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Clare Short: I do not think that we should be embarrassed by such agreement; we are talking about enormously profound and important issues for everyone's future. Indonesia grew with horrible corruption and repression, but the beauty of the lessons of the Asian financial crisis--provided that we can help people and that the suffering is not too great--is that we have reached the point where that model is not sustainable. In fact, democracy, inclusion, dealing with corruption and bringing education and health care to all represent the

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stable model, so we have refined the model that is most successful economically in a way that advances the condition of humanity.

Mr. Streeter: I am grateful to the Secretary of State for that intervention. It is absolutely right to look for sustainable models, not flashes in the pan. We are looking for things that will last, and the Indonesian model and perhaps those of one or two other Asian tigers have shown themselves to be unsustainable, because they did not put in place the necessary political stability, transparency and perhaps the freedom from rank corruption, so I certainly agree with the Secretary of State.

We must make the case for globalisation, harnessed as best we can, although I am sure that many mistakes will be made. If we do not make that case, we will be in danger of letting the arguments go by default and increasing the sense of alienation and disenchantment with the political process as a whole that is felt by a growing number of people.

I would be the first to accept that globalisation is not producing equality. Richer nations have thus far benefited more than poorer ones. Indeed, some of the world's poorest nations have so far been almost entirely excluded from the real economic benefits, but that does not mean that globalisation is not the solution, just that we have not yet driven the process far enough forward. However, that does not need to be the case if those nations can be helped to choose a different path by which they, too, can prosper.

Decisions made in Uganda in recent years have been better, on average, than those made by the Government in Zimbabwe, and the people of Uganda have benefited. Policies pursued in Taiwan have helped its people march into prosperity, while the decisions made in North Korea have had the reverse effect. Countries can choose prosperity in a globalising world.

Our goal is not equality--although some people think that it should be--and perhaps it is not even relativity; it is surely to see absolute living standards rise, so that everyone has access to shelter, food, water, reasonable education and health care. That should certainly be our goal. Some people point the finger at the multinational corporations and blame them for not doing enough to improve living standards for the poor. Of course, their primary goal is to make a profit. That will always be the case, which is as it should be, but by investing in developing countries they will, over time, bring economic growth with them. That is happening all over the world.

The best of our multinational corporations are increasingly aware that they have some responsibility for the communities in which they invest, on wage levels, child labour, environmental stewardship and other issues. I shall cite some famous names that are bound to fill the MobGlob world with fury, but BP, Nestle, Gap and Nike all employ people in developing countries. They are not the anti-Christ. No doubt they can do things differently and no doubt they can improve their commitment to local communities; and they should be held to account--through whatever stakeholder power is available and through our consumer choices--for the commitments that they make to corporate and social responsibility, which are now a common feature of their annual reports. They say such things, and we are entitled to hold them to account for them, but they do not deserve the vilification that the anti-capitalists have heaped on them.

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Globalisation is happening. It has been going on for generations. Modern technology has speeded up the process and, short of unforeseen disasters, the momentum of globalisation seems set fair to continue. We in the Conservative party recognise that and broadly welcome it, and we have designed development policies that are intended to help to shape globalisation in a way that benefits the world's poorest. In the second part of my speech, I shall therefore briefly set out the four key development policies that we shall pursue in government to help to maximise the forces of globalisation for good, not ill.

First, we shall focus on good governance, as we have made clear in our policy papers. I have talked about that endlessly; I am even getting bored with hearing myself speak about it--a serious state of affairs. I accept that the DFID is currently focused on good governance, but we shall make it an even higher priority. My observations and experience, drawn from the past two years, show that the state and quality of governance in a developing country is absolutely critical and fundamental to its success in choosing to enter into prosperity.

Decisions by national Governments remain at the heart of a nation's fortunes. Although globalisation is all about what happens in the entire world, we all recognise that nation states still remain extremely important. Without good governance, the rule of law and a willingness to embrace market economies, the framework for prosperity is simply not in place. I am not talking about a "one size fits all" approach, but I accept that we can advocate nothing but democracy. Some countries have embraced market economies when they are not fully democracies--we are all a little concerned about Uganda and the succession strategy there; but, from our experience, we can only advocate democracy and, certainly, benign government--one of the key fundamentals that must be in place.

I should like to read a brief extract from the World Bank report "Poverty in an age of Globalisation", just to make the point. Page 9 states:

no surprises there.

The next Conservative Government will do more to help to build good governance. That is our unique governmental contribution to global poverty. I know that the policy is long term, intangible and difficult to measure, but it is vital. As part of our policy, we want the Westminster Foundation for Democracy and the British Council to increase their work in democracy building and governance. We want to see more support for political parties overseas. Strange as it may seem to some of us, political parties are actually rather important organisations, and their establishment in many of the countries that we are talking about is very important, especially if they are rooted in the community and open to all. We will seek to support strong civil society, and we will draw upon the experience of the know-how fund and make British expertise available, especially in the civil service, judicial and security sectors.

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There is one thing that we know how to do well in this country--collect tax. That represents the sort of expertise that many countries would be very keen to draw on, and we will make that the primary focus. That will be the best way to meet international development targets, which we support. The best contribution that we can make to poverty reduction and to producing a poverty focus throughout the world is to help to strengthen the framework of countries with which we are working, so that the private sector and foreign direct investment can do their jobs in increasing living standards in such countries.

Our second and related focus will be to bear down on corruption. We all know of the reality in many countries. I was interested to read some recent research by Mr. de Soto, a Peruvian economist, who found that corruption and poor bureaucracy represented a real block to enterprise in many countries. He wrote:

We want to bear down on such corruption, wherever we possibly can. We shall be rigorous in withdrawing development assistance where there is evidence of misuse, and we shall encourage other donors to do the same. We will review the increasing use of sector-wide funding plans, which are clearly more open to misuse than more strictly monitored financial support.

Clare Short: The hon. Gentleman is absolutely right. An effective modern state goes beyond democracy and human rights, proper tax collection, the proper management of public finances, the rule of law and people having the right to property so that they can build houses, which is important for many slum dwellers, and so on. All that is absolutely key and we are increasingly moving towards it, but sector-wide approaches involve building an effective state, and they replace an old approach that went outside the state because there was corruption. We must take the risk and become engaged in helping countries develop their financial management systems and those by which they deliver services to their people. That is what sector-wide approaches involve. I therefore agree 100 per cent. with the hon. Gentleman about wanting to work more on corruption and effective government. I agree with the diagnosis completely and that is what we are doing, but he has a contradictory objective in wanting to move away from sector-wide approaches--they go together.

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