unctad.org | Ministerial Meeting on new partnerships for productive capacity building in the least developed countries - High-level inaugural session
Statement by Mr. Mukhisa Kituyi, Secretary-General of UNCTAD
Ministerial Meeting on new partnerships for productive capacity building in the least developed countries - High-level inaugural session
Cotonou, Benin
27 Jul 2014

[AS PREPARED FOR DELIVERY]

Mr. President, Excellencies, Ladies and Gentlemen,

It is a great pleasure for me to be here today and contribute to the discussions on a topic of crucial importance for least developed countries: the building of productive capacities.

This meeting has a special meaning for UNCTAD, as it links two pieces of our analytical contribution to development thinking: the least developed countries category and productive capacities.

UNCTAD is proud that our work in the late 60's paved the way to the identification of the least developed countries category and to its formal recognition by the UN General Assembly in 1971.

And, it was also UNCTAD's research on the reasons behind the slow development progress in LDCs, which led to the conceptualization and analysis of productive capacities at the beginning of this millennium. This led to a consensus in the Istanbul Programme of Action wherein productive capacities is recognized and identified as "priority A".

 

Mr. President, Excellencies,

Over the years we have continued to associate with international efforts to advance the trade and development interests of LDCs, either through our research, consensus building, or our technical assistance programmes on the ground.

Collectively we must admit modest gains in help LDCs develop. Since 1971, the number of LDC designated countries has grown from 25 to 48, and only 4 have graduated. More recently, while LDCs grew at an average pace above 7% in the first decade of this millennium, growth has not created sufficient and good quality jobs; it has not set the basis for structural transformation.

This calls for clear strategy to build and strengthen productive capacities. These are the productive resources, entrepreneurial capabilities and production linkages which together determine the capacity of a country to produce goods and services and enable it to grow and develop.

Such capacities are essential for technological catch-up and productivity growth, job creation and the promotion of structural change. In sum, macroeconomic, industrial, agricultural, rural and infrastructure policies should be geared to employment generation and the development of productive capacities.

Thus, LDCs should pursue deliberate policies for employment-rich growth to achieve two complementary objectives: expanding the number of jobs so as to absorb the growing labour force, and raising the incomes generated by these jobs. Meeting these objectives is crucial to combat the generalized prevalence of poverty and underemployment in LDCs. Reaching these objectives will involve implementing a range of mutually supportive policies aimed at building productive capacity and fostering structural transformation. Through such an approach LDCs will be able to rely less on aid and increasingly turn to domestic resource mobilization to finance their growth.

 

Excellencies, Ladies and Gentlemen,

Of course, there is no simple, uniform and universal blue print that enables all LDCs to address their persistent and emerging development challenges. Countries should design their home-grown development policies and strategies based on their specific socio-economic circumstances, resources base, institutional capability and overall local conditions. But lessons learnt over the years should inform the design of those policies.

By way of sharing our alternative views, let me emphasize the central role of the State in building productive capacities. In our view success in building productive capacities and promoting structural transformation greatly depends on whether the State can effectively guide the development process.

My point is that the building of productive capacities requires an enabling State which can design and implement policies and set up incentives that create a market that foster inclusive and sustainable development. This is the developmental state.

Development is a process of self-discovery. Successful developmental states, like the ones of the so-called Asian tigers, have been willing and able to experiment in order to better fine-tune their policies to their specific conditions.

In this context, the ability of the State to design, implement and monitor policies is fundamental. And a key element, is that a successful developmental State can quickly realize where policies are heading and what corrective or complementary actions are necessary in order to maximize the developmental impact of such policies.

Experience and empirical evidence show that an approach to developing productive capacities, which is simply "trade-centric" will not be sufficient for sustained and inclusive growth and development in LDCs. Nor will it be sustainable. Therefore a new policy orientation which entails a development - driven approach to trade rather than a trade-driven approach to development is crucial. In this, the State plays a central role.

Fostering industrialization and technological upgrading are critical for building productive capacities and accelerating structural transformation. This must be done with clear coherence of policies in other productive sectors. Especially strengthening linkages between agriculture and the industrial sectors.

Increased agricultural labour productivity in LDCs has the potential to both raise the real incomes of rural households and stimulate demand for rural non-farm goods and services.

 

Mr. President, Excellencies, Ladies and Gentlemen,

The State alone cannot be a panacea for the complex development challenges facing LDCs, particularly in addressing the difficult task of building productive capacities.

Given the size and weakness of the private sector in most LDCs, necessary investment in infrastructure and other requirements for a viable local market call for sound regional and international engagement. Developmental regionalism can be a critical catalyst for overcoming challenges of small economies.

Successful experiences of the Greater Mekong Sub-region can provide valuable lessons, in this regard. In essence, developmental regionalism requires not only a coordinated set of policies to collectively address structural vulnerabilities, but also a greater provision of regional public goods: hard and soft infrastructures, energy and telecommunications.

Equally important are supportive international policies and an overall external environment conducive for LDCs' development. Global actions and policies are important for building productive capacities, ensuring diversification and promoting structural transformation in LDCs. These should include in particular, facilitating foreign direct investment flows, bridging the digital and knowledge divide, opening the markets of rich countries to the goods and services of LDCs, providing financial resources including through ODA and debt relief, and realigning international support measures to the needs and priorities of LDCs.

We strongly believe that new international support measures for LDCs are urgently needed. Such support measures should go beyond the confines of ODA and technical assistance and include transfer of technology and know-how as well as building technological capabilities and innovation in these countries.

 

Mr. President, Excellencies, Ladies and Gentlemen,

As the world moves to the Post-2015 Compact on development, LDCs remain the primary frontier at which the battle against extreme poverty will be won or lost. Building on our experience of the past, we must now fashion policies and interventions which address transformative economic prosperity as the main vehicle for sustainable social progress.

 

Ladies and Gentlemen,

43 years ago, we coined the term Least Developed Countries.

Today, my sincere hope is that in the decades to come, we can all work together to make this concept obsolete.

Only then shall we consider our mission of inclusive prosperity to have been accomplished.



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