UN Conference on LDCs urges need for structural progress

Next year's global conference on the world's 49 poorest countries should reconsider current approaches to helping these nations and envision steps that can "generate faster and long-lasting development in LDCs (least developed countries)," UNCTAD's Deputy Secretary-General told the organization's Trade and Development Board this morning.
Deputy Secretary-General Petko Draganov and other UNCTAD officials said extreme poverty has continued to climb in LDCs. "Even in the period between 2002 and 2007, during the so-called 'boom of the LDCs,' the pattern of growth followed in most countries has been neither inclusive nor sustainable," Draganov said.
Citing the recently released UNCTAD Least Developed Countries Report 2010, he said UNCTAD research indicates that LDCs "must start to diversify their economic structure" and reduce their dependence on basic agricultural and natural resource products, or commodities. Otherwise, he and other UNCTAD experts said, these nations will continue to be subject to booms and busts based on the cyclical nature of commodities demand and commodities prices, and will not make substantial progress towards meeting the Millennium Development Goals (MDGs), which include halving extreme poverty by 2015.
The LDC report calls for a new international development architecture (NIDA) to support a transition to more broad-based economic growth with a greater emphasis on value added -- that is, greater application of domestic knowledge and more sophisticated manufacturing capability to goods LDC economies produce. Commodities exports themselves can benefit from an emphasis on non-traditional products and on greater sophistication, speakers said -- for example, exports of fresh flowers have been a promising development for several LDCs.
The two-day Trade and Development Board (TDB) executive session is focusing on the situation and prospects for LDCs in advance of the LDC IV conference, which is scheduled for next May in Istanbul.
Jo Elizabeth Butler, UNCTAD's Officer-in-Charge and Deputy Director of the Division for Africa , LDCs, and Special Programmes (ALDC) said "the recent triple economic crises" -- rising food and energy prices followed by the global recession -- "have significantly undermined the development and growth prospects" of LDCs. "Poverty remains massive and widespread," she said, and LDCs' vulnerabilities to shocks and shifts in the global economy remain.

Assessments carried out by UNCTAD reveal that "some LDCs have considerable potential" for increasing exports, Ms. Butler said. A case study of Uganda has shown that the country "has sustained relatively higher economic growth for a relatively longer period of time" than most LDCs. One reason is a growing emphasis on non-traditional exports such as fish and horticulture, which "have shown tremendous increases," Butler said. Similarly, Ethiopia has a fast-growing floriculture industry that now employs more than 16,000 workers. Floriculture is expected to overtake coffee within five years as Ethiopia 's primary export, she said.
Among lessons learned from case studies of LDCs are that "activist, but less interventionist government policies" help encourage sustainable growth, along with effective incentives for investors and other steps to set up favourable environments for businesses and job growth, Butler said.
Charles Gore, Head of UNCTAD's Research and Policy Analysis Branch of the Division for Africa and Least Developed Countries, provided the meeting with a detailed review of the Least Developed Countries Report 2010. The report was released November 25.
UNCTAD economist and LDC specialist Zeljka Kozul-Wright, one of the authors of the report, said "the international environment should aid, assist, and abet LDCs rather than hinder their development prospects." Currently, that doesn't always occur, she said. Research shows that links between the international community and its aid programmes and LDC governments are sometimes "fraught" with difficulties, and aid flows are often "inadequate and misguided," she said. "The interational community has not honoured its aid commitements to LDCs." She told the meeting that steps are needed to reduce LDC vulnerabilities to the economic boom-bust cycles that have long plagued them.

Representatives of regional groups of UNCTAD member States variously told the meeting that new approaches to LDC development are needed that reflect lessons learned from past efforts; that the growing power and breadth of economic relations between developing countries (often referred to as "South-South" cooperation) should be harnessed to help LDCs; that greater investment should be channeled to infrastructure improvements in LDCs; that more research and analysis is needed of LDC "human assets;" and that LDCs have yet to "reap the full benefits of globalisation" and further work is required to link their economies with global markets.
Several countries stressed the need for UNCTAD's substantive and technical work on LDCs to be strengthened following the LDC IV conference