UNCTAD Productive Capacities Index: Focus on Landlocked Developing Countries
Weak productive capacities penalize structurally weak and vulnerable economies, including many landlocked developing countries. This penalty is aggravated by the coronavirus disease pandemic, and the global economic crisis that has accompanied it, wreaking havoc on the production structures, trading relationships and domestic livelihoods of these countries. The deep economic shock is compounding mounting damage from climate change, steep drops in international commodity prices and declining trust in global solidarity, threatening to erase the development gains of the last decades. New pathways for building economic resilience and addressing the root cause of vulnerabilities in these countries are desperately needed.
The Productive Capacities Index is the first comprehensive attempt to measure productive capacities in all economies and construct a multidimensional index that can provide country-specific insights and diagnostics of productive capacity development. The Index draws on decades of extensive research and policy analysis work by UNCTAD, as well as technical support to the most vulnerable countries in developing key aspects of their trade and productive structures. The Index also offers country and regionspecific scores to help in understanding the sources of systemic vulnerabilities and the identification of the enablers of economic growth, including progress towards sustainable development in countries and the Sustainable Development Goals.
This study provides an in-depth analysis of the challenges to productive capacity development in landlocked developing countries. It reveals that the average scores of landlocked developing countries lag behind those of developing regions in seven of the eight categories comprising the Index, although landlocked developing countries have scores slightly above the average scores of the least developed countries.
The only area in which landlocked developing countries perform better than other developing countries is in terms of their natural capital, which indicates their dependence on the extractive sectors for exports and overall economic growth. As a result, UNCTAD is calling for a new generation of domestic policy strategies that place the fostering of productive capacities at their centre, shifting from current fragmented and project-based interventions towards coherent, economy-wide and programme-based approaches, to remove binding constraints on development. Actions and interventions at the domestic level need to be supported and complemented by new and robust international support measures from development and trade partners.
Developing countries, including the most vulnerable among them, with the support of development partners, need to strive to grow their productive capacities, transforming their economic structures and reversing their continued marginalization in the global economy. The Productive Capacities Index offers indispensable guidance for new policy pathways that can realign incentive structures to revive socioeconomic progress and address persistent vulnerabilities to external shocks, whether economic, health-related or other shocks.
Secretary-General of UNCTAD
The UNCTAD Productive Capacities Index is the outcome of United Nations Development Account Project 1617M, titled “Indices for benchmarking productive capacities for evidence-based policymaking in landlocked developing countries”.