Despite strong GDP growth during the last decade -- an average of 6.9 to 7.1 percent -- Least Developed Countries' economies continue to be challenged by the absence of structural transformation and employment creation, said Taffere Tesfachew, Director of UNCTAD's Division for Africa, Least Developed Countries and Special Programmes.
"The benefits of growth were neither inclusive, nor sustainable," he added, during his presentation of this year's Least Developed Countries Report to the UNCTAD Trade and Development Board on November 28. "LDCs have 12 percent of the world's population, yet they account for only 0.9 percent of the world's GDP. In trade it's 1 percent, but if you remove oil, it goes down to about 0.6 percent. And they attract only 2.5 percent of world FDI inflows."
But answers may be coming from the South, as in the last decade, LDCs' economic ties with southern partners have intensified and become a crucial dimension in their integration into the world economy, accounting for nearly half of LDCs' merchandise exports, 40 percent of foreign direct investment inflows, and 60 percent of the USD 26 billion in remittances (2010).
South-South development cooperation is also particularly well-suited for LDCs, as its modalities emphasize productive sectors and infrastructure provisions.
"In light of the slow recovery in LDCs' traditional markets and development partners, it's obvious that LDCs will have to search for opportunities elsewhere," Tesfachew explained. "Larger, dynamic developing countries, as well as regional partners can be expected to acquire a more prominent role as growth engines, not only for the LDCs, but for other low-income developing countries."