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media before 19 July 2007, 17:00 GMT
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Foreign official aid has been much less effective than it should be because it does not recognize the essential role that technological change plays in sustained economic growth, a new UNCTAD report says.
High-income countries, such as those belonging to the Organization for Economic Cooperation and Development (OECD), almost all have programmes to strengthen their own national innovation systems and to promote innovation among domestic businesses. But in poor countries the development of science, technology and innovation has been largely missing from the foreign assistance they receive from high-income countries, says UNCTAD´s Least Developed Countries Report 2007.
The report, subtitled "Knowledge, Technological Learning and Innovation for Development", argues that such progress is as relevant in the poorest countries as it is in the richest. Technology acquisition in the least developed countries (LDCs) through international markets is currently weak (see press release UNCTAD/PRESS/PR/2007/14). So aid has a major role to play in spurring technology transfer and in the development of the technological capabilities of domestic enterprises -- both firms and farms.
Donor priorities do not comply with these needs. Reported annual technical cooperation commitments for improving governance in LDCs in 2003-2005 were US$1.3 billion, while reported aid commitments for agricultural extension were only $12 million. While good governance certainly matters, it is difficult to see how it will be achieved unless a country has a vibrant economy which generates productive livelihoods for it citizens.
Aid for science, technology and innovation in poor countries is an essential component of aid which is not a handout, but a hand up, the report contends. Shifting the focus there could lead to a radical break with past aid failures.
Aid for science, technology and innovation (STI) -- the current situation
A review of just two categories for which aid disbursements and commitments are identifiable -- aid for research and for advanced skills -- shows that STI-related aid is a very low priority for most donors. Annual disbursements for these two categories were $728 million during the period 2003-2005 -- equivalent to only 3.6% of overall aid to LDCs. Moreover, 59% of total STI-related aid went to boosting higher education.
Some 767 million people live in LDCs, and 70% of the labour force works in agriculture. But during 2003-2005, donors provided only $22 million per year to support national agricultural research, only $9 million per year for agricultural extension, and only $12 million per year for agricultural education and training. And donor commitments to agricultural research and to agricultural education and training in LDCs halved between 1998-2000 and 2003-2005.
This downward trend is particularly disturbing as agricultural research and extension are key priorities of the poverty reduction strategies of LDC governments. Grinding rural poverty is mostly due to low levels of agricultural productivity as well as declining farm sizes. This makes science-based agricultural development urgent. Yet public investment in agricultural research in the LDCs is at its lowest level since 1971 (see chart).
Aid for STI outside agriculture is also important, but donor efforts do not reflect this. In 2003-2005, donors provided $62.1 million per year for vocational training, $17.4 million for advanced technical and managerial training and only $5.1 million for industrial technological research and development. The latter category includes such key support services as industrial standards, quality management, metrology, testing, accreditation and certification. It is vital for developing enterprise competitiveness in LDCs. Yet it received only 0.02% of total aid disbursements in 2003-2005.
What can be done?
The report calls for a rapid increase in official development assistance (ODA) for agricultural research and development in LDCs, particularly to support a "Green Revolution" in basic staple foods. Not only do donors need to strengthen national agricultural research and extension systems; they must also re-invest in the network of international agricultural research centres under the umbrella of the Consultative Group on International Agricultural Research (CGIAR).
The report also says aid should be increased to strengthen the technological capabilities of domestic firms engaged in industry and services. It recommends that donor-supported physical infrastructure projects include components which use the construction process to develop domestic design and engineering capabilities. There also is a need for public support for enterprise-based skills development -- particularly for design and engineering. This could be in the form of grants or soft loans for large firms which are customers, or for local subsidiaries of transnational corporations (TNCs) to support training activities within domestic small and medium-sized firms.
In addition, the report calls for including technological development in the "Aid for Trade" programme now being developed by a series of international agencies.
Agricultural research intensity in the LDCs and other developing countries (ODC), 1971-2003
(Investment in agricultural research as % of agricultural output)
Source: UNCTAD, Least Developed Countries Report 2007