Boom years did not change structure of LDC economies

The globe’s least developed countries (LDCs) will best make economic progress and raise living standards if – with international help – more attention and resources are devoted to increasing their agricultural productivity and expanding their industrial bases, UNCTAD’s secretary-general said today.
The worldwide economic boom from 2002 to 2007 resulted in economic growth in LDCs of some seven per cent per year on average, secretary-general Supachai Panitchpakdi told journalists at a press conference held to stake out UNCTAD’s position on what should be done for the world’s 48 LDCs.
The press conference was held as deliberations continued at the Fourth United Nations Conference on the Least Developed Countries. Most of this economic growth was centred on extractive industries. Unfortunately, it did not create jobs, nor did it help LDCs to broaden their economies and thereby spread the profits more widely through their populations, Supachai said, adding that the LDCs now make up one eighth of the world’s population, but they produce only one hundredth of the world's output. "Lack of attention and investment in agriculture in poor countries has resulted in stagnation in that vital economic sector in recent decades," he added.
Farming is still the greatest source of employment in LDCs. Meanwhile, the populations of LDCs are growing rapidly, and more and more jobs are needed, especially in urban areas, as people increasingly move from the countryside to the city. The total labour force of the LDCs is expected to increase by 10.2 million people per year between 2005 and 2015.
Unless the young populations can find productive work, poverty and frustration will increase, as will the already significant pressure for international emigration. Structural change is required for lasting progress, he said, especially a shift away from dependence by LDCs on exporting raw industrial materials and other commodities and towards manufacturing and related activities that progressively add value to goods produced.
"Such production brings higher profits, creates more and better-paying jobs, and brings employment to cities," he said, adding that it also reduces vulnerability to abrupt shifts in prices for commodities on global markets – a problem that has plagued LDC economies for years, as exemplified by the rapidly climbing prices for basic foods in 2008 and in recent months.
The LDCs need a more growth-oriented macroeconomic policy, together with a developmental agricultural policy and a developmental industrial policy, Supachai added.
Growth on that basis holds the best promise of freeing LDCs over time from the need for continued official development assistance, and also holds the best hope for meeting the United Nations Millennium Development Goals (MDGs). "Such broader economic growth depends on a number of factors," he said, including better use of domestic as well as overseas financial resources.
Despite progress since 2000, particularly in the areas of primary-school enrolment and gender equality in schooling, most LDCs are not on track to achieve the MDGs, Supachai said, adding, "Of special concern is the level of extreme poverty."