Invest more in production, UN urges LDCs

According to the report on Least Developed countries (LDCs) entitled Developing Productive Capacities, donor support alone would not reduce poverty in poor countries.

The report notes that while many LDCs have recorded impressive levels of growth over the recent past, such growth has hardly translated into improved livelihoods for citizens.

“There is a widespread sense, which is apparent in the concern to ensure pro-poor growth, that this growth is not translating into poverty reduction and improved human well being,” the report states.

“Moreover, the sustainability of the accelerated growth is fragile as it is highly dependent on commodity prices…trends in external finance, preferences for exports of manufactured goods and climatic and weather conditions. In the late 1970s and 1980s, many LDCs experienced growth collapses in which earlier growth spurts were reversed, and the vulnerability to this happening again remains.”

From the late 1970s through the 1980s, international prices of copper, Zambia’s principal export, remained depressed and the country’s economy suffered damage that has continued haunting citizens to date.

Zambia’s fortunes are further compromised by heavy reliance on climatic and weather conditions for agriculture, the dominant economic activity that accounts for over 65 per cent of employment opportunities.

The UNCTAD report states that only by developing productive capacities would LDCs be able to mobilise domestic resources to finance their own development, reduce dependency on aid and attract the kind of investment that can support development.

“It is also through developing their productive capacities that LDCs will be able to compete in international markets in goods and services which go beyond primary commodities and which are not dependent on special market access preferences," it states.

“Developing productive capacities is also key to reducing pervasive poverty in the LDCs. Although aid transfers to LDCs are increasingly used to alleviate suffering, substantial and sustained poverty reduction cannot be achieved with such expressions of international solidarity alone. It requires wealth creation in the LDCs and the development of domestic productive capacities in a way in which productive employment opportunities expand.”

In this light, the report suggests, international engagement should focus more on supporting the enhancement of LDCs’ productive capacities alongside the donor flows towards the social sectors.

“National and international policies do not adequately address the challenge of developing productive capacities in the LDCs,” it states.

“There is a need for a paradigm shift which places the development of productive capacities at the heart of national and international policies to promote development and poverty reduction.” ‘ The Post.

July 2006
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