UN report suggests
Star Business Report
Least-developed
countries like Bangladesh will have to focus on structural
transformation and human development to achieve the sustainable
development goals in the post-2015 period, said an UN report.
The countries need to go beyond economic growth to complete a virtuous circle of sustainable economic and human development, said the Least Developed Countries Report 2014 by the United Nations Conference on Trade and Development or UNCTAD.
This requires structural transformation, combining increases in labour productivity within sectors, and a shift of labour from low-productivity sectors to high-productivity sectors, Towfiqul Islam Khan, research fellow of the Centre for Policy Dialogue, said at the unveiling of the report yesterday.
Structural transformation is needed to enhance labour productivity. The more labour moves into industry, the faster the overall productivity increases, he said.
To assist the LDCs' progress towards the sustainable development goals, UNCTAD proposes a post-2015 development agenda for the LDCs, comprising both domestic and international policy measures.
Domestically, LDCs should focus especially on resource mobilisation, active industrial and prudent macroeconomic policies, the report said.
Resource mobilisation requires a strategic and selective approach to domestic investment and foreign direct investment.
Industrial policy should follow a dual track, developing sectors of current comparative advantage and at the same time anticipating and promoting changes in comparative advantage.
The garment sector, which accounts for 80 percent of Bangladesh's exports, has so far been the key focus of the industrial policy.
But the policy should also pay attention to other potential sectors such as plastic, leather, shipbuilding, said Khan.
Macroeconomic policies should support resource mobilisation and industrial policies by ensuring credit for productive investment and strong and steady demand growth.
As international measures, the report stressed donors' fulfilment of their long-standing commitments on the quantity and the terms of aid to LDCs.
Debapriya Bhattacharya, distinguished fellow of CPD, said Bangladesh should focus on diversification of economy and development of human capital as a strategy to come out from the LDC list.
“It is an urgent need to focus on active and promising sectors for diversification of economy,” he said, adding that the country now has some thrust sectors which are in want of coordination between policy and goal.
He went on to stress improvements in labour productivity, as it will generate more decent jobs in the country.
More than 54 percent of the country's total jobs still come from the agriculture sector, although the contribution of the manufacturing sector as a percentage of GDP is increasing, he said.
The report also said the international community must learn from the failure of most of the poorest countries to meet the Millennium Development Goals despite registering strong economic growth, a phenomenon the report dubs the "LDC paradox".
The report -- subtitled 'Growth with Structural Transformation: A Post-2015 Development Agenda' -- said the LDCs are the battleground on which the post-2015 development agenda will be won or lost.
The LDC paradox arises from the failure of LDC economies to achieve structural changes despite having grown vigorously as a result of strong export prices and rising aid flows.
Some other developing countries -- not categorised as 'least developed' -- especially those that mostly depend on commodities for production, employment and exports have also faced a similar paradox.
Yet from 2002 to 2008, LDC growth exceeded the 7 percent target agreed by the international community, and even after the 2008 financial crisis they grew faster than other developing countries, at an average of 5.7 percent per year.
Only one LDC -- the Lao People's Democratic Republic -- in South and Southeast Asia is on track to achieve all seven of the MDG targets analysed in the report and only four from the rest of the world.
Under the MDGs, global poverty was halved by rapid progress in the more advanced developing countries, the report says.
But a central goal of the post-2015 development agenda is expected to be the eradication of poverty by 2030.
This means reducing it to zero everywhere -- and it is in the LDCs that this will be the most challenging. Their performance will largely determine the success or failure of the whole post-2015 development agenda.
Eradicating poverty in 15 years is a much more ambitious goal than the MDG target of halving it in 25 years, the report said. Even China has not achieved this, despite extraordinary economic growth and development for twice as long.
Moreover, prospects for export prices are now much more uncertain following the financial crisis, while aid to LDCs has stopped increasing as donor countries implement austerity policies.
As per the UN, 48 countries can now be termed LDCs; in 1971, the number was 25. Equatorial Guinea and Vanuatu are scheduled to be taken out of the bracket in June 2017 and December 2017 respectively.
Mustafizur Rahman, executive director of CPD, and Khondaker Golam Moazzem, additional research director of CPD, also spoke.
Left,
Debapriya Bhattacharya, distinguished fellow of the Centre for Policy
Dialogue, speaks at the launch of an LDC report at Cirdap auditorium in
Dhaka yesterday. Right, Mustafizur Rahman, executive director of CPD,
and Towfiqul Islam Khan, a research fellow, are also seen. Photo: STAR
The countries need to go beyond economic growth to complete a virtuous circle of sustainable economic and human development, said the Least Developed Countries Report 2014 by the United Nations Conference on Trade and Development or UNCTAD.
This requires structural transformation, combining increases in labour productivity within sectors, and a shift of labour from low-productivity sectors to high-productivity sectors, Towfiqul Islam Khan, research fellow of the Centre for Policy Dialogue, said at the unveiling of the report yesterday.
Structural transformation is needed to enhance labour productivity. The more labour moves into industry, the faster the overall productivity increases, he said.
To assist the LDCs' progress towards the sustainable development goals, UNCTAD proposes a post-2015 development agenda for the LDCs, comprising both domestic and international policy measures.
Domestically, LDCs should focus especially on resource mobilisation, active industrial and prudent macroeconomic policies, the report said.
Resource mobilisation requires a strategic and selective approach to domestic investment and foreign direct investment.
Industrial policy should follow a dual track, developing sectors of current comparative advantage and at the same time anticipating and promoting changes in comparative advantage.
The garment sector, which accounts for 80 percent of Bangladesh's exports, has so far been the key focus of the industrial policy.
But the policy should also pay attention to other potential sectors such as plastic, leather, shipbuilding, said Khan.
Macroeconomic policies should support resource mobilisation and industrial policies by ensuring credit for productive investment and strong and steady demand growth.
As international measures, the report stressed donors' fulfilment of their long-standing commitments on the quantity and the terms of aid to LDCs.
Debapriya Bhattacharya, distinguished fellow of CPD, said Bangladesh should focus on diversification of economy and development of human capital as a strategy to come out from the LDC list.
“It is an urgent need to focus on active and promising sectors for diversification of economy,” he said, adding that the country now has some thrust sectors which are in want of coordination between policy and goal.
He went on to stress improvements in labour productivity, as it will generate more decent jobs in the country.
More than 54 percent of the country's total jobs still come from the agriculture sector, although the contribution of the manufacturing sector as a percentage of GDP is increasing, he said.
The report also said the international community must learn from the failure of most of the poorest countries to meet the Millennium Development Goals despite registering strong economic growth, a phenomenon the report dubs the "LDC paradox".
The report -- subtitled 'Growth with Structural Transformation: A Post-2015 Development Agenda' -- said the LDCs are the battleground on which the post-2015 development agenda will be won or lost.
The LDC paradox arises from the failure of LDC economies to achieve structural changes despite having grown vigorously as a result of strong export prices and rising aid flows.
Some other developing countries -- not categorised as 'least developed' -- especially those that mostly depend on commodities for production, employment and exports have also faced a similar paradox.
Yet from 2002 to 2008, LDC growth exceeded the 7 percent target agreed by the international community, and even after the 2008 financial crisis they grew faster than other developing countries, at an average of 5.7 percent per year.
Only one LDC -- the Lao People's Democratic Republic -- in South and Southeast Asia is on track to achieve all seven of the MDG targets analysed in the report and only four from the rest of the world.
Under the MDGs, global poverty was halved by rapid progress in the more advanced developing countries, the report says.
But a central goal of the post-2015 development agenda is expected to be the eradication of poverty by 2030.
This means reducing it to zero everywhere -- and it is in the LDCs that this will be the most challenging. Their performance will largely determine the success or failure of the whole post-2015 development agenda.
Eradicating poverty in 15 years is a much more ambitious goal than the MDG target of halving it in 25 years, the report said. Even China has not achieved this, despite extraordinary economic growth and development for twice as long.
Moreover, prospects for export prices are now much more uncertain following the financial crisis, while aid to LDCs has stopped increasing as donor countries implement austerity policies.
As per the UN, 48 countries can now be termed LDCs; in 1971, the number was 25. Equatorial Guinea and Vanuatu are scheduled to be taken out of the bracket in June 2017 and December 2017 respectively.
Mustafizur Rahman, executive director of CPD, and Khondaker Golam Moazzem, additional research director of CPD, also spoke.
Published: 12:00 am Friday, November 28, 2014
Last modified: 12:49 am Friday, November 28, 2014
