UNCTAD's Least Developed Countries Report, 2014 was published last week. The complete Report can be found at http://unctad.org/en/PublicationsLibrary/ldc2014_en.pdf, and the Overview at http://unctad.org/en/PublicationsLibrary/ldc2014overview_en.pdf. A brief summary of the Report's findings is below.
Senior Adviser, Division for Africa, Least Developed Countries and Special Programmes, UNCTAD
Least Developed Countries Report, 2014: Growth with Structural Transformation - a Post-2015 Agenda
The least developed countries (LDCs) are the battleground where the sustainable development goals (SDGs) will be won or lost. Global poverty was halved under the MDGs with a much smaller reduction in LDCs; but eradicating poverty means reducing it to zero everywhere, and it is in the LDCs that this will be most challenging.
To be successful, the Post-2015 Agenda must therefore learn from the "LDC paradox" - the failure of most LDCs to meet most of MDG targets, despite record economic growth since 2000. There are two reasons for this:
· the failure of the international community to implement the global partnership for development foreseen in MDG 8; and
· the inability of LDCs to translate economic growth into structural transformation of their economies and high-quality jobs.
Meeting the SDGs will require LDCs to go beyond economic growth - to complete a virtuous circle of sustainable economic and human development, by creating productive and remunerative employment to translate increased productive potential into incomes for poverty reduction and public revenues for essential public services. This requires structural transformation, combining increases in labour productivity within sectors, with a progressive shift of labour from low-productivity to high-productivity sectors and activities. Without this, progress towards the SDGs will be inadequate and unsustainable.
To this end LDCR 2014 proposes a post-2015 development agenda for the LDCs. Based on the experiences of development success stories, the Report advocates development strategies based on
· pragmatism, adapting policies and instruments to national circumstances and priorities;
· a holistic approach, all policies forming part of a coherent overall vision;
· gradual and strategic integration into the global economy;
· a strong emphasis on rural development and rural economic diversification; and
· plurality of financing, strategically combining public and private and domestic and foreign sources.
Domestically, LDCs should focus on:
· resource mobilization, taking a strategic and selective approach to domestic and foreign investment, according to their particular advantages and disadvantages, and maximizing the development impact of ODA through labour-intensive methods and local procurement in infrastructure investment;
· industrial policies on a dual track, not only developing sectors of current comparative advantage but also anticipating and promoting changes in comparative advantage, and encouraging innovation and enterprise - not "picking winners" but "picking possibles" and maximizing learning from commercial failures; and
· supportive macroeconomic policies, ensuring credit for productive investment and strong and steady demand growth rather than over-emphasising inflation control.
Rural development is fundamental both to structural transformation and to poverty eradication, and can be promoted by exploiting the strong complementarities between agricultural upgrading and rural economic diversification. Rural electrification, taking advantage of the potential of small-scale renewable energy technologies, can be a major engine of rural development on the supply side, as can labour-intensive infrastructure investment on the demand side.
Achieving the SDGs will also require international measures as ambitious as the goals themselves, in terms of the quantity and quality of aid , trade, finance and technology transfers, to ensure a global economic environment conducive to LDCs' development, as well as a prompt, effective and equitable global response to climate change. Such measures should be included in the SDGs, and the international community should make a firm commitment to their implementation.