TWN Info Service on UN Sustainable Development (Jun18/08)
14 June 2018
Third World Network

United Nations:  UNCTAD releases policy tool to help LDCs meet SDGs
Published in SUNS #8699 dated 12 June 2018

Geneva, 11 Jun (Kanaga Raja) - The United Nations Conference on Trade and Development (UNCTAD) last week released a policy compendium aimed at assisting the Least Developed Countries (LDCs) in achieving the Sustainable Development Goals (SDGs).

The compendium of policy options, titled "Achieving the Sustainable Development Goals in the Least Developed Countries", was launched on 6 June by Amina J Mohammed, Deputy Secretary-General of the United Nations, on the sidelines of the sixty-fifth session of UNCTAD's Trade and Development Board (TDB) meeting here last week.

According to UNCTAD, the compendium synthesises nearly 15 years of UNCTAD research and policy options in a single resource.

It identifies possible types of instruments in various policy areas that ma y foster development progress, enhance growth and support poverty eradication and economic structural transformation in the LDCs.

The UNCTAD policy compendium offers a wide range of ways for policymakers and international development partners to fashion targeted solutions for the social, economic and environmental challenges facing the LDCs.

"UNCTAD is, as it always has been, in the forefront of crafting vital policy options needed for the structural transformation of the world's poorest and most fragile economies," said Ms Mohammed, in a press release launching the compendium.

"Without concrete proposals to bring about this transformation, the development prospects of millions of people remain in jeopardy," she said.

"I welcome this UNCTAD compendium as a powerful resource for countries working to achieve the targets of the Sustainable Development Goals, and for their development partners worldwide," Ms Mohammed added.

"UNCTAD has always been ahead of the curve, producing cutting-edge policy options with a special focus on the LDCs, based on sound analytical research. This compendium, rich in options for action and trendsetting in its approach to LDC challenges, is such an example of frontier research," said UNCTAD Secretary-General Dr Mukhisa Kituyi.

At a media briefing on 6 June, Dr Kituyi elaborated that this is an exercise that talks to a core issue in arriving at the SDGs.

"We at UNCTAD have always believed that the battle for success in realising Agenda 2030 will be won or lost in the LDCs," he said, pointing out that of the 169 SDG targets, 18 explicitly refer to the LDCs.

Dr Kituyi said it is true that donors and international partners have a role to play, but at the end of the day policy approaches that will lead to building productive capacity and structural transformation for LDC economies will fundamentally be public policies domestically embraced and initiated by the governments.

Also at the media briefing, UN Deputy S-G Ms Mohammed said that this is a tool that is a touchstone for "what we would like to do in 47 countries that already have capacity issues to put that into one compendium that allows them to have reference material that can help again revise, [and] shape policies but als o give us an equal, I would say, playing field for what we come to discuss how you in form the support from the UN system itself and the many partners that we will be requiring to move with."

CHALLENGES FACED BY LDCs

According to the UNCTAD compendium, there are currently 47 least developed countries (LDCs). They host just over 1 billion people, approximately 13 per cent of the world's population, but account for only 1.2 per cent of global gross domestic product (GDP).

Almost half of the population of LDCs still lives in extreme poverty. At the same time LDCs have the world's fastest population growth rate.

The basic causes of persistent and widespread poverty in LDCs are low productivity, and high levels of unemployment and underemployment.

Most LDCs face considerable challenges posed by demographic developments, rising inequality and persistent poverty, combined with accelerated urbanization.

The population living in the present LDCs is projected to almost double to 1.9 billion by 2050.

With a soaring youth population, an additional 630 million people (equivalent to about one third of the estimated LDC population in 2050) will have entered the labour market by 2050.

Moreover, it is the most vulnerable countries among LDCs that are the most affected by these demographic trends.

Insufficient paid employment creation has the potential to become a source of significant social and political tension and can weaken domestic demand growth.

In sharp contrast with demographic developments, the rate of capital accumulation and technological progress in LDCs is generally slow.

As a result, most workers, who, on average, receive only low levels of educ ation and training, must earn a living by using their raw labour, and basic tools and equipment.

They also face challenges related to poor infrastructure provision.

The compendium noted that in most LDCs the growing labour force has mostly found employment in agriculture, largely in connection with the cultivation of additional land.

However, with further population growth, more and more young people are seeking work opportunities outside of agriculture.

Nascent manufacturing activities and services offer new opportunities for productive employment, mostly in urban centres, but these employment opportunities are not expanding fast enough to meet the growing demand for jobs.

As a result, poverty in LDCs has two faces. One is low-productivity, small-scale agriculture and the other is low-productivity, urban, informal-sector activities in petty trade and services.

This situation has led to large-scale emigration, said UNCTAD.

"If this situation persists, poverty reduction will be very slow, despite accelerated output growth. In addition, the link between output growth and employment creation needs to be strengthened."

It was only during the period of relatively fast output growth from 2001-2008, that average annual LDC employment growth (at about 3.4 per cent) exceeded the rate of population growth.

Even during this period, however, employment growth was less than half of the growth rate of real GDP (7.2 per cent).

It is therefore alarming that after 2014, GDP growth in LDCs has fallen to an average of less than 5 per cent, while average annual growth of at least 7 per cent is recommended by the Istanbul Programme of Action for the Least Developed Countries for the Decade 2011-2020 (IPoA), and targeted by the 2030 Agenda for Sustainable Development (SDG target 8.1).

Moreover, said the compendium, LDCs are characterized by chronic current account deficits and remain highly dependent on external finance.

Even in times of record economic growth, during the first decade of this millennium, many LDCs continued to rely on external resources to finance a majority of their investments and part of their consumption.

THE SDGs and LDC STRATEGIES

According to the compendium, accelerated economic development in the least developed countries (LDCs) is at the centre of efforts to achieve the Sustainable Development Goals (SDGs).

Not only is the incidence of poverty and malnutrition the greatest in this group of countries, but the selection and implementation of effective policies to overcome these problems are also the most challenging there.

Among the SDGs that are important reference points for the design of national development strategies for LDCs are:

* End poverty everywhere (SDG 1);

* End hunger, achieve food security and improved nutrition and promote sustainable agriculture (SDG 2);

* Ensure access to affordable, reliable, sustainable and modern energy for all (SDG 7);

* Promote sustained and sustainable economic growth, full and productive employment and decent work for all (SDG 8);

* Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation (SDG 9);

* Reduce inequality within and among countries (SDG 10);

* Combat climate change (SDG 13); and

* Strengthen the means of implementation (SDG 17).

The compendium noted that LDCs have the highest shares of population living in extreme poverty.

The fundamental goal of ending poverty, with the specific target to eradicate extreme poverty by 2030, must be the central reference of policy making in LDCs, it said.

Achieving this goal matters for improving welfare, sustaining livelihoods and enabling peace. It also will strengthen domestic growth and promote structural transformation in LDCs.

Thanks to substantial increases in social spending, poverty has been reduced almost everywhere since 2000, the year when the international community agreed on the Millennium Development Goals (MDGs).

Yet, for sustained and sustainable poverty reduction, income transfers and other forms of public or charitable social spending must be subsidiary to measure s that tackle the root causes of the problem, i.e. the lack of productive and decently paid jobs.

This means that output growth and employment creation in LDCs must be accelerated considerably.

Enhancing agricultural production remains an indispensable element of the development strategy of LDCs.

The scope for raising agricultural output and productivity is considerable and leveraging this will help to ensure food security, raise agricultural exports and increase the quantity and quality of raw materials available for domestic manufacturing.

UNCTAD said a rapid expansion of non-agricultural activities must also be considered as the central pillar of sustainable development strategies.

Energy provision is one of the priority areas of the Istanbul Plan of Action (IPoA), as inadequate access to energy seriously constrains economic growth and sustainable development in the majority of LDCs.

Sixty-two per cent of people in LDCs lack access to electricity and even more do not have access to modern fuels for cooking and heating.

While energy deficiency is most pronounced in rural areas, it is also an obstacle to the expansion of economic activities in the manufacturing and service sectors and to greater participation in international trade.

The energy sector contributes directly to gross domestic product (GDP) by generating value added, jobs and, in some LDCs, exports.

Energy is also indispensable for the adoption of technological innovations and productivity growth in other sectors.

Achieving SDG 7 will require increased power generation, extended distribution infrastructure and upgraded technology to enable the supply of modern and sustainable energy, including an increased share of electricity generated from renewable energy sources.

Achieving virtually all the SDGs requires economic growth at a pace that is significantly faster than in the past.

From 2010 to 2016, average annual GDP growth in LDCs was 4.8 per cent, considerably below the explicit SDG target of 7 per cent.

Accordingly, average annual growth per capita in LDCs fell from 5 per cent in 2002-2008, to 2.6 per cent in 2012-2017, a pace far too slow to reach the ambitious SDG targets, let alone catch up with more advanced economies.

"Therefore, sound national development strategies must be strongly geared towards a sustained acceleration of output growth, combining productivity increases with the creation of productive employment opportunities and an expansion of supply capacities with demand growth."

As in the case of energy, improvements in water, transport and telecommunications infrastructure can directly improve living conditions.

Such improvements are also a prerequisite for the viability and profitability of productive activities in practically all sectors of the economy.

Diversification of the production structure, technological upgrading and productivity growth also depend on innovation in the design of products and the application of new production techniques in LDC economies.

"Policies aimed at accelerating the progresses towards a higher share of the manufacturing industry in income and employment generation must therefore be complemented by measures to ensure that benefits accrue to all groups of society and that the modes of production and consumption are environmentally sustainable and climate friendly."

According to the compendium, despite considerable progress in combatting poverty in low-and middle-income countries since the early 1990s, disparities in household income between the highest and the lowest income groups have widened.

However, in Africa, the continent with the largest number of LDCs, these disparities have shrunk. Still, inequality in Africa is higher than the global average.

Similar to reducing poverty, reducing income inequality within each country is both an objective and a means to strengthen the domestic forces of growth.

Average real per capita income in LDCs is only about 2 per cent of that in developed countries and about 21 per cent of the average per capita income in the other developing countries, excluding China.

The gaps have narrowed somewhat since 2005, mainly due to growth in the Asian LDCs.

"Significant further reductions will only be possible if LDCs can move to a substantially higher growth path and increase the net earnings from their participation in international trade," said UNCTAD.

It also said the challenges posed by climate change are especially pressing for LDCs and small island developing States (SIDS).

Like other developing countries, these economies are obliged to integrate responses to climate change into their national development strategies, but they are more heavily affected than others by the impacts of climate change.

"The principle of common but differentiated responsibility for combatting climate change is of particular relevance for these countries," said UNCTAD.

"Whereas developed countries must undertake major efforts for climate change mitigation, the challenge for LDCs is primarily to take effective measures to strengthen their resilience against the inevitable impacts of climate change."

The 2030 Development Agenda clearly recognizes the responsibility of developed countries for taking the lead in climate change mitigation and for strengthening the capacity of LDCs, landlocked developing countries (LLDCs) and SIDS to adapt to the economic and social effects of climate change.

The SDGs are extremely ambitious, especially at a time when climate change poses additional challenges.

Achieving them requires economic progress at a pace similar to the performance of the most successful newly industrializing countries over the past 50 years. Indeed, the speed of poverty reduction will have to be even faster than it has been in China.

"This illustrates the scope of the challenge for each of the LDCs and for the international community."

With the 2030 Development Agenda, the international community has acknowledged that LDCs can achieve the SDGs only with the strengthened financial and technical support of more advanced countries.

Therefore, developed countries are called upon to fully implement their official development assistance (ODA) commitments, including raising their ODA to the target range of 0.15 to 0.20 per cent of their gross national income (GNI).

They are encouraged to consider setting their targets even higher.

UNCTAD said that the compendium does not intend to provide a blueprint for policy intervention in LDCs.

Country-specific circumstances differ considerably among LDCs and experience from successful development episodes shows that a variety of policies and institutional arrangements may be successful in supporting economic development in poor countries.

Although LDCs have many challenges in common, each LDC government must take a pragmatic approach that involves a combination of policy measures tailored to country-specific conditions.

The key constraints for sustained and inclusive economic development must be individually identified in each country.

Similarly, policies to overcome these constraints must be designed at the country level, taking into account different historical, cultural and structural circumstances, said UNCTAD.