Analysis By Steve Schifferes BBC News Online economics reporter

Protests against free trade have multiplied

A new report has called for radical changes in the direction of world economic policy to overcome the negative effects of globalisation.

Major changes in trade and immigration policy are needed if the world's poor are to share in the benefits of globalisation, according to the UN-sponsored report of the World Commission on the Social Dimension of Globalisation.

"There a deep-seated and persistent imbalances in the current workings of the world economy, which are ethically unacceptable and politically unsustainable," the report said.

The report says that only a dozen developing countries have benefited from the increasing integration of the world economy,.

Global markets have grown rapidly without the parallel development of economic and social institutions necessary for their smooth and effective functioning Social Dimension of Globalisation Report

Those who have lost out include "the poor, the asset-less, illiterate and unskilled workers, and indigenous peoples."

Income per person in the world's 20 poorest countries has barely changed in the last 40 years, from $212 in 1960-62 to $267 in 2000-02, while income in the richest 20 nations has tripled, from $11,417 to $32,339.

The report said globalisation's "potential for good is immense", but "the advantages are too distant for too many, while the risks are all too real".

Global solidarity

The president of Tanzania and co-chair of the report, Benjamin Mkapa, said the situation was "untenable" and that "countries with impoverished, disadvantaged and desperate populations are breeding grounds for present and future terrorists".

Dire poverty "is a breeding ground for terrorism"

He called for a better balance between globalisation for profit, and globalisation for people, and for countries to "eschew gratuitous unilateralism" in favour of a UN-based system.

Among the more important changes called for by the commission are:

• An international agreement on migration

   

• Fairer trade agreements that open Western markets to agricultural and textile products from developing countries

   

• An agreement on a "balanced framework" for foreign direct investment that will ensure that developing countries benefit

   

• Enforcement of labour laws and trade union rights especially in export processing zones

   

• Better coordination between world institutions like the IMF, World Bank, ILO, and World Trade Organisation in ensuring that job creation is the central economic policy goal.

   

Free up migration

Tarja Halonen, the president of Finland and also co-chair of the report, said there should be more emphasis on the free movement of labour through migration, as opposed to the free movement of capital, if developing countries were to benefit.

The remittances of migrant workers back to developing countries already amount to $75bn worldwide, 50% more than the total development assistance given by rich countries to the poor.

President Halonen told BBC News Online that reaching an international agreement on migration would be difficult, given the "real sensitivities" in rich and poor countries, and in particular, the "somewhat egocentric" approach of the EU.

In contrast to the past, many more migrants from developing countries were highly skilled and highly educated, contributing to a local brain drain.

But she said all countries would benefit from an "orderly and managed process of international migration" instead of the current system which encouraged illegal migration and exploitative practices.

Towards global government

The report says that the fundamental problem is that "global markets have grown rapidly without the parallel development of economic and social institutions necessary for their smooth and effective functioning".

It says that "there is a serious democratic deficit at the heart of the system" and calls for more influence for developing countries and the poor on the key institutions of global governance like the World Bank and IMF.

In some of its most controversial passages, the authors float ideas for a global tax that would redistribute the fruits of globalisation to the world's poor.

They also call for parliamentary oversight of the world financial institutions, and a UN globalisation forum which would produce an annual report.

But with the world's largest economy, the United States, firmly committed to working on development issues largely on its own, such developments may be some distance from realisation.

And international economic policy coordination, whether on exchange rates or growth packages, is still stalled amid disagreements between the rich countries.

Nevertheless, President Mkapa stressed that developing countries were not "begging, but seeking a fair system of exchange" so that turbulence could be replaced by hope and cooperation.