Ten years ago, the world community adopted the Brussels Declaration and the Programme
of Action for the Least Developed Countries (LDCs), providing a framework to accelerate economic
growth and achieve sustainable development in LDCs. Yet, despite the fact that some of them
enjoyed the worldfs highest and most sustained growth rates and they have development potential
in general, more than half of their population still lives in absolute poverty. Their economic hardships
are being compounded by the recent economic and financial crisis, increasing food and energy
insecurity and climate variability.
UNCTAD has made comprehensive proposals for a new international development architecture
for LDCs. The paradigm shift involves a more pro.active approach to developing productive capacities,
which will require a better balance between markets and the State, and places production and
employment at the heart of efforts to reduce poverty. This productive capacity approach gives greater
emphasis to the promotion of investment, both domestic and foreign, while using aid to end, rather
than reinforce, aid dependence.
Foreign direct investment (FDI) has played an important role in LDCs in the last decade, as
it was a major contributor to the group´s capital formation. FDI contributed towards promoting propoor
growth and sustainable development, and reducing social and income disparities. However,
the concentration of FDI in enclaves of export-oriented primary production with limited employment,
technological and productivity linkages remains the main challenge in most LDCs.
The present report by UNCTAD, prepared on the eve of the Fourth United Nations Conference
on the Least Developed Countries, aims to give readers a broad overview of the FDI trends in LDCs
over the past decade, focusing on the challenges LDCs face in attracting and benefitting from FDI
for developing their productive capacities and on what can be done to improve the situation in the
light of our longstanding work on FDI at UNCTAD. This report provides useful analysis and insights
for all stakeholders, and will contribute to designing new measures and strategies for achieving
sustainable development in the LDCs.