Ecofin 5

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C. Mayhew + R. Simmon (NASA/GSFC)

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

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
Trinity College

Ryan Youra
American University

Courtney LeNoir
New York University

CJ Stavrakos
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

Bonnie Pham
Director-General
Williams College

Delia Solomon
Conference Director
Emory University

Puja Dullabh
Chief of Staff

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
Georgetown University

Maggie Lawrence
Trinity College

Ryan Youra
American University

Courtney LeNoir
New York University

CJ Stavrakos
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

- 1 -


- 2 -

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.

- 3 -

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.

Best,

Bonnie Pham
Director-General, NHSMUN 2013
dg.nhsmun@imuna.org


- 4 -

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

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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.

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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.

- 10 -

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.


- 11 -

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.

- 12 -

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).

- 13 -

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.

- 14 -

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.

- 15 -

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.

- 16 -

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.

- 17 -

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.

- 18 -

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.

- 19 -

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.

- 20 -

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.

- 21 -

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.

- 22 -

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/.

- 23 -

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.

- 24 -

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.

- 25 -

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.

- 26 -

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.

- 27 -

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.

- 28 -

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.

- 29 -

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.

- 30 -

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.

- 32 -

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/.

- 33 -

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.

- 34 -

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.

- 35 -

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.

- 36 -

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.

- 37 -

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.

- 38 -

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.

- 39 -

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.

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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.

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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.

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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.

- 43 -

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/.

- 44 -

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.

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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.

- 46 -

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.

- 47 -

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.

- 48 -

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.


- 49 -

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.


- 50 -

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?


- 51 -

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?


- 52 -

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.

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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.
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-
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.
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.


- 54 -

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.


- 55 -

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.
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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.
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.


- 56 -

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.

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.


- 57 -

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-
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.


- 58 -

ASEAN Infrastructure Fund Targets USUSD13 billion towards ASEAN Connectivity. Association
for South East Asian Nations. Accessed 6 September 2012.
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.

- 59 -

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.


- 60 -

Infrastructure to 2030. OECD Observer. Accessed 6 Sept. 2012.

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.

- 61 -

Overview. Association of Southeast Asian Nations. Accessed 6 September 2012.
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.
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.

- 62 -

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.

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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.
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.

- 64 -

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.
This webpage describes how to calculate the Gini Coefficient and how to derive the curve to graphically show income
inequality.


- 65 -

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.

- 66 -

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.

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