Placing productive capacities at the heart of least developed countries’ development policy and strategy

UNCTAD Policy Brief No. 86

The coronavirus disease (COVID-19) pandemic has brought to light not only the systemic interdependence of countries, but also the socioeconomic fragility of the global economy. From a trade and development perspective, this has been felt most acutely in the most vulnerable developing countries – the least developed countries (LDCs).

Even prior to the onslaught of the COVID-19 pandemic, LDCs faced complex development challenges, compounded with economic growth patterns that have failed to translate into accelerated poverty reduction and job creation.

As the international community prepares for the upcoming fifteenth session of the United Nations Conference on Trade and Development (UNCTAD XV) and the Fifth United Nations Conference on the Least Developed Countries (UNLDC V), innovative strategies and approaches to enhance economic growth and address underlying vulnerabilities are urgently needed.

This policy brief is a call to action for LDC Governments and the broader international community of development partners to take concerted action in the fostering of productive capacities for sustainable development.

Key points:

  • The least developed countries (LDCs) and development partners should prioritize the building, maintenance and use of productive capacities as an overarching framework of support for these countries.

  • The forthcoming programme of action in support of LDCs and domestic policies in LDCs themselves should make productive capacities central in order to build resilience to shocks.

  • Countries that have developed a broader and deeper set of productive capacities across various dimensions have been better positioned to face the effects of recent external shocks.

  • Building and utilizing productive capacities is the key to achieving sustainable and inclusive economic growth in LDCs. That is, such growth and poverty reduction in the LDCs rely on fostering productive capacities.

  • By developing productive capacities, LDCs will be better positioned to enter and compete in new international markets in goods and services, especially in more sophisticated value added goods, which leverage technology and innovation to go beyond primary commodities.

16 Jun 2021