UNCTAD16 parallel event: Expanding productive capacities to enhance developing countries’ financial sustainability

Your Excellency, Baboucarr Ousmaila Joof, Minister of Trade, Industry, Regional Integration and Employment of The Gambia

Dear Lee Kinyanjui, Cabinet Secretary for Investments, Trade and Industry of the Republic of Kenya

Dear Tekreth Kamrang, Secretary of State, Ministry of Commerce of the Kingdom of Cambodia

Dear Xiaowen Fu, Professor at Hong Kong Polytechnic University

Dear Taffere Tesfachew, Senior Advisor on Economic Transformation in Africa, Tony Blair Institute for Global Change,

Dear Gilson Pina, National Director for Planning, Ministry of Finance of the Republic of Cabo Verde 

Dear Ratnakar Adhikari, Executive Director of the Executive Secretariat of the Enhanced Integrated Framework,

Excellencies,

Distinguished participants,

There are few issues that are as important for shaping the economic future of developing countries as productive capacities.

They are at the heart of any efforts for structural transformation, and the backbone of sustainable, inclusive and resilient development.

And as many of you know, this is a topic embedded in UNCTAD’s DNA and work.

It is thus my pleasure to welcome you to this event on productive capacities.

Let me start with a brief historical note:

The term productive capacities was coined by UNCTAD nearly two decades ago. It is an example of UNCTAD’s contribution to development thinking, similarly to the establishment of the Least Developed Countries category.

The term identified and reflected the factors that we knew can determine the ability of a country to produce goods and services that will help it grow and prosper. This includes factors of production such as capital, entrepreneurial capabilities, and production linkages.

The concept was born.

But then another challenge emerged.

How to measure in a meaningful way all these factors that determine productive capacities? Consider that we are talking about levels of education, health conditions, the sustainability of power sources, roads and railway networks, access to internet, institutions, etc.

While many of these factors can be measured individually, how to combine them to have a better indication of productive capacities?

This required a big leap in productive capacities: From treasure what we can measure to measure what we treasure.

It was the genesis of the Productive Capacities Index, or PCI as some of you know it.

Today, the PCI measures and benchmarks economy-wide productive capacities. It helps countries identify structural gaps and pinpoints comparative advantages across key areas like energy, ICT, and transport.

It enables us to design policies to close development divides and foster transformative growth.

Ladies and gentlemen,

No country in history has achieved sustainable development without strengthening its productive capacities. They are key to broaden the technological base, increase productivity, diversify the economy, and create decent jobs.

We know that strengthening productive capacities and structural transformation is hard.

In fact, two thirds of developing countries remain commodity dependent, and this proportion has hardly changed in the last three decades.

For many of these countries growth has often been fragile, short-lived, and externally driven. This had led to high vulnerability, low value-added production, limited social development, and persistent poverty.

It has also undermined their external debt sustainability, diverting fiscal resources from essential social and economic priorities to debt servicing.

We know that today, 3.4 billion people live in countries that spend more on debt interest than on health or education. This does not provide developing countries much space to boost their productive capacities. 

However, we remain hopeful.

Despite the challenges, developing economies have a rich, untapped potential in natural resources, human capital, and entrepreneurial spirit.

By expanding their productive capacities, developing countries can unlock the full potential of their economies.

Of course, this requires resources.

To assist countries in identifying policies that enable them to strengthen their productive capacities and finance their development agendas,  UNCTAD has developed the Sustainable Development Finance Assessment tool.

Excellencies,

Distinguished friends,

I trust all of you in this room believe in the importance of productive capacities to build more inclusive, sustainable and resilient economy. In a way, I am preaching to the converted.

So, my question to you is how to take the work on productive capacities to the next level?

How can we better use the PCI to provide tailored assessments to help countries identify constraints and unlock pathways to shape their future?

And how can national development plans that build productive capacities be financially viable?

UNCTAD remains fully committed to helping countries strengthen their productive capacities, catalyze their transformation and shape a future that leaves no one behind.

To this end, your ideas and discussions will be key and I look forward to the outcome of your deliberations.

Thank you.