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Launch of UNCTAD’s Productive Capacities Index

Statement by Mukhisa Kituyi, Secretary-General of UNCTAD

Launch of UNCTAD’s Productive Capacities Index

Geneva, Switzerland
08 février 2021

As one of my last official press-conferences as Secretary-General of UNCTAD I am pleased today to launch UNCTAD’s new Productive Capacities Index (PCI). The PCI is a new tool for countries assessing their performance in building up the core components of inclusive development, in order to inform national priorities for development policies.

UNCTAD first developed the concept of “Productive Capacities” fifteen years ago in its Least Developed Countries Report, as an innovative way of capturing all the elements that influence the capacities of an economy to achieve sustainable and inclusive growth. For the last 15 years, our work on productive capacities has focused on understanding why many developing countries were unable to translate the high economic growth of the early 2000s into significant job creation, poverty reduction, or productivity growth. Most LDCs continue to face challenges  fostering industrialization and technological upgrading that are critical for long-term development. By contrast, countries with adequate productive capacities have achieved sustained poverty reduction over the last 30 years, through efforts to promote investment, innovation, and structural transformation.

UNCTAD defines productive capacities as “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”.  Productive resources include factors such as natural resources, physical capital and human capital, while entrepreneurial capabilities and production linkages include elements such as technological skills and integration into global value chains. These are the core ingredients that underlie a inclusive, sustainable growth path – rather than a pattern of commodity-driven enclave-based growth that does not automatically “lift all boats”, and can lead to higher inequality.

This concept gains even greater prominence in the context of the current Covid-19 pandemic, as countries that have built productive capacities also tend to be more resilient to external shocks. They have stronger capacities to respond to health crises and the socio-economic devastation they can wreak.

Today we unveil a new Index developed by UNCTAD which aims to capture the broad concept of productive capacities and operationalize it for policymakers.  The new PCI allows policymakers to assess how far productive capacities have been developed in a country, benchmark country performance over time and monitor the effectiveness of past policies, in order to improve future policy choices.

The PCI itself does not aim to promote specific policy priorities, but only to provide information to support policymakers in setting priorities according to their national development strategy. This index will be available on a dedicated website, as well as on UNCTAD Stat, and will thus be freely available to policymakers, academics and the interested public for their use. We hope that this new Index can be a useful tool in highlighting the need for coherent development policies, and in supporting developing countries to achieve inclusive and sustainable growth and reach the SDGs.