PRELIMINARY REPORT OF THE HIGH-LEVEL PANEL ON THE REVIEW OF PROGRESS IN THE IMPLEMENTATION OF THE PROGRAMME OF ACTION FOR THE LDCs FOR THE 1990s

TD//47/CRP.5 Page 1 Distr. RESTRICTED TD//47/CRP.5 16 October 2000 ENGLISH ONLY TRADE AND DEVELOPMENT BOARD Forty-seventh session Geneva, 9 October 2000 Agenda item 4 PRELIMINARY REPORT OF THE HIGH-LEVEL PANEL ON THE REVIEW OF PROGRESS IN THE IMPLEMENTATION OF THE PROGRAMME OF ACTION FOR THE LDCs FOR THE 1990s preliminary report contained distributed request Chairperson High-level Panel. solely authority Chairperson Panel, issued form language received. Panel meeting Geneva 25 27 October finalize report. GE.00- TD//47/CRP.5 Page 2 . INTRODUCTION Background Panel Report 1. 1971, international community recognized existence category countries distinctiveness lies profound poverty people weakness economic, institutional human resources, compounded geophysical handicaps. 1971, General Assembly approved list Developed Countries (LDCs) comprised 25 countries. list expanded 48 countries, combined population, 1997, 610.5 million, equivalent 13.2 percent population developing countries (DC) 10.5% world total. 33 LDCs (69%) located Africa, 9 Asia, 1 Caribbean 5 Pacific. inception LDC concept, country (Botswana) graduated list. 2. economic social development countries represented major challenge development partners. respond challenge, United Nations General Assembly decided hold, 1981, United Nations Conference Developed Countries Paris. conference, international community unanimously adopted Substantial Programme Action (SNPA) 1980s Developed Countries guidelines domestic action LDCs, complemented international support measures. , policy reforms initiated number LDCs carry structural transformation domestic economies supportive measures number donors areas aid, debt trade, economic situation countries worsened 1980s. 3. 1990, number LDCs increased 42 combined population 440 million. -thirds population remained illiterate, child died attaining age year, person ten access safe drinking water. Factors contributed worsening state affairs included domestic policy TD//47/CRP.5 Page 3 weaknesses, natural disasters adverse external conditions. addition, external debt servicing emerged major problem LDCs 1980s. 4. international community, arrest continued socio-economic deterioration Developed Countries issue concern. , United Nations General Assembly decided, 1987, convene United Nations Conference Developed Countries. Conference, 150 Governments participated, held Paris 3 14 September 1990. outcome Conference embodied Paris Declaration Programme Action Developed Countries 1990s POA 1990). 5. prime objective Programme Action (POA 1990) arrest deterioration socio-economic situation LDCs, reactivate accelerate growth development countries , process, set path sustained growth development. policies measures support objectives set Programme Action, revolve major areas: • establishment macro-economic policy framework conducive sustained economic growth long-term development; • development mobilization human resources; • development, expansion modernization productive base; • reversing trend environmental degradations • promotion integrated policy rural development aimed increasing food production, • enhancing rural income enhancing -agricultural sector activities; • provision adequate external support. 6. POA 1990 represented qualitative step SNPA contained features, assessment progress implementation undertaken 1995 York, noted great concern vigorous efforts LDCs implement economic reforms envisaged Programme Action, LDCs group meet objectives. TD//47/CRP.5 Page 4 Mandate UN Conference LDCs 7. 1997, General Assembly decided convene United Nations Conference Developed Countries high level year 2001: () assess results Programme Action 1990s country level; (ii) review implementation international support measures, areas official development assistance, debt, investment trade; (iii) formulation adoption national international policies measures sustainable development developed countries progressive integration world economy. 8. global conference LDCs scheduled held Brussels 2001. order provide independent perspective Brussels conference facilitate preparatory work undertaken UNCTAD conference decided convene High Level Panel Experts. composition Panel Annex . Objective Panel Review 9. general objectives review assess impact effectiveness Programme Action 1990s country level, including actions LDCs development partners, areas: () macro-economic policy framework; (ii) mobilizing developing human capacities LDCs; (iii) development, expansion modernization economic base (agriculture, rural development, manufacturing infrastructure); (iv) financing growth development LDCs; domestic external resource mobilization; () external debt; (vi) external trade TD//47/CRP.5 Page 5 10. work Panel undertook review progress implementation Programme Action LDCs 1990s order : () assess results Programme Action 1990s country level; () review implementation international support measures, areas Official Development Assistance (ODA), debt, investment trade; () suggest improvements mechanisms international support measures institutions policy vehicles implementation POA country level regional level. Work Panel 11. work Panel severely constrained lack time . Panel met times Geneva (June 2000), York (July 2000) York (September 2000) deliberate contents substance report. field visits LDCs undertaken Panel members order hold consultations country level ( Annex 2 listing field visits). present interim draft report outcome information generated field visits, deliberations Panel reference documentation circumstances LDCs Panel. present document prepared view provide input deliberations Trade Development Board (TDB) UNCTAD completed 7 October, 2000. severe constraints time logistics mind reviewing document. report Panel presentation Brussels conference finalised receiving inputs TDB final meeting Panel Geneva 25-27 October. Structure Panel Report 12. Panel report structured heads: . Introduction TD//47/CRP.5 Page 6 . Review Progress LDCs 1980s 1990; . Diagnosing Performance LDCs; • impact SNPA POA; • Problems Governance; • Challenges Globalisation . review international support measures LDCs • Capital flows; • Debt; • Trade . Responses Challenges LDCs • Structural diversification; • Upgrading Governance; • Enhancing Human Capital; • Responding shocks; . International Responses Problems LDCs . REVIEW OF THE PROGRESS OF THE LDCS IN THE 1980S AND 90S Weak economic performance 13. evidence suggests adoption Substantial Programme Action (NSPA) Paris 1981 meeting LDCs, span decades, LDCs realised substantial transformation human economic circumstances. number LDCs expanded 25 48. remain considerable variations trajectories performance LDCs registered visible improvement economic growth, human development indicators (HDI) macro-economic balances. , countries LDCs realised degree structural transformation economies put path sustainable development permanently ranks LDCs. TD//47/CRP.5 Page 7 14. Table 1 presents indicators economic social change 1980s 1997 comparing trajectories performance LDCs relation developments developing countries (DCs) equivalent period. noted capita GNP disparities 1997 remained unchanged widened absolute terms. matter concern 48 LDCs comparable data, Table 2 shows 28 countries faced deceleration economic growth 1980s 1990’ 28 countries registered negative growth 1990s. 15. corollary weaker economic performance LDCs compared DCs, Table 1 points large growing disparity energy consumption. , LDCs barely increased energy offtake DCs , 1980 1996, increased capita consumption 508 kg 898 kg period. Lagging social development 16. social indicators, population growth resultant age dependency ratio LDCs position deteriorated vis vis DCs, population growth rates dependency ratios 1960s 70s 1990s. conspicuous exceptions trend Bangladesh managed reduce population growth 1980 1997. 17. social indicators, progress registered LDCs. , Table 1 shows social disparities LDCs DCs widened 1980s 1990s nutritional deprivation, infant mortality, life expectancy access hospital beds physicians. Similarly disparities educational indicators widened secondary tertiary level. 18. Table 2 shows 18 46 LDCs life expectancy declined 1980 1997, possibly consequence impact civil strife ravages HIV/AIDS. Nutritional intake improved 18 countries 46 LDCs infant mortality risen 36 countries 1980 1996. indicators expected register robust implementation POA TD//47/CRP.5 Page 8 1990s. indicators deteriorated occasion considerable concern. Structural atrophy 19. Table 1 shows economic structures LDCs exposed modest compared transformation economies DCs relates share agriculture GDP labour force. 18 42 LDCs share manufacturing GDP declined 1980 1997 manufacturing growth declined 18 29 LDCs. consequence shallow nature structural LDC economies export concentration index remained higher (0.53) compared DCs (0.378) export instability index 1980-97 (20.3) higher DCs (13.4) period. trends reflect fact LDCs remain tied export primary commodities. 20. Due inadequate economic performance LDCs, weak capacity domestic resource mobilisation, dependence external resource inflows, form official development assistance (ODA), remained high. Inspite economic reforms varying degrees intensity, undertaken LDCs mid 80s onwards, macro-economic balances LDCs remain fragile budget balance payments deficits LDCs showing improvement 1990s. area positive gains registered moderating inflation. trend, , reflect lack dynamism economic performance improvement monetary management. . DIAGNOSING THE PERFORMANCE OF THE LDCS impact SNPA POA 21. weak performance LDCs large measure reflected shallow impact SNPA 1980s Programme Action (POA) 1990’. actual practice LDCs, , fully internalised goals POA national development plans. TD//47/CRP.5 Page 9 result, LDC ownership POA remained weak impinged marginally consciousness national policymakers. LDCs, POA overridden dominance principal aid donors, multilateral agencies World Bank, development agenda. 22. Country Assistance Strategy (CAS) World Bank remained important influence guiding development priorities. World Bank’ orientation poverty eradication emphasis domestic ownership policy design birth Poverty Reduction Strategy Paper (PRSP) designed number LDCs emerged strategic document choice guiding development LDCs. POA PRSP eventually internalised national development plans. undertaken superficially. prevailing realities policymaking development prioritisaiton LDCs, remains difficult gauge level commitment POA 1990s, actual realisation goals capacity redirect development priorities. Refocusing agenda LDCs 23. Panel believes central features distinguishing LDCs advanced developing countries lies diversity production structures, quality governance inclusiveness distributive process capacity access external resources part process integration globalisation process. review POA LDCs focus areas: • inability bring discernible change structures economy • lack impact quality governance LDCs • weak response international system meet commitment LDCs Realising structural change 24. evidence performance LDCs 1980s 1990s, summarised data Table 1 2, points lack structural change LDCs. TD//47/CRP.5 Page 10 rare exceptions LDCs 1990s remained dependent agriculture, narrow range commodity based exports, outset 1980s. hazards narrow specialisation LDCs left economies vulnerable exogenous shocks originating fluctuations global economy / demand exports. exposure exogenous shocks remains bane LDCs 20 years exposure SNPA POA 1990s designed LDC status. LDCs Bangladesh Nepal, moved exploit comparative advantage labour-intensive manufactures diversify economies export base. , economies manufacturing sector’ lack export diversity remains measure LDC status. graduation countries LDC category requires economic diversification enables economies readily respond external shocks natural calamities global market fluctuations introduce element instability export markets. LDCs export broad range products positioned cope fall demand prices exports remain subject sharp fluctuations export earnings. issue governance 25. number LDCs remain victims poor governance. manifested weak representative status regimes, lack accountability transparency role government insufficient participation stakeholders policymaking process. outcome weak governance manifested persistence poverty, corruption, poorly conceived policies lack domestic support, weak implementation policy, absence rule-based administrative system domestic political social conflicts countries. 26. Weak governance perpetuated poverty. LDCs high levels poverty levels diversification large segments population excluded full participation economic development inadequate human development lack command productive assets. forms deprivation reduce capacity segment population fully participate market producers consumers. Exclusionary policies practices aggravated crisis governance TD//47/CRP.5 Page 11 LDCs. persistence civil conflicts, based ethnic, religious, tribal regional contradictions LDCs, emerged process exclusionary governance. conflicts threatening fragile economic gains registered number LDCs. Faced crisis governance surprising impact POA national plan process reforms limited, inflows private capital inhibited efficacy official development assistance weakened. 27. focusing governance key variable distinguishing LDCs advanced DCs mind LDCs wide variations quality governance impact development. LDCs improved governance manifested improvements development performance. , Panel believes meaningful agenda change recognize significance governance inclusion central process development structural change LDCs. Challenges Globalisation 28. Weak governance absence structural change LDCs ill-equipped cope challenges globalisation. increasingly open trading system LDCs find difficult avail benefits existing production capacities progressively weakened. LDC’ dependent commodity exports, faced decline demand principal exports. decades fast changing structures global demand, technological held promise LDCs, long tied production export commodities survival. 29. LDCs moved - manufacturing process, sheltered quotas preferential trading arrangements , decade, exposed harsh winds competition advanced DCs trading system open. LDCs upgrade competitive capacity product diversification moving chain enhance productivity, limited gains TD//47/CRP.5 Page 12 registered 1990s risk. relevant exports textiles clothing. 30. LDCs established industrial base serve domestic markets erosion base face increasingly severe competition imports liberalised trading regime. LDCs liberalisation import regimes driven structural adjustment reforms (SAR) initiated programmes World Bank IMF. trade policy reforms practice opened economies rapidly required protocols WTO. reforms improving competitiveness economies regime based endemic rent-seeking, impact LDCs, developed , led closure industries, disemployment workers. LDCs inability attract investment economic activities linked dynamics globalisation. weak cases nascent entrepreneurial class, operating underdeveloped financial structure unable unwilling put resources assume risks investment liberal trading regime. 31. Virtually LDCs lack adequate infrastructure sustain competitive industries. Transport underdeveloped, land-locked countries, power capacity insufficient irregular, telecommunications remains inadequate technologically primitive. circumstances, FDI constrained coming LDCs fill domestic entrepreneurial gap. . REVIEW OF THE INTERNATIONAL SUPPORT MEASURES FOR THE LDCS 32. SNPA POA considerable emphasis role international support measures changing condition LDCs. Panel addresses contribution measures heads: Trade, Capital flows, Debt. TD//47/CRP.5 Page 13 Trade 33. recognised outset SNPA market access play crucial role transforming production structures LDCs. process market access, based quota free duty free access markets industrialised countries advanced DCs, policy instrument open opportunities economic transformation. Essential system market access preferential system gave LDCs easier access markets developed DCs. 34. LDCs benefited quota driven trade regime Multifibre Trading Arrangement (MFA) niche markets LDCs manufacturing capability textile export. Generalised System Perferences (GSP) pervasive impact LDCs providing unrestricted access broad range commodities exported LDCs industrialised countries. LDCs responded opportunities LDCs position generate adequate supply response. respect responses SSA LDCs landlocked island economies merits special attention. 35. initiative United States provide unrestricted market access 58 countries Africa, Caribbean Central America opens opportunities countries avail market opportunities largest dynamic economy world. 34 African countries included programme, LDCs figure prominently list includes -LDCs South Africa Nigeria. projected result initiative export apparel Africa USA expand current level $250 million $4.2 billion 2008. 36. mind SSA LDCs find difficult avail opportunity offered US due supply side constraints, compete bigger DCs SSA. .. initiative attached strong political conditionalities met countries hoping avail trade access offer, covers issues state democracy, human rights workers rights. .. legislation, , unique opportunity SSA addressed TD//47/CRP.5 Page 14 urgency governments international system support building export capacity target global markets. 37. , noted system regional territorial trade concessions offered political considerations discriminates number LDCs competitive position .. market weakened relation countries pay customs tariffs exports US. approach, , adequate substitute providing preferential market access LDCs markets industrialised countries. respect, move EU extend GSP 900 commodities importance DCs positive impact helping LDCs, community, diversify production structures. Capital Flows LDCs Trends Long-term Capital flows LDCs 38. Long-term capital inflows LDCs declined 25 cent nominal terms 1990. World Bank statistics, level inflows $10.4 billion 1998, peak $14.2 billion 1991. decline sharper real terms. import price index LDCs deflate current values (.. express terms purchasing power foreign goods), long-term capital inflows LDCs level 1980. Official development assistance (ODA) 39. decline net resource flows LDCs largely product declining flows ODA, aid. Aid flows LDCs, measured share net ODA disbursements donor’ GNP, halved 1990s. start decade, total ODA DAC member countries LDCs stood 0.09 percent combined GNP, 1998 record 0.05 cent. countries met special targets ODA LDCs percentage GNP set Programme Action LDCs 1990s. Gross ODA disbursements LDCs period 1997-98 22 cent period 1990-95, net ODA DAC countries, estimated $10.8 billion 1998, represented cut TD//47/CRP.5 Page 15 $5 billion compared 1992. 48 LDCs, 37 countries, including 29 33 African LDCs, experienced gross ODA levels 1997-98 compared period 1990-95. 40. composition ODA changed implications restructuring LDC economies. ODA flows 1990s show significant increase proportion ODA commitments devoted social development, 14 cent ODA commitments 1985-89 33 cent 1995-98. time, commitments economic productive sector infrastructure projects fallen 58 cent 39 cent. significant feature 1990s increase grants form debt forgiveness emergency aid. Trends Private Capital Inflows 41. ODA LDCs declining 1990s, private capital inflows increasing. large increases private long-term capital inflows LDCs concentrated countries remain influenced behaviour long-term private capital investments oil gas sector. Private capital generally small proportion total capital inflows increasing unable offset decline official finance LDCs. Debt Debt Relief Measures 42. large number LDCs contend rising burden debt. debt LDCs derives concessional loans received part ODA commercial debt exposed advanced DCs severe economic problems. build LDC debt originate profligate unregulated commercial borrowing speculative inflows short term portfolio capital loans offered ODA. , principal aid donors LDCs participated process debt creation share responsibility indebted LDCs size unsustainability debt. TD//47/CRP.5 Page 16 43. fact ODA loans offered concessional terms loans expected imposing unsustainable debt burden LDC. reason burden built LDCs originated failure concerned LDC enhance external earnings level adequately service debt. number Asian LDCs substantially increased external earnings debt service burden manageable. , countries find debt unsustainable tend structurally constrained LDCs unable expand exports revenue earnings pace debt service obligations. 44. LDCs advantage variety debt-relief opportunities alleviate debt burden. LDCs granted debt forgiveness part ODA debt. 1978 1986, 33 LDCs benefited retroactive adjustment measures 15 DAC countries, nominal $ 3 billion form debt cancellation. 1988 1998, LDCs benefited total debt forgiveness statistics grant commitments, face US$ 7.1 billion. “traditional” debt relief mechanisms ameliorated debt burden LDCs, measures sufficed provide total exit debt problems. 45. HIPC Initiative extension process debt amelioration introduce innovations. , HIPC Initiative widens coverage types debts eligible relief include multilateral debt hithertoo remained programmes. critical shift recognizes formal mechanism multilateral debt relief multilaterals remain largest source LDC debt. , HIPC Initiative introduced sources mechanisms financing debt relief. include: IMF gold sales, enabling World Bank multilateral institutions resources, setting HIPC Trust Fund bilateral donors contribute multilateral institutions. Finally, underlying principles forming HIPC Initiative debt relief targeted poorest member countries excessive debt severe obstacle development. , relieved debt mandated directed programmes targetted poverty alleviation beneficiary LDCs. TD//47/CRP.5 Page 17 46. Reviewing experience LDCs debt relief, Panel believes LDCs, current expectations impact implementation enhanced HIPC Initiative unrealistic. , Initiative designed create national international conditions “strong, sustained economic growth” recipient countries based agenda structural change. practice, debt relief serving form ODA, form reduction capital outflow obligations official debt form official capital inflows. RESPONSES AND CHALLENGES BEFORE THE LDCs Assumptions underlying policy intervention 47. discussion based assumptions relevance policy interventions LDCs. , source developed status lies structural deformities exclusively derive severe limitation access resources. , weak capacity LDCs mobilise domestic resources, human material, access resources inclusive resource productively, perpetuates LDC status. capacity mobilise, distribute resources structural nature structural constraints originate combination policy weaknesses governance failure derive peculiar political economy countries. 48. Panel emphasises assumptions imply access external resources unimportant SALDCs. peculiar structural constraints inhibit resource mobilisaion dependant external resource inflows. resort external resources aggravated crisis external dependence constrained capacity mobilise resources. External dependence , turn, exacerbated growing influence aid donors policy agendas LDCs discussed erosion ownership direction implementation policy. 49. light assumption underlying Panel report, areas action identified Panel helping LDCs, graduate LDC status: (). Assumption ownership policy agendas; TD//47/CRP.5 Page 18 (ii). design policies diversify production export base economy; (iii). strategy ensuring wider participation citizens benefits economic development. (iv). Measures improving international economic environment LDCs operate. Ownership policy 50. LDC resume policy ownership direction development strongly emphasised. Economic social change LDC place people country desire change, consulted design, involved implementation stake outcomes. process demands build political consensus development agenda. 51. meaningful programme action originate national plan drawn process consultation. national plan draw , , local professional skills expatriate assistance local experts identify . Realistically speaking, LDC sufficient local capacity hand undertake professional tasks involved preparation plan. central POA emerging 2001 conference Brussels develop professional capacity investment capacity building. Diversifying production export base 52. grow LDC status, countries broaden production base. includes agriculture dependence narrow range subsistence commercial crops poses hazards sustainability agricultural growth farmers hostage vagaries nature market. Investment policy intervention crop diversification LDCs remained weak point -existence. Institutional renovation policy reform supportive small farmers remain crucial TD//47/CRP.5 Page 19 agenda structural change agriculture. , agenda structural change LDCs locate food security centre policy restructure agriculture provide enhancing capacity rural poor diversify earning opportunities. 53. Agricultural diversification backed diversification manufacturing sector. countries diversification labour intensive manufacturing sector stimulated export growth, linkage stimulate secondary industrial agricultural growth. , large part export earnings LDCs appropriated marketing chain suppliers intermediate inputs intermediate links domestic LDC producers final consumer global market. 54. recognised LDCs accelerated import liberalisation exposed local industry entrepreneurs competition uneven playing field. , provisions WTO SAR reforms today LDCs expect return regime protects local industry entrepreneurs. interventions designed promote diversification production sector LDCs designed enhance competitive capacity entrepreneurs. process export diversification reinforced policies reduce excessive import dependence LDCs larger populations. smaller LDCs, regional arrangements pursued vigour address problems coming decade. , bigger partners regional grouping donors provide unrestricted market access meaningful support enable LDCs benefit linkages. domestic market attention restored small medium industries (SMI) rural based industries suffered heavily regime indiscriminate import liberalisation remain crucial strategy poverty- alleviating growth. 55. industrialisation strategy backed credible public institutions. weakened capacity government LDCs play role industrialisation process attention role LDCs arrest process deindustrialisation contributed structural atrophy. TD//47/CRP.5 Page 20 56. part process helping LDCs diversify economies, Panel put special emphasis information technology telecommunications industries. industries, individually, offer LDCs plateau economic development. Closed attitudes industries, , exacerbate significant "digital divide". potential benefits include significantly reducing problems LDCs derive land-locked small island states. sector, , requires attention demands higher priority education, generally specialized training. panel recommends convening global private sector commission suggest steps LDCs order attractive partners attract global information technology investment. additional innovation call create international information technology corps (patterned US Peace Corps). agenda poverty eradication 57. Poverty eradication heart strategy transforming LDCs. , strategy move standard target-group interventions based micro-credit higher allocations human development. poor poor, class, located centre policy design. Policies, resources community institutions put place provide basic education, health care, employment security income erosion health, age environmental reasons. programmes backed creative agenda interventions designed give poor access productive assets corporate wealth LDCs effectively integrated productive process dynamic market. Improving Governance 58. suggestions premised reinvention state behave differently prevailing manifestations state LDCs. TD//47/CRP.5 Page 21 rethinking role state, assumes state exposed levels accountability public hierarchy. Devolution authority local elective institutions accountability administrative bodies, farmers investors, remains part standard agenda good governance. 59. LDCs suffer coverage fiscal system levels collection. major attention LDCs improving governance revenue mobilisation agencies investing political authority state ensure rich powerful evade tax net. , improved revenue collections directed priority areas poverty eradication insrastructure development consumed -productive areas. public expenditure infrastructure sector, human development, remain remain, largely public hands, governance sectors substantially improved state divest operational responsibilities. Enhancing Human Capital 60. consultations LDC countries, importance Human Resources Development improvement condition populations emphasized. include investments education training, health, sanitation environment, managing population increase coping ravages HIV/AIDS. emphasis 1990s human development, LDCs suffered erosion quality human resource base due reform programmes cases led drastic cuts financial allocations social sectors. POA , recognise human capabilities good health, nutrition, education, important facilitate elimination barriers constrain people’ ability contribute benefit improvement economy. POA strongly recommend investing people. 61. Continuing high fertility rates LDCs, , result rapidly growing populations, large proportion young people school - age, impacts costs, content quality education. demographic TD//47/CRP.5 Page 22 implications accelerated development -articulated POA concrete, - funded, measures moderating population supported LDCs. 62. area health, POA address issue HIV/AIDS diseases malaria, impacted development. important advances years addressing diseases . LDCs expected cope deadly scourge HIV/AIDS . demands regional global effort global resources invested research delivery affected countries affordable prices. 63. quality human resources viewed context enabling LDCs catch rest world. respect, content education training relevant. imperatives technological change development information technology demand attention LDCs position advantage liberalised cross-border transactions, competitiveness global networks, enhance employability improve access vulnerable populations labour market opportunities. LDCs managed pace changed nature content jobs ways production systems work organized. Workers enabled adjust flexibly effectively job career imposed globalizing world economy. issue highlighted field missions selected LDCs, stated LDCs access markets meaningless market, terms quality competitiveness. 64. appropriateness content education training cited responsible hindering employability job creation, recognised LDCs, increased global competition led job losses concentrated sectors industries. scenario justified economic efficiency grounds, negative impact social pain left difficult legacies contributed civil unrest political upheaval LDCs. POA recognize key role employment wealth - creation, primary instrument distributing equitably. Strategies designed ensure jobs TD//47/CRP.5 Page 23 destroyed result increased global competition compensated growth jobs context global market place. 65. enhancement preservation pool high quality human resources delinked system remuneration incentives enable LDCs retain trained manpower. downsides globalisation process faced LDCs massive brain drain qualified persons countries impact professional capacity. country visits LDCs confirmed weaknesses institutional capacity productive sectors government public agencies. Responding shocks 66. Part process LDC lies frequent exposure shocks global system nature civil upheaval. discussed issue civil upheaval context governance. , natural shocks form periodic national disasters pandemic diseases remain common LDCs. ravages nature. operative issue lies capacity respond natural shocks. inability readily absorb shocks originates undiversified nature LDC economy. natural disaster cripple economy LDC interrupting agricultural growth, causing damage infrastructure industry disturbing macro-economic stability enhanced budgetary costs compounded loss revenue export earnings. 67. LDCs remain ill-equipped cope shocks lead large scale loss life, famine disaster. LDCs long exposure natural disaster improved coping capacity diversifying agriculture order dependent weather establishing permanent bodies cope disaster. respond promptly crisis quickly diverting resources disaster management. countries civic mobilisation, led - established NGOs, funded donations , government deliver resources disaster victims. TD//47/CRP.5 Page 24 68. light LDC experience interventions suggested cope shocks administered natural disasters: • Disaster-prone countries standing public bodies place, involving government civil society, cope disaster; • Established response protocols place assign responsibility short notice agency prepare population impending disaster structure national-wide response disaster occurs; • Mechanisms oversight, ensure accountability transparency process disaster management, place; • effort build political coalition deal disaster purposes political opportunism; • global response mechanism place, moves ad hoc relief measures prevent starvation diseases rescue victims. mechanism provide compensatory financing external resource view compensate affected country loss export earnings domestic revenues cover additional budget costs providing relief, rehabilitation investing recovery economy; . INTERNATIONAL RESPONSES Trade 69. light Panel' earlier discussions role LDCs global trading system agenda action suggested inclusion prospective Programme Action emerge Brussels’ conference: 70. LDCs recognised single group countries spirit Uruguay (UR) negotiations view subsequent approach articulated successive Ministerial Meetings. approach suggests parity treatment LDCs group countries group divide LDCs discriminate countries ommitted benefits. TD//47/CRP.5 Page 25 71. Market access LDCs remains lasting service international system provide LDCs. provide basis stimulating investment technology inflows guided impetus market forces. market access regime LDCs aim measures. • Grant quota free tariff access LDCs markets developed economies DCs larger economies; • Revise rules origin (ROO) requirements preferential treatment GSP schemes suit development local manufacturing capacities LDCs provide encouragement LDCs participate regional trading arrangements. • Ensure issues labour standards, competition policy environment manner applied NTBs exports LDCs. • Provide liberalisation market access movement labour industrialised countries area LDCs natural advantage. 72. Integrated Framework initiative technical assictance LDCs failed unfunded mandate. , intended address key supply side constraints LDCs. effort donors, multilateral institutions LDCs alike give higher priority capacity problems LDCs areas : • Funding capacity expansion diversification; • Providing incentives industrial country enterprises institutions promoting transfer technology LDCs; • Providing funding support LDCs enable effective WTO’ dispute settlement procedures. 73. 48 LDCs, 29 members WTO. severely constrained lack adequate capacity ensure compliance WTO provisions. time special membership status countries possibly expected fulfil WTO requirements. status confer helpful relevant benefits TD//47/CRP.5 Page 26 LDCs, requiring reasonable. , LDCs WTO members suspend membership assume status. panel understands suggestion runs counter efforts WTO -encompassing, panel views efforts unrealistic , , interest WTO multilateral trading system. creative oucomes multilateral trade . Capital Flows LDCs 74. decline relative absolute terms ODA flows LDCs demands urgent address international community. Paris Conference 1990, international community general specific commitments respect ODA (paragraphs 20 24 POA) largely failed honour. Mid-term Global Review late 1995 LDCs development partners emphasised critical importance ODA, resolved “Donors expeditiously implement agreed menu aid targets / commitments set paragraph 23 Programme Action fulfil commitments provide significant substantial increase aggregate level external support LDCs.” 75. view Panel failure donor community deliver financial support measure commensurate foreseen POA consequence deficiencies LDCs meeting goals SNPA POA 1990. , Panel argues failure increase ODA LDCs fully explains disappointments setback development LDCs 1990s. difficulties problems, decline ODA 1990s quarter , increased ODA contributions foreseen, major factor perpetuating crisis LDCs. 76. Panel sees early reversal steep trend decline developed countries’ financial contribution ODA poverty alleviation development LDCs decisive condition limited success countries. task return ODA LDC group 1990 level seek ways means TD//47/CRP.5 Page 27 decade 2000 2010 expand ODA line agreed POA 1990s. 77. Panel opportunity explore range donors understanding reached 1990 significantly expand ODA poorest countries dramatically negated. donor countries measure aid fatigue; , aid managers acutely aware implementation difficulties, problems sustainability . , priorities financial support donors presented urgency 1990s, arising humanitarian crisis situations rebuilding economies transition. donor community attention financial support assist poorest countries flagging. evidence donor countries, individually capitals collectively DAC, understanding reached POA 1990s expand ODA LDCs reflected processes ODA allocation. POA document shelves – rarely referred capitals deliberations DAC. 78. Panel sees part due deficiencies monitoring POA. UNCTAD produces year report LDC situation (including forthcoming report concentrating development financing), country level – LDCs donors – monitoring appears effective. explicit incorporation agreed menu aid targets / commitments donor aid strategies budgetary planning mechanisms place, performance individual donors respect targets commitments critically systematically assessed consultations country examinations DAC. Panel realises monitoring produce major reversals flow ODA LDCs, attention opportunities improvement brought fore, cost inaction clarified. 79. Moving goals aid community meet obligations LDCs Paris 1990, longer term vision address reaching global aid regime. suggestion worthy consideration Panel ODA gradually phased advanced DCs TD//47/CRP.5 Page 28 left access global market increasingly financing capital transfers DCs exclusively directed LDCs. 80. attention aid donors enhancing ODA levels financing infrastructure development LDCs. growing tendency leave LDCs mercies capital market build power plants upgrade telecommunications facilities led growing underprovisioning investments sector LDCs. LDCs access FDI areas access sufficient urgency. infrastructure investments stimulate investments commodity service producing sector, delayed investment infrastructure impacts willingness FDI LDCs. panel suggests LDCs encouraged attract FDI infrastructure development, ODA enhance diversify access resources areas. 81. panel convinced expanding private capital flows LDCs ingredient assuring LDCs lag global economy alleviating poverty. Addressing investment deficit major item Program Action coming decade. Debt 82. light problems identified Panel addressing problem debt relief LDCs programme action suggested area: • Provisions deeper, faster broader debt relief based thresholds judging debt sustainability, realistic forecasts economic growth, exports import, -front extinction debt stocks front-loading debt service relief. • International policy efforts focus financing bottlenecks constraining debt relief poor countries. Costs debt reduction takes account risk -payment. Assessment real financing costs debt relief creditors account benefits removing TD//47/CRP.5 Page 29 debt overhang official creditor-donors condition enhanced aid effectiveness. • durable exit debt problem domestic policies promote faster economic growth. policies focus fundamentals increasing investment, productive capacities, productivity, savings international competitiveness targetted structural change poverty reduction. • tension enhanced resource flows, policy conditionality domestic ownership resolved, pragmatic view key policy ingredients accelerating growth. Strengthening capacity debtor countries implement effective debt management policies important. technical assistance , , required enable debtor countries participate equal partners HIPC process. • imperative domestic development strategies supported international policy environment. • Finally, problem moral hazard HIPC initiative addressed. emphasis debt part process structural change LDCs. present approach HIPC debt relief selective process based severity LDC’ debt servicing expanded cover LDCs. Similarly, focus debt relief focus exclusively focus poverty alleviation extended service investment infrastructure promote structural needed ensure LDC enhance external earnings capacity avoid lapsing debt. TD//47/CRP.5 Page 31 Table 1 Selected Economic Social Indicators LDCs Developing Countries (1980s 1990s) (1) (2) (3) (4) . Economic Indicators Year/period LDCs Developing Countries DC/LDC Disparity ratios (2) % (3) GNP capita (Current International Dollars) 1980 724 2587 27.99 1990 1179 4078 28.91 1997 1343 4598 29.21 Share Labour Agriculture 1990 73 32 228.13 Share Agriculture GDP 1997 34 17 200.00 Share Primary Commodities Total Exports 1980 86.3 79.6 108.42 1997 68.9 31.9 215.99 Export Concentration Index 1998 0.53 0.38 140.21 Export Instability Index 1980-97 20.3 13.4 151.49 Energy Consumption -Coal, Oil, Gas Electricity 1980 64 508 12.60 1996 69 898 7.68 -Fuel, Wood Charcoal 1980 212 125 169.60 1996 210 135 155.56 .Social Indicators Annual Population Growth 1960-70 2.4 2.3 104.35 1990-97 2.6 1.7 152.94 Age Dependency Ratio (dependence working-age population) 1975 0.9 0.81 111.11 1997 0.92 0.67 137.31 Infant Mortality Rate( 1000) 1997 14.08 65 21.66 Life Expectency Birth(years) 1990-95 49 62 79.03 Hospitals beds 1000 population 1990 1.1 4.8 22.92 Physicians( 1000 people) 1990 0.1 1.6 6.25 Adult Literacy rate(age 15 ) 1995 48.9 81.4 60.07 School Enrolment Primary (% gross) 1995 72 100 72.00 Secondary (% gross) 1995 16 65 24.62 Tertiary (% gross) 1995 1.6 17.7 9.04 Infrastructure Telephone main lines( 1000 people) 1997 5.1 94 5.43 Telephone average cost local line (US $ minutes) 1997 0.1 0.05 200.00 Source: Developed Countries, 1999 Report, United Nations. Table 2 Trajectories change LDCs(1980-1997) Total Number LDCs countries: 48 Year Number LDCs 1 2 3 4 5 . Macro Economic Indicators 1.Annual Average Growth Rates capita real GDP(%) 1980-1990 1990-1997 15 22 5 0 6 2. Capita Agriculture Production Growth Rate(%) 1980-1990 1990-1997 15 26 2 1 4 3. Capita Food Production Growth Rate(%) 1980-1990 1990-1997 11 25 9 0 3 4.Average Annual Growth Rate(%) Mfg. Sector 1980-1990 1990-1997 10 17 1 1 19 5.Population Annual Average Growth Rate(%) 1980-1990 1990-1997 15 23 5 5 6.Average Annual Growth Rate(%) Investment 1980-1990 1990-1998 16 11 4 0 17 7.Manufacturing Sector' Share GDP 1980 1997 17 16 2 7 6 8.Current Account balance Percentage GDP 1981-1990 1991-1996 4 13 4 27 .Human Development Indicators 1.Infant Mortality Rate ( 1000 Live Births) 1985-1990 1997 10 32 4 2 2.Average Life Expectency Birth (years) 1985-1990 1990-1995 25 13 5 3 2 3.Total Food Supply(Claories capita day) 1980 1997 18 17 4 5 4 4.Percentage Population access sanitation Urban 1980 1997 30 10 2 1 5 5.Percentage Population access sanitation Rural 1980 1997 22 7 3 1 15 6.Total School Enrolment Ratio (% Relevant age group) primary 1980 1996 19 17 5 7 7.Female School Enrolment Ratio (% Relevant age group) primary 1980 1996 21 14 6 7 8.Total School Enrolment Ratio (% Relevant age group) Secondary 1980 1996 20 7 14 7 9.Female School Enrolment Ratio (% Relevant age group) Secondary 1980 1996 24 5 11 1 7 . Infrastructure 1.Telephones 1980 1996 18 11 5 1 13 2.Coal, Oil, Gas Electricity(consumption capita) 1980 1996 20 21 3 1 3 3.Fuelwood, charcoal bagasse(consumption capita) 1980 1996 9 21 7 2 9 4.Installed eletricity capacity 1980 1996 11 25 5 4 3 .External Economic Trends 1.Total Financial Flows 1985 1997 31 14 2 1 2.ODA 1985 1997 29 10 6 3 3. capita ODA 1980-1989 1990-1997 29 12 3 3 1 4.Debt/GDP (%) 1985 1997 22 16 3 7 5.Debt service/ exports(%) 1985 1997 4 37 1 6 Key 1:Indicators show improvement 1990s compared 1980s 2:Indicators show deterioration 1990s compared 1980s 3:Indicators show improvement 1990s compared 80s performance trajectories showed continued deterioration 1980s 1990s 4: Change 5:Data 1980s 1990s Source: Developed Countries,1999 Report, United Nations