DEVELOPMENT COMMITTEE (Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries) ONE HUNDREDTH MEETING WASHINGTON, DC – OCTOBER 19, 2019 DC/S/2019-0036 October 19, 2019 Statement by Abdulhamid Alkhalifa Director-General of the OPEC Fund of International Development (OFID) Statement by Abdulhamid Alkhalifa Director-General of the OPEC Fund for International Development (OFID) 100th Meeting of the Development Committee October 19, 2019 Washington, DC Subject: World Development Report 2020 – Trading for Development in the Age of Global Value Chains The world faces more demanding and interlinked development challenges than ever before. Looking at the global economy, trade growth has weakened, while investment prospects have softened. While both of these remain important engines of growth, so too are increases in productivity, innovation, job creation and sustainable development. For example, the economic and technological forces that are changing how the world is connected are impacting manufacturing in developing countries. As the 2020 World Development Report states, global value chains (GVCs) have emerged as the dominant mode of doing international business. Importantly, all empirical evidence seems to support a picture of GVCs greatly boosting productivity and incomes in contrast to ‘standard’ trade. But it appears that the gains from GVC trade are being distributed unequally. Among its conclusions, the draft report states that developing countries must implement deeper reforms and industrialized countries pursue open, inclusive and predictable policies. As the Joint Ministerial Committee may be aware, the OPEC Fund works closely with organizations such as regional development banks, the bilateral and multilateral agencies of member countries and specialized agencies of the United Nations and the World Bank. We help tackle poverty in many ways: providing finance to build essential infrastructure, strengthen social services and promote productivity, competitiveness and trade. By providing affordable development finance to countries and regions that often find funds difficult to secure, we help to solve market challenges – in a market supportive manner. As well as providing improved access to trade finance, the OPEC Fund also supports trade-related technical assistance and capacity building programs within its partner countries. Working with the International Islamic Trade Finance Corporation (ITFC), for example, we support a range of beneficiaries along the trade value chain. This support can include helping smallholder farmers secure seeds and technical assistance (to improve yields and achieve guaranteed selling prices) and / or supporting the energy security of developing countries. Our loan portfolio financed with the ITFC covers agriculture, banking and finance, commodities, energy, industry, health and mineral resources. A unique feature of the OPEC Fund – and a characteristic that is as true today as it was back in the 1970s – is that our organization supports only developing countries other than our own. Our organization was established with an outward-looking development mandate. Member countries, undeterred by their own priorities, set out to help others and to reaffirm the natural solidarity which unites our countries with other developing countries, in their struggle to overcome underdevelopment. Our assistance is demand-driven and our South-South focus is as strong today as ever before, supporting partner developing countries to work together toward improving the creative capacity to find solutions to development challenges, in keeping with their own aspirations, values and needs. A good example of this creative capacity is the technological and digital transformation taking place in partner countries which can help improve product quality. No longer is low-cost labor a compelling reason for firms to invest in developing economies. Comparative advantage is being driven more and more by innovative differences in products and technologies. In turn, technology, supply chain improvements and job creation will help developing countries increase their share of global manufacturing value-added. One clear outcome we see arising from these economic, technological and digital changes is that business, commerce, trade and value chains are all affected, positively and negatively, depending on the situation. These forces of change are inseparable and need to be embraced. Eventually, it is clear that machines, digitization and robots – automation that is capital-intensive – will displace labor intensive methods of work. This means that the labor intensive technologies that underpinned the earlier Asian growth stories will transform to more capital and automated value-added production. With over 700 million people still living in extreme poverty, income growth is insufficient to ensure shared prosperity. Low-skilled jobs and income inequalities will remain challenges, requiring robust education, trade and labor policies in developing countries to promote more inclusiveness. In addition, efforts to help developing countries expand market access and make effective use of disruptive technologies to create opportunities for the poor are important. At a global level, as trade expands in line with world output, we need to support a stronger, more stable global economy for everyone by ensuring broad-based growth, raising basic incomes, creating jobs, and fully incorporating women and young people into the workplace. The OPEC Fund is well-placed to help to help and we look forward to playing our part in this important work. To date, we have committed more than US$24 billion to development operations in 134 countries. But there is still much work to be done. With this in mind, our highest policy-making body, the Ministerial Council, approved the general principles of a new strategic framework at its 40th Annual Session in July. Over the coming months, the OPEC Fund will strengthen its efforts to provide support to developing countries – especially low-income countries – in an increasingly complex and challenging development landscape. Our overarching goal is to maximize its development impact.