59. In the third world, the government is the dominant institution in society. The problems of privatization and the enablement of business are all government problems. These new tasks are more difficult and complex than governments had before. New organizational structures have to be built, new skills imparted to carry out new functions, and new attitudes developed to displace a culture of risk avoidance and secrecy. Governments need to be able to analyse market conditions; set policy frameworks; draw up, negotiate and enforce contracts; regulate monopolies; coordinate, finance and support producers; enable community self-provision; and provide consumers with information on their options and remedies.
60. This is the challenge to governments. The challenge to the international community is to support them in these changes. At the World Economic Forum in Davos, Switzerland, last February, the Secretary-General said: "there is a new universal understanding that market forces are essential for sustainable development. Second, the role of the State is changing in most of the developing world, from one that seeks to dominate economic life, to one which creates the conditions through which sustainable development is possible." He called for a new partnership among governments, the private sector and the international community.
61. The dramatic increase in world trade, the emergence of powerful new trading blocs and the lack of direct foreign investment in the least developed countries (only 1 per cent of the total goes to 48 least developed countries) have contributed to the marginalization of the world's poorest nations. By contrast, United Nations assistance goes predominantly to low-income countries, where it should focus closely on establishing the conditions for private sector development.
62. This is in line with United Nations policy decisions. The General Assembly has said that United Nations activities, inter alia, should focus on the promotion of private sector involvement in development through public-private partnerships and other interactions. It was specifically recommended that the sectoral and cross-sectoral agencies of the United Nations provide, on request from governments, independent evaluations and assessments of their privatization policies and programmes; that the United Nations should expand its assistance to the Member States concerned with military conversion; manage an information clearing house; develop enterprise conversion models; and provide technical support (General Assembly resolution 50/225 of 19 April 1996). Assembly resolution 50/106 of 20 December 1995 on business and development mandates United Nations agencies to foster active participation in support of entrepreneurship, privatization, demonopolization, the simplification of administrative procedures, and the encouragement of private-sector involvement in the efficient construction and maintenance of infrastructure. With respect to entrepreneurship, resolution 50/106 particularly valued the promotion of small and medium-sized enterprises. As a follow-up to this, the Economic and Social Council adopted resolution 1996/51 on action to be taken against bribery and corruption in international commercial transactions.
63. The twelfth Meeting of Experts on Public Administration and Finance (see A/50/525-E/1995/122) recommended that the United Nations Programme help governments define the role and scope of the public, mixed and private sectors and to suggest options in the modalities of interaction in accordance with the practical realities in each country, especially at the local and municipal levels, by means of specific technical assistance, dissemination and exchange of country experience and research on the conditions for successful replication. The United Nations can orchestrate governments and international agencies in addressing social needs through public-private interactions, and act as a facilitator in the sensitization to needs and in stimulating the flow of resources. Special attention should be given to the development of new services, e.g. in recreation, health and environmental protection, and to the development of reliable cost data.
64. In the area of infrastructure, the World Bank Group (the World Bank, IFC and MIGA) is active, not so much as a provider of capital as in the 1980s, but as a catalyst for private capital, and by encouraging governments to adopt business-friendly policies and systems and to develop local capital markets which will reduce dependence on foreign capital by mobilizing domestic savings and repatriating flight capital. The World Bank helps countries get access to limited recourse project financing by providing guarantees of syndicated bank loans and bond issues. As policy and institutional reforms take hold, the need for such support diminishes and is taken over by commercial institutions (Ferreira and Khatami, p. 27).