UNGA79 Side-Event: Building productive capacity in Small Island Developing States

Your Excellency, Moosa Zameer, Minister of Foreign Affairs of Maldives;

Your Excellency, Dr. Rui Alberto de Figueiredo Soares, Minister of Foreign Affairs, Cooperation and Regional Integration of Cabo Verde;  

Dear Lord Collins of Highbury, Parliamentary Under-Secretary of State of the Foreign, Commonwealth and Development Office;

Excellencies,

Distinguished delegates,

Ladies and Gentlemen,

This year is pivotal for Small Island Developing States, marked by the fourth International Conference on Small Island Developing States, held in Antigua and Barbuda in May.  

The Conference highlighted the notable socio-economic progress made by many SIDS, despite their unique challenges.

But their challenges remain broad: From geographic isolation, small economies and heavy reliance on external trade, to systemic risks, structural vulnerability and underdeveloped production networks.

Moreover, they are disproportionately affected by natural disasters and are on the front-lines of climate change.

Historically, support for SIDS has addressed their geographic isolation and small size. However, the key to their development lies in building productive capacities.

Productive capacities are the productive resources, entrepreneurial capabilities and production linkages that together determine a country's ability to produce goods and services that will help it grow and develop. They provide the means for economic diversification, structural transformation, resilience to external shocks and poverty reduction.

UNCTAD has done pioneering work in this area.

We developed an index to measure and benchmark productive capacities. The so called PCI is a practical tool that helps developing countries assess the status of their productive capacities and identify ways to improve them.

It includes eight dimensions: human capital, natural capital, energy, transport, information and communication technology, institutions, private sector, and structural change.

The index is now available for 194 economies.

For SIDS, the PCI reveals that Caribbean SIDS generally score higher but often lag in private sector development and natural capital.

African and Pacific SIDS show mixed results, while SIDS that are also Least Developed Countries have the poorest performance.

To address gaps and leverage comparative advantages, UNCTAD has also developed National Productive Capacities Gap Analyses and Holistic Productive Capacities Development Programmes.

So far, gap analyses have been prepared for 13 countries, including two SIDS: Comoros and Haiti.

A successful pilot holistic programme was implemented in Angola, funded by the European Union. The programme modernized Angola's trade, investment, and production-related policies, boosting diversification and green transition. During the project’s implementation, Angola’s non-oil exports increased by 5.7 per cent in real terms.

The importance of productive capacities has been recognized in various international initiatives.

Critically, the Antigua and Barbuda Agenda for SIDS calls for assisting SIDS to diversify economies and strengthen productive capacities. Member states particularly called for supporting SIDS in formulating economy-wide Holistic Productive Capacities Development Programmes. Such programmes require new forms of development partnerships, including South-South and triangular cooperation.

Another example is Secretary-General Guterres’ Initiative “Transforming4Trade” launched during the General Assembly last year. The initiative highlights the PCI, National Productive Capacities Gap Analyses, and Holistic Productive Capacities Development Programmes as valuable tools to address gaps and leverage comparative advantages.

Productive capacities are also central to UNCTAD’s SIDS Strategy.

UNCTAD is the first organization to develop a comprehensive strategy to address the systemic and persistent development challenges of SIDS. Developed in consultation with the SIDS Group and under the leadership of our Secretary-General Grynspan, the strategy is data-driven and focuses on leveraging SIDS’ comparative advantages, addressing their key constraints, and seeking improved development partnerships. It offers concrete support tools to strengthen production and export potential; build the Blue Economy; improve connectivity and customs control; implement trade facilitation reforms; and facilitate digital transformation, investment and private sector development. The strategy aims to make SIDS economies driven by skills, knowledge and technology, especially in sectors where they have a comparative advantage, such as services trade, blue economy and bioprospecting.

To ensure the strategy’s success, adequate resources are required. To this end, we set up a SIDS Trust Fund. We greatly appreciate the contribution that was already received from Portugal.

Moreover, we are launching a new project through the UN Development Account “Stronger and greener productive capacities for just transitions in Caribbean Small Island Developing States”. This initiative, in collaboration with UNDESA, ECLAC and the RC system, supports four Caribbean SIDS to boost statistical capacity, identify productive capacities gaps, and design holistic programmes to address these gaps.

Funding is particularly important as SIDS often have less access to external finance and are among the most indebted developing countries in the world.

To address the debt problem, UN Trade and Development has advocated for a new development-centered international debt architecture. This means:

• Scaling up concessional finance and grants from multilateral and regional development banks through greater capitalisation and re-channeling of unused Special Drawing Rights to Multilateral Development Banks.
• Enhancing international liquidity through improved access to existing Global Financial Safety Net instruments with a focus on fairness and increased quotas for developing countries.
• Implementing standstill rules that provide breathing space during crises to boost resilience to external crises. A good example are climate-resilient debt clauses.
• Enhancing debt sustainability analysis by reflecting investments in the SDGs.
• And making the Common Framework worthwhile for countries in distress.

Dear friends,

SIDS are a vital part of the global community, yet their economies face distinct and compounded challenges.

It is our shared responsibility to support these states as they cannot face these challenges alone.

As Secretary-General Grynspan has emphasized, multilateralism remains the best tool for achieving an inclusive and sustainable future, even as we navigate a more multipolar world.

I thank you for your attention and continued support.