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Preferential Market Access
% imports admitted duty free
excluding arms and oil
• Developing countries
– 1996:
– 2008
54%
80%
• Least developed countries
– 1996
– 2008
78%
81%
Funding Limitations
• (Enhanced) Integrated Framework: only US$1 million per
LDC. Total IF/EIF expenditures 2002-2008 equivalent
less than 0.1 per cent of aid for trade disbursements.
• LDC Fund (climate change): only US$4 million per LDC
BUT
• UN system prioritizes LDCs
– Expenditures on operational activities for LDCs rose from $2.4
billion in 2000 to $7 billion in 2008
– 38 per cent of expenditure on operational activities targets LDCs
– Share of UN in-country expenditure on operational activities in
LDCs up from 39% in 2003 to 50% in 2008
Despite Enhanced Integrated Framework,
LDCs lag behind in Aid for Trade allocations
Issues with Global Economic
Regimes
• Missing elements (commodities)
• Models of trade, finance and technology
inadequate for LDCs
• GERs constrain policy ownership
• Policy in LDCs more driven by PRSP
process than BPOA
• ´The right hand has been taking away
what the left hand was meant to be giving´
What’s New for the Coming
Decade
• Internally: Employment challenge and
employment transition.
• Externally
– Climate change
– Intensifying South-South economic relationships
(50% of LDCs exports to, and 62% of LDC imports
from, developing countries in 2007-2008)
• Lessons of experience. We know how
development is done. We know how countries
escape the poverty trap and achieve mass
poverty reduction.
How to improve international support for the
LDCs in coming decade
• LDCs need a new generation of international
support mechanisms
– Mechanisms not measures
– Focus on developing productive capacities
– Coherent with global economic regimes
• Reforms in global economic regimes which
affect development and poverty reduction in
LDCs
• Enhanced South-South development
cooperation
A New International Development
Architecture for LDCs (NIDA)
“NIDA is defined as a new architecture of formal and informal
institutions, rules and norms, including incentives, standards and
processes, which would shape international economic relations in a
way that is conducive to sustained and inclusive development in
LDCs”
Objectives:
(i) reverse marginalization and help LDCs catch-up;
(ii) support a pattern of accelerated and economic growth which
would improve general well-being
(iii) help LDCs to graduate from LDC status

THIS IS AN AID-PLUS APPROACH

FOCUS ON POTENTIAL NOT SIMPLY NEED
8 principles of NIDA
• New development paths based on developing productive
capacities
• Country ownership and policy space to enable national
leadership
• Strategic integration with better balance between
external and domestic sources of demand and finance
• Better balance between state and markets (meaning of
`market-based policies´)
• Greater domestic resource mobilization
• Policy coherence (between pillars and between GERs
and ISMs)
• S-S development coooperation complementary to N-S
development cooperation
• LDc voice and representation in global governance
Five Major Pillars of NIDA
•
•
•
•
•
Finance
Trade
Commodities
Technology
Climate change adapation and mitigation
Finance Pillar
• Key Challenges
–
–
–
–
–
Low domestic savings and investment
Capital flight
High aid dependency
Weak country ownership
Continuing debt overhang
• Strategic Orientations/Specific Initiatives
– Increase aid in line with existing commitments
– Seek innovative sources of finance (e.g. SDR allocation)
– Catalytic use of aid to leverage development finance
• Promote domestic resource mobilization;
• Increase share of aid to production/infrastructure;
• Innovative uses of aid for private sector development
– Improve aid effectiveness through support for country ownership
• Reduce conditionalities,
• Foster aid management policies at recipient country level,
• Build developmental state capabilities
Trade Pillar
• Key Challenges
–
–
–
–
–
–
Deep trade liberalization/low competitiveness
Continuing marginalization in global economy
Increasing lock-in to commodities/low skill manufactures/tourism
High levels of export concentration
Weak linkages to rest of the economy
High levels of food imports
• Strategic Orientations/Specific Initiatives
– “Early harvest” from Doha Development Agenda (extension of
DFQF market access)
– Enable LDCs to pursue policies of strategic integration
• Empower LDCs to use available flexibilities within WTO (e.g. bound
rather than applied tariffs)
• Improve Special and Differential Treatment within WTO
– Address supply-side constraints through ensuring Enhanced
Integrated Framework leads to more and more effective Aid for
Trade
Commodities Pillar
• Key Challenges
– High levels of commodity dependence coupled with absence of
international commodity policy
– Long-term decline in terms of trade
– High and increasing volatility of commodity markets (effects of
financialization)
– Low resource rents and mismanagement of resource rents
• Strategic Orientations/Specific Initiatives
– Introduce contingency financing facilities to reduce impact of
commodity price volatility
– Introduce new measures to reduce commodity price volatility
• Taxation of commodity derivative markets
• Innovative commodity stabilization schemes
– Use aid to improve ability to negotiate contracts with TNCs (e.g.
improve data on LDCs’ natural resource potential) and
management of resource rents through boom and bust cycles)
– Use financial and technical assistance to promote greater local
value-added and linkages from resource-based diversification
Technology Pillar
• Key Challenges
–
–
–
–
–
–
Weak domestic technological capabilities
Little technology transfer and low absorptive capabilities
Poor human resources/physical infrastructure
Excessive focus on intellectual property rights
Donor blind-spot
Poor STI state capacities and STI institutional infrastructure
• Strategic Orientations/Specific Initiatives
– Create a better balance between private and public dimensions
of knowledge in global knowledge architecture
– Support technology transfer and the development of STI
capabilities at enterprise level
• Implement TRIPS Article 66.2
• International Spark Initiative
• Establish technology licence bank for LDCs
– Invest to improve domestic knowledge systems (eg via diaspora)
– Enhance dev. state capacities to promote technological learning
Climate Change Pillar
• Key challenges
– Major environmental impacts (increasing natural disasters,
higher average temperatures, reduced availability of wager
resources, sea-level rise)
– Low adaptive capabilities
– Lack of financial resources and technologies
• Strategic orientations/specific initiatives
– Enhance sustainability and predictability of global climatechange-related with LDC exceptions
– Improve governance of climate change finance
• Increase finance to LDC Fund so that it can support adaptation
programmes not projects; integrate into development strategies
– Promote development of renewable energy resources (CDM)
– Constructive engagement with REDD (reducing emissions from
deforestation and forest degradation)tcmisegament with constru
South-South Development Cooperation
(transversal issue in 5 pillars)
• Strengthen South-South dev cooperation
with large/dynamic developing countries
• Deepen regional integration
• Preferential financing of technology
transfer
• Regional R&D hubs
If NIDA implemented, significant gains
in income per capita possible by 2020
The Haitian earthquake
illustrates the extreme
vulnerability of LDCs. The
global financial and
economic crisis can be
considered a catastrophic
event analgous to an
earthquake, which not
only wreaks devastation
but also offers an
opportunity for
reconstruction and a new
beginning.
This work is part of a longer series
Thank you
To download UNCTAD Least
Developed Countries Reports,
http:/www.unctad.org/ldcr