In a bold move, UNCTAD’s The Least Developed Countries Report,1 subtitled Transforming Rural Economies, presents a road map to address rural poverty, lack of progress in rural transformation and the root causes of migration within and from the least developed countries (LDCs).
The report also invokes the principle that “to will the ends is to will the means” in calling for donors to meet their long-standing commitment to provide 0.7 per cent of their gross national income in development aid. This will allow donors to make allocations in line with the LDC share of global needs to meet the recently adopted Sustainable Development Goals, and which would amount to a six-fold increase in aid to LDCs by 2030.
“In many least developed countries, migration is triggered by rural poverty, reflecting the lack of economic opportunities to earn even a minimally adequate income,” UNCTAD Secretary-General Mukhisa Kituyi said when launching the report. He added: “There can be no sustainable solution to the migration crisis without a poverty eradication-oriented approach to transforming rural economies in these countries.”
Poverty-driven rural–urban migration fuels excessive rates of urbanization in many LDCs. Further, many international migrants come from rural areas – either directly or after first migrating to towns and cities in their own countries. The report’s recommendations aspire to slow this process by focusing on rural development, which emphasizes poverty reduction and thus seeks to “create the conditions for a rural–urban migration process driven primarily by choice rather than necessity”.
Rural development is also critical to the Sustainable Development Goals, which aim to “leave no one behind”. The first Goal aims to end poverty in all forms by 2030. More than two thirds of people in LDCs live in rural areas, where poverty is twice as widespread as in towns and cities. The report indicates that the Goal of poverty eradication will require a doubling of the so-called “global consumption floor” (which is the estimated income per person in the poorest households in the world) in just 15 years, while it has been stagnating for 20–30 years (figure 1). Shortfalls in rural areas are also much wider for other Goals such as universal access to water, sanitation, electricity and education. Meeting the Sustainable Development Goals in rural areas of LDCs will require a “quantum leap” in the rate of infrastructure investment: more than twice as many people would have to gain access to water each year than was the case in 2011–2012, four times as many to electricity, and six times as many to sanitation (figure 2).
Poverty can only be eradicated if there are employment and economic opportunities for all, with incomes above the poverty line matched by productivity – a process the report terms “poverty-oriented structural transformation”. But, with current policy approaches, such a transformation has barely begun in most LDCs.
In order to achieve this in rural areas of LDCs, the report therefore proposes a new approach, articulated around a three-phase increase in infrastructure investment, and the combination of increasing agricultural productivity and promoting non-farm activities.
By using labour-based construction methods and buying construction materials locally, increased infrastructure investment boosts local demand for food and other consumption goods. The report argues that by helping local producers to respond to this increase in demand, Governments can initiate a virtuous circle of increasing incomes, demand and productivity. The key is to combine upgrading of small-scale agricultural production with the development of more productive non-farm activities, while maximizing the synergies between the two.
A wide-ranging policy chapter highlights a number of key policy priorities and principles to achieve this (see box).
A critical issue is sequencing infrastructure investment and interventions to ensure that producers can respond effectively to changes in market conditions. The first phase focuses on increasing supply potential, combining infrastructure investment which mainly impacts productivity (for example. electrification) with measures to improve supply response. This prepares producers for a second phase focusing on increasing demand as well as productivity, through labour-based infrastructure investment. Together with support to agricultural upgrading and the development of dynamic non-farm enterprises, this prepares the ground for a third phase focused on “opening” by strengthening rural–urban transport linkages, allowing producers to survive the resulting exposure to wider competition and to exploit wider markets.
Financing increased infrastructure investment is crucial. The report calls for donors to fulfil their commitments on the quality of aid as well as its quantity. Furthermore, it proposes an increase in the target for aid to LDCs to a level reflecting their share of global needs to achieve the Sustainable Development Goals, which it puts at 0.35 per cent of donors’ gross national income. If donors did this while simultaneously raising total official development assistance up to the 0.7 per cent target, this would increase aid to LDCs from around $40 billion to $250 billion by 2030, while also allowing a 150 per cent increase in aid to non-LDC developing countries.
NOTE: Forty-eight countries currently are designated by the United Nations as LDCs: Afghanistan, Angola, Bangladesh, Benin, Bhutan, Burkina Faso, Burundi, Cambodia, the Central African Republic, Chad, the Comoros, the Democratic Republic of the Congo, Djibouti, Equatorial Guinea, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, the Lao People’s Democratic Republic, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Nepal, the Niger, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone, Solomon Islands, Somalia, South Sudan, the Sudan, Timor-Leste, Togo, Tuvalu, Uganda, the United Republic of Tanzania, Vanuatu, Yemen and Zambia.
As well as a major increase in infrastructure investment, UNCTAD’s The Least Developed Countries Report 2015: Transforming Rural Economies highlights the importance of:
• Strengthening agricultural research and development and extension services, and ensuring that they are oriented towards the needs of disadvantaged producers;
• Supporting expansion of dynamic enterprises that generate productive and well-paid employment, and avoiding a proliferation of low-productivity microenterprises;
• Ensuring that finance for productive investment is not only available but affordable, and investigating pro-poor alternatives to microcredit;
• Adult education, as well as schooling for children, including financial literacy and business skills;
• Estimating changes in demand as poverty is reduced and taking this as a basis for policies and interventions – and providing such information to producers in order to strengthen their supply response;
• Gender-specific measures to address disadvantages caused directly by gender norms, combined with more inclusive gender-sensitive measures to address their poverty-related consequences;
• Adapting policies to local circumstances, recognizing the major differences between remote and isolated areas and those closer to towns and cities;
• Effective coordination of rural development policy at the national level, and strengthening cooperatives, producers and women’s networks as agents of change at the local level.
a Pre-Millennium Development Goals
b Millennium Development Goals
c Sustainable Development Goals
Notes: (a) Figure 1. The solid line indicates estimates of the “global consumption floor” – in effect, the income per person of the poorest household in the world – from 1981 until 2011, using two alternative baselines for the calculation ($1 per day and $1.25 per day). The dotted line shows the increase that would be needed to achieve Sustainable Development Goal target 1.1 of eradicating extreme poverty by 2030 – that is, raising the income of the poorest household to the $1.25-a-day poverty line – assuming that there has been no further reduction since 2011. The historical estimates are from Martin Ravallion, 2014, Are the World’s Poorest Being Left Behind? National Bureau of Economic Research Working Paper 20791, table 1, p. 32 (available at http://www.nber.org/papers/w20791.pdf). (b)Figure 2. The first two sets of columns show the annual increase in the number of people in rural areas of LDCs with access to water, electricity and sanitation during the 10 years before the adoption of the Millennium Development Goals in 2000, and from then until the latest available data in 2012. The final set of columns shows the annual increase that would be needed from now until 2030 if the Sustainable Development Goal targets of universal access to water, electricity and sanitation by 2030 are to be achieved, based on United Nations population projections. The data for 2000–2012 are from the World Bank’s World Development Indicators database.
Report and Overviews: http://unctad.org/en/pages/PublicationWebflyer.aspx?publicationid=1393
