The contents of this press release and the related Report must not be quoted or
summarized in the print, broadcast or electronic
media before 17 November 2011,17:00 [GMT]
(12:00 New York; 18:00 Geneva, 22:30 New Delhi, 02:00 - 18 November Tokyo)
Geneva, 17 November 2011 - South-South cooperation can be conducive to the emergence of an effective and stronger State in Least Developed Countries (LDCs), according to UNCTAD´s latest report, which proposes a new type of developmental State for LDCs - one that is more appropriate to the specific vulnerabilities and the structural constraints of LDCs.
The Least Developed Countries Report 2011 (LDC 2011)(1) , released today, is subtitled "The Potential Role of South-South Cooperation for Inclusive and Sustainable Development".
Unlike the developmental States of the East Asian countries, the State in LDCs - called "Catalytic Developmental State" - has to focus on creating new productive capacities rather than "re-allocating" given resources and putting given productive capacities to more efficient use. In other words, its focus is on creating dynamic comparative advantage, and ensuring the availability of financial resources for long-term investment and for the development of new productive capacities. South-South cooperation opens up more opportunities and the policy space needed to build such a Catalytic Developmental State.
More strikingly, the report finds that South-South cooperation and State capacity-building in LDCs can be mutually reinforcing. While cautioning that South-South cooperation should not be seen as a panacea, the report stresses that it can be a win-win strategy for LDCs and their Southern partners.
In most LDCs, the State has very limited resources available to finance governance and growth-enhancing policies, and is confronted with specific development challenges, such as the absence of economies of scale, underutilized resources in the rural economy, reliance on static comparative advantages, and sizeable technological and financial gaps.
The report argues that South-South cooperation is particularly well-placed for supporting LDCs to build developmental State capabilities through three main channels: (a) direct support to State capacity-building efforts; (b) sharing policy lessons; and (c) providing alternative sources of finance.
The experiences of successful developing economies are particularly relevant for LDCs, especially in regard to their strategic type of integration into the global economy, the promotion of vibrant small and medium-sized enterprises, the development of innovative schemes to address rural poverty, and to build a broader growth consensus.
For instance, the lessons from poverty reduction measures taken by some Southern development partners - such as Brazil´s Bolsa Familia, India´s rural employment guarantee schemes, as well as the role of China´s Spark Initiative in generating rural non-farm employment within town and village enterprises - could be valuable for LDCs.
Policy lessons based on experiences from the more successful developing countries are helping LDCs to create new instruments and institutions to promote structural transformation, employment generation and poverty reduction.