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Trade and Development Report 2004

Policy Coherence, Development Strategies and Integration into the World Economy

image of Trade and Development Report 2004

The current edition of the Trade and Development Report focuses on the global economic recovery currently underway. The Report raises questions about its considerable downside risks stemming from oil prices and exchange rates and the fact that both the sources and incidence of growth are unequally distributed around the globe. The TDR 2004 argues that, to enable developing countries to establish a virtuous interaction between external financing, domestic investment and export growth, a feasible development agenda has to be based on the concept of coherence. UNCTAD warns that attempts by many countries to keep their currencies undervalued could end up in competitive devaluations that could be disastrous for the world economy. UNCTAD suggests that changes in the exchange rate that imply deviation from purchasing-power parity should be governed by multilateral regulations.

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Fostering coherence between the international trading, monetary and financial systems

Developing countries depend on a favourable international trading environment to reap the full benefits of their integration into the world economy. Equally important for their successful integration is the creation of strong supply capacities. An essential lesson from the experiences of countries that combined successful integration into the world economy with sustained growth is the critical role of active and well sequenced policies to augment the existing stock of physical and human capital, enable the use of more efficient technologies, and shift resources from traditional, lowproductivity activities towards activities that offer a high potential for productivity growth.

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