Are LDCs moving out of the trap? What is the impact of international support measures?
During the UNCTAD XIII, the Fondation pour les Etudes et Recherches sur le Développement International (Ferdi) in association with other members of the consortium LDC IV Monitor organized a side event on the topic “Are LDCs moving out of the trap? What is the impact of international support measures?” High level participant from LDCs, former LDCs and LDCs partners and international institutions (ITC, UNDESA, UNCTAD), attended this meeting to discuss and highlight their different viewpoints. The session begun with two presentations by Pr. Patrick Guillaumont president of Ferdi and Pr. Jaime de Melo Professor at the University of Geneva, and Senior Fellow at Ferdi, based on a forthcoming book under the direction of Pr. Guillaumont. Discussants were D. Bhattacharya, CPD, Dhaka and JM Paugam, ITC. While a previous book explained why some low income countries have been caught in a trap (the LDCs) and others have escaped, the new book is assessing the effects of the special measures to support LDCs, and then disentangling them from those of the specific structural features of these countries.
Participants agreed that the observed improvement of LDC growth in the last decade is due to commodity prices, new LDCs resilience, emerging countries dynamics, and aid resumption, although aid has largely been devoted to humanitarian assistance. The drawback of this commodity oriented development is the lack of diversification and potential value addition. Trade domestic institutions in LDCs should be strengthened. LDCs must be more aggressive and add more value to what is offered to them (UNCTAD).
According to former LDCs (Cape Verde), they escape from the category because of their economic and institutional performance, and need to be supported to succeed their post-graduation stage.
For LDCs recommended to be soon graduated (Vanuatu), transition measures are all the more needed, and support measures for LDCs were effective, in particular in vulnerable countries. Other LDCs (Niger, Haiti, Lao PDR) underlined that they are implementing relevant economic policies to escape from the category, needing more support from partners.
Speakers from LDCs and partner countries, academic and non-academic fields have actively participated in this session. The invited presenters were:
• Patrick Guillaumont, President of Ferdi : "Are LDCs moving out of the trap? What is the impact of international support measures?"
• Debapriya Bhattacharya, Former Ambassador of Bengladesh at WTO, Distinguished Fellow, Center for Policy Dialogue, Bengladesh
• Jaime de Melo, Professor at University of Geneva : "LDCS and the multilateral tradind system"
• Taffere Tesfachew, UNCTAD Director Division for Africa, Least Developed Countries and Special Programmes.
The above speakers have debated on all of the following three issues, constituting the content of the session:
1. Does the recovery trend of LDCs economies evidence a structural change and tend to persist?
2. What is the impact of trade preferential measures?
3. What is the impact of Official Development Assistance?
The category of least developed countries (LDCs) was introduced in 1971, to enable these countries to benefit from the special measures adopted by the international development community. Potential benefits fall into three main areas: (a) preferential market access, (b) special treatment regarding World Trade Organization-related obligations, and (c) official development assistance including development financing, technical cooperation and other forms of assistance.
The list of LDCs remains long. The lack of success in development is due to a multitude of factors, one of which is an inability to take sufficient advantage of the potential benefits associated with least developed country status.
A group of influential scholars has undertaken extensive work on the impact of the category’s membership on the development of its members. The effectiveness of the support measures has been assessed, in particular for those measures related to the economic impact of the trade preferences, LDC specific WTO provisions, ODA targets and other LDC specific support such as the Enhanced Integrated Framework and the various special measures delivered by the multi-lateral system.
The results of this large collective study will be published under the title ‘Out of the trap: supporting the Least Developed Countries” under the direction of Patrick Guillaumont.
The assessment of the impact of the category membership faces a methodological issue, which ex-plains why such an assessment is still missing. It is difficult to identify a counterfactual cor-responding to other developing countries confronting similar situations not benefiting from the specific support measures and permitting a comparison with LDCs. The book tries to overcome this difficulty thanks to innovative quantitative methods, and through qualitative analyses.
The book reviews the effectiveness of the whole set of support measures on growth and poverty reduction, and the effectiveness of specific measures related to trade, to development assistance, and to the treatment supplied by multilateral institutions. In particular it examines how the special measures are addressing the structural handicaps to growth of the LDCs, namely their high vulnerability and their low level of human capital. Lessons are drawn for the improvement of the special measures. They include considering how the role of LDCs can be enhanced in global economic governance.
The book is a companion volume of ‘Caught in the trap: Identifying the Least Developed Countries’ by Patrick Guillaumont. While this previous book evidenced the factors likely to maintain the LDCs in a trap, the new one enlightens how international support combined with national efforts can lead LDCs to move out of the trap and consequently graduate out of the category. This prospect of graduation has become of the highest importance since the fourth UN LDC Conference held in Istanbul (May 2011) where an ambitious goal of reduction by half of the number of LDCs during the present decade has been adopted.