Transcript Part 1 - UNCTAD Paragraph 166 Course

Towards a New International
Development Architecture for
LDCs
Presentation to Delegations
In the framework of courses organized by UNCTAD Virtual Institute
on International Economic Relations, 18 March 2011
Charles Gore
Head, Research and Policy Analysis Branch
Division for Africa, LDCs and Special Programmes
Is there still a case for international
support for LDCs?
Resilience in the global recession
of 2009 is deceptive
• Heterogeneity. GDP per capita declined in 19
LDCs in 2009
• Channels of impact. Some direct financial
contagion but more through lower export
revenues (26% decline in merchandise exports
WTO, 34%decline to major partners ITC); also
falling FDI (13% decline); slowdown in
remittances
• Offsetting factors. Recovery of commodity prices
in 2009. Large inflows of official financial flows
from IMF, World Bank and regional development
banks. “Walmart effect” for some manufactures.
The boom is not as good as it looks
• Despite strong growth performance in the
past decade, LDCs still diverging
• Very weak development of productive
capacities
• Slow poverty reduction and MDG
achievement
LDCs long-term growth performance
Weak development of productive
capacities during the boom
• Investment up from 20% of GDP (2000) to 23%
(2008) but declining savings in LDCs excluding
oil exporters. Savings in LDCs adjusted for
natural resource depletion were close to zero in
2008.
• Manufacturing accounted for 10% of GDP at
start and end of the boom. 27 LDCs experienced
de-industrialization during the boom
• Imports of machinery and equipment increased
only marginally in boom years except in oil
exporters
Weak development of productive
capacities during the boom
• Agricultural productivity growth slow. Agric valueadded per worker grew at one-third of GDP per
worker. Agric exports stagnated.
• Food imports grew from US$7.6 billion in 2000
to US$24.8 billion in 2008
• Share of fuel and mineral exports in total
merchandise epxorts increased from 43% in
2000 to 67% in 2007
• Export concentration increased
Trends in Extreme Poverty in LDCs – 1980-2007
(Source: UNCTAD Least Developed Countries Report 2010: under embargo
until Nov 25)
Off-target to meet MDG-1:
Poverty Reduction
Progress towards MDG-1 on poverty reduction in LDCs
Share of population living below $1.25 per day in LDCs
70
60
50
40
30
20
10
0
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
Source: UNCTAD based on data for 33 LDCs from M. Karshenas 2010
LDCs
MDG goal
2012
2014
Impressive progress
MDG on primary school enrolment
But most LDCs not on track to
meet most MDGs
• Only half of LDCs on track to meet net
primary school enrolment target
• One-third of LDCs on track to meet target
on access to safe water
• One-quarter of LDCs on track to reach
targets on infant mortality and child
mortality
• Mixed performance on undernourishment
(pre-2008)
The central development challenge facing
LDCs is to create productive jobs and
livelihoods for a rapidly growing labour force
• In Mali, the new entrants to the labour force
were 171,800 in 2005 and they will increase to a
peak of 447,800 per annum in 2045, when the
annual additional labour force will start to
decline.
• In Madagascar, the new entrants to the labour
force in 2005 are estimated as 286,200 and their
number will increase to 473,400 per annum by
2035, when the additional labour force will begin
to decline.
MOST LDCs ARE EXPERIENCING A
BLOCKED STRUCTURAL TRANSITION
• In the past, the major way in which the growing labour
force was absorbed was in agriculture (mainly on new
land)
• With population growth, agricultural farm sizes are
declining and farms are more located on marginal land.
• Mass poverty means that many cannot afford the means
for sustainable intensification of agricultural production.
• More and more people are seeking work outside
agriculture and urbanization is accelerating.
• Most LDCs have not been able to generate sufficient
productive off-farm jobs to absorb the growing labour
force seeking work outside agriculture.
• Most find work in survival urban informal activities
How have successive POAs
worked
• UNLDC I. Ideologically sidelined. State-led development
model. Obsolete after introduction of implementation of
SAPS
• UNLDC II. Asymmetrical implementation. LDCs
undertook deep econ. Liberalization; real aid per capita
fell 45% 1990-2000, very little debt relief
• UNLDC III. More effective partnership (aid doubled in
real terms 2000-2008, LDCs continued to implement
economic reforms and improve governance BUT
– Increasing though incomplete recognition of LDCs as a category
– LDC-specific international support measures had symbolic rather
than practical developmental effects
– Global economic regimes not development-friendly and working
at cross-purposes with ISMs (aid architecture, lack of
international commodity policy, technology)
International Support in BPOA
• BPOA. Commitments to 156 actions by LDCs
and 178 by development partners
• Compare evaluations of 8 key measures
–
–
–
–
–
–
–
–
ODA targets
Untying aid
LDC WTO accession
SDT in WTO agreements
Preferential market access for LDC goods
TRIPS Article 66.2
(Enhanced) Integrated Framework
LDC Fund for climate change adaptation
Common Failings of LDC-specific
Measures
• Design – exclusions eg market access
preferences, failure to take account of LDc
characteristics (untying aid)
• Very little action on WTO accession and SDT in
WTO agreeements
• Development benefits stymied by inertia in
existing practices (aid untied de jure but not de
facto)
• Many studies but little financial follow-through
• BUT (painfully slow) learning process (eg EIF)
Aid targets continuously not met
Gap based on 0.15% of GNI target
Technology: TRIPS Article 66.2
• “Developed country members shall provide
incentives to enterprises and institutions in their
territories for the purpose of promoting and
encouraging technology transfer to LDCs in
order to enable them to create a sound and
viable technological base”
• Problems
– “Technology transfer” not defined
– No institution to enable LDCs to create a “sound and
viable technology base”
– Only 22% of reported programmes actually promoted
technology transfer specifically targeted at LDCs