Boom years did not change structure of LDC economies or create many jobs; escaping persistent poverty requires changing focus, Secretary-General tells journalists
Istanbul, 11 May 2011 - The globe´s least developed countries (LDCs) will best make economic progress and raise living standards if - with international help - more attention and resources are devoted to increasing their agricultural productivity and expanding their industrial bases, UNCTAD´s Secretary-General said this morning.
The worldwide economic boom from 2002 to 2007 resulted in economic growth in LDCs of some 7 per cent per year on average, Secretary-General Supachai Panitchpakdi told journalists at a press conference held to stake out UNCTAD´s position on what should be done for the world´s 48 LDCs. The press conference was held as deliberations continued at the Fourth United Nations Conference on the Least Developed Countries.
Most of this economic growth was centred on extractive industries. Unfortunately, it did not create jobs, nor did it help LDCs to broaden their economies and thereby spread the profits more widely through their populations, Mr. Supachai said.
The LDCs now make up one eighth of the world´s population, but they produce only one hundredth of the world´s output.
Lack of attention to and investment in agriculture in poor countries has resulted in stagnation in that vital economic sector in recent decades, Mr. Supachai said. Farming is still the greatest source of employment in LDCs.
Meanwhile, the populations of LDCs are growing rapidly, and more and more jobs are needed, especially in urban areas, as people increasingly move from the countryside to the city. The total labour force of the LDCs is expected to increase by 10.2 million people per year between 2005 and 2015. Unless these young populations can find productive work, poverty and frustration will increase, as will the already significant pressure for international emigration.
Structural change is required for lasting progress, the Secretary-General said, especially a shift away from dependence by LDCs on exporting raw industrial materials and other commodities and towards manufacturing and related activities that progressively add value to goods produced. Such production brings higher profits, creates more and better-paying jobs, and brings employment to cities, he said. It also reduces vulnerability to abrupt shifts in prices for commodities on global markets - a problem that has plagued LDC economies for years, as exemplified by the rapidly climbing prices for basic foods in 2008 and in recent months.
LDCs need a more growth-oriented macroeconomic policy, together with a developmental agricultural policy and a developmental industrial policy, Mr. Supachai said. Growth on that basis holds the best promise of freeing LDCs over time from the need for continued official development assistance, and also holds the best hope for meeting the United Nations Millennium Development Goals (MDGs). Such broader economic growth depends on a number of factors, he said, including better use of domestic as well as overseas financial resources.
Despite progress since 2000, particularly in the areas of primary-school enrolment and gender equality in schooling, most LDCs are not on track to achieve the Millennium Development Goals, Mr. Supachai said. Of special concern is the level of extreme poverty. While the percentage of LDC populations living in extreme poverty has been slowly declining, the Secretary-General explained, in terms of actual numbers, the totals are increasing because of rapid population growth. The number of people living in extreme poverty in LDCs in 2007, at the height of the economic boom, was actually 120 million higher than the total in 1990.
If the slow decline in levels of extreme poverty in LDCs continues, Mr. Supachai said, the number of people living in extreme poverty in LDCs in 2015 will be 439 million. If the MDG target on halving extreme poverty by 2015 were met, the number would be 255 million.
