Info Service on WTO and Trade Issues (Jun18/10)
14 June 2018
Third World Network
United Nations: UNCTAD releases policy tool to help LDCs meet
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
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,"
"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
"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
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
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
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
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
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
"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
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
"The principle of common but differentiated responsibility for
combatting climate change is of particular relevance for these countries,"
"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.