Developing countries should be allowed to sue multinational companies that have formed cartels for exports to developing countries, according to the Global Economic Prospects 2003.
The World Bank report released today says six such international cartels are estimated to have overcharged developing countries up to $7 billion in the 1990s.
The report has proposed greater information disclosure and stronger enforcement mechanisms to prevent such abuses.
The cartels covered drugs and steel tubes, which are essential requirements for most developing countries.
Commenting on the proposed multinational agreement on investment under the World Trade Organisation (WTO), the report says a global agreement to help companies against possible government expropriation would do little to increase the inflow of foreign direct investment (FDI) in developing countries.
The report also says investment-distorting trade barriers to exports from developing countries should be removed.
The report has projected a global gross domestic product (GDP) growth rate at 2.5 per cent in 2003, which is higher than that achieved in 2002 and 2001.
However, it says this is significantly lower than the long-term potential growth rates, and there is a danger that the global rebound may reverse into a recession.
South Asia, including India, will grow at 5.4 per cent, while east Asian economies will grow at over 6 per cent, the report points out.
The report says the factors suppressing global growth in the near term include waning of consumer confidence, high levels of debt, the corporate financial scandals in the US, and excess investment in telecommunications and other high technology sectors in the Europe.
The report has said that governments in developing countries have to step in to boost investment in infrastructure because foreign investors have become averse to long-term projects.
The impact of the collapse of Enron and Worldcom has dampened such investments to developing countries.
