Global Policy Forum

Least Developed Countries in a "Trap" of Poverty


By Jim Wurst

UN Wire
February 17, 2004

The world's Least Developed Countries are falling behind in their efforts to lift themselves out of poverty because they are "caught in a trap" in which slow growth reduces foreign investment, which in turn limits growth, Jose Antonio Ocampo, the U.N. undersecretary general for economic and social affairs, said today.

"Despite the efforts made by the countries themselves and the commitments made by the international community, they are falling behind in their endeavors to achieve the Millennium Development Goals," Ocampo said. "Most LDCs are presently caught in a trap in which low income and slow growth limits the scope for domestic resource mobilization and, in turn, low rates of investment and an inefficient use of resource limit growth," he said. "The only way to escape is to augment external finance. But current constraints are such that most LDCs cannot attract private flows and hence rely on [official development assistance] as their major source of external finance," he added.

Ocampo was speaking at the opening of an Economic and Social Council session on mobilizing domestic and international resources to eradicate poverty in the LDCs, the first meeting of a series planned for this year. The situation is "further aggravated" because LDCs are "suffering from heavy external debt burden, which is a constant drain on their meager resources," are affected by the "marked long-term decline in world commodity prices" and are still heavily dependent on foreign aid, Ocampo said.

The United Nations lists 50 countries — 33 of them in Africa — as "least developed." A country falls into the category if its per capita gross domestic product is under $900 and it has a weak social infrastructure and a highly vulnerable economy. Approximately 600 million people live in the LDCs. "The best hope for LDCs and other developing countries lies in the success of the current round of multilateral trade negotiations," Ocampo said. "The multilateral trade negotiations should aim to eliminate all tariff and nontariff barriers as well as subsidized competition in the developed countries to trade in agricultural products, textiles and other products of special interest to the LDCs."

The bulk of today's session will consist of roundtables examining issues including how to mobilize domestic resources to create "an enabling environment for poverty eradication," how to better use regional initiatives and how to increase international assistance. Finnish Ambassador Marjatta Rasi, the president of ECOSOC, said the issues that need to be addressed include looking at whether policies are "becoming more pro-poor and more focused toward achieving the Millennium Development Goals" and how official development assistance can be better used "to enhance pro-poor policies and accelerate progress toward poverty eradication and sustainable development." "Poverty eradication in LDCs will ultimately depend on renewed efforts at the national, regional and global levels, based on the spirit of shared responsibility and global partnership," she said.

On Friday, the U.N. Conference on Trade and Development released a report examining how foreign investment in five landlocked African LDCs — Angola, Burkina Faso, Burundi, Botswana, the Central African Republic, Malawi, and Zimbabwe — decreased in 2002.


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