Contents

2. Contents 1. Is Mic a meaningful concept?......................................... 3 2. Borderline countries....................................................... 4-5 3. The importance of Uruguay............................................ 6 4. Graphs: • Poverty ............................................................. 7 • Uruguay in the HDI world ranking.................... 8 • Uruguay in the HDI ranking (compared)........... 9 • ODA.................................................................. 10 6. Challenges ....................................................................... 11

3. 3 Is “MIC” a meaningful concept? • Per capita income is not sufficiently relevant for development cooperation. • The concept of MIC should be substituted for that of “borderline countries”: • Countries with both high human development indicators (high educational levels, low infant mortality, etc) and severe vulnerabilities in key areas: • Low investment and growth rates (the country struggles between crisis and growth, which makes it vulnerable to external shocks, from the economic perspective). • Institutional weaknesses regarding design and implementation of public policies. • It is easier to understand countries—from the viewpoint of helping their development—by examining their structural vulnerabilities and their effort to overcome them. • Universal principles of the United Nations and its Charter lead us not to exclude any State, not even to consider that there is a “full stop” in terms of development. One does not “graduate” from underdevelopment.

4. “Borderline countries”: • The majority of “Middle Income” countries are, in fact, borderline countries and, therefore, cooperation efforts should not be discontinued but rather reoriented towards support inthose areas that represent some risk. • In the current political and economic context the search for national stability and predictability represents values shared by International Financial Institutions and the United Nations System. • The proposal to focus on borderline issues is compatible with the “cost-benefit” rationale and is much more useful in order to determine the needs relative to development assistance. • When structural vulnerability is duly identified as “borderline”, the cost of intervention is, in general, considerably lower than the cost of overcoming a crisis. 4

5. 5 Borderline countries: • Account for 41% of the world developing population whose income is under two dollars a day. • Concentrate 80% of poor population worldwide. • 85% of the poor in Latin America and the Caribbean live in borderline countries. • 66% of abject poverty in Latin America and the Caribbean is found in borderline countries. • Present the highest levels of inequality.

6. 6 The importance of Uruguay: • Serious difficulties to: • - reach sustained and sustainable growth • - reduce the incidence of poverty • - reduce inequalities in income distribution • - strengthen the quality of its institutions and policies • Vulnerable to external shocks. • Poses two challenges for UN to rethink cooperation strategies with this kind of countries: • Official development assistance is negligeable compared to the amount of public spending. • MICs Represent a great number of developing countries not homogeneous as a group with severe inequalities and vulnerabilities.

7. Uruguay: Poverty (%) Major financial crisis 7

8. Uruguay in the HDI world ranking (1975-2004) 1975 1980 1985 1990 1995 2000 2004 8

9. Uruguay in the HDI world ranking (1975-2004) * 1975 1980 1985 1990 1995 2002 2004 9 *Countries shown here are a selection of those for which data was available in the whole period.

10. ODA as % of Public Spending and GDP * * Less countries comprised in this category as data was not available. 10

11. 11 Challenges UN has to face • How to reprioritise the role of international cooperation. • Identify vulnerabilities and benefits to be obtained from cooperation. • Need to reflect on whether UN will help “poor countries” or “the poor”. • If “borderline countries” are not supported, the poor will not be given support. • Need to resort to other indicators, rather than income, to decide whether a country is elligible for cooperation or not. • The relevance of the international system goes beyond the importance of financial cooperation (specially in the case of Uruguay). • Need to generate a new paradigm for cooperation with borderline countries, the international community, and stakeholders should evaluate the impact—both local and international—of each intervention when it is able to prevent a situation from becoming borderline. • Instead of classifying countries, the interventions of the United Nations System should be classified, according to each country’s critical needs indicators, on the grounds of the conceptual wealth contributed by, inter alia, MDG-related activities. • Contribution to development comes closer to becoming a strategic-steps model to consolidate development processes by overcoming those vulnerabilities that are more likely to become critical. This is also consistent with the concerns over all aspects of security.