• Sun. Apr 21st, 2024

The 5th United Nations Conference on LDCs looks promising


Mar 14, 2023

DOHA March 14th (ABP) – The 5th United Nations Conference on Least Developed Countries (LDCs) has been held in the city of Doha from March 5 to March 9, 2023. About 40 presidents of those countries, heads of international organizations starting with the UN Secretary General, Antonio Guterres, but also 9,000 participants and a large number of journalists gathered in Qatar. They were brought together around a ten-year program (2020-2030) called the “Doha Action Program on LDCs”. It succeeds the Istanbul Action Program which has just expired and whose results have not been satisfactory when considering the criticisms of the Heads of State who have taken the floor, where they denounced “the broken promises”.

Indeed, according to the report of the United Nations Conference on Commerce and Development (UNCCD) released in 2021 entitled: “The least developed countries in the post-COVID world: taking lessons from 50 years of experience”, the number of LDCs doubled from 25 when the category was created in 1971 to a peak of 52 in 1991.

Six countries graduated from the category, namely Botswana, Cabo Verde, Equatorial Guinea, Maldives, Samoa and Vanuatu, and as of January 2021, the remaining LDCs are 46 in number. The COVID-19 pandemic has resulted in the worst growth performance in 30 years and has reversed progress made on several dimensions of development, including poverty, education, nutrition and health. The low vaccination rate of LDCs against COVID-19, which concerns only 2% of the population, compared to 41% in developed countries, erodes the already weak resilience of those countries. LDCs accounted for only 0.13% of total world trade in the 2010s. The development challenges of LDCs have remained broadly the same over the past 50 years, and their marginalization in international trade has persisted.

85% of LDCs remain dependent on commodities, despite the improvement in the share of manufactured goods in their exports, which rose from just over 20% in 2011 to 37% of total exports in 2019. According to that report, economic and social development indicators have improved considerably over the years, although weaknesses remain. The real Gross Domestic Product (GDP) of LDCs increased five-fold, from around $200 billion in 1971 to $1,118 billion in 2019 (all figures in constant 2015 prices). According to that report, real GDP per capita increased at a much slower rate than real GDP (1.3% per year), rising from around $600 to $1,082 over the same period, due to rapid population growth.

Prior to the COVID-19 shock, LDCs accounted for about 1% of global GDP, roughly the same share as in the early 1970s. That report also states that GDP per capita for the LDC group was less than 10% of the global average in 2019, before the COVID-19 crisis. The figure was even lower than in 1971, when their GDP per capita was 15% of the world average. Only seven LDCs, namely Bangladesh, Bhutan, Cambodia, Lao People’s Democratic Republic, Lesotho, Mali and Myanmar have consistently exceeded the world average GDP per capita growth by more than 1% and have therefore converged towards the living standards in higher income countries. Half of the current 46 LDCs have lagged behind the world average since 1971, while a dozen other LDCs have somehow come out of it and have globally reached the world average growth rate of GDP per capita.

Growth spurts have been common over those 50 years, but LDCs stand out for having more frequent growth slumps than other country groups: between 1971 and 2019, slumps accounted for 16% of all observations per country and per year in the case of LDCs, against 10% for other developing countries and only 2% for developed countries.

Between 1995 and 2018, almost all LDCs recorded some expansion in manufacturing value added, but in most cases (23 out of 43) this was outpaced by growth in other sectors, so that the overall weight of manufacturing industry in total value added has decreased, giving rise to “relative deindustrialization”. Labor productivity increased by an average of 6% per year between 1995 and 2018, in the 15 LDCs for which detailed sectoral data are available. The reallocation of workforce from agriculture to higher productivity sectors is responsible for about half of this improvement, while the rest can be attributed to productivity growth within the same sector (through the expansion of capital per worker and on-the-job learning).

According to some analysts, the UN conference on LDCs offered a unique opportunity to translate the vision of the Doha agenda into tangible results, countries and stakeholders presented a multitude of commitments. Those commitments range from improving biodiversity to tackling malnutrition and building the resilience of LDCs. On closer inspection, the United Nations Conference on LDCs is promising because many organizations and States have pledged to provide outstanding support for LDCs to graduate. It remains to be seen whether those promises will be kept.

Qatar announced a financial package of $60 million: $10 million to support the implementation of the Doha Program of Action and $50 million to help build resilience in LDCs. Germany has allocated 200 million euros of new money in 2023 to financing LDCs. Canada announced $59 million for the distribution of vitamin supplements in 15 LDCs and the conservation of ecosystems in Burkina Faso. The European Commission has announced cooperation agreements aimed at promoting sustainable investments in Africa, for a total amount of more than 130 million euros. Finland has announced an annual event, the United Nations LDC Future Forum, in Helsinki, with the Office of the United Nations High Representative for LDCs, Landlocked Developing Countries and Small Island Developing States (OHRLLS), to ensure that the latest thinking and research is implemented to advance the most vulnerable States. The Green Climate Fund has announced a new $80 million equity project to provide green guarantees to businesses in LDCs and lower the cost of capital. The United Nations World Tourism Organization has announced a new €10 million fund for tourism and development in LDCs, supported by the TUI Care Foundation, which will invest by 2030 to support sustainable tourism in LDCs as a key driver of development. The Government of Kazakhstan pledged $50,000 to continue its work in support of the most vulnerable UN Member States and the Government of the Kingdom of Saudi Arabia announced a new program of large loans for LDCs.