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The Uited Nations Conference on Trade and Development (UNCTAD) has warned that the world’s poorest countries will remain on the margins of the global economy if States are unable to boost economic production, and the international community fails to provide more support.
UNCTAD’s Least Developed Countries(LDCs) 2021 Report which was released this Monday highlighted that LDCs’ ability to respond to and recover from crises such as COVID-19, and to advance towards sustainable development, is dependent on increasing production capacities.
Following this, UNCTAD said boosting production was crucial for LDCs post-pandemic.
UNCTAD Secretary-General, Ms. Rebeca Grynspan said there was a need for the global community to extend support to LDCs as they were facing the unprecedented times posed by the pandemic.
“Today LDCs find themselves at a critical juncture. They need decisive support from the international community to develop their productive capacities and institutional capabilities to face traditional and new challenges,” said Grynspan.
Ahead of UNCTAD’s conference which is set to take place in October this year under the theme, ‘From inequality and vulnerability to prosperity for all,’ Ms. Grynspan encouraged LDCs’ development partners to consider the special needs of the more than one billion living in these countries.
The UNCTAD emphasised the need for massive investment in State and productive capacities for the LDCs grouping.
“Productive capacities are the productive resources, entrepreneurial capabilities, and production linkages that together determine the capacity of a country to produce goods and services and enable it to grow and develop,” UNCTAD said.
It further indicated that developing production allows the world’s LDCs to foster structural economic transformation, which will in turn help reduce poverty and accelerate progress towards the UN Sustainable Development Goals (SDGs).
The report warns that reaching SDGs will require massive investment and spending, which go well beyond LDCs’ own financial means.
According to UN News, the UN established the LDC category 50 years ago and the grouping of the world’s weakest economies has expanded from an initial 25 countries in 1971, peaking at 52 in 1991, and stands at 46 today, with only six countries progressing enough to no longer be considered an LDC.
The UNCTAD report also pointed out that over the last two decades, only a handful of LDCs has displayed encouraging signs of structural transformation and meaningful productivity improvements.
Articulating on the grim outlook, the report has it that LCDs recorded the worst growth performance in about three decades during 2020 and the COVID-19 pandemic has dramatically highlighted their institutional, economic, and social shortcomings.
LDCs’ limited resilience is reflected in their low COVID-19 vaccination rates, as only 2% of their population have managed to get shots, compared with 41% in developed countries.
The UNCTAD report describes LDCs’ financing needs as ‘daunting’, especially in relation to structural transformation targets.
The report estimated that the average annual investment required to reach the 7 percent growth target (SDG 8.1) is around $462 billion, while the average annual investment required to end extreme poverty (SDG 1.1) in LDCs, is estimated at $485 billion.
The average annual investment required to double the share of manufacturing in GDP (SDG 9.2) is estimated at over $1 trillion.
To generate sufficient development finance, the report revealed, LDCs will need to strengthen their fiscal capacities, increase domestic resource mobilization and improve the effectiveness of public expenditures, the report said but warned even this will not be enough.
“The international community has an essential role to play in supporting LDCs in their efforts to mobilize adequate financing for their sustainable development needs,” the report highlighted.
According to UNCTAD’s analysis, most LDCs will need three to five or more years, to recover the level of GDP per capita they had in 2019.
Director of UNCTAD’s Division for Africa and least developed countries Paul Akiwumi, said domestic efforts to recover need to be supported by a new generation of international support measures that are more closely aligned to LDCs’ needs and 21st-century realities.
“A purposeful industrial policy should be at the core of LDCs’ pursuit of green growth and structural transformation because these countries need to urgently diversify from their overdependence on primary commodities,” said Akiwuni.
He added that increasing investment in state capacity and productive capacities must be at the heart of the next programme of action for these countries for the decade 2022 to 2031, to be adopted at the Fifth UN Conference on LDCs in January 2022.
He also urged LDC governments to adapt programmes negotiated at the international level to their unique national conditions and to resolve trade-offs when formulating their national developments plans.
Source -UN News
