the mining sector worldwide, and particularly in LAC PROFIT FROM MINING SECTOR BY MAJOR MINING REGIONS, 1980-2009 (In millions of US$ from 2005)90.00080.00070.00060.00050.00040.00030.00020.00010.000 0 1970 1975 1980 1985 1990 1995 2000 2004 2009 Norteamerica Asia del Sur Europa y Asia central Asia del Este y el Pacifico América Latina y el Caribe Source: Econoic Commissions for Latin America and the Caribbean (ECLAC), on the basis of World Bank, World Development Indicators. Note: *The data for 2009 for East Asia and the Pacific corresponds to the year 2006.
  28. 28. The profitability of mining in LAC reached historically unprecedented levels LATIN AMERICA & THE CARIBBEAN: RETURN ON ASSETS FORT HE 500 LARGEST BUSINESSES IN THE REGION, 2010 (In percentages) 30.0 25.0 20.0 15.0 10.0 5.0 0.0 Economic rent in the mining sector in LAC, estimated by the World Bank, exceeded 75,000 million dollars in 2009Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of statistical information from América Economía, December 2011(http://www.americaeconomia.com/).
  29. 29. In relation to the world total, regional participation in the consumptionof hydrocarbons and oil reserves has grown, but the importance of gas reserves and oil production has decreased RESERVES, PRODUCTION AND CONSUMPTION OF HYDROCARBONS: LATIN AMERICA AND THE CARIBBEAN PARTICIPATION IN THE WORLD TOTAL (In Percentage) 14,9% Reservas de petróleo 9,9% 12,0% 13,0% 4,7% Reservas de gas natural 4,7% 5,2% 6,0% 12,0% Producción de petróleo 13,0% 14,0% 12,0% 7,0% Producción de gas natural 6,0% 5,3% 4,8% 9,2% Consumo de petróleo 8,5% 9,0% 8,0% 7,0% Consumo de gas natural 6,0% 5,3% 4,8% 0,0% 2,0% 4,0% 6,0% 8,0% 10,0% 12,0% 14,0% 16,0% 2006-2010 2001-2005 1996-2000 1991-95Source: Econoimc Commission for Latin America and the Caribbean (ECLAC), on the basis of BP2011.
  30. 30. Worrying decline in the reserve / production ratio of hydrocarbons, with the exception of the Bolivarian Republic of Venezuela RATIO OF RESERVES/PRODUCTION OF LATIN AMERICA & THE CARIBBEAN (years) 80 70 4 veces en GN 60 VEN VEN 50 2.5 veces en PE 1995 2000 40 2005 2009 30 2010 20 10 0 Gas Natural Gas Natural Petróleo Petróleo Petroleo&GasNatural Petroleo&GasNatural Total ALC Total ALC s/VenezuelaSource: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of BP2011.
  31. 31. Risk of “reprimarization”, especially in South America LATIN AMERICA AND THE CARIBBEAN: CHANGES IN THE STRUCTURE OF EXPORTS TO THE WORLD SINCE THE EARLY 1980S (Percentages of regional total)Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of data from United NationsCommodity Trade Statistics Database (COMTRADE).
  32. 32. -2% 2% 4% 6% 8% 0% 10% 12% 14% Enero Febrero Marzo Abril Mayo Junio Julio 2007 Agosto Septiembre Octubre Noviembre Diciembre Enero Febrero Marzo Alimentos Abril Mayo Junio Julio 2008 Agosto Septiembre octubre noviembre diciembre Enero Febrero Marzo Abril Mayo Junio Julio 2009 Agosto Septiembre Octubre Subyacente noviembre diciembre Enero Febrero Marzo Abril Mayo Junio (Inflation during 12 months, simple average) Julio 2010 AgostoSource: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of oficial figures. Septiembre Octubre noviembre diciembre Enero Febrero Otros Marzo Abril Mayo LATIN AMERICA: CONTRIBUTIONS TO INFLATION, JANUARY 2007-FEBRUARY 2012 Junio Julio 2011 Agosto Septiembre Octubre noviembre has impacted inflation in countries in the region diciembre Enero Febrero 2012 The increase in international prices for energy and food
  33. 33. This increase has resulted in almost continuous appreciation, jeopardizing the competitiveness of other tradable goods outside the natural resources sector LATIN AMERICA & THE CARIBBEAN: REAL EFFECTIVE LATIN AMERICA & THE CARIBBEAN: REAL EFFECTIVE EXCHANGEEXCHANGE RATE TOTAL, FEBRUARY 2012 VS AVERAGE RATE EXTRA-REGIONAL, JANUARY 2008 – JANUARY 2012 1990-2009 (Indexes, Average from 1990-2009 = 100) (Percentages) 100 96 92 88 América Latina y el Caribe América del Sur 84 Centroamérica, México y Caribe 80 juLio09 ene-08 ene-09 ene-10 ene-12 abr-11 oct-08 oct-09 oct-10 ene-11 oct-11 jul-08 jul-10 abr-08 abr-09 abr-10 jul-11 Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of oficial figures.
  34. 34. El aumento del precio internacional por sobre los costos de producción, determina un aumento importante de las rentas del sector minero a partir de 2004Precio del cobre refinado en la Bolsa de Metales de Londres y costos de producciónpromedio de cátodos de cobre en América Latina* (En centavos de dólar por libra)400350300250200150100 50 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Precio Cu (BML) Costo de producción (promedio América Latina)**Fuente: Elaboración propia sobre la base de datos de COCHILCO.Notas: * Se refiere a los costos totales, C3 de acuerdo a la terminología de Brook Hunt. ** Los costos para el período 1992-1996 son sólo de Chile.
  35. 35. Enforcement mechanisms Key Fiscal InstrumentsMechanism Advantages DisadvantagesRoyalty Fixed payment per unit of production or a percentage of Can distort investment and production decisions, as they the production or gross income. Provide an early and are insensitive to costs. Are regressive. fiscally stable minimum payment for the resources used and are relatively easy to administer.Taxes based They are less distorting because are based on revenue Are relatively complexes to administer. Revenues also areon revenue less costs. Foreign investors appreciate the fact that delayed: since depend on the depreciation of capital, which foreign tax credits can be applied. are often generous to attract investment (i.e., provide a faster return on investment).Taxes based They are neutral because the payment is only required They are more effective but are also the most difficult toon profit when the investor generate returns. manage. The risk balance is biased towards the government.State assets Allows the government to increase their participation and Capital "paid" requires the government to contribute to the thus increases the sense of national belonging. cost of initial capital, and often leads to conflicts of interest derived from the governments role as a regulator.Export They are not very common. Export duties are relatively Distort the decision to sell crude oil in the foreign countryduties easy to administer. and are insensitive to costs.Import duties Provides income (even before royalties) during the project Full or partial exemptions for are often provided to mitigate development due to import requirements. the negative impact on investors.Others Include: Company and production bonuses, land lease payments, withholding taxes on interest, dividends and services, and the value added tax (VAT)
  36. 36. Institutional strengthening to achieve…• More progressiveness in state participation in the rent- seeking by exploitation of natural resources during boom cycles, particularly given the magnitude and persistence of the current cycle of international prices of primary goods ...• ... while preserving the dynamics of investment in the present natural resource sectors and avoiding tax competition between countries.• Efficient public investment income from natural resources in education, health, infrastructure, innovation and technological development, and equitable distribution among levels of government and social groups.• Institutionalize countercyclical macroeconomic management against volatility of international price cycles and capital flows.
  37. 37. Innovation and productive convergence• Ties must be forged between low-productivity sectors and those already at the technological frontier• Co-evolution of macroeconomic and productive development policies• Reforming the long term institutional architecture for development: • An explicit and integrated productive development policy • Higher priority for science and technology • Strengthening educational and health infrastructure • Development banking for building production capacity and promoting innovation and internal convergence • Integrated strategy to provide financial support to SMEs and link them to more dynamic sectors (+certification, traceability, carbon footprint)
  38. 38. Some economies have been able to make virtuous structural changes that combine high rates of productivity growth and employment. Lessons for countries seeking to accelerate their development are :• Economic development means changing comparative advantage and the allocation of resources to technology-intensive sectors with strong growth in demand.• A country that is moving toward a structure dominated by dynamic efficiency over time reduces the external constraint on growth by allowing higher rates of export growth thug allowing the expansion of imports.• The desirable structural change is defined and evaluated based on their aggregate effects on the economic system, including employment.• The structural change requires industrial policies combined with macroeconomic policy (high exchange rate, low interest rates and low volatility) to produce the necessary incentives. At the center of this proposal is the State action. The question is no longer to have more State or more market, but to opt ​for a better State and more efficient and equitable market.
  39. 39. Guidelines for achieving sustainabilityCreate synergies between inclusion, social protection, humansecurity, empowerment of people, disaster risk reduction andenvironmental protection • Public transport • Treatment of wastewaterMeasure the sustainability of development • Adoption of green net domestic product and/or the United Nations System of Integrated Environmental and Economic Accounting (SEEA)Internalize the environmental and social costs and benefits of publicand private economic decisions • Pricing of activities that pollute or cause environmental degradation • Eliminate direct or indirect subsidies for activities that damage the environment • Apply mechanisms such as royalties to channel resources into human capital to facilitate transformation of production structure
  40. 40. Rio + 20 expected outcomes Improve international governance for sustainable development(consistency, coherence, efficiency and effectiveness), particularlyaround natural resources: Strengthen the Economic and SocialCouncil to ensure that the three pillars are integrated Comply with ODA commitments SDGs on production and consumption patterns: subsidies, andpricing of externalities. Improve international cooperation to allow access to newtechnologies (technological weaknesses and the world intellectualproperty system limit such transfers)Process to adopt national wealth indicators beyond GDP to properlycount human and natural patrimonies.
  41. 41. Joseluis SamaniegoChief, Sustainable Development and Human Settlements Division

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