Least Developed Countries Report 2010: Towards a New International Development Architecture for LDCS

The global financial and economic crisis highlight the urgent need to move beyond business as usual and, through concerted international action, foster more stable and inclusive global development. The crisis has been a sober reminder that economic and social imbalances and inequalities, both within and between countries, if left to correct themselves, are likely to produce damaging and destructive outcomes, particularly for vulnerable countries and communities. This Report focuses on the boombust cycle of the past decade in the least developed countries (LDCs) and offers alternatives for the coming decade.

Even as global economic growth accelerated in the first decade of the millennium, the LDCs remained marginal in the world economy owing to their structural weaknesses and the form of their integration into the global economy. The number of people living in absolute poverty in these countries has continued to rise, even during the boom years of 2002–2007, and progress towards achievement of the Millennium Development Goals has remained very slow. The Report calls for the creation of a new international development architecture (NIDA) for the LDCs aimed at: a) reversing their marginalization in the global economy and helping them in their catch-up efforts; (b) supporting a pattern of accelerated economic growth and diversification which would improve the general welfare and well-being of all their people; and © helping these countries graduate from LDC status.

The Report argues that these objectives can be achieved if there is a paradigm shift that supports new, more inclusive development paths in LDCs. This requires the State to play a more developmental role in creating favourable conditions for job creation, capital accumulation, technological progress and structural transformation. The NIDA should be designed to facilitate the new development paths. The Report shows, through alternative policy scenarios, that accelerated growth and poverty reduction are achievable through policy changes.

The NIDA for LDCs is defined as a new architecture of formal and informal institutions, rules and norms, including incentives, standards and processes, which would shape international economic relations in a way that is conducive to sustained and inclusive development. It would be constituted through: (a) reforms of the global economic regimes which directly affect development and poverty reduction in LDCs; and (b) the design of a new generation of special international support mechanisms (ISMs) for the LDCs aimed at addressing their specific structural constraints and vulnerabilities. Increasing South- South international flows of trade, FDI, official finance and knowledge also implies that South-South cooperation, both within regions and between LDCs and large, fast-growing developing countries, could also play an important role in a NIDA for LDCs.

The Report proposes five major pillars of the NIDA: finance, trade, commodities, technology, and climate change mitigation and adaptation. At present, the focus of support for LDCs is mainly in the area of trade. This Report identifies a forward-looking agenda for action in the NIDA for LDCs in all five areas. It is intended to serve as a major input to the policy debate for the fourth United Nations Conference on Least Developed Countries to be held in Turkey in 2011. Combining international support measures for LDCs with a new international framework for policy and cooperation that can deliver more stable, equitable and inclusive development is one of the most urgent challenges facing the international community today.