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The least developed countries

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Dave » 12 years 3 weeks ago

The United Nations Conference on Trade and Development (UNCTAD) recently released a comprehensive report on the state of the 50 least developed countries. It highlights the economic forces and trends affecting these countries and dives into a slew of economic data I won’t even try to understand.

The overall picture is that while these least developed countries (LDCs) have made record progress as a whole, they are still wrought with enormous challenges. The progress they have made isn’t necessarily sustainable, and the productivity gap is widening.

With regards to the latter point:

The data show that, on average, it requires 5 workers in the LDCs to produce what one worker produces in other developing countries, and 94 LDC workers to produce what one worker produces in developed countries in 2000–2003.

There’s a chapter (PDF) that goes into technological progress and its affect. From the chapter:

In the most successful developing economies which have achieved fast rates of catch-up growth, economic growth has been associated with a structural transformation. This has occurred as successive waves of economic activity which are new to the country have been introduced and diffused. Agricultural productivity growth has usually occurred at the initial stages of the growth process. However, agriculture has become progressively less important and manufacturing and services have become relatively more important as a share of GDP and source of employment. There has also been a shift from less to more technology-, skill- and capital-intensive activities both within and across sectors. Moreover, there has been a progressive shift in the export structure as enterprises located within the country acquire the technological capabilities necessary to compete internationally.

In its conclusions for the chapter, the agency hilites the vital role of technology and a knowledge economy in economic development:

Within rich countries, an increasing proportion of production is now within what is called the knowledge economy, i.e. they are based on the manipulation of ideas and knowledge rather than material objects. But the knowledge intensity of production within the global economy is high not only in hightechnology sectors, creative industries and producer services. It is also increasing within primary production and low-skill manufactures. For this reason, knowledge accumulation and the development of technological capabilities is as important for the LDCs as it is for rich countries. International competitiveness in the global economy is increasingly based on knowledge and innovation rather than on price and cost. As this occurs the divide between rich and poor countries in terms of their stock of knowledge assets and learning capabilities is becoming increasingly important as an obstacle to development and poverty reduction. For the LDCs, the weak development of technological capabilities together with weaknesses of capital accumulation reinforce each other and threaten the marginalization of the LDCs within the global economy. Yet, as discussed in the growth model at the start of the previous chapter, the availability of technologies already in use in other countries offers a major opportunity for catch-up growth.

From a BBC article:

UNCTAD wants to see LDCs focus on capital accumulation, structural economic change and technological development, so that they can become more competitive internationally.

[…]

“There are 600 million people in these countries. They have to develop and we have to help them. It’s a moral, ethical, economic and political issue,” [said one of the report’s co-authors].

“Poverty reduction needs wealth creation. Good words and solidarity are not enough.”