New UN update on the Least Developed Countries

December 24, 2008

     By Duncan Green     

UNCTAD’s 2008 Least Developed Countries (LDCs) Report, was published last week. Given 7% average annual growth rates in the 50 LDCs over the last 3 years, the report is surprisingly downbeat, arguing that even these levels of growth are failing to make a dent on poverty (as of 2005, 36% of the LDC population lived on less than $1 a day, 76% on less than $2).

Other points worth noting:
– a massive increase in LDCs’ exports, almost doubling from 2004-6 to reach $99bn, has been driven by oil, gas and mining, and sharply increased LDCs’ dependence on primary commodities from 59% of total exports in 2000-2002, to 77% in 2005-2006.
– this disguises a sharp divergence between Asian LDCs, which continue to diversify and industrialize, and African LDCs, many of which are deindustrializing

UNCTAD advocates a paradigm shift (don’t we all?) consisting of three elements:

1. Focus more on production and productivity, rather than global integration and trade per se
2. Give more attention to creating decent jobs, rather than just funding essential services
3. A greater role for the state in steering the economy, sorting out market failures etc

Finally, the report is highly critical on the quality of aid received by the LDCs, arguing that conditionality is still widespread in areas such as privatisation and liberalization, that country ownership is limited, and donors continue to impose huge burdens on poor countries with donor missions, reporting requirements etc. Citing positive examples in Mozambique, Rwanda, Uganda and Tanzania, it urges LDC governments to adopt ‘aid management policies’. These restore an element of control to national government and can generate better data on aid flows, more trust, more rationalization and harmonization between donors and increased mutual accountability.

All good stuff. Let’s hope rich country donors and others stop writing UNCTAD off as a kind of ‘loony left’ within the UN system, and start actually reading what it says.


December 24, 2008
Duncan Green