11/29/2010

News / New approach needed to end extreme poverty in poorest nations

29 November 2010 – The number of people living in extreme poverty in the world’s least developed countries (LDCs) has been on the rise despite higher national incomes in some of those States, a senior United Nations official said today, calling for a review of the current development approaches.

“Even in the period between 2002 and 2007, during the so-called ‘boom of the LDCs,’ the pattern of growth followed in most countries has been neither inclusive nor sustainable,” said Petko Draganov, the Deputy Secretary-General of the UN Conference on Trade and Development (UNCTAD).

Next year’s global conference on the world’s 49 poorest countries should reconsider current approaches to helping these nations and come up with steps that can “generate faster and long-lasting development,” Mr. Draganov told a meeting of UNCTAD’s Trade and Development Board in Geneva.

He cited research contained in UNCTAD’s 2010 report on the LDCs, which was released last week and recommends that poor countries start to diversify their economies to reduce their dependence on basic agricultural and natural resource products and commodities in order to have sustainable growth.

Reliance on the export of primary commodities would continue to expose LDCs to “booms and busts” that follow the cyclical nature of commodities demand and prices, a trend that will make those countries unable to advance towards the Millennium Development Goals (MDGs), which include halving the number of people living in extreme poverty by 2015.

The report calls for a “new international development architecture” to support a transition to more broad-based economic growth with a greater emphasis on adding value to commodities produced in LDCs.

The two-day Trade and Development Board (TDB) executive session is focusing on the situation and prospects for LDCs in advance of the LDC IV conference, which is scheduled for next May in Istanbul, Turkey.

“The recent triple economic crises have significantly undermined the development and growth prospects” of LDCs, said Jo Elizabeth Butler, UNCTAD's Officer-in-Charge and Deputy Director of the Division for Africa, LDCs, and Special Programmes. “Poverty remains massive and widespread,” she added.

According to UNCTAD assessments, some LDCs have considerable potential for increasing exports, Ms. Butler said.

A case study of Uganda has shown that the country has sustained relatively higher economic growth for a relatively longer period of time than most LDCs. One reason is a growing emphasis on non-traditional exports such as fish and horticulture, which have shown tremendous increases, Ms. Butler said.

Similarly, Ethiopia has a fast-growing floriculture industry that now employs more than 16,000 workers. Floriculture is expected to overtake coffee within five years as Ethiopia's primary export, she said.

Among lessons learned from case studies of LDCs are that “activist, but less interventionist government policies” help encourage sustainable growth, along with effective incentives for investors and other steps to set up favourable environments for businesses and job growth, Ms. Butler added.

UNCTAD economist and LDC specialist Zeljka Kozul-Wright, one of the authors of the report, said that “the international environment should aid, assist, and abet LDCs rather than hinder their development prospects. The international community has not honoured its aid commitments to LDCs,” she said.

http://www.un.org/apps/news/story.asp?NewsID=36890&Cr=least+developed&Cr1=

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