13 May 11 - Productive capacity building key to sustained economic growth in least developed countries (LDCs)

Supachai PanitchpakdiUNCTAD's Secretary-General reflected on the organization's policy recommendations for overcoming the persistent challenges facing LDCs. He spoke at an UNCTAD-organized event during the Fourth United Nations Conference on Least Developed Countries.

The 48 least developed countries, as a group, have achieved their best economic results in decades over the last ten years. They recorded 7.4% average GDP growth, undeniably better than the 3.7% average rate recorded during the previous ten-year period.

Yet the general economic conditions in LDCs have not significantly changed over the last ten years. Most LDCs continue to suffer from structural weaknesses, such as high dependence on commodity exports, vulnerability to external shocks, pronounced economic inequality, and insufficient job creation. LDCs now make up one eighth of the world's population, but produce only one hundredth of the world's output. Poverty affects three quarters of their population.

UNCTAD Secretary-General Supachai Panitchpakdi reflected on this apparent paradox at a "High Level Thematic Debate on Enhancing Productive Capacities and the Role of the Private Sector", on 9 May, in Istanbul. The event took place during the Fourth UNLDC Conference.

Mr. Supachai pointed out UNCTAD's argument, put forward in successive LDC Reports, that the key to achieving sustained development and poverty reduction in the LDCs is to put the development of productive capacities - and the related expansion of productive employment - at the heart of national and international policies.

UNCTAD's use of the term "productive capacities" refers to the expansion of productive resources, the acquisition of technological capabilities, and the creation of production linkages that help countries to produce a greater range of goods and services and enable their beneficial integration into the global economy.

Development of productive capacities is an undertaking that requires coordinated action of a range of stakeholders. Clearly a vibrant private sector has a huge role to play in the process and can provide capital, technology and links to local and international production chains. Equally, a strong State is essential: one that can create institutions, provide regulatory mechanisms, and mobilize resources to achieve development goals. Further opportunities to boost LDCs' productive capacities lie in creating a system of international support mechanisms and in deepening South-South cooperation.

During the conference, UNCTAD has organized a number of side events in close cooperation with UN sister organizations, civil society, and the private sector.

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