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The Least Developed Countries Report 2011 - The Potential Role of South-South Cooperation for Inclusive and Sustainable Development

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The Least Developed Countries Report 2011 puts forward a policy framework for enhancing the development impact of South–South cooperation, and proposes ways to leverage South–South financial cooperation for development in the LDCs.

U n i t e d n at i o n s C o n f e r e n C e o n t r a d e a n d d e v e l o p m e n t


THE LEAST DEVELOPED COUNTRIES
REPORT 2011


The Potential Role of South-South Cooperation for Inclusive and Sustainable Development




U N I T E D N AT I O N S C O N F E R E N C E O N T R A D E A N D D E V E L O P M E N T


THE LEAST DEVELOPED COUNTRIES
REPORT 2011


The Potential Role of South-South Cooperation for Inclusive and Sustainable Development


New York and Geneva, 2011




Note


Symbols of United Nations documents are composed of capital letters with figures.
Mention of such a symbol indicates a reference to a United Nations document.


The designations employed and the presentation of the material in this publication
do not imply the expression of any opinion whatsoever on the part of the Secretariat
of the United Nations concerning the legal status of any country, territory, city or
area, or of its authorities, or concerning the delimitation of its frontiers or boundaries.


Material in this publication may be freely quoted or reprinted, but full acknowledgement
is requested. A copy of the publication containing the quotation or reprint should be sent
to the UNCTAD secretariat at: Palais des Nations, CH-1211 Geneva 10, Switzerland.


The overview of this report can also be found on the Internet, in all six official languages of
the United Nations, at www.unctad.org/ldcr


UNITED NATIONS PUBLICATION


Sales No. E.11.II.D.5


ISBN 978-92-1-112835-2


eISBN 978-92-1-055156-4


ISSN 0257-7550


UNCTAD/LDC/2011


Copyright © United Nations, 2011
All rights reserved




What are the least developed countries?


Forty-eight countries are currently designated by the United Nations as “least developed countries” (LDCs).
These are: Afghanistan, Angola, Bangladesh, Benin, Bhutan, Burkina Faso, Burundi, Cambodia, the Central
African Republic, Chad, the Comoros, the Democratic Republic of the Congo, Djibouti, Equatorial Guinea, Eritrea,
Ethiopia, the Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, the Lao People’s Democratic Republic, Lesotho,
Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Nepal, Niger, Rwanda, Samoa, Sao Tome
and Principe, Senegal, Sierra Leone, the Solomon Islands, Somalia, Sudan, Timor-Leste, Togo, Tuvalu, Uganda,
the United Republic of Tanzania, Vanuatu, Yemen and Zambia.


The list of LDCs is reviewed every three years by the United Nations Economic and Social Council in the light of
recommendations by the Committee for Development Policy (CDP). The following three criteria were used by the
CDP in the latest review of the list of LDCs, which took place in March 2009:


(a) A “low-income” criterion, based on a three-year average estimate of the gross national income (GNI) per
capita, with a threshold of $905 for possible cases of addition to the list, and a threshold of $1,086 for
graduation from LDC status;


(b) A “human assets weakness” criterion, involving a composite index (the Human Assets Index) based on
indicators of (i) nutrition (percentage of the population that is undernourished); (ii) health (child mortality rate);
(iii) school enrolment (gross secondary school enrolment rate); and (iv) literacy (adult literacy rate); and


(c) An “economic vulnerability” criterion, involving a composite index (the Economic Vulnerability Index) based
on indicators of (i) natural shocks (index of instability of agricultural production, share of the population made
homeless by natural disasters); (ii) trade shocks (an index of instability of exports of goods and services);
(iii) exposure to shocks (share of agriculture, forestry and fisheries in GDP; index of merchandise export
concentration); (iv) economic smallness (population in logarithm); and (v) economic remoteness (index of
remoteness).


For all three criteria, different thresholds are used for identifying cases of addition to, and cases of graduation
from, the list of LDCs. A country will qualify to be added to the list if it meets the addition thresholds on all three
criteria and does not have a population greater than 75 million. Qualification for addition to the list will effectively
lead to LDC status only if the government of the relevant country accepts this status. A country will normally qualify
for graduation from LDC status if it has met graduation thresholds under at least two of the three criteria in at
least two consecutive triennial reviews of the list. However, if the GNI per capita of an LDC has risen to a level at
least double that of the graduation threshold, the country will be deemed eligible for graduation regardless of its
performance under the other two criteria.


Only three countries have so far graduated from LDC status: Botswana in December 1994, Cape Verde
in December 2007 and Maldives in January 2011. In March 2009, the CDP recommended the graduation
of Equatorial Guinea. This recommendation was endorsed by the Economic and Social Council in July 2009
(Resolution 2009/35), but the General Assembly had not, by September 2011, confirmed this endorsement. In
September 2010, the General Assembly, giving due consideration to the unprecedented losses which Samoa
suffered as a result of the Pacific Ocean tsunami of 29 September 2009, decided to defer to 1 January 2014
graduation of that country.


After a CDP recommendation to graduate a country has been endorsed by the Economic and Social Council
and the General Assembly, the graduating country is granted a three-year grace period before graduation effectively
takes place. This grace period, during which the country remains an LDC, is designed to enable the graduating
State and its development and trade partners to agree on a “smooth transition” strategy, so that the possible
loss of LDC-specific concessions at the time of graduation does not disrupt the socio-economic progress of the
country.




Acknowledgements


The Least Developed Countries Report 2011 was prepared by a team consisting of Željka Kožul-Wright (team
leader), Agnès Collardeau-Angleys, Igor Paunovic, Alberto Gabriele (since June 2011), Madasamyraja Rajalingam, Rolf
Traeger, Giovanni Valensisi and Stefanie West. The work was carried out under the overall guidance and supervision
of Charles Gore, Head, Research and Policy Analysis Branch, Division for Africa, Least Developed Countries and
Special Programmes (ALDC), and Jo Elizabeth Butler, Deputy Director ALDC, and Officer-in-Charge from March
2010 to September 2011.


An ad hoc expert meeting on “South–South Integration and Cooperation for the Sustainable Development of
LDCs” was held in Geneva on 11 and 12 April, 2011. It brought together specialists in the fields of international finance
and development financing, South–South cooperation, macroeconomic policies, poverty and labour economics,
and the role of developmental State in accelerating economic development. The participants in the meeting were:
Rashmi Banga, Ben Fine, Pierguiseppe Fortunato, Charles Gore, Stephany Griffith-Jones, Richard Kožul-Wright,
Željka Kožul-Wright, Antonio Carlos Macedo e Silva, Moazam Mahmood, Amelia Paulino-Santos, Igor Paunovic,
Alfredo Saad-Filho, Gyekye Tanoh, Taffere Tesfachew and Giovanni Valensisi.


The Report draws on background papers prepared by Dae-Oup Chang, Ben Fine, Clovis Freire, Sebastian
Kopulande and Stephany Griffith-Jones. Comments on specific parts of the Report were received from Ajit Singh
(Professor, University of Cambridge), William Milberg (Professor, New School for Social Research, New York), Vivianne
Ventura-Dias (Brazil), and also from the following colleagues from UNCTAD: Richard Kožul-Wright (Head, Unit on
Economic Cooperation and Integration among Developing Countries), Adriano Timossi, Antonio Macedo e Silva,
Padmashree Gehl Sampath and Alfredo Saad Filho.


UNCTAD is grateful to Andrew Mold (formerly OECD–Paris, now United Nations Economic Commission for
Africa) and Clovis Freire (United Nations Economic and Social Commission for Asia and the Pacific) for having peer
reviewed the draft of the Report in August 2011.


Secretarial support was provided by Stefanie West. Sophie Combette designed the cover. The overall layout,
graphics and desktop publishing were done by Madasamyraja Rajalingam.


The financial support of donors to the UNCTAD LDC Trust Fund is gratefully acknowledged.




Contents


What are the least developed countries? ............................................................................................................. iii


Explanatory notes .............................................................................................................................................. viii


Abbreviations ......................................................................................................................................................ix


Classifications used in this Report........................................................................................................................xi


Overview ........................................................................................................................................................ I-XIV


CHAPTER 1: Recent Trends and Outlook for the LDCs .................................................................................................... 1


A. Introduction ...................................................................................................................................................2


B. Recent trends in LDC economies .................................................................................................................2


1. Trends in economic growth ........................................................................................................................2


2. Trends in international trade ........................................................................................................................9


3. Trends in external finance and debt ..........................................................................................................16


C. The current world economic situation, the outlook for the coming decade and implications
for LDCs ......................................................................................................................................................21


1. LDC prospects in the changing geography of the world economy ...........................................................21


2. The crisis continues to affect the world economy .....................................................................................23


3. Far-reaching changes in other developing countries ................................................................................26


D. The Istanbul Programme of Action: The importance of productive capacities and structural
transformation for LDCs ..............................................................................................................................26


1. Selected highlights of the Istanbul Programme of Action ..........................................................................26


2. The importance of productive capacities and structural transformation for LDCs in the
Istanbul Programme of Action ..................................................................................................................30


E. Conclusions ................................................................................................................................................39


Notes ................................................................................................................................................................40


References .......................................................................................................................................................40


CHAPTER 2: The Rise of the South: Development Implications for the LDCs ...................................................... 43


A. Introduction .................................................................................................................................................44


B. Analytical frameworks for the changing geography of the world economy ................................................45


C. The multifaceted economic relations between the LDCs and the South ....................................................49


1. LDC trade and the rise of the South ........................................................................................................49


2. Key features of the LDCs’ trade with Southern partners ...........................................................................54


3. Southern foreign direct investment in LDCs ..............................................................................................63


4. Migration and remittances .......................................................................................................................68


5. Southern official flows to LDCs .................................................................................................................70


D. The regional dimension and South–South relations ....................................................................................75


E. Conclusions.................................................................................................................................................77


Notes ................................................................................................................................................................79


References .......................................................................................................................................................82




The Least Developed Countries Report 2011vi


CHAPTER 3: Activating the Developmental State in LDCs: The Role of South-South Cooperation ............ 85


A. Introduction .................................................................................................................................................86


B. The catalytic developmental State .............................................................................................................86


1. The catalytic developmental State for LDCs ............................................................................................87


2. The importance of development governance ............................................................................................90


C. The catalytic developmental State and South–South cooperation ............................................................90


1. Positive synergies .....................................................................................................................................91


2. Towards mutual advantage between LDCs and Southern partners ...........................................................97


D. South–South integration and the development of productive capacities ..................................................98


E. Developmental regionalism and South–South cooperation: Integration beyond liberalization ................100


1. The nature of developmental regionalism ................................................................................................100


2. Examples of successful developmental regionalism ...............................................................................101


3. The importance of regional support mechanisms within developmental regionalism:
The case of the ADB coordinated GMS Program ...................................................................................102


F. Conclusions...............................................................................................................................................105


References ....................................................................................................................................................106


CHAPTER 4: Leveraging South–South Financial Cooperation for LDC Development .................................... 109


A. Introduction ...............................................................................................................................................110


B. LDCs’ financial vulnerability .....................................................................................................................110


C. The role of regional and subregional development banks in regional financial cooperation ....................114


1. Types of regional financial cooperation ...................................................................................................114


2. Revitalizing regional and subregional development banks ......................................................................115


3. Some policy issues .................................................................................................................................116


D. Reserve accumulation in the South and Sovereign Wealth Funds as instruments of
foreign exchange reserves .......................................................................................................................117


E. Sovereign Wealth Funds as policy tools to promote South–South financial cooperation ........................120


F. Conclusions...............................................................................................................................................121


Notes ..............................................................................................................................................................122


References .....................................................................................................................................................122


ANNEX: Statistical Tables on the Least Developed Countries ................................................................................ 125


BOXES


1. Countries whose exports are more diversified and oriented to the South have been hit less hard by the crisis ..4


2. Intra-industry trade .........................................................................................................................................50


3. Chinese investment in Zambia: A case study ..................................................................................................67


4. Economic diversification and regional trade integration in Africa ......................................................................76


5. The potential of regional supply chains: The case of textiles and clothing sector in South Asia ........................78


6. The nature of the developmental State ............................................................................................................88


7. South–South cooperation — multiplicity of actors and plurality of forms ........................................................112


8. China’s cooperation with the LDCs ...............................................................................................................113




viiCONTENTS


CHARTS


1. LDCs’ real GDP growth and mid-term forecasts compared with the IPoA growth rate target, 2002–2016 .....7


2. Merchandise trade indices of the LDCs, 2000–2010 ...................................................................................10


3. Export shock: Volume and price effects, 2009 ............................................................................................11


4. Food, meat and cereal price indices, January 2005–June 2011 ..................................................................13


5. LDCs’ merchandise exports to the rest of the world and crude petroleum prices, 2000–2010 ....................15


6. Private financial flows to LDCs, 2003–2010 ................................................................................................16


7. Official capital flows to LDCs, 2000–2009 ...................................................................................................19


8. Contribution to world GDP growth by region, 2002 –2016 ..........................................................................22


9. The “rise of the South”: Developing countries, excluding LDCs, 1980 –2009 ...............................................22


10. Schematic presentation of the Istanbul Programme of Action ......................................................................28


11. LDCs in the world economy, 1970 –2009 ....................................................................................................31


12. Real GDP per capita in LDCs relative to other country groups, 1970–2009 .................................................32


13. Distribution of people living in extreme poverty across developing countries, 1990, 2000 and 2007 ............33


14. Industrial activities as a percentage of GDP in LDCs, 1970–2008 ................................................................35


15. Change in ESCAP index of productive capacity in LDCs, 1984–2009 .........................................................37


16. ESCAP index of productive capacities in LDCs, 2009 .................................................................................38


17. LDCs’ merchandise exports to main country groups, 1995–2009 ...............................................................51


18. Contribution to LDCs’ merchandise export growth, by main country groups, 1996–2009 ............................52


19. LDCs’ merchandise imports from main country groups, 1995–2009 ...........................................................53


20. Contribution to LDCs’ merchandise imports growth, by main country groups, 1996–2009 ..........................53


21. LDCs’ merchandise trade balance with other groups of countries, 1995–2009 ..........................................54


22A. Share of LDCs’ merchandise exports destined to Southern partners, 2000 and 2009 .................................56


22B. Share of LDCs’ merchandise imports originating from Southern partners, 2000 and 2009 ..........................57


23. Merchandise exports of LDCs to 10 main Southern partners, 2000 and 2009 .............................................59


24. Merchandise imports of LDCs from 10 main Southern partners, 2000 and 2009 .........................................60


25. Contribution to LDCs export growth in each country group, by product, 2000–2009 .................................61


26. Contribution to import growth of LDCs in each country-group by product, 2000–2009 ...............................62


27. Share of LDCs’ merchandise exports destined to Southern markets, by product type, various years ..........63


28. South–South FDI flows, worldwide, 1990–2009 ..........................................................................................64


29. Regional distribution of FDI projects in LDCs, by source, 2003 and 2010 ...................................................65


30. Value of greenfield FDI projects in LDCs, by sector, 2003–2010 ..................................................................65


31. China’s outward FDI in LDCs, 2003–2009 ...................................................................................................66


32. Remittances inflows to LDCs by region of origin, 2010 ................................................................................69


33. Share of remittance inflows, by region of origin, 2010 ..................................................................................71


34. Net ODA disbursements to LDCs by Southern countries reporting to OECD-DAC, 2000–2009 ...................72


35. Comparative complexity of new products exported to the South and to the North by LDCs, 2009 ..............99


36. Economic corridors in the Greater Mekong Subregion ...............................................................................103


37. World total foreign exchange reserves, 2000 –2010 ..................................................................................118




The Least Developed Countries Report 2011viii


BOX CHARTS


1. South–South trade and the 2009 shock to LDCs’ exports .............................................................................4


2. Oil and mineral commodity dependence and the 2009 shock to LDCs’ exports .............................................4


3. Intra-industry trade across income groups: Grubel-Lloyd index, 1990 and 2006 ..........................................50


4. Growth rates of African countries’ exports by destination, 1995–2009 .........................................................76


TABLES


1. Real GDP and real GDP per capita growth rates of LDCs, developing economies and
advanced economies, 2008–2011 .................................................................................................................3


2. Real GDP and real GDP per capita growth rates in LDCs, and forecasts until 2016 ........................................6


3. Estimation of the number of years needed to meet the GNI graduation threshold for LDCs, by country..........8


4. Exports and imports of merchandise and services in LDCs, by country groups, 2006–2010 ........................12


5. Price indices of selected primary commodities of importance to LDCs, various years...................................14


6. Remittances inflows to LDCs, various years .................................................................................................18


7. Top 10 LDC exporters to Southern partners, various years ..........................................................................58


8. Top 10 LDC destinations for China’s outward FDI, 2007–2009 .....................................................................67


9. Selected indicators of financial development: LDCs and other country groups, various years .....................111


10. Multilateral ODA to LDCs, gross disbursements, 2005 –2009 ....................................................................115


11. Reserve accumulation across LDCs, various years ....................................................................................118


12. Sovereign Wealth Funds in emerging and developing countries, March 2011 .............................................119


EXPLANATORY NOTES


The term “dollars” ($) refers to United States dollars unless otherwise stated. The term “billion” signifies 1,000
million.


Annual rates of growth and changes refer to compound rates. Exports are valued f.o.b. (free on board) and
imports c.i.f. (cost, insurance, freight) unless otherwise specified.


Use of a dash (–) between dates representing years, e.g. 1981–1990, signifies the full period involved, including
the initial and final years. An oblique stroke (/) between two years, e.g. 1991/92, signifies a fiscal or crop year.


The term “least developed country” (LDC) refers, throughout this report, to a country included in the United Nations
list of least developed countries.


In the tables:


Two dots (..) indicate that the data are not available, or are not separately reported.


One dot (.) indicates that the data are not applicable.


A hyphen (-) indicates that the amount is nil or negligible.


Details and percentages do not necessarily add up to totals, because of rounding.




ixCONTENTS


Abbreviations


ADB Asian Development Bank


AfDB African Development Bank


ASEAN Association of Southeast Asian Nations


BIMP–EAGA Brunei-Indonesia-Malaysia-Philippines East ASEAN Growth Area


BPoA Brussels Programme of Action for the Least Developed Countries for the Decade 2001–2010


CABC Chinese African Business Council


CDP Committee for Development Policy (UN-DESA)


CDS catalytic developmental State


CIS Commonwealth of Independent States


DAC Development Assistance Committee (OECD)


DS developmental State


ECA Economic Commission for Africa


ECLAC Economic Commission for Latin America and the Caribbean


ESCAP Economic and Social Commission for Asia and the Pacific


ESCWA Economic and Social Commission for Western Asia


EU European Union


FAO Food and Agriculture Organization of the United Nations


FDI foreign direct investment


FOCAC Forum on China-Africa Cooperation


GCC Gulf Cooperation Council


GDP gross domestic product


GMS Greater Mekong Subregion


GNI gross national income


HIPC highly indebted poor country (also HIPC Initiative)


IBSA India, Brazil and South Africa


ICT information and communication technology


IFI international financial institutions


ILO International Labour Organization


IMF International Monetary Fund


IPoA Istanbul Programme of Action for the Least Developed Countries for the Decade 2011-2020


LDC least developed country


MDG Millennium Development Goal


MDRI Multilateral Debt Relief Initiative


n.e.s. not elsewhere specified


NGO non-governmental organization


NIDA New International Development Architecture


NIE newly industrialized economy


ODA official development assistance


OECD Organization for Economic Cooperation and Development


OHRLLS Office of the High Representative for the Least Developed Countries, Landlocked Developing
Countries and Small Island Developing States


PRSP Poverty Reduction Strategy Paper


R&D research and development


RDB regional development bank


RSM regional support measure


S&T science and technology




The Least Developed Countries Report 2011x


SADC Southern African Development Community


SCME State-controlled mixed enterprises


SEZ special economic zones


SME small and medium-sized enterprise


SOE State-owned enterprise


STI science, technology and innovation


SWF Sovereign Wealth Fund


TNC transnational corporation


UNCTAD United Nations Conference on Trade and Development


UN-DESA United Nations Department of Economic and Social Affairs


UN-OSAA United Nations Office of the Special Adviser on Africa


UNDP United Nations Development Programme


UNIDO United Nations Industrial Development Organization


WB World Bank


WIPO World Intellectual Property Organization


WTO World Trade Organization





xiCONTENTS


Classifications used in this Report


The least developed countries (LDCs) covered in this Report consist of all the 49 countries belonging to that category
in 2010, as classified by the United Nations. Although Maldives graduated from LDC status as of 1 January 2011 (see
box below), it is still included for analytical purposes as an LDC, since the data in this report do not refer beyond the
year 2010, when Maldives was still part of the LDC group.


The following classifications have been used in this report, depending on the specific purpose of the analysis.


LDCs


Afghanistan, Angola, Bangladesh, Benin, Bhutan, Burkina Faso, Burundi, Cambodia, Central African Republic,
Chad, Comoros, Democratic Republic of the Congo, Djibouti, Equatorial Guinea, Eritrea, Ethiopia, Gambia, Guinea,
Guinea-Bissau, Haiti, Kiribati, Lao People’s Democratic Republic, Lesotho, Liberia, Madagascar, Malawi, Maldives,
Mali, Mauritania, Mozambique, Myanmar, Nepal, Niger, Rwanda, Samoa, Sao Tome and Principe, Senegal, Sierra
Leone, Solomon Islands, Somalia, Sudan, Timor-Leste, Togo, Tuvalu, Uganda, United Republic of Tanzania, Vanuatu,
Yemen, Zambia.


Geographical classification of LDCs


African LDCs (and Haiti): Angola, Benin, Burkina Faso, Burundi, Central African Republic, Chad, Democratic Republic
of the Congo, Djibouti, Equatorial Guinea, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Haiti, Lesotho, Liberia,
Madagascar, Malawi, Mali, Mauritania, Mozambique, Niger, Rwanda, Senegal, Sierra Leone, Somalia, Sudan, Togo,
Uganda, United Republic of Tanzania, Zambia.


Asian LDCs: Afghanistan, Bangladesh, Bhutan, Cambodia, Lao People’s Democratic Republic, Myanmar, Nepal,
Yemen.


Island LDCs: Comoros, Kiribati, Maldives, Samoa, Sao Tome and Principe, Solomon Islands, Timor-Leste, Tuvalu,
Vanuatu.


Other country groupings


Developed economies: Andorra, Austria, Australia, Belgium, Bulgaria, Bermuda, Canada, Cyprus, Czech Republic,
Denmark, Estonia, Faeroe Islands, Finland, France, Germany, Gibraltar, Greece, Greenland, Holy See, Hungary,
Iceland, Ireland, Italy, Israel, Japan, Latvia, Lithuania, Luxembourg, Malta, Netherlands, New Zealand, Norway,
Poland, Portugal, Romania, Saint Pierre and Miquelon, San Marino, Slovakia, Slovenia, Spain, Sweden, Switzerland,
United Kingdom of Great Britain and Northern Ireland, United States of America.


European Union: Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany,
Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania,
Slovakia, Slovenia, Spain, Sweden, United Kingdom.


Transition economies: Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Croatia, Georgia, Kazakhstan,
Kyrgyzstan, Montenegro, Republic of Moldova, Russian Federation, Serbia, Tajikistan, The former Yugoslav Republic
of Macedonia, Turkmenistan, Ukraine, Uzbekistan.


All developing countries: All other countries, territories and areas in Africa, Asia, America, Europe and Oceania not
specified above.


Other developing countries: All developing countries excluding LDCs.


Newly industrialized economies, first tier: Hong Kong (Special Administrative Region of China), Republic of Korea,
Singapore, Taiwan Province of China.


Countries with membership of the Development Assistance Committee (DAC) of the Organization for Economic
Cooperation and Development (OECD): Australia, Austria, Belgium, Canada, Denmark, European Union, Finland,
France, Germany, Greece, Ireland, Italy, Japan, Luxembourg, Netherlands, New Zealand, Norway, Poland, Portugal,
Republic of Korea, Spain, Sweden, Switzerland, United Kingdom, United States.




The Least Developed Countries Report 2011xii


Low-income, lower-middle-income, upper-middle-income and high-income countries: The classification used is that
of the World Bank, as of July 2011, available from http://data.worldbank.org/about/country-classifications/country-
and-lending-groups .


Advanced economies and emerging and developing economies: The classification used is that of the International
Monetary Fund in the Statistical Appendix of the World Economic Outlook 2011, available from http://www.imf.org/
external/pubs/ft/weo/2011/01/pdf/statapp.pdf .


Product classification


For analytical purposes, merchandise exports and imports have been classified, where appropriate, according to
main product groups. Following the codes used in the Standard International Trade Classification (SITC), revision 3,
product groups are designated as follows:


All food items: 0 + 1 + 22 + 4


Agricultural raw materials: 2 less 22, 27 and 28


Ores, metals, precious stones: 27 + 28 + 68 + 667 + 971


Fuels: 3


Manufactured goods: 5 to 8 less 667 and 68


Other goods non elsewhere specified: 9 excluding 971


Primary commodities excluding fuels: 0 + 1 + 2 + 4 + 68 + 667 + 971


Graduation of the Maldives from the Group of Least Developed Countries


Maldives was admitted to the category of LDCs in 1971, at the inception of LDC status. In 2000, the Committee
for Development Policy observed that the performance of Maldives with regard to the critieria of income per capita
and human capital was 27 per cent and 12 per cent, respectively, above the relevant graduation thresholds, and
that the country’s score under the new economic vulnerability criterion was only marginally below the relevant
threshold of 96 per cent. The Committee accordingly found Maldives eligible for graduation, and recommended
that the country be taken off the LDC list. The Committee, at the request of the Economic and Social Council
(ECOSOC), re-examined the graduation case of Maldives in 2001, taking the view that “the high vulnerability of
Maldives was not deemed sufficient for the Committee not to recommend graduation” from LDC status. Then
ECOSOC decided to defer to the 2003 review of the list of LDCs the question of Maldives’ graduation.


The 2003 review of the list generated broadly similar results regarding Maldives, which by then had a per capita
income level more than double the relevant graduation threshold (220 per cent). ECOSOC and the General
Assembly did not act upon this recommendation until 2004, with General Assembly resolution 59/210 of 20
December 2004 formally endorsing the recommendation that Maldives (as well as Cape Verde) be graduated
from LDC status. The countdown to Maldives’ graduation was interrupted on 30 November 2005, when
the General Assembly decided to grant Maldives, on an exceptional basis, a three-year moratorium on the
graduation process. The 2005 deferral resolution (60/33), in which the General Assembly recognized the severe
disruption that had been caused to Maldives by the 26 December 2004 tsunami, postponed to 1 January 2008
the formal commencement of the regular three-year transition period before graduation. As a result, the new date
for Maldives’ graduation was set to take place on 1 January 2011, and Maldives was formally removed from the
LDC list on that date.


Despite its graduation, Maldives is considered an LDC in this Report for analytical purposes, given that the data
considered do not refer beyond the year 2010, when it was still part of the LDC group.


In 2009, international tourism accounted for 81 per cent of Maldives’ total export earnings; the relative prosperity
of the country owes arguably little to LDC-specific benefits, which do not involve concessions in services trade.
However, the preferential market access Maldives enjoyed as a result of the European Union Everything but Arms
(EBA) initiative has supported the fishing industry — the second largest sector of the economy and an important
source of income for many households. Losing LDC treatment could therefore pose a real challenge to Maldives.
Accordingly, government authorities have made a consistent plea for “smooth transition” concessions: phasing
out rather than abruptly eliminating LDC benefits. Hence, EBA treatment and the right to continue to benefit
from the “enhanced integrated framework of trade-related technical assistance to LDCs” are not lost upon its
graduation from LDC status.




OVERVIEW




The Least Developed Countries Report 2011II


Introduction


This year has been a significant one for the least developed countries (LDCs). From 9 to 13 May, Heads of State
and Government and Representatives of States gathered in Istanbul for the Fourth United Nations Conference on
the Least Developed Countries (LDC–IV) to discuss the specific development challenges facing the LDCs and to
deliberate on actions which could best enable their accelerated, inclusive and sustainable development. At the end
of the Conference, member States declared their collective commitment to a renewed and strengthened global
partnership for the development of the LDCs, and they adopted a new Programme of Action for the Least Developed
Countries for the Decade 2011–2020.


The overarching goal of the Istanbul Programme of Action (IPoA) is “to overcome the structural challenges faced
by least developed countries in order to eradicate poverty, achieve internationally agreed development goals and
enable graduation from the least developed country category” (para. 27). This goal is expected to be achieved
through national policy actions and international support, which focus on (a) achieving sustained, equitable and
inclusive economic growth in LDCs of at least 7 per cent per annum; (b) building human capacities; (c) reducing the
vulnerability of LDCs to economic shocks and disasters, as well as climate change, and strengthening their resilience;
(d) ensuring enhanced financial resources and their effective use; and (e) ensuring good governance at all levels. The
aim is to enable half the LDCs to reach the criteria for graduation by 2020 (para. 28).


An important feature of the IPoA is the enhanced importance given to building the productive base of LDCs’
economies and promoting structural change. In this regard, one third of the priority actions agreed by LDCs and their
traditional development partners focus on (a) productive capacity–building; (b) agriculture, food security and rural
development; (c) trade; and (d) commodities.


Only two LDCs graduated from LDC status during the last decade. It will therefore need a major up-scaling of
effort at both national and international levels to ensure that at least half the LDCs reach the graduation criterion over
the next 10 years. For part of the last decade, the gross domestic product (GDP) of the LDCs as a group grew by
over 7 per cent. However, this growth did not generate sufficient productive employment opportunities, despite a
rapidly growing labour force. Poverty reduction has therefore been slow. A shift in the development model is required
to promote sustained and inclusive economic growth.


The key to achieving the ambitious goals of the IPoA is implementation. LDCs themselves have committed to
integrate the policies and measures in the IPoA into their national and sectoral development strategies. Development
partners have committed to integrate it into their respective national cooperation policy frameworks, programmes
and activities. And developing countries have also committed to support effective implementation consistent with
their capacities and through South–South cooperation. As paragraph 12 puts it:


“Guided by the spirit of solidarity with least developed countries, developing countries, consistent with their
capabilities, will provide support for the effective implementation of the programme of action in mutually agreed areas
of cooperation within the framework of South–South cooperation, which is a complement to, but not a substitute for,
North–South cooperation”.


The Least Developed Countries Report 2011 focuses in particular on the potential role of South–South
cooperation in supporting inclusive and sustainable development in LDCs. It puts forward a policy framework for
enhancing the development impact of South–South cooperation. And it proposes how to leverage South–South
financial cooperation for development in the LDCs.


Recent economic trends and long-term
outlook and development perspective


In 2010, LDCs grew by 5.7 per cent, one percentage point higher than in 2009, but far below the average of 7.1
per cent attained during the boom period. Asian LDCs fared better than African and island LDCs, both during the
crisis and afterwards, because of the “pull” effect of their regional trading partners, and their more diversified export
structure. Although the LDCs taken as a group did not experience a contraction of economic activity during the
global recession, one fifth of them did fall into a recession. The growth rate on a per capita basis was negative in




IIIOVERVIEW


18 LDCs in 2009 and in 9 in 2010. Finally, six LDCs saw their economic growth in per capita terms contract in two
consecutive years (2009 and 2010).


The outlook for the medium term is that the high growth rates of the pre-crisis economic boom are unlikely to be
achieved. The International Monetary Fund (IMF) forecasts for the LDCs indicate that the growth rates from 2009 to
2016 would be on average around 5.8 per cent, i.e. almost one and a half percentage points slower than during the
boom period. Thus, in the next five years, LDCs as a group would not be able to reach the growth rate of 7 per cent,
which is one of the main goals of the IPoA for the decade 2011–2020. Forecasts by country indicate that only 10
LDCs of the total of 48 would reach the target rate.


International trade has a decisive influence on the economic performance of LDC economies. While the value
of export of merchandise from the LDCs grew five-fold from 2000 to 2008, the volume exported increased by only
97 per cent. This illustrates the strong effect of commodity prices on the export boom during the 2000s. Exports
declined sharply in value terms in 2009 (-28 per cent), driven by the slump in the exports of African LDCs (-33.6 per
cent). They have since recovered, partly owing to higher commodity prices. But the exports of goods in 2010 were
still below the 2008 level.


The substantial increase in fuel and food prices in the last two years has again adversely affected many LDCs.
Combined with a drought in Eastern Africa, it has led not only to food insecurity but also to a widespread famine
affecting around 9 million people in 2011. Given the high commodity dependence of the LDCs, both as net exporters
and net importers, the volatility of their prices has clear detrimental consequences for these economies.


One of the salient features of the high growth rate during the 2000s in the LDCs was the increase in external
financial flows. While the sum of foreign direct investment (FDI) inflows and workers’ remittances barely reached $10
billion at the beginning of the decade, they were more than five times greater in 2008. However, the global recession
reversed some of these previous trends, so the FDI in 2010 ($26.4 billion) was $6 billion smaller than in 2008 ($32.4
billion). In contrast, workers’ remittances continued to grow even during the crisis, albeit more slowly. Likewise, the
net ODA disbursement, together with the net debt relief, increased from almost $13 billion in 2000 to $38.6 billion in
2008. The aid to LDCs has continued to increase, even during the crisis, and reached a record level of $40.1 billion
in 2009, the equivalent of 8.3 per cent of their GDP.


The current external conditions are such that lower growth rates and lower export dynamism of the LDCs may be
expected in the present decade, coupled with more volatility, especially in commodity prices, and most worryingly,
high fuel and food prices. The trends also portend somewhat weaker private external capital inflows and possibly less
aid. The recovery from the recent food, energy and economic crisis is, at best, partial in the LDCs, and the current
world economic situation and the outlook in the mid-term are not promising either.


THE DEVELOPMENT CHALLENGE IN LONG-TERM PERSPECTIVE


The scale of the development challenge facing LDCs is not simply a matter of the new post-crisis global economic
environment — it also must be understood against the background of long-term economic and social trends.


In this regard, the continuing marginalization of LDCs in the global economy is apparent in a number of dimensions.
While LDCs represent a significant and increasing share of world population (12 per cent in 2009), their contribution
to global output remains below 0.9 per cent, considerably lower than what it was in the mid-1970s. In other words,
one eighth of the world’s population produces less than one 100th of the world total GDP. With regard to international
trade, the LDCs’ share of world merchandise exports hovered around 0.6 per cent between the 1980s and the early
2000s, and has climbed to 1 per cent more recently. The bulk of the recent improvements, however, is accounted for
by fuels; excluding that product line, LDCs accounted for only 0.53 per cent of world exports in 2009.


The position of LDCs looks marginally better with regard to FDI flows. In 2009, their economies received around
2.5 per cent of total FDI inflows worldwide. This does indeed represent a small improvement compared to the last
couple of decades, but should be evaluated against a global context of surging FDI flows to developing countries,
and growing demand for primary commodities.


Finally, relative to other country groups (developed economies and developing economies excluding the LDCs),
the real GDP per capita in LDCs decreased from the beginning of the 1970s until the mid-1990s (chart 1). During that
period, the LDCs real GDP per capita, relative to that of developed countries, declined from above 2 per cent to only




The Least Developed Countries Report 2011IV


1 per cent. Relative to the real GDP per capita of other developing countries, the LDCs had fallen from almost 40 per
cent of their level in 1970 to less than 20 per cent by the mid-1990s. The increased dynamism of LDC economies
during the 2000s has reversed these trends. But the real GDP per capita of LDCs was only 1.5 per cent of that of
developed economies in 2009. Moreover, despite the economic boom in LDCs in the 2000s, there has been no
improvement of the real GDP per capita of LDCs relative to other developing countries. Thus, even with the growth
performance they recorded during the 2000s, LDCs were not able to start a process of closing the gap with other
developing economies. To embark on a sustained catching-up path, the LDCs will have to substantially improve their
economic performance.


Turning to social trends, UNCTAD’s assessment of poverty reduction trends and millennium development goals
(MDG) achievements (Least Developed Countries Report 2010: chapter 1) indicates that some progress is being
made in the LDCs, with an acceleration of achievement since 2000. Poverty reduction is, however, particularly weak
and most LDCs are off track to meet most human development MDGs. Overall progress is very slow.


The main feature of poverty in LDCs remains its all-pervasive and persistent nature: in 2007, 53 per cent of the
population was living on less than $1.25 a day, and 78 per cent on less than $2 a day. This implies that 421 million
people were living in extreme poverty in LDCs that year. The incidence of extreme poverty was significantly higher
in African LDCs, at 59 per cent, than in Asian LDCs, at 41 per cent. For the $2-a-day poverty line, however, the
difference was less marked: 80 per cent in African LDCs and 72 per cent in Asian LDCs.


It is estimated that the number of extreme poor living in LDCs by 2015 will be 439 million, while if the MDG target
were achieved it would be only 255 million.


Another way of looking at these trends is to compare the share of total number of people living in extreme poverty
in developing countries who are in LDCs (chart 2). In 1990, China and India accounted for 61 per cent of the people
living in extreme poverty in all developing countries. By 2007, this figure has gone down to 42 per cent, largely owing
to China, where the number of poor people more than halved in 20 years. In contrast, the share of the global extreme
poor who were living in LDCs has increased from 18 per cent in 1990 to 27 per cent in 2000, and reached 36 per
cent in 2007. Given current trends, and the continuation of business as usual, it is clear that, over time, LDCs will
become the major locus of extreme poverty in the world.


Chart 1. Real GDP per capita in LDCs relative to other country groups, 1970–2009


0


5


10


15


20


25


30


35


40


0


0.5


1.0


1.5


2.0


2.5


1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008


Developed economies (left scale)


P
er


ce
nt


ag
e


P
er


ce
nt


ag
e


Other developing economies (right scale)


Source: UNCTAD secretariat calculations, based on UNCTADstat database.




VOVERVIEW


A major effort will be needed to make a difference now and achieve the goals of the IPoA. This will require action
in a variety of areas. This Report focuses on the potential for South–South cooperation.


The rise of the South: Development implications for LDCs


One of the key features of the last decade or so has been the rising importance of some developing economies
in the global economy and the intensification of South–South economic relationships. From the point of view of
the LDCs, the multi-faceted process of reconfiguration of the world economy has translated, most notably, into a
remarkable strengthening of their economic ties with Southern countries. As a consequence, although traditional
Northern partners remain crucial, South–South relations now play an important and increasing role in LDCs’
integration into the world economy. Further, they are likely to acquire an even greater prominence in the future, given
the significant downside risks that loom on the recovery in developed economies, as well as the need for a global
rebalancing.


A critical development issue for LDCs is whether the dynamism of their intensifying relationships with Southern
economies can serve as a springboard for developing their productive capacities, facilitating structural transformation,
and providing more productive jobs and livelihoods, which are the necessary basis for substantial poverty reduction.


THE TYPE AND IMPORTANCE OF LDC-SOUTH ECONOMIC RELATIONS


The intensification of economic ties between the LDCs and other developing countries is a complex and
multifaceted process, encompassing not only trade and investment, but also migration and official financial flows.


UNCTAD’s analysis of international trade shows that, throughout the 2000s, the rapid expansion in LDCs’ exports
and imports has been driven by a mounting prominence of Southern markets and sources of supply. By 2009,
LDCs’ merchandise exports to Southern partners were worth $68.5 billion. This compares with $59.5 billion to
developed and transition economies. In other words, developing countries in 2009 absorbed more than half of
LDCs’ merchandise exports, up from 40 per cent at the beginning of the decade. The above shift in LDCs’ export
destinations has been paralleled by the simultaneous evolution of their merchandise imports. In a decade during
which the LDCs’ imports bill rose from $42 billion in 2000 to almost $144 billion in 2009 (after the peak in 2008),
developing countries expanded their market share by roughly 10 percentage points. As a result, nowadays they
account for well over half of LDCs’ total merchandise imports.


Chart 2. Distribution of people living in extreme poverty across developing countries, 1990, 2000 and 2007
(Below $1.25/day)


1990 2000


18%


61%
21%


2007


China and India LDCs


Other developing countries, excl. China and India


21%


51%


27%


22%


36%42%


Source: UNCTAD, 2011c.




The Least Developed Countries Report 2011VI


An important feature of LDCs’ trade with Southern partners, however, is its geographic concentration. A few
large developing countries (mostly in the Asian region) account for the overwhelming share of LDCs’ exports to and
imports from the South. Such a concentration is coupled with huge asymmetries between individual LDCs and their
main Southern partners, in terms of economic size, as well as the dependency on each other’s market. The two
Asian giants, China and India, play a particularly prominent role in LDCs’ growing integration with other developing
countries. China and India became respectively the first and fourth largest markets for LDCs’ exports, and the second
and third source of LDCs’ imports in 2009. Beyond them, though, a much broader array of countries is involved in
the multifaceted process of South–South economic integration, ranging — just to name a few — from Brazil to South
Africa, from Thailand to Saudi Arabia, and from Malaysia to Turkey.


A major feature of the composition of exports from LDCs to developing countries is the important role of commodity
exports. Indeed, the growth of commodity exports has largely driven the expansion of LDCs’ exports to the South
while the growth of manufactures exports, often within the context of preferential market access schemes, has
played a more prominent role in the expansion of LDCs’ exports to the North. In 2009, only 15 per cent of LDCs’ total
manufactures exports went to Southern markets, while the latter received over half of LDC total exports of fuel and
minerals. Besides, as much as 68 per cent of LDC agricultural raw materials exports (including products like cotton)
were sent to Southern destinations. Manufactures imports, particularly from China, India, South Africa and Thailand,
dominate the composition of imports of LDCs from developing countries.


Though less discussed in the literature, migration-related issues also deserve great attention in the context of the
growing South–South economic relations. While data reliability is far from perfect, it is estimated that only one of four
migrants coming from the LDCs moved to a developed country. One of five went to another LDC, and approximately
half of all migrants went to other developing countries. Accordingly, it is estimated that in 2010 two thirds of the
nearly $26 billion of remittances received by the LDCs originated in Southern countries, despite the fact that migrants
working in developed nations tend to remit larger sums. In particular, Southern economies such as India, Saudi
Arabia, Gulf Cooperation Council countries and South Africa play an important role for diasporas originating in many
LDCs, including the largest recipients of remittances, namely Bangladesh, Nepal and Sudan.


Finally, there are increasing financial flows between LDCs and other developing countries, including both FDI and
official financial flows. Between 2003 and 2010, when total FDI inflows to the LDCs were growing on average at
nearly 20 per cent per year, the share of FDI projects accounted for by Southern investors climbed from 25 per cent
to upwards of 40 per cent. While these investments are still largely related to extractive industries, there are signs of
incipient diversification to other economic sectors, such as finance, telecommunication, tourism and manufacturing,
with promising implications in terms of innovation and technological transfers. Southern official flows to LDCs have
also surged rapidly over the last few years. Though South–South official financial flows are rather small in relationship
to traditional ODA disbursements to LDCs, their focus on infrastructure and productive sectors render them very
conducive to developing productive capacities.


DEVELOPMENT IMPLICATIONS FOR LDCS


The Report suggests that the development implications of these intensifying and multi-dimensional economic
relationships between LDCs and other developing countries can be analysed through three major approaches: (a) the
flying geese paradigm, (b) a traditional centre-periphery model, and (c) a growth pole approach.


The first approach — the flying geese paradigm — presents a broadly positive picture of evolving economic
relationships between more advanced and less advanced developing economies which occurs as the former
industrialize. It explains the successes of Newly Industrializing Economies by relating the life cycle of particular sectors
over their course of development, with the relocation of industries from more advanced to less advanced countries
in the region in response to shifts in competitiveness. Once they manage to emulate the “leader” and establish
themselves as exporters of a new product, the “followers” are gradually encouraged by competitive pressures to
repeat the same pattern of relocation to their less developed neighbours. Simultaneously, more advanced economies
not only climb up the ladder of product sophistication, but also function as export markets for the “followers”, by
allowing reverse import. If the “follower” countries are in the same region, then the whole process fosters greater
regional integration. The mental image of countries as flying geese, all advancing together but at different stages of
development, can act in this context as an important indicative programme which establishes expectations.




VIIOVERVIEW


The second approach is the traditional centre-periphery model. In contrast to the flying geese paradigm, this
presents a negative view of the development impact of the rise of the South on LDCs. The centre-periphery model
emphasizes the reproduction of old North–South relationships within the South, with the smaller and poorer countries
being locked in to commodity dependence, and with asymmetric bargaining power.


The third approach is a growth pole approach. This recognizes that in the context of increasing global
interdependence, large and dynamic developing countries have emerged as growth poles in the global economy.
Growth poles can exert both positive and negative influences on the economic space to which they are related
through a complex field of multifaceted forces.


The evidence presented in this Report indicates that the emerging patterns of trade and FDI flows are to some
extent reminiscent of the centre-periphery dynamic. However, the actual pattern is more complex, as growing demand
for natural resources from Southern countries is increasing the bargaining power of LDCs and boosting domestic
resource mobilization thus enabling more policy space. Vibrant South–South trade is also broadening LDCs’ access
to low-priced intermediates and consumer goods, with unambiguous benefits for firms using those inputs, as well as
final consumers, but some potentially detrimental effects on import-competing industries.


But beyond trade, the emergence of Southern growth poles has provided many LDCs with broader access
to financial resources, through workers’ remittances, private and official flows, as well as greater opportunities for
technological upgrading. Partly in line with the flying geese paradigm, the incipient insertion of some LDCs into
regional and subregional production networks may open up new opportunities of structural transformation, skills
acquisition, and technological upgrading. This is particularly evident in Asia, where policy is playing an important role
to facilitate the dynamic development of the regional division of labour and growing regional interdependence.


The specificities of each country, the multiple channels through which South–South relations take place, and the
set of potential partners are so rich that no single narrative could possibly account for all aspects. But the growth
pole approach, which recognizes an array of external effects from the rapid growth and transformation of a few
rapidly growing developing countries, some of which are negative and some of which are positive, appears to be
the most rounded approach. The key question, from the point of view of LDCs’ development objectives, is to what
extent these emerging relationships can be leveraged to promote the development of productive capacities and the
diversification of their economies.


The next section of this overview summarizes a policy framework to help LDCs forge a proactive and strategic
approach to their integration with Southern partners, while the final section presents a practical application of this
framework for leveraging South–South financial cooperation for LDCs’ development.


Activating the developmental State in LDCs:
The role of South–South cooperation


The argument developed in this Report is that the benefits of South–South cooperation will be greatest when
a dynamic (two-way) relationship is established in which policies carried out by “catalytic” developmental States in
LDCs and South–South cooperation reinforce each other in a continual process of change and development. In such
a dynamic relationship, South–South cooperation supports both the building of the catalytic developmental State in
LDCs and the successful achievement of its objectives. The catalytic developmental State in LDCs in turn enhances
and shapes the benefits of South–South cooperation. New modalities and structures are required to strengthen
the interdependence between the two phenomena in the post-crisis environment. In this regard, developmental
regionalism is particularly important.


THE CATALYTIC DEVELOPMENTAL STATE


There is a real and significant opportunity for rapid poverty reduction in LDCs through the development
of productive capacities and associated expansion of productive employment. It can emerge from mobilizing
underutilized resources, as well as the addition of new capacity through (a) investment in agricultural productivity,
plant and equipment; (b) the diffusion of available technologies; (c) public spending on infrastructure, skills and
capabilities; and (d) the creation of new products and markets.




The Least Developed Countries Report 2011VIII


There is no single way to combine these elements into a single “correct” strategy for inclusive growth. However, if
history is any guide, a cohesive, strong, catalytic and effective State responsive to the needs of its constituents is one
of the prerequisites for defining the content of a long-term development strategy.


The modalities, role and reach of the State in national economic management have tended to fluctuate over time.
However, in all dynamic developing economies and in all countries now classified as developed market economies,
the government has played an influential role in promoting and supporting economic development. In this context,
the coordinating function of the developmental State is stressed, as well as its role in formulating a development
vision and creating the policy space required to combine and integrate policy measures in support of structural
transformation.


The Report defines the developmental State as a set of institutions, tools, capacities and capabilities committed
to national development, with a capacity to implement its articulated economic and social strategies. But within
this broad definition, it is possible to identify a number of different visions of the developmental State, including
the East Asian developmental State and developmental State rooted in Latin American structuralism. Due to the
specific vulnerabilities and structural constraints of LDCs and their initial conditions, there is a need to develop a more
appropriate model of developmental State, which is especially tailored for LDCs. This Report, therefore, proposes the
Catalytic Developmental State (CDS).


The CDS focuses on creating new productive capacities rather than “re-allocating” given resources and putting
given productive capacities to more efficient use. In other words, its focus is on creating dynamic comparative
advantage, and ensuring financial resources for long-term investment and for evolution of new productive capacities.
The CDS approach is more holistic and integrated, encompassing both economic and social development, and
needs to ensure that such development is served by finance rather than the other way around.


Each CDS will need to choose the trajectory of development suited for its own economy, ranging from the traditional
path toward “modernity” through Rostow’s well-established stages of development, including industrialization via
textile and garments and other labour-intensive commodities, or through technological leapfrogging into services or
skill-intensive capital goods. The CDSs have to identify and promote the type of industrialization which is best suited
for the particular LDC. This type of search makes up a key component of the new functions of the CDS. Rather than
taking industrialization as a given trajectory for all LDCs, the CDS “searches” (tries, experiments pragmatically) for the
optimal path of development in its own economy, including choosing the optimal form of productive transformation,
a process which requires policy space.


At early stages of development, the initiatives of the CDS will not rely solely on market forces to generate the
desired structural change and economic transformation. In order to accelerate growth, the CDS will need to carry
out significant shifting and reallocating of national and possibly international assets and resources to the growth-
enhancing sectors. For this purpose, the CDS in LDCs should engage in a more strategic type of integration into the
global economy, rather than pursuing rapid trade liberalization based on current and given comparative advantage.
The CDS should assist LDCs in achieving an optimal degree of economic openness according to their own needs
and circumstances, as well as the form of their integration into the global economy.


The CDS model is thus underpinned by a theory of openness within a managed trade policy that may enable a
country to concentrate its relatively scarce resources in areas of production where world demand is highly income-
and price-elastic; additionally from this analytical perspective, it needs to promote the diffusion of knowledge of the
kind of learning needed for continuous upgrading of the quality of all of the local factors of production. Essentially, trade
needs to be managed in order to gain all of the above-mentioned benefits, especially in the context of low income
economies which are overly specialized on natural resources. Openness works positively only if the phenomenon
of learning is suitably institutionalized on the policy side, involving appropriate government interventions that would
make the domestic economy more responsive to change.


The success of the CDS will depend on effective development governance, and in particular the capacity to
achieve and sustain high rates of investment and to implement policies that encourage the acquisition and learning
of new technologies. In all cases, the allocation of public investment is the primary function of the CDS, along with
setting up of a pro-investment regulatory framework that would enable rapid catch-up growth that could accelerate
economic development along the lines discussed in previous Least Developed Countries Reports. Moreover, the
State needs legitimacy and to be a truly representative State, which will enable it to ensure a consensus for the
development drive. This is a question of political will that involves what the Report calls “development contracts” or
a social consensus in support of national development objectives.




IXOVERVIEW


THE CATALYTIC DEVELOPMENTAL STATE AND SOUTH-SOUTH COOPERATION


The benefits of South-South cooperation will be greatest when there is a dynamic two-way relationship in which
South–South cooperation supports the building of developmental State capacities and the objectives of developmental
States in LDCs, while the developmental State in LDCs in turn generates and augments the development impact of
South-South cooperation. Action is required by both the LDCs and their Southern development partners to create
positive synergies between the catalytic developmental State and South–South cooperation.


What LDCs can do


For LDCs, national ownership and leadership of policies are sine qua non for enhancing the development
benefits of any kind of development cooperation, whether North–South or South–South. Mainstreaming South–
South cooperation, both interregional and intraregional, into the national development strategies of LDCs is thus
a necessary condition to ensure that South–South cooperation promotes rather than hinders the achievement of
inclusive and sustainable development in LDCs. It is clear that, with current policies, globalization has not fostered the
desirable kind of structural change in LDCs that could pull labour from less to more productive activities. A CDS would
seek to use South–South cooperation to reshape integration into the global economy in way which would enable
the structural transformations that are necessary for creating decent and productive employment opportunities and
achieving substantial poverty reduction. The CDS in LDCs should also be able to shape the integration into the global
economy in a way that promotes learning and enhances resilience.


Although intensified South–South economic relationships are likely to become a central element of the approach
of the CDS in shaping its strategic integration into the global economy, this should not be treated as a simple
substitute for traditional North–South relationships. The latter remain crucially important for most LDCs. Thus, the
challenge for LDCs is to maximize the development benefits of both North–South and South–South cooperation and
to articulate them in a positive way. This is a daunting task, particularly given the different modalities of cooperation.
However, the new opportunities associated with South–South cooperation should enable greater policy space for
LDC governments.


To use this policy space effectively, it is important that LDCs develop institutions which allow them to integrate
different forms of cooperation at the national level. As discussed in earlier Least Developed Countries Reports, one
possible tool is the establishment of an aid management policy, which includes both an information system for
tracking both North–South ODA flows and South–South official financial flows, as well as regular national forums in
which LDC governments discuss with their cooperation partners the development effectiveness of their support.


What Southern partners can do


While LDCs themselves must exercise leadership to make the most of South–South cooperation, it is clear that
South–South cooperation has certain features which can particularly support the building of developmental State
capacities in LDCs and also help to overcome the constraints facing CDSs. Southern cooperation partners can best
support the LDCs if their cooperation efforts accentuate these features.


Two features are particularly important.


Firstly, given the experience of major development partners in the South, South–South cooperation is more likely
to support and encourage developmental State–building than traditional forms of development cooperation.


This can happen through three main channels: (a) supporting capacity–building efforts; (b) sharing policy lessons;
and (c) providing alternative sources of finance.


The great potential for knowledge-sharing which supports policy learning and institutional experimentation in
LDCs is rooted in the fact that all developing countries face similar challenges. Thus, even the largest dynamic
Southern economies face problems with respect to poverty levels, technological gaps and non-level playing fields,
similar to those which LDCs face, though to a much less severe degree. But on top of this, successful developing
economies continue to formulate and implement developmental policies and to build developmental institutional
arrangements. In short, policy-learning based on experiences from the more advanced developing countries may
help LDCs to create new instruments and institutions to develop their productive capacities in a way which promotes
structural transformation, employment generation and poverty reduction.




The Least Developed Countries Report 2011X


Policy learning can be encouraged in various ways, including (a) the organization of seminars and round tables;
(b) sponsoring internships and visits of LDC officials in key development planning institutions and ministries; and (c)
enabling academic exchange on development policies and strategies between research institutions and universities
of LDCs and Southern partners. However, it should be noted that this requires resources and commitment. In general,
technical capacity–building should be pursued as well as South–South policy dialogues to draw policy lessons from
experience.


The provision of alternative sources of finance is another major channel through which South–South cooperation
can support the building of the CDS in LDCs. Financing public investment, particularly in productive sectors and
for physical and technological infrastructure, are critical functions of the developmental State. At present, the
effectiveness of the State in LDCs is handicapped by a scarcity of public resources. Finance from other developing
countries can directly enable policy initiatives in LDCs which do not correspond with the preferences of traditional
donors. Moreover, new demand for natural resources from Southern partners can help to boost natural resource rents
in LDCs, which can also support domestic resource mobilization. Helping to lift the financial resource constraint of
LDC governments, either directly or through indirect effects on domestic resource mobilization, can be as important
a form of South–South cooperation as helping to lift the technical capacity constraint through support for policy
learning.


The second feature of South–South cooperation which is likely to be particularly supportive to LDCs is that
building productive capacities has been much more integral to South–South cooperation than traditional development
assistance. Thus, South-South cooperation can not only support developmental State–building, but also support the
objectives of developmentally effective States.


There are three main channels through which South–South cooperation potentially supports the development
of productive capacities in LDCs: (a) through official financial flows for production and economic infrastructure; (b)
through investment and technology transfer and support for technological learning at the enterprise-level in LDCs;
and (c) through the provision of preferential market access in a manner which permits, or even promotes, learning.
Currently, the first is most important while the second and third are developing.


Although official financial flows from Southern partners to LDCs cover a wide range of activities, they tend to
focus more on infrastructure and production sectors compared with traditional donors, who increasingly target the
social sectors. The situation is particularly striking in Africa, where China, India and Arab countries are all active in the
provision of infrastructure finance to African LDCs.


South–South technology transfer is also an important channel for developing productive capacities in LDCs.
Technologies available in Southern countries are often more suitable to the needs and requirements of LDCs, at similar
level of development, thereby confirming the scope for technology transfer. Moreover, the necessary human capital
requirements for utilizing and adopting the new technologies, originating in the South, may be more absorbable,
cost-effective, and generally more available in other developing countries than in the North.


One way in which Southern partners have been enabling learning in LDCs is through implementing specially-
designed regional and bilateral free trade agreements in a way which provides LDCs with breathing space –– extra
time to liberalize –– so that they have the time to help their domestic enterprises develop necessary capabilities to
compete. In recent years, various Southern countries have started preferential trade schemes for LDCs in the form
of duty-free, quota-free market access provisions. A critical issue is whether these schemes will provide a training
ground for LDC enterprises to upgrade production. As discussed in the Report, this is not likely to be automatic.
Thus, designing these schemes in such a way that can realize the nascent potential of South–South trade to support
learning and upgrading is important.


The importance of mutual advantage


While a dynamic relationship can be established between CDSs in LDCs and South–South cooperation, it is clear
that, for this to occur in practice, the relationship between LDCs and their Southern partners should not only be
valuable to the former but also lead to mutual advantage.


In this regard, the fundamental principles of solidarity and mutual respect which underpin South–South cooperation
are important. Given their shared histories of colonialism and neo-colonialism, similar initial conditions and familiar
economic and political constraints, there are strong reasons to believe that South–South cooperation and integration
can avoid reproducing the asymmetries and biases that have overshadowed traditional development cooperation.




XIOVERVIEW


However, South–South cooperation should not be thought of as a panacea for development and should not be
romanticized. While the donor–recipient relationship characteristic of aid and development is absent in the context
of South–South cooperation, this does not mean that all can participate on an equal basis. South–South trade,
investment and development aid also include both complementary and competitive relations between the domestic
interests of LDC nations and those of investors and exporters from more advanced developing countries.


Nevertheless, it is possible to identify a number of reasons why Southern partners may be motivated to engage in
the types of cooperation suggested above and mutual advantages obtained with LDCs. In particular:


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cooperation should be seen as a policy tool that can facilitate the building of new markets both in terms of
production and consumption.


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exploitation of these resources can be mutually beneficial for both parties provided the policy framework focuses
on its developmental impact in LDCs.


t 3FHJPOBMQSPTQFSJUZBOESFHJPOBMTUBCJMJUZDBOOPUCFBDIJFWFEXJUIPVUUIFQBSUJDJQBUJPOPGBMMUIFDPVOUSJFTJOUIF
region, including the LDCs. Strategic geopolitical interests also play an important rational that provides motivation
for cooperation with LDCs.


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and exercise its collective influence in all forums. Other Southern partners could also gain from broadening the
voice and participation of a larger membership of countries, in order to better articulate the needs of developing
countries in general.


DEVELOPMENTAL REGIONALISM


Developmental regionalism is an important mechanism through which the CDS and South–South cooperation can
reinforce each other. Developmental regionalism is understood here as a development-led regionalism that accepts
globalization as a historical trend, but rejects the market-led approach to globalization. Developmental regionalism
aims at maximizing the benefits of regional cooperation with the goal of achieving an advantageous insertion of the
members’ economies into world markets. This goal is not an end in itself, but only a means to accelerate economic,
social and human development.


Developmental regionalism is concerned with both (a) internal economic development and domestic integration,
while at the same time, with (b) strategic integration of the regional trading blocs into the world economy. As it is the
case with other forms of regionalism, the most basic level of cooperation covered by developmental regionalism is
that of trade. Most LDCs lack a sufficiently large and diverse home market, (that could allow diversification of the
industrial structure) and thus regional markets provide an important economic space within which learning over time
can take place.


However, the concept of developmental regionalism goes beyond the domain of trade per se, and includes other,
more ambitious forms of intervention, such as industrial policy. There are major opportunities for the achievement
of economies of scale through the provision of various kinds of regional public goods which would benefit LDCs
and other developing countries within regional groupings. Such regional public goods include various kinds of
physical infrastructure supporting transport, communications and energy, as well as regional science and technology
infrastructure and regional innovation systems.


In addition, with regard to the agricultural constraints to development in LDCs, reflected in their inability to generate
surplus and to guarantee food security for all, joint adaptive research with neighbouring countries, regional storage
facilities and coordinated investment programmes at the regional level can all make a difference. Financial deepening
can also have a strong regional dimension through regional development banks, as will be discussed in more detail
below. What all this can add up to is a type of regional industrial policy which can involve a variety of policy tools,
and not only those traditionally associated to trade policies proper — from tariff and non-tariff barriers, to subsidies,
concessional loans, direct provision of infrastructure and other public goods, promotion of research and development
and science and technology activities, State-owned enterprises and State-controlled mixed enterprises, and many
others. For greatest impact and efficiency, these policies should be harmonized and coordinated among participating
countries in the regional association.




The Least Developed Countries Report 2011XII


Under developmental regionalism, trade amongst regional partners is favoured with respect to extraregional trade,
implementing strategic trade policies consistent with each member State’s domestic industrial policies. Strategic
trade policies may include traditional or less traditional tools — such as tariffs, import and export quotas and bans,
technical and phytosanitary standards. In tandem with its holistic vision of development, regional trade can also
be promoted through coordination of investment to strategic areas such as regional transport and other ancillary
infrastructure. Prioritizing investment in strategic areas of common interest and common constraints can help to
overcome the pre-existing bias against regional trade caused by the colonial legacy that characterizes many LDCs
and other poor countries.


The Report discusses various successful examples of developmental regionalism, particularly in Asia, which
illustrate the potential. These include trilateral cooperation between China, the Republic of Korea and Japan on
developing new technologies and the catalytic role of the Asian Development Bank and the Brunei Darussalam–
Indonesia–Malaysia–Philippines East Association of Southeast Asian Nations (ASEAN) Growth Area. Another
important example is the the development of economic corridors within the Greater Mekong Subregion, that is
coordinated by the Asian Development Bank. This involves the development of economic corridors, which cover
Cambodia, the Lao People’s Democratic Republic and Myanmar and promise to link them more closely economically
with their neighbours. However, past experience shows that the benefits of regionalism can be unequally shared.
Thus, the Report argues that LDCs will benefit more through a policy of regional integration which involves an
integrated regional development approach linking trade, finance, investment, technology and employment policies
and also, where necessary, through specific regional support measures.


Leveraging South–South financial cooperation for LDCs’ development


The Least Developed Countries Report 2011 provides a practical application of this policy framework. It focuses
on one of the most fundamental challenges in implementing the new IPoA for LDCs, namely mobilizing financial
resources and directing them to productive use in a way which leads to sustainable and inclusive growth and
development.


The Report argues, firstly, that regional and subregional development banks should play a larger role in supporting
LDCs and also financing developmental regionalism. It then goes on to make a proposal aimed at mobilizing untapped
resources from Southern partners in order to boost the provision of development finance through regional and
subregional development banks. The central idea underlying this proposal is to channel a very small proportion of the
foreign exchange reserves increasingly held by developing countries towards regional and subregional development
banks. These banks would, in turn, intermediate these financial resources in support of development-oriented
investments in the provision of regional, and also national, public goods which would enable the LDCs to build and
strengthen their productive capacities.


As expressed in the IPoA, the policy suggestions should not be seen as a substitute for North–South development
assistance. They are rather intended to improve the diversity and efficacy of development financing in LDCs. Although
the proposals would generate additional external resources considering their implementation, it is also necessary to
take account of the development challenges facing southern partners, and their capacity.


THE ROLE OF REGIONAL DEVELOPMENT BANKS


Regional financial cooperation covers a wide spectrum of activities, including (a) regional payments systems
which provide financial incentives to intraregional trade; (b) regional monetary systems which can provide liquidity
finance to cushion against external shocks; and (c) regional and subregional development banks which provide long-
term finance — development finance — to support private and public investment.


Revitalizing and strengthening the role of regional and subregional development banks is an important component
of the agenda of reforming the international financial architecture and such banks should play an increasing role in
financing development in the LDCs. Important regional development banks for LDCs at the moment include (a) the
Inter-American Development Bank, created in 1959; (b) the African Development Bank, created in 1964; and (c) the
Asian Development Bank, created in 1966. In general, the regional and subregional development banks in Asia and
Latin America supply a much greater share of total multilateral ODA within their respective regions than the regional




XIIIOVERVIEW


and subregional development banks in Africa do. Also, regional development banks provide a relatively low share of
total multilateral ODA disbursements to LDCs.


There are a number of advantages of regional and subregional development banks. First, because of their regional
ownership structure, regional development banks can facilitate a stronger voice to developing country borrowers, as
well as enhance regional ownership and control. Second, they can be more effective because they tend to govern
more through informal peer pressure rather than imposing conditionality. Third, information asymmetries are smaller
at the regional level, given proximity as well as close economic and other ties. In this regard, it has been proposed that
there should be a conscious effort to translate the principle of “subsidiarity” into the practice of development finance.
That is, where development investments aspire to global or transregional objectives, there is an obvious rationale for
a global institution to play the dominant role. But where investments seek to meet national or regional objectives,
there is less need for a global institution to be the key player. Accumulation of development-related knowledge and
expertise better occurs and is utilized closer to the ground. Regional or subregional development banks can be
particularly valuable for small and medium-sized countries such as LDCs, which are unable to carry much influence in
global institutions. Their voice can be better heard and their needs better met by regional and subregional institutions,
rather than by global institutions.


Regional and subregional development banks may also be particularly suitable for provision of regional public
goods. Since industrial development occurs increasingly within regional production networks, the provision of “social
overhead capital” — such as infrastructures, energy, or telecommunication networks — at the regional level is likely
to become more and more critical. Regional development banks, in this context, appear to be the most appropriate
institutions to oversee the financing and implementation of such large-scale investments projects, while ensuring that
the interests of even the smallest country involved are adequately taken into account.


However, for maximum success it is important that regional development banks’ activities do not take place
in a policy vacuum. They need to become an integral part of a broader developmental regionalism framework,
supported by a catalytic developmental State. Indeed they should be regarded as a key instrument of developmental
regionalism through which the benefits of integration accrue to least developed member countries. Moreover,
an important factor affecting the working of both multilateral and regional development banks is their ownership
structure. Some regional banks have both developed and developing country members, in varying proportions;
others, notably subregional development banks such as the Andean Development Corporation, have a membership
composed almost exclusively of developing countries. This matters because banks tend to respond to the political
agendas of their major shareholders.


Experience indicates that regional and subregional banks have worked particularly well where their shareholders
are also their clients. One good example is the European Investment Bank. It provided a significant financial
mechanism to make economic integration in Europe equitable, providing grants and guarantees for building regional
infrastructure in less developed areas. The Andean Development Corporation is also a good example. It is a regional
development bank exclusively owned by developing countries and its features include the great average speed with
which loans are approved, and the absence of conditionality.


At present, non-borrowing countries still have a strong position in most regional development banks. However, if
an increasing share of regional development banks’ financial resources comes from Southern countries, the relations
of power inside the regional development banks is likely to change, with Southern countries being entitled to much
higher quotas of capital and more governing board members. Such a change in the legal ownership of regional
development banks could in itself powerfully enhance the sense of political ownership of the programmes and
projects financed by the banks on the part of beneficiary countries.


SOVEREIGN WEALTH FUNDS AS POLICY TOOLS TO PROMOTE SOUTH–SOUTH COOPERATION: A PROPOSAL


Between December 2001 and the end of 2010, the value of global reserves increased from $2.05 trillion to
$9.30 trillion. The bulk of the increase was due to reserves accumulated by developing countries which, as a whole,
accounted for more than 80 per cent of global reserve accumulation during this period. By the end of 2010, their
reserves approached $6.1 trillion. Part of these reserves were held by commodity exporters, oil exporters in particular,
who have been accumulating foreign exchange holdings thanks to the boom in commodity prices. Another part was
by large and medium-sized manufacturing exporters, who have enjoyed trade and current account surpluses for
many years. The latter group is made up by a small number of Asian developing countries.




The Least Developed Countries Report 2011XIV


Such an extraordinary process of reserve accumulation is without parallel in recent history. A significant proportion
of those assets has been accumulated in Sovereign Wealth Funds, (SWFs), which are generally run independently
from traditional reserve management by central banks and/or finance ministries. Total SWF assets were estimated
in March 2011 to be valued at $4.3 trillion, of which $3.5 trillion were owned by developing and emerging countries,
including $7 billion by three LDCs — East Timor, Kiribati and Mauritania.


Without underestimating the economic, institutional and political difficulties that such an initiative would entail,
one promising way in which Southern countries could strengthen the role of regional financial institutions could be
through channelling towards them a very small share of the financial resources presently managed by their SWFs.
This proposal would provide the SWFs with an opportunity to diversify their long-term financial position — currently
held mainly in developed countries. Moreover, SWFs could enhance the regional development banks’ capacity for
long-term lending and provide them with opportunities to match their long-term assets to long-term liabilities.


Assessing the viability of such initiative is beyond the scope of this Report and would require a full-fledged feasibility
study; however, a “back-of-the-envelope calculation” suggests that this strategy could boost significantly the role of
regional development banks, leading to large increases in the availability of development finance. If only 1 per cent of
Southern SWF assets were invested into regional development banks, for example, this would increase their paid-in
capital by $35 billion. Assuming a conservative ratio of authorized capital to paid-in capital of 2.8, this would translate
into an additional $98 billion of authorized capital, corresponding to an additional annual lending capacity of over $84
billion. This figure would be higher than the total lending disbursements to developing countries by all multilateral and
regional development banks — including the World Bank and the European Investment Bank — in 2009, the year
when their lending activities peaked (at $64 billion) due to the extraordinary credit requirements caused by the global
financial crisis.


A similar boost in regional development banks’ lending capacities could clearly play a central role in financing
the provision of region-wide infrastructures (thereby facilitating regional trade integration), as well as supporting the
development of domestic productive capacities, particularly in the LDCs.


Two important caveats must be taken into account, however, when promoting the development of South–
South financial cooperation. First, it is important to distinguish the growing opportunities for South–South financial
cooperation from the longstanding responsibilities underlying the traditional development cooperation framework.
South–South financial cooperation should be viewed as a complement, rather than as a substitute for, traditional
North–South cooperation. The second caveat is that it is important that Southern partners can actively use this
new modality for mutual advantage. Increased financial support should go hand-in-hand with increased voice in the
governance of regional development banks.


Dr. Supachai Panitchpakdi


Secretary-General of UNCTAD




1CHAPTER
RECENT TRENDS AND


OUTLOOK FOR THE LDCS




The Least Developed Countries Report 20112


A. Introduction


This chapter is intended to serve three distinct but interrelated purposes.
The first is to describe and analyse the recent economic trends in the least
developed countries (LDCs) and the economic outlook in the medium term.
Recent trends in economic growth, international trade and external finance are
assessed. In addition, this section gauges the possibilities of meeting the target
of the Istanbul Programme of Action for the Least Developed Countries for the
Decade 2011–2020 (IPoA) to enable half of the LDCs to meet the criteria for
graduation from that category by 2020. The analysis suggests that prospects
for achieving that goal are not particularly good.


The second objective of this chapter is to briefly analyse the current world
economic situation and describe the medium-term growth prospects of the
LDCs. It points to a slower and potentially more volatile growth and spells out
several implications for them. Of particular concern is that developed economies
are not likely to grow at rates consistent with full employment and thus would
be unable to provide the required stimulus for world demand. Conversely,
developing economies are likely to continue to be considerably more dynamic
than developed ones in the medium-term, which means that the South would
play a more prominent role in the world economy. This reconfiguration suggests
that LDCs might need to rethink their development strategy by taking into
account the so-called “rise of the South”.


The third objective of the chapter is to present selected highlights of the
IPoA. The Fourth United Nations Conference on the Least Developed Countries
(LDC-IV) held in Turkey, adopted the IPoA in May 2011. This review presents the
main focus of the IPoA, as well as some of its underlying themes. It also touches
upon several long-standing issues faced by the LDCs, such as the absence of
structural transformation and diversification, and the insufficient development
of productive capacities. The last section presents the main conclusions of the
chapter.


B. Recent trends in LDC economies


1. TRENDS IN ECONOMIC GROWTH


The economies of the LDCs as a group grew by 5.7 per cent in 2010. This
is a slight improvement — one percentage point — in comparison with the
result in 2009, but is far below the 7.1 per cent average annual growth rate
attained during the boom period between 2001 and 2008. The September 2011
forecasts of the International Monetary Fund (IMF) for LDCs point to a somewhat
slower economic growth in 2011 (4.9 per cent), considerably below the rates
recorded during the boom period (table 1).


In comparison with the average growth of 7.3 per cent of developing and
emerging economies, the LDCs as a group underperformed in 2010 and are
forecasted to underperform in 2011 as well. This differs radically from the
situation preceding the triple crisis — the food, fuel and financial crisis — when
LDC economies on average grew somewhat faster than other developing
economies. If these trends continue, there is a danger that the LDCs will not only
continue to diverge from other developing economies in per capita terms — the
tendency before the crisis — but also in terms of total gross domestic product
(GDP). In contrast, the growth rates of the LDCs have been much better when


LDC economies grew by 4.6 per
cent in 2009, 5.7 per cent in 2010
and are forecasted to grow 4.9 per


cent in 2011.




3CHAPTER 1. Recent Trends and Outlook for the LDCs


compared with advanced economies, both during the triple crisis and in recent
times.


The average growth rate per capita of the LDCs was stymied by high
population growth rates. On average, the population growth rate of the LDCs
is almost double that of emerging and developing economies and almost four
times as high as in advanced economies. For that reason, the expansion of
GDP per capita in the LDCs was on the order of 3.4 per cent in 2010. Again,
that is far below the average annual real GDP per capita growth rate during the
previous boom period, 4.4 per cent.


In terms of country groups’ performance, the Asian LDCs fared the best both
during the crisis and afterwards. Their economies slowed down to 5.1 per cent
in 2009 from 5.4 per cent in 2008. They rebounded to an estimated 6.3 per
cent growth in 2010, while forecasts for 2011 point to slower growth (5.2 per
cent). The main reason behind this better performance is the overall dynamism
of developing economies in Asia, especially Chinese and Indian, during the crisis
and after. Developing economies in Asia grew 7.2 per cent in 2009 and 9.5 per
cent in 2010, and are forecasted to expand by 8.2 per cent in 2011. The pull
effect of their trading partners, together with a more diversified export structure,
help explain why the Asian LDCs have recently fared better than other LDCs
(see box 1).


Conversely, the African LDCs were more affected by the crisis. The difference
between their growth rate in 2008 (7.3 per cent) and 2009 (4.5 per cent) was
almost three percentage points, and the growth in 2010 picked up marginally (5.2
per cent). The composition of their exports, more concentrated in commodities
and less diversified than that of the Asian LDCs, makes them more vulnerable
to external shocks. Since population growth is higher in African LDCs than in
Asian LDCs, the underperformance of the former in terms of per capita growth
is even starker. Finally, island LDCs have been hit harder by the crisis because of
their extreme specialization in very few goods and services. Thus, a drop in the
number of tourist arrivals caused by the recession in advanced countries had a
profound impact on GDP in island LDCs in 2009 (-1.9 per cent). Subsequently,
they recovered relatively quickly, attaining 5.1 per cent growth in 2010, and are
forecasted to continue growing at a similar pace in 2011.


As could be expected from such a large group of countries, the performance
of individual LDCs in the last two years has been very heterogeneous (table 2). It
is worth emphasizing that the growth rate was negative in 10 countries in 2009.
This shows that although the LDCs as a group did not experience a contraction
of economic activity during the global recession, one fifth of those countries did
fall into a recession. In addition, the per capita growth rate was negative in 18
LDCs in 2009. The subsequent timid recovery in 2010 was elusive for nine LDCs


Table 1. Real GDP and real GDP per capita growth rates of LDCs, developing economies and advanced economies,
2008–2011


(Annual weighted averages, percentage)


Real GDP Real GDP per capita


2008 2009 2010 2011a 2008 2009 2010 2011a


Total LDCs 6.5 4.6 5.7 4.9 4.1 2.3 3.4 2.6
African LDCs and Haiti 7.3 4.5 5.2 4.7 4.6 1.8 2.6 2.1
Asian LDCs 5.4 5.1 6.3 5.2 3.5 3.3 4.5 3.4
Island LDCs 8.1 -1.9 5.1 5.4 5.9 -3.9 3.0 3.2


Memo items:
Emerging and developing economies 6.0 2.8 7.3 6.4 4.5 0.8 5.8 4.6


Advanced economies 0.1 -3.7 3.1 1.6 -0.7 -4.5 2.5 0.9


Source: UNCTAD secretariat calculations, based on IMF, World Economic Outlook database, September 2011.
a Forecasted.


In terms of country groups’
performance, the Asian LDCs fared
better than other LDCs both during
the crisis and afterwards because
of the pull effect of their trading


partners, and their more diversified
export structure.


The difference between the growth
rate of the African LDCs in 2008 (7.3


per cent) and 2009 (4.5 per cent)
was almost three percentage points,


and the growth in 2010 picked up
only marginally (5.2 per cent).




The Least Developed Countries Report 20114


Box 1. Countries whose exports are more diversified and oriented to the South have been hit less hard by the crisis


The gradual deepening of South–South economic linkages during the last decade has already altered the terms of the
LDCs’ integration into the global markets, and thus modified their vulnerability to exogenous shocks. The impact of the global
demand shock hitting LDCs’ export volumes during the recent crisis was negatively correlated with the share of merchandise
exports destined to Southern partners — and the negative correlation was statistically significant at the 99 per cent level
of confidence (Box chart 1). Similarly, the beneficial impact of geographical diversification has also been documented with
respect to FDI flows and remittances. During the recent crisis, countries receiving FDI or remittances originating in other
Southern partners experienced more resilient inflows (UNCTAD, 2010; World Bank, 2009). Thus, the higher geographical
diversification brought about by the rise of the South is beneficial to LDCs in the same way it helped them mitigate the brunt
of the downturn in the last couple of years.


Box chart 1. South–South trade and the 2009 shock to LDCs’ exports


-70


-60


-50


-40


-30


-20


-10


0


10


20


30


40


10 20 30 40 50 60 70 80 90 100


V
ol


um
e


in
di


ce
s


of
e


xp
or


ts
(%


c
ha


ng
e


20
08


–2
00


9)


Share of merchandise exports to Southern partners, 2008 (%)


y = 0.2699x —0.1739
R² = 0.1612


Source: UNCTAD secretariat calculations, based on UNCTADstat database.


The geographical distribution of international trade and investment flows is, however, only one facet of diversification; the
same principle applies, mutatis mutandis, to their sectoral distribution. In that respect, the evidence concerning the impact
of the recent crisis on LDC economies points to the structural weaknesses in their specialization patterns. Indeed, the LDCs,
including big oil exporters such as Angola or Sudan, were particularly exposed to adverse price shocks in 2009 because
of their heightened dependence on oil and mineral commodities (box chart 2).a Again, this result is largely explained by the
differential slump in international prices across commodities, with prices of fuels and mineral commodities experiencing a free
fall in the first half of 2009, while other commodities witnessed more contained reductions (UNCTAD, 2010). Thus, in general,
a highly concentrated export structure implies a relatively higher risk of adverse price movements. This is particularly true in
relation to primary commodities, characterized by volatile prices and short-term rigidity of demand and supply.


Box chart 2. Oil and mineral commodity dependence and the 2009 shock to LDCs’ exports


y = —0.2941x + 0.0021
R² = 0.6153


-40


-30


-20


-10


0


10


20


30


10 20 30 40 50 60 70 80 90 100


U
ni


t v
al


ue
o


f e
xp


or
ts


(%
c


ha
ng


e
20


08
–2


00
9)


Share of fuels and minerals in total merchandise exports in 2008 (%)


Source: UNCTAD secretariat calculations, based on UNCTADstat database.


a Across LDCs, the 2008—2009 percentage change in the unit price of exports is negatively correlated with the share of fuels and minerals in
total exports and the negative coefficient is statistically significant at a 99 per cent confidence level.




5CHAPTER 1. Recent Trends and Outlook for the LDCs


as their economies contracted on the per capita basis that year. Finally, six LDCs
saw their economic growth shrink in per capita terms for two consecutive years,
2009 and 2010.


According to UNCTAD (2010), the relative resilience of the LDCs to the
global recession was mainly the result of offsetting factors, such as large
inflows of official financial flows from the international financial institutions, the
countercyclical behaviour of workers’ remittances, a countercyclical fiscal policy
in a few countries and the swift recovery of commodity prices in the second
semester of 2009. In addition, the relative underdevelopment of financial
systems in the LDCs shielded them from financial contagion. Instead, the main
channels of transmission of the crisis were trade (the value of merchandise
exports declined by 28 per cent in 2009) and investment (the inflow of foreign
direct investment (FDI) to LDCs declined by 20 per cent in 2009).


In light of the persistent economic difficulties in the advanced countries
(analysed in more details in section C of this chapter), the question arises as to
what can be expected in terms of economic growth in the short and medium
terms. The available forecasts by the IMF (IMF, 2011) point to a slower growth of
the world economy than in the previous decade. This has obvious repercussions
for the LDCs, given their open economies and their pursuit of export-led growth.


The IMF projections for the LDCs indicate that the growth rates of real GDP
in the period from 2009 to 2016 would be on average around 5.8 per cent, i.e.,
more than one percentage point slower than the growth rate recorded from 2001
to 2008. While that growth cannot be considered sluggish, it is nevertheless
slower than in the previous boom period and is also below the target rate of 7
per cent annual growth established in the IPoA (chart 1). Moreover, given the
headwinds the global economy experienced throughout 2011 and the difficulties
of finding solutions for various global, regional and national macroeconomic
problems, such as global imbalances, the sovereign debt crisis and financial
sector regulation, the IMF forecasts should indeed be viewed as a best-case
scenario.


Be that as it may, even in that best-case scenario, neither group of LDCs
would be able to reach the targeted growth rate in the next five years. The
forecasted growth rates of 5.8 per cent for African LDCs suggest a slowdown of
over one and a half percentage points compared with the average of the previous
eight years, 7.4 per cent. The Asian LDCs are also likely to experience slower
growth from 2009 to 2016, when compared with the previous period — 5.9 per
cent and 6.8 per cent, respectively — but the slowdown is not as marked as in
the case of African LDCs. The region’s economic dynamism, already singled out
as the main driver of the recovery of the Asian LDCs in 2010 and 2011, is likely
to continue to exert a positive influence on their prospects in the medium-term.


The pronounced volatility of economic growth has been a defining
characteristic of the LDC economies over the years. In the 1980s and 1990s,
their growth rates were several times more volatile than those of the developed
countries. Island LDCs are the most vulnerable of the group to shocks
coming from the global economy and natural disasters. The extreme volatility
of economic growth of the island LDCs and their vulnerability stem from their
specialized and narrow economic structure. As a result, they display the highest
volatility of growth rates. The trough of 2005 was caused by the Indian Ocean
tsunami of December 2004. The peak of 2006 (growth rate higher than nine per
cent) was due to the reconstruction efforts. However, their growth suffered again
in 2009 as a consequence of the global recession. As their economies depend
to a large extent on tourist arrivals from advanced economies, it would appear
that their economies should be more affected by the continuation of sluggish
growth in these economies. Thus, they are likely to fall far short of the target


Although the LDCs as a group did
not experience a contraction of


economic activity during the global
recession, one fifth did fall into a


recession. In addition, the per capita
growth rate was negative in


18 LDCs in 2009.


The IMF projections for the LDCs
indicate that the growth rates of


real GDP from 2009 to 2016 would
be on average around 5.8 per cent.
That is slower than in the previous
boom period and is also below the


target rate of 7 per cent annual
growth established in the IPoA.




The Least Developed Countries Report 20116


Table 2. Real GDP and real GDP per capita growth rates in LDCs, and forecasts until 2016
(Annual average growth rates, percentage)


Real GDP Real GDP per capita


2008 2009 2010 2011
2001–
2008


2009–
2016


2008 2009 2010 2011
2001–
2008


2009–
2016


Angola 13.8 2.4 3.4 3.7 15.5 6.6 10.9 -0.2 0.4 0.7 12.3 3.5
Bangladesh 6.0 5.9 6.4 6.3 6.1 6.6 4.5 4.5 4.9 4.9 4.4 5.1
Benin 5.0 2.7 2.6 3.8 3.8 4.4 2.2 -0.1 -0.2 0.9 0.7 1.6
Bhutan 4.7 6.7 8.3 8.1 8.5 8.9 3.0 5.2 7.1 7.0 5.8 7.7
Burkina Faso 5.2 3.2 7.9 4.9 5.8 6.1 2.8 0.8 5.5 2.5 3.1 3.7
Burundi 4.5 3.5 3.9 4.2 3.0 4.8 2.5 1.4 1.8 2.2 0.7 2.7
Cambodia 6.7 -2.0 6.0 6.7 10.1 7.0 5.6 -2.9 5.0 5.6 8.8 5.9
Central African Republic 2.0 1.7 3.3 4.1 0.9 5.1 0.0 -1.9 0.8 1.5 -1.1 2.5
Chad 1.7 -1.2 13.0 2.5 9.9 4.6 -0.8 -3.6 10.3 0.0 6.2 2.0
Comoros 1.0 1.8 2.1 2.2 1.8 3.5 -1.1 -0.2 0.0 0.1 -0.3 1.4
Dem. Rep. of the Congo 6.2 2.8 7.2 6.5 6.2 6.6 3.1 -0.2 4.1 3.4 3.1 3.5
Djibouti 5.8 5.0 3.5 4.8 3.9 5.3 3.3 2.4 1.0 2.2 1.8 2.8
Equatorial Guinea 10.7 5.7 -0.8 7.1 15.9 2.8 7.6 2.8 -3.6 4.1 12.6 -0.1
Eritrea -9.8 3.9 2.2 8.2 -0.2 4.2 -12.6 0.7 -0.9 4.9 -3.9 1.2
Ethiopia 11.2 10.0 8.0 7.5 8.9 6.5 8.3 7.2 5.5 5.0 6.1 4.1
Gambia 6.3 6.7 6.1 5.5 3.9 5.6 2.7 3.1 2.6 2.0 0.6 2.1
Guinea 4.9 -0.3 1.9 4.0 2.6 4.7 2.6 -2.7 -0.5 1.4 0.6 2.1
Guinea-Bissau 3.2 3.0 3.5 4.8 2.4 4.6 1.0 0.7 1.3 2.5 0.0 2.4
Haiti 0.8 2.9 -5.4 6.1 0.7 5.5 -0.8 1.2 -4.8 4.5 -0.9 4.1
Kiribati -0.7 -0.7 1.4 3.4 2.3 2.5 -2.7 -3.6 -0.6 1.5 0.3 0.8
Lao People's Dem. Rep. 7.8 7.6 7.9 8.3 7.3 7.8 5.8 5.6 6.0 6.3 5.5 5.8
Lesotho 4.3 3.1 3.6 5.2 3.5 4.9 2.4 1.3 1.8 3.3 1.6 3.0
Liberia 7.2 4.5 5.6 7.0 -0.4 7.5 2.0 -0.3 1.3 3.2 -3.3 4.2
Madagascar 7.1 -3.7 0.6 1.0 4.4 4.0 4.3 -6.2 -2.0 -1.6 1.6 1.5
Malawi 8.3 9.0 6.5 4.6 4.8 4.2 5.4 6.0 3.5 1.7 2.2 1.3
Maldives 10.9 -7.5 7.1 6.5 8.5 4.5 9.1 -8.9 5.4 4.8 6.7 2.8
Mali 5.0 4.5 5.8 5.3 5.0 5.3 2.5 2.0 2.8 2.2 2.5 2.3
Mauritania 3.5 -1.2 5.2 5.1 5.3 5.7 1.1 -3.5 2.7 2.6 2.8 3.2
Mozambique 6.8 6.3 6.8 7.2 7.9 7.6 4.7 4.2 4.7 5.1 5.8 5.5
Myanmar 3.6 5.1 5.5 5.5 12.3 5.6 1.6 3.1 3.4 3.5 9.9 3.5
Nepal 6.1 4.4 4.6 3.5 3.7 3.8 5.1 3.4 3.5 2.5 2.2 2.8
Niger 9.6 -0.9 8.0 5.5 5.1 7.5 6.3 -3.9 4.7 2.3 2.0 4.3
Rwanda 11.2 4.1 7.5 7.0 7.9 6.9 8.9 2.0 5.3 4.8 5.9 4.7
Samoa 4.9 -5.1 -0.2 2.0 4.2 2.1 4.3 -5.1 -0.7 1.4 3.9 1.8
Sao Tome and Principe 5.8 4.0 4.5 5.0 6.5 8.7 3.8 2.1 3.2 2.5 4.9 6.6
Senegal 3.2 2.2 4.2 4.0 4.5 4.8 0.8 -0.2 1.8 1.6 2.1 2.3
Sierra Leone 5.5 3.2 5.0 5.1 8.9 12.7 2.9 0.7 2.3 2.4 5.1 9.8
Solomon Islands 7.3 -1.2 6.5 5.6 5.9 5.8 5.0 -3.5 4.1 3.1 3.7 3.4
Sudan 3.7 4.6 6.5 -0.2 7.1 2.9 1.1 1.9 3.8 -2.6 4.4 0.5
Timor-Leste 10.9 12.9 6.0 7.4 3.2 8.5 8.3 10.2 3.4 5.0 0.6 5.9
Togo 2.4 3.2 3.7 3.8 2.5 4.4 -0.1 0.7 1.1 1.3 -0.1 1.8
Tuvalu 6.5 0.0 0.0 0.0 0.9 1.0 6.2 -0.2 -0.2 -0.2 0.4 0.7
Uganda 8.7 7.2 5.2 6.4 7.9 6.5 5.2 3.5 1.5 2.7 4.5 2.8
United Rep. of Tanzania 7.3 6.7 6.4 6.1 7.2 6.8 5.2 4.6 4.4 4.0 5.1 4.8
Vanuatu 6.2 3.5 2.2 3.8 4.7 3.9 3.9 1.2 0.1 1.2 2.3 1.5
Republic of Yemen 3.6 3.9 8.0 -2.5 4.0 2.5 0.5 0.8 4.9 -5.3 0.8 -0.5
Zambia 5.7 6.4 7.6 6.7 5.5 7.4 3.1 3.8 5.0 4.1 3.0 4.8
Total LDCs 6.5 4.6 5.7 4.9 7.1 5.8 4.1 2.3 3.4 2.6 4.4 3.5


African LDCs and Haiti 7.3 4.5 5.2 4.7 7.4 5.8 4.6 1.8 2.6 2.1 4.6 3.1
Asian LDCs 5.4 5.1 6.3 5.2 6.8 5.9 3.5 3.3 4.5 3.4 4.1 4.1


Island LDCs 8.1 -1.9 5.1 5.4 5.9 5.0 5.9 -3.9 3.0 3.2 3.7 2.9


Source: UNCTAD secretariat calculations based on IMF, World Economic Outlook database, September 2011.
Note: LDCs growth is calculated as the weighted average of each country's real growth (base year 2000).
No data for Afghanistan and Somalia.
Data for 2011–2016 are forecasted.




7CHAPTER 1. Recent Trends and Outlook for the LDCs


rate of 7 per cent growth in the near term. Finally, on the basis of forecasts by
country, only 10 out of 48 LDCs would grow fast enough to reach the target rate
set out in the IPoA.


Given the emphasis in the IPoA on graduation of the LDCs from that
category, it is worth exploring the medium-term outlook for the LDCs and the
possibilities of meeting the graduation criteria during this decade. The LDC
category is a United Nations grouping of countries based on three criteria: (a)
income; (b) human assets; and (c) economic vulnerability. Each country needs
to meet graduation thresholds in at least two criteria in order to graduate. The
decision on graduation is made by the United Nations Economic and Social
Council based on recommendations by the Committee for Development Policy.


The income threshold for graduation is based on the gross national income
(GNI) per capita (a three-year average) and was set in the 2009 review of the
status of LDCs at $1,086. If only the income threshold criterion is assessed, the
following picture, with three groups of countries, emerges (table 3). At present,
there are 11 LDCs that have already achieved that threshold.1 These countries
should work during the decade to meet at least one additional criterion. It is
encouraging that the probability of these 11 countries meeting the graduation
criteria by the end of the current decade is relatively high.


In the second group, there are seven countries2 that could meet the income
threshold for graduation by 2020. The assumption used in table 3 to estimate
the number of years needed to reach this target is that the average annual
per capita growth rate forecasted by IMF for the period 2010–2016 would be
representative of their growth rate during the whole of the present decade.
Given that these seven countries would also have to meet at least one additional
criterion to graduate, the probability of graduation for these countries within the
next 10 years is lower than for the first group.


Chart 1. LDCs’ real GDP growth and mid-term forecasts compared with the IPoA growth rate target, 2002–2016


-2


-1


0


1


2


3


4


5


6


7


8


9


10


2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016


P
er


ce
nt


ag
e


IPoA target African LDCs and Haiti Asian LDCs Island LDCs


Source: UNCTAD secretariat calculations based on IMF, World Economic Outlook database, September 2011.
Note: Data for 2011–2016 are forecasted.


On the basis of the IMF forecasts for
growth rates in the medium term,


only 10 out of 48 LDCs would grow
fast enough to reach the target rate.




The Least Developed Countries Report 20118


Table 3. Estimation of the number of years needed to meet the GNI graduation threshold for LDCs, by country
GNI per capitaa Average annual growth rateb Number of


yearsc2010 2010–2016


Countries that have reached the income threshold
Equatorial Guinea 14,680 -0.2 Achieved
Angola 3,960 3.9 Achieved
Samoa 2,930 2.0 Achieved
Vanuatu 2,760 1.7 Achieved
Tuvalu 2,749 0.9 Achieved
Timor-Leste 2,220 6.2 Achieved
Kiribati 2,010 0.9 Achieved
Bhutan 1,920 7.9 Achieved
Djibouti 1,280 3.0 Achieved
Sudan 1,270 0.5 Achieved
Sao Tome and Principe 1,200 7.4 Achieved


Countries that should reach the income threshold ($1,086) by 2020d


Lesotho 1,080 3.1 0.2
Zambia 1,070 4.8 0.3
Mauritania 1,060 3.3 0.7
Lao People's Dem. Rep. 1,000 5.7 1.4
Senegal 1,050 2.5 1.4
Solomon Islands 1,030 3.3 1.6
Cambodia 760 6.1 5.9


Countries that should reach the income threshold in the long termd
Bangladesh 640 5.2 10.2
Haiti 650 4.9 10.4
Sierra Leone 340 9.8 11.8
United Rep. of Tanzania 530 4.9 14.6
Rwanda 540 4.6 15.2
Mozambique 440 5.6 16.1
Comoros 820 1.6 17.9
Burkina Faso 550 3.6 18.8
Benin 750 1.8 20.1
Niger 360 4.2 26.4
Uganda 490 3.0 26.9
Ethiopia 380 3.9 27.0
Mali 600 2.2 27.0
Guinea-Bissau 540 2.4 28.5
Nepal 490 2.8 28.8
Myanmar 380 3.5 29.8
Central African Republic 460 2.8 31.1
Liberia 190 4.4 39.2
Guinea 380 2.5 41.8
Gambia 440 2.0 45.1
Madagascar 440 2.0 45.3
Togo 440 1.9 46.5
Chad 600 1.3 46.8
Dem. Rep. of the Congo 180 3.4 52.9
Burundi 160 2.8 67.6
Eritrea 340 1.1 102.4
Malawi 330 1.1 112.1
Yemen 1060 -0.6 ..
Afghanistane 457 .. ..


Somaliae 211 .. ..


a GNI per capita, Atlas method (current dollar), World Bank, World Development Indicators, August 2011, except for Afghanistan, Haiti,
Myanmar, Somalia and Tuvalu, GNI per capita current dollar, UNdata, 2009.


b GDP per capita average annual growth rate is calculated by UNCTAD secretariat based on IMF forecasts for the period 2011–2016.
c The years have been estimated using the formula ln(1086)- ln(GNI pc 2010)/(GDP pc growth rate 2010–2016).
d Assuming that the LDCs will grow at the same average annual growth rate as forecasted for 2010–2016 and that everything else remains


constant.
e No forecast is available for Afghanistan and Somalia.




9CHAPTER 1. Recent Trends and Outlook for the LDCs


30 LDCs have low probability of
reaching the graduation criteria


by 2020.


With the expected slower growth
on average than during the 2000s,
the goal of reaching the income


graduation threshold is likely to be
more difficult for the LDCs during


the 2010s. In addition, progress on
both the human assets index and
the economic vulnerability index


is likely to be slow if recent trends
continue.


It is encouraging that 11 LDCs have
high probability of meeting the
graduation criteria by the end


of the current decade.


The third group of countries, 30 LDCs,3 should reach the income threshold
for graduation in the long-term. The assumption, again, is that the per capita
growth rate from 2010 to 2016 would be representative of their long-term growth
rate. Under that assumption, large heterogeneity among LDCs is predominant;
for example, Bangladesh would need 10.2 years, while for other countries it
may take more than 100 years to meet the income graduation threshold. The
probability of these countries reaching the graduation threshold in at least two
criteria by 2020 is thus low. Since there are no IMF forecasts for Afghanistan and
Somalia, the number of years needed to meet the income graduation threshold
could not be estimated.


Thus, with the expected slower growth on average than during the 2000s,
the goal of reaching the income graduation threshold is likely to be more difficult
for the LDCs during the 2010s. In addition, if the outlook deteriorates further, the
probability of meeting the graduation criteria would decline substantially.


The other two criteria for graduation are human assets and economic
vulnerability. The former involves a composite human assets index based
on indicators of (a) nutrition (percentage of the population undernourished);
(b) health (child mortality rate); (c) school enrolment (gross secondary school
enrolment rate); and (d) literacy (adult literacy rate). Economic vulnerability
involves a composite economic vulnerability index based on indicators of
(a) natural shocks (index of instability of agricultural production and share of
population displaced by natural disasters); (b) trade shocks (index of instability
of exports of goods and services); (c) exposure to shocks (share of agriculture,
forestry and fisheries in GDP; merchandise export concentration index); (d)
economic smallness (population in logarithm); and (e) economic remoteness
(remoteness index).


The human assets index in many ways resembles the Millennium Development
Goals (MDGs). Based on the assessment (UNCTAD, 2010) of the progress
made by the LDCs in meeting the MDGs, most of the LDCs would likely miss
most of the Goals. It is possible to infer, then, that the progress towards meeting
the graduation thresholds of the human assets index by most LDCs is not likely
to gain momentum during the present decade. The economic vulnerability index
contains some of the indicators that cannot be easily changed, or that cannot
be changed at all — economic remoteness, for example. More importantly, the
indicators that can be changed (the share of agriculture, forestry and fisheries
in GDP, or the merchandise export concentration index for example) are either
stagnant (the former) or deteriorating (the latter). The concentration index of
LDCs, for example, increased from 0.23 in 1995 to 0.54 in 2008. Against that
background, progress on both the human assets index and the economic
vulnerability index is likely to be slow if the recent trends continue.


2. TRENDS IN INTERNATIONAL TRADE


The economic boom of the 2000s in the LDCs was mostly price-driven as
commodity prices increased substantially. As a result, the value of merchandise
exports from the LDCs grew five-fold from 2000 to 2008 (chart 2). However, the
volume exported registered an increase of only 97 per cent in the same period.
This clearly indicates that the extraordinary increase in the value of exports was
in large part due to the price effect. It is important to note that the LDCs have
negligible, or even no influence at all on the international prices of commodities.
Therefore, the export success cannot be attributed to the national policies of
LDCs, but to international circumstances beyond their control.


A similar trend, although somewhat smaller in magnitude, can be seen on the
import side. The value of imports of merchandise increased 268 per cent from




The Least Developed Countries Report 201110


Chart 2. Merchandise trade indices of the LDCs, 2000–2010
(Index, 2000 = 100)


0


50


100


150


200


250


300


350


400


450


500


2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010


Value index of exports Value index of imports
Volume index of exports Volume index of imports


Source: UNCTAD secretariat calculations based on UNCTADstat database, July 2011.


International trade was the main
channel of transmission of the global


crisis to the LDCs.


The most distinguishing feature of
the aftermath of the global recession
with regard to LDC trade is that the
exports of goods in 2010 were still


below the 2008 level.


2000 to 2008, while the volume of imports only recorded 94 per cent growth in
that period. This means the merchandise imported by the LDCs also recorded
relatively high price increases, partially offsetting the positive effect of the price
increases for LDCs’ exports.


While international trade can serve as a powerful engine of growth, it can
also increase the economic vulnerability of national economies. The data in chart
2 show that the merchandise trade indices of the LDCs suffered a very strong
reversal in 2009. The index measuring the value of exports fell from 488 in 2008
to 352 in 2009, producing a strong adverse impact on the growth of the LDC
economies. Indeed, international trade was the main channel of transmission of
the global crisis to the LDCs.


The most distinguishing feature of the aftermath of the global recession with
regard to LDC trade is that the exports of goods in 2010 were still below the
2008 level. The value of merchandise exports of LDCs as a group declined
almost 28 per cent in 2009, driven by the slump in the exports of African LDCs
(-33.6 per cent). That slump was mostly due to the price effect caused by the
plummeting prices of primary commodities. In contrast, the impact on export
volumes was smaller and very heterogeneous across individual countries (chart
3).


The rebound of the value of exports for all LDCs in 2010 was significant —
22.6 per cent — but not enough to recover to the pre-crisis level. By country
groups the trends suggest a performance similar to the trends in economic
growth. While merchandise exports of the African LDCs fell much more sharply
than those of the Asian LDCs in 2009, the subsequent recovery was also much
more subdued in the former. In spite of a 20.2 per cent increase in 2010, the
merchandise exports of the African LDCs were still much lower than in 2008. In
contrast, the decline of merchandise exports in Asian LDCs amounted to only
6.9 per cent in 2009, and their growth in 2010 was impressive at 29 per cent.




11CHAPTER 1. Recent Trends and Outlook for the LDCs


Chart 3. Export shock: Volume and price effects, 2009


-70 -60 -50 -40 -30 -20 -10 0 10 20 30 40
Afghanistan


Angola
Bangladesh


Benin
Bhutan


Burkina Faso
Burundi


Cambodia
Central African Republic


Chad
Comoros


Dem. Rep. of Congo
Djibouti


Equatorial Guinea
Eritrea


Ethiopia
Gambia
Guinea


Guinea-Bissau
Haiti


Kiribati
Lao People's Dem. Rep.


Lesotho
Liberia


Madagascar
Malawi


Maldives
Mali


Mauritania
Mozambique


Myanmar
Nepal
Niger


Rwanda
Samoa


Sao Tome and Principe
Senegal


Sierra Leone
Solomon Islands


Somalia
Sudan


Togo
Uganda


United Rep. of Tanzania
Vanuatu
Yemen
Zambia


LDC median
LDC weighted average


Percentage change in export volumes, 2009 Percentage change in unit value of export, 2009


Source: UNCTAD secretariat calculations based on UNCTADstat database, April 2011.


These differences in performance, both during and after the global recession,
point to a substantial dissimilarity among the two groups of LDCs, as in the
case of economic growth. The more diversified export basket of the Asian LDCs
helped them weather the crisis much better.




The Least Developed Countries Report 201112


The value of merchandise imports, in turn, was much less affected in 2009
than that of exports. With a reduction of only 5.2 per cent, that was testimony
to the import dependence of the LDC economies. The growth of the value of
imports resumed in 2010 (10.3 per cent), surpassing the 2008 level. Merchandise
imports were especially strong in Asian and island LDCs in 2010 (growing 21.0
per cent and 22.3 per cent, respectively), while in African LDCs they were still
below the 2008 level.


As a result, the trade balance in merchandise went from a surplus during
2006—2008, to a deficit in 2009 and 2010. In 2009, the LDCs had a negative
merchandise trade balance of $27.6 billion. More than half of that was due to the
Asian LDCs. While African LDCs recorded a deficit in 2009, their merchandise
trade balance returned to a surplus in 2010. The island LDCs continued to
register deficits in their merchandise balance throughout the period.


The LDCs’ trade in services suffered less than their trade in goods, mainly
because there were no price swings such as those affecting commodities. The
reductions in 2009 were in the single digits, and both exports and imports in
2010 surpassed the 2008 peak. The rebound in both exports and imports of
services in that year recorded double-digit increases, except for island LDCs.
The balance of the trade in services in all LDC groups continues to be negative
and increasingly so.


While merchandise exports of the
African LDCs fell much more sharply


than those of the Asian LDCs in
2009, the subsequent recovery was


also much more subdued in the
former. The more diversified export
basket of the Asian LDCs helped


them weather the crisis much better.




Table 4. Exports and imports of merchandise and services in LDCs, by country groups, 2006–2010
(Millions of dollars)


2006 2007 2008 2009 2010
Change in
2009 (%)


Change in
2010 (%)


Merchandise exports
LDCs total 103,486 128,499 176,715 127,416 156,253 -27.9 22.6


African LDCs and Haiti 73,717 95,801 138,288 91,845 110,404 -33.6 20.2
Asian LDCs 29,276 32,120 37,711 35,092 45,269 -6.9 29.0
Island LDCs 492 578 715 479 580 -33.0 21.1


Merchandise imports
LDCs total 101,702 125,400 163,500 155,016 170,961 -5.2 10.3


African LDCs and Haiti 63,707 79,682 106,880 101,647 106,371 -4.9 4.6
Asian LDCs 35,997 43,361 53,653 50,969 61,654 -5.0 21.0
Island LDCs 1,999 2,356 2,967 2,401 2,936 -19.1 22.3


Merchandise trade balance
LDCs total 1,784 3,099 13,215 -27,600 -14,707 -308.9 46.7
African LDCs and Haiti 10,011 16,119 31,408 -9,802 4,033 -131.2 141.2
Asian LDCs -6,721 -11,242 -15,942 -15,876 -16,385 0.4 -3.2
Island LDCs -1,506 -1,778 -2,251 -1,922 -2,356 14.6 -22.6


Services exports
LDCs total 13,929 17,019 21,233 20,320 23,462 -4.3 15.5
African LDCs and Haiti 8,697 10,679 13,330 12,515 14,655 -6.1 17.1
Asian LDCs 4,250 5,174 6,622 6,501 7,348 -1.8 13.0
Island LDCs 982 1,166 1,281 1,304 1,459 1.8 11.9
Services imports


LDCs total 33,791 44,746 60,678 55,585 63,567 -8.4 14.4
African LDCs and Haiti 26,202 36,057 50,047 45,402 51,509 -9.3 13.5
Asian LDCs 6,825 7,721 9,335 8,909 10,706 -4.6 20.2
Island LDCs 764 968 1,296 1,274 1,352 -1.7 6.1
Services trade balance (net export of services)


LDCs total -19,862 -27,727 -39,445 -35,265 -40,105 10.6 -13.7
African LDCs and Haiti -17,504 -25,378 -36,717 -32,888 -36,854 10.4 -12.1
Asian LDCs -2,575 -2,547 -2,713 -2,408 -3,359 11.3 -39.5


Island LDCs 218 198 -15 30 108 303.9 254.3


Source: UNCTAD secretariat calculations, based on UNCTADstat database.




13CHAPTER 1. Recent Trends and Outlook for the LDCs


The value of merchandise imports
in 2009 decreased much less than


that of exports. As a result, the trade
balance in merchandise went from
a surplus during 2006—2008, to a


deficit in 2009 and 2010.


The food security outlook began
to deteriorate again in the second


semester of 2010, with steep
increases in food prices.


An additional characteristic of the world economy in the last two years in
the area of international trade has been a substantial increase in fuel and food
prices. The recovery of international commodity prices that had already started
in the second half of 2009 has been surprisingly strong. Petroleum prices, for
example, increased from the trough of around $35 in March 2009 to a peak
of $114 in March 2011. This obviously helps the LDCs that are net exporters
of petroleum. Indeed, this price effect brings extraordinary benefits to the six
petroleum-exporting LDCs. However, this is not good news for the rest of the
LDCs. The LDC economies that are heavily dependent on imports of food and
fuel had already experienced a crisis in 2007 and 2008, caused by a sharp
increase in international prices.


The food security outlook began to deteriorate again in the second semester
of 2010, with steep increases in food prices (chart 4). Ortiz, Chai and Cummins
(2011) estimated that domestic food prices in 58 developing countries were,
on average, 55 per cent higher in November 2010 than in May 2007. Given
that poor households have been adversely affected by high food prices for
several years, they have exhausted coping strategies; therefore, even a small
spike in prices could cause great distress. According to estimates of the Food
and Agriculture Organization of the United Nations (FAO) (2011), the number of
hungry and undernourished people in the world reached the unprecedented
level of over one billion in 2009. Given the further increases of food prices in
2010 and 2011, this is likely to get even higher.


When one compares the price indices of selected primary commodities of
importance to LDCs, the most striking factor is the overall rise in prices. For
all food, the increase from 2000 to the first quarter of 2011 is around 180 per
cent (table 5). Prices of agricultural raw materials increased by an even larger
percentage. For minerals, ores and metals, however, the increase in the same
period reached more than 270 per cent. The price of iron ore has augmented
more than ten-fold in that period, while copper, gold and crude petroleum have
recorded close to five-fold price increases.


Chart 4. Food, meat and cereal price indices, January 2005–June 2011
(Index, 2002–2004 = 100)


50


100


150


200


250


300


01/05 06/05 11/05 04/06 09/06 02/07 07/07 12/07 05/08 10/08 03/09 08/09 01/10 06/10 11/10 04/11


Food price index Meat price index Cereals price index


Source: UNCTAD secretariat calculations based on FAO Food Price Index, July 2011.




The Least Developed Countries Report 201114


Table 5. Price indices of selected primary commodities of importance to LDCs, various years
(Index 2000 = 100)


2005 2008 2009 2010
2011
Q1


Standard
deviation,


2005–2011Q1


Percentage
change,


2005–2001Q1


All food 128 236 216 232 284 55 121.2
Wheat 133 288 197 204 292 59 119.6
Rice 141 344 289 256 257 78 82.3
Sugar 121 156 222 260 348 82 187.7
Fish meal 172 274 298 409 421 85 144.6
Coffee, Arabicas 132 162 167 226 322 69 143.6
Coffee, Robustas 120 254 179 187 262 50 117.6
Cocoa beans 173 291 325 353 377 83 117.4
Tea 87 109 127 125 141 21 61.6


Agricultural raw materials 129 198 163 219 315 63 143.4
Tobacco 93 120 142 109 147 20 57.5
Cotton 92 121 106 175 350 93 282.3
Non-coniferous woods 117 154 154 161 159 16 35.3


Minerals, ores and metals 173 333a 269a 414a 512a 109 195.8
Iron ore 226 494 643 1,178 1,436 478 535.8
Aluminium 123 166 107 140 161 25 31.7
Copper 203 384 283 416 532 104 162.3
Gold 159 312 349 440 496 121 211.2


Memo Items:
Crude petroleum 189 344 219 280 353 63 162.4


Unit Value Index of manufactured goods
exported by developed countries


119 139 132 134 142 8 18.9


Source: UNCTADstat, Commodity Price Bulletin; IMF, International Financial Statistics.
a Estimates.


When one compares the price
indices of selected primary
commodities of importance


to LDCs, the most striking factor
is the overall rise in prices.


Given the high commodity
dependence of the LDCs, both as
net exporters and net importers,
the volatility of their prices has


detrimental consequences
for these economies.


Apart from the increases in primary commodity prices, the issue of volatility
also looms large. A comparison of the first quarter of 2011 with the average of
2010 indicates vast price increases for many commodities in a relatively short
period. The most notable increase was that of crude petroleum prices, in part
because of the political instability in the main producing region in the world.
Another example is the price of cotton, whose index increased from an average
of 175 in 2010 to 350 in the first quarter of 2011. In contrast, there was a steep
drop in June and July, reducing the price 38 per cent in just over a month,
and 53 per cent from its peak in early March 2011. The last two columns of
table 5 suggest that the high volatility of primary commodities has become a
generalized phenomenon in the world economy.


Given the high commodity dependence of the LDCs, both as net exporters
and net importers (mainly fuel and food), the recent volatility of their prices clearly
has detrimental consequences for these economies. The LDCs are vulnerable to
fluctuations in commodity prices, irrespective of whether they are net exporters
or net importers.


The net overall impact of high commodity prices on the LDCs is difficult to
gauge, but it is ambiguous at best. UNCTAD (2011a) studied the impact of
changes in fuel prices in 33 LDCs, comparing the average of 2000—2002 with
the average of 2007—2009. The fuel imports-to-GDP ratio of fuel-importing
LDCs has increased in 76 per cent of the countries, while there has been a
decrease in only 6 per cent of countries; the rest experienced no significant
impact. Similarly, a study of 15 net-food importing LDCs and their food imports-
to-GDP ratio in the same period shows that the situation deteriorated (food
imports-to-GDP ratio increased) for 11 of them (73 per cent), while the indicator
improved for 2 of them (13 per cent); the remaining 2 recorded no significant
change.




15CHAPTER 1. Recent Trends and Outlook for the LDCs


The ongoing analysis suggests that economic growth in many LDCs during
the 2000s, as well as during the crisis and the partial recovery that followed, had
been driven in large measure by swings in commodity prices. The expectation
that the boom before the crisis of 2008–2009 would be sustainable was
unrealistic. Similarly, the expectation now that the current recovery based on
increases in commodity prices could be sustainable is equally unrealistic. The
possibility of the fuel and food crisis repeating itself in the near future is a real
threat to the LDC economies. Even if there is no full-blown fuel and food crisis,
the high level of commodity prices works as a counteracting force on recovery
and economic growth in many LDCs.


Moreover, the boom-bust development cycles as a persistent feature of the
LDCs may have intensified, owing to the increased specialization in exports of
commodities in the last decade. Indeed, the data suggest that the exports of
LDCs are highly correlated with trends in international crude petroleum prices
(chart 5). This implies that LDC exports are in large measure influenced by what
happens to petroleum prices.


Given the characteristics of the LDC economies, future movements of
international commodity prices are a crucial issue. While it is impossible to
predict these movements with any precision, some authors (Cuddington and
Jerret, 2008; Kaplinsky and Farooki, 2010) consider that there is a high likelihood
of an emergence of a supercycle of high international commodity prices. The
reasoning behind that prediction is that the global demand for commodities
would be sustained at high levels for years, given the rapid economic growth
in large developing countries such as China and India. As their infrastructure
would have to be substantially upgraded, and as their production is and will, for
some time, be highly resource-intensive, these and other developing countries
would need enormous amounts of natural resources. Some LDCs, most notably


Economic growth in many LDCs
during the 2000s has been driven


in large measure by swings in
commodity prices.


The boom-bust development cycles
as a persistent feature of the LDCs
may have intensified, owing to the
increased specialization in exports
of commodities in the last decade.


Chart 5. LDCs’ merchandise exports to the rest of the world and crude petroleum prices, 2000–2010


0


5,000


10,000


15,000


20,000


25,000


30,000


35,000


40,000


45,000


50,000


Q1
2000


Q3
2000


Q1
2001


Q3
2001


Q1
2002


Q3
2002


Q1
2003


Q3
2003


Q1
2004


Q3
2004


Q1
2005


Q3
2005


Q1
2006


Q3
2006


Q1
2007


Q3
2007


Q1
2008


Q3
2008


Q1
2009


Q3
2009


Q1
2010


Q3
2010


LD
C


s’
m


er
ch


an
di


se
e


xp
or


ts
($


m
illi


on
)


0


20


40


60


80


100


120


140


C
ru


de
p


et
ro


le
um


p
ric


e
($


/b
ar


re
l)


LDCs merchandise exports Crude petroleum price


Source: UNCTAD secretariat calculations based on UNCTADstat database and IMF, Direction of Trade database, July 2011.




The Least Developed Countries Report 201116


the oil-exporting and mineral-exporting LDCs, are already supplying these large,
dynamic economies with natural resources, and that could continue for many
years.


3. TRENDS IN EXTERNAL FINANCE AND DEBT


A further significant reason behind the high growth rate during the 2000s in
the LDCs is the increase in external financial flows to these countries. In contrast
with the previous decades when the LDCs had difficulty attracting private capital
flows, the 2000s were characterized by an ever-rising inflow of external financing
(chart 6). While the sum of FDI inflows and workers’ remittances barely reached
$10 billion at the beginning of the decade, these flows to the LDCs were more
than five times greater in 2008.


However, the global recession reversed some of these previous trends.
Inflows of FDI to LDCs declined in 2009 and 2010. In 2010, FDI — in the amount
of $26.39 billion — was around $6 billion less than in 2008, when it accounted
for $32.35 billion. In other words, FDI inflows in 2010 were one fifth smaller than
in 2008. It is not clear if and when these flows will regain their pre-crisis level. In
contrast, workers’ remittances continued to grow even during the crisis, albeit
more slowly, and thus helped cushion the adverse social impact of the crisis on
LDCs. Another interesting feature is that remittances in 2010 almost equalled
the FDI inflows to LDCs. Given the differential growth rates, remittances may
surpass FDI to the LDCs in the near future.


Although data for 2009 on profit remittances from FDI flows are not yet
available, it is likely that these outflows were substantial. For all LDCs, these
outflows surpassed $10 billion in 2005 and continued to increase. The last data


Chart 6. Private financial flows to LDCs, 2003–2010
(Millions of dollars, current)


-5,000


0


5,000


10,000


15,000


20,000


25,000


30,000


35,000


2003 2004 2005 2006 2007 2008 2009 2010


Portfolio equity, net inflows Remittances inflows Inward FDI flows


$
m


illi
on


, c
ur


re
nt


Source: UNCTAD secretariat calculations based on UNCTADstat database; World Bank, World Development Indicators, online, July 2011;
and World Bank, 2010.


A significant reason behind the high
growth rate during the 2000s in the


LDCs is the increase in external
financial flows to LDCs.


While the sum of FDI inflows and
workers’ remittances barely reached


$10 billion at the beginning of the
decade, these flows to the LDCs
were more that five times greater


in 2008.




17CHAPTER 1. Recent Trends and Outlook for the LDCs


FDI inflows in 2010 were one fifth
smaller than in 2008. In contrast,


workers’ remittances continued to
grow even during the crisis.


The bulk of FDI that the LDCs
attracted during the decade was
in the extractive industries. That


leaves them further entrenched in
specialization in commodities, and
the impact on development of their


productive capacities is, at best,
limited.


available are for 2008, when they reached $22.2 billion. They thus represent a
considerable outflow of resources from the LDCs. Given that the FDI stocks in
LDCs have risen sharply — from $37.4 billion in 2000 to $151.7 billion in 2010
— these outflows are likely to grow rapidly in the future. If retained profits are
reinvested in host countries, however, their development opportunities would be
greatly enhanced.


Another important characteristic of FDI inflows is its uneven distribution
among LDCs given that only three countries (Angola, Equatorial Guinea and
Sudan) accounted for 49 per cent of all FDI inflows in 2010. The single largest
recipient was Angola, with around 33 per cent of the total for all LDCs. In
addition, the three largest recipients are all petroleum-rich LDCs. This illustrates
a more general point: the bulk of FDI that the LDCs attracted during the decade
was in the extractive industries. That leaves the LDCs further entrenched in their
specialization in commodities, and the impact on development of productive
capacities of the LDCs is, at best, limited. As a result, they are becoming more
and more commodity-dependent and subject to boom-bust cycles emanating
from the volatility of international commodity prices.


It is important to highlight that the growth of FDI is mostly a feature of African
LDCs, as they accounted for more than four fifths of all inflows in 2010. Given
that African LDCs are rich in natural resources, it appears that FDI seeks to
locate in the LDCs mainly to exploit natural resources. As these are finite and
will eventually be exhausted, it is imperative that the LDCs find ways to diversify
away from these types of economic activity.


In contrast to the FDI flows, the amount of workers’ remittances rose steadily,
even during the global recession. From 2000 to 2008, the average annual
growth rate was 17.1 per cent (table 6). This stunning growth has been spurred
by the increasing migration of the working-age population from the LDCs to
other countries in search of better opportunities. During and after the crisis, the
growth rate of family remittances slowed down considerably, but nevertheless
continued to be positive, reaching 5.7 per cent in 2009 and 6.8 per cent in 2010.


The continued underperformance of developed economies is likely to
weigh down remittance growth in the near term. Moreover, the oil-producing
countries in Western Asia and Northern Africa are also an important source of
remittances for the LDCs. Given the political turmoil in these regions, the outlook
for remittance growth is uncertain. In contrast, remittance flows from developing
Asian economies would probably take up some of the slack because of their
continuous dynamism. Overall, however, it is likely that in the short-term,
remittance growth in LDCs will not regain pre-crisis levels.


Similar to FDI inflows, the defining feature of remittances is its uneven
distribution across LDCs. The five biggest recipients in 2009 — Bangladesh, Haiti,
Nepal, Sudan and Yemen — accounted for 79.4 per cent of total remittances
sent to the LDCs. Since that kind of financial flow mostly benefits consumption
in recipient countries, its impact on the development of productive capacities
in LDCs is even weaker than that of FDI. Nevertheless, these remittances have
helped lift some households out of poverty and at the same time have helped
raise the level of demand in LDCs.


The surge of private capital flows to LDCs from 2000 to 2008 was
accompanied by a large increase in official capital flows. The data regarding
net official development assistance (ODA) disbursement, together with net debt
relief, show that their sum increased from almost $13 billion in 2000 to $40
billion in 2009 (chart 7). Net debt relief, through debt-relief measures such as
the Heavily Indebted Poor Countries (HIPC) Initiative and the Multilateral Debt


The continued underperformance
of developed economies is likely to


weigh down remittance growth
in the near term.




The Least Developed Countries Report 201118


Relief Initiative (MDRI), played an important role in some, but not all cases (only
26 LDCs have benefited from HIPC status).


Net ODA disbursement has continued to increase, even during the crisis
in 2008 and 2009. While in 2005 net ODA amounted to $25.9 billion, in 2008
it stood at $38.6 billion and reached a record level of $40.1 billion in 2009.
Thus, net ODA for all LDCs represented 8.3 per cent of their GDP in 2009. The
increase is also important in per capita terms. Net ODA disbursements reached
$48.1 per capita in 2009, compared with $34.1 in 2005. Therefore, ODA in the
second half of the 2000s has reversed the long-term downward trend that had
begun in 1990 when it stood at $41 per capita.


It is also worth emphasizing that ODA played a countercyclical role during
the food and fuel crisis in 2008 and during the financial crisis in 2009 — the triple
crisis — when private financial inflows decreased substantially. Consequently, it


Table 6. Remittances inflows to LDCs, various years
(Selected years)


Remittances inflows
(Millions of dollars, current)


Share of
total LDCs


(%)


Average annual
growth rate


(%)


Growth
rate
(%)


2000 2005 2009 2010a 2009 2000–2008 2009–2010a


Bangladesh 1,967.5 4,314.5 10,523.1 11,050.2 43.4 20.2 5.0
Benin 87.1 172.7 242.5 235.5 1.0 21.1 -2.9
Burkina Faso 67.3 50.0 49.1 42.7 0.2 -2.0 -13.1
Burundi .. 0.1 3.5 3.4 0.0 169.5 -1.4
Cambodia 120.5 199.7 337.8 363.8 1.4 15.8 7.7
Comoros 12.0 12.0 11.3 11.0 0.0 0.0 -2.7
Djibouti 12.3 25.8 28.3 28.2 0.1 13.4 -0.3
Ethiopia 53.2 173.5 352.8 386.9 1.5 43.0 9.7
Gambia 14.0 57.4 60.2 61.1 0.2 33.0 1.5
Guinea 1.2 78.0 68.3 65.6 0.3 61.4 -3.8
Guinea-Bissau 8.0 27.7 28.3 27.1 0.1 17.2 -4.4
Haiti 578.0 986.2 1,375.5 1,499.0 5.7 11.6 9.0
Kiribati 7.0 7.0 8.2 8.8 0.0 1.7 7.9
Lao People's Dem. Rep. 0.7 1.0 0.9 1.0 0.0 4.7 8.0
Lesotho 252.2 326.6 450.1 525.3 1.9 10.3 16.7
Liberia .. 31.9 54.2 57.5 0.2 6.8 6.0
Madagascar 11.3 11.0 10.3 10.2 0.0 -3.9 -1.3
Malawi 0.7 1.0 0.9 0.9 0.0 4.1 2.8
Maldives 2.2 2.3 3.1 3.4 0.0 6.3 8.2
Mali 73.2 177.2 404.7 385.2 1.7 22.5 -4.8
Mauritania 2.0 2.0 1.9 1.8 0.0 0.0 -3.0
Mozambique 36.8 56.6 111.1 116.8 0.5 13.9 5.1
Myanmar 103.6 130.8 137.3 154.2 0.6 3.9 12.3
Nepal 111.5 1,211.8 2,985.6 3,512.9 12.3 44.7 17.7
Niger 14.4 66.4 75.5 70.0 0.3 27.3 -7.3
Rwanda 6.6 20.9 92.6 90.9 0.4 34.7 -1.9
Samoa 45.0 109.9 124.4 142.2 0.5 18.1 14.3
Sao Tome and Principe 0.5 1.5 2.0 1.9 0.0 23.2 -2.6
Senegal 233.5 788.8 1,190.8 1,163.6 4.9 24.9 -2.3
Sierra Leone 7.1 2.4 46.7 48.4 0.2 14.1 3.6
Solomon Islands 4.3 7.2 2.4 2.7 0.0 27.8 12.9
Sudan 640.8 1,016.1 2,992.7 3,177.9 12.3 16.4 6.2
Togo 34.2 192.5 306.8 301.7 1.3 29.0 -1.7
Uganda 238.1 321.8 694.0 772.6 2.9 9.1 11.3
United Rep. of Tanzania 8.0 19.4 16.3 17.5 0.1 7.7 7.0
Vanuatu 34.7 5.1 6.5 7.0 0.0 -18.8 8.8
Yemen 1,288.0 1,282.6 1,378.0 1,471.4 5.7 0.7 6.8
Zambia .. 52.9 67.6 71.1 0.3 11.6 5.1


LDC total 6,080.8 11,944.1 24,245.4 25,891.3 100.0 17.1 6.8


Source: World Bank, 2010.
a Estimated.


The surge of private capital flows
to LDCs during the 2000s was


accompanied by a large increase
in official capital flows, from almost


$13 billion in 2000 to $40 billion
in 2009.




19CHAPTER 1. Recent Trends and Outlook for the LDCs


Chart 7. Official capital flows to LDCs, 2000–2009
(Millions of dollars, current)


0


5,000


10,000


15,000


20,000


25,000


30,000


35,000


40,000


45,000


2000 2001 2002 2003 2004 2005 2006 2007 2008 2009


Net ODA disbursement, excluding debt relief Net debt relief


$
m


illi
on


, c
ur


re
nt


Source: UNCTAD secretariat calculations based on OECD-DAC Statistics, online, July 2011.


Net ODA disbursement has
continued to increase and played
a countercyclical role during the
food and fuel crisis in 2008 and
the financial crisis in 2009 when


private financial inflows decreased
substantially.


represented yet another offsetting factor that explains the LDCs’ resilience to the
global crisis.


The geographical distribution of net ODA disbursements shows that the
African LDCs continue to be the leading recipients of aid — receiving 72 per
cent of the total in 2009. In terms of aid dependence indicators, there is a very
high level of heterogeneity among different groups of countries, with the island
LDCs showing by far the most elevated figures (16.1 per cent of GDP in 2009).
Although in absolute terms the amount of aid has gone up for island LDCs, as
a share of GDP, it was five percentage points lower than in 2005. With regard to
the African LDCs, that indicator reached the equivalent of 10.5 per cent of GDP,
while that of Asian LDCs only attained 5.9 per cent. Note also that the latter is
greatly influenced by aid to Afghanistan. Not including aid to that country, the
rest of the Asian LDCs received aid that is the equivalent of only 2.5 per cent
of GDP in 2009. In terms of aid per capita, the island LDCs received $229, the
African LDCs, $60.9, and the Asian LDCs, $33.1 the same year.


Another long-standing feature of net ODA is its high concentration in a small
number of countries. Six major recipients accounted for almost half of the total
aid received by the LDCs in 2009. For these countries, the aid represented the
equivalent of 14 per cent of GDP in 2009. In contrast, the aid for the rest of the
LDCs represented the equivalent of only 5.9 per cent of GDP, less than half of
what it is for the six major aid recipients. The same asymmetry is repeated in
the data for net ODA disbursements per capita, where the six major recipients
received $68.7, while the rest of the LDCs received $37.3 in 2009.


Since the data for net ODA disbursements in 2010 were still not available at
the time of writing, it is difficult to evaluate the most recent trends in aid. However,
it is possible to infer indirectly the future trends in the level of aid from traditional
aid donors. Owing to continuous fiscal problems in traditional donor countries
and the adoption of large fiscal consolidation programmes, it is unlikely that aid
to the LDCs in the near future will attain the level reached in 2008 and 2009.


A long-standing feature of net ODA
is its high concentration in a small


number of countries. Six major
recipients accounted for almost


half of the total aid received
by the LDCs in 2009.




The Least Developed Countries Report 201120


Although the increase of private-sector and official capital flows during
the 2000s has been beneficial for economic growth, it has also increased the
dependence of LDCs on external financing. When some of the flows retrenched
in 2009, the LDCs experienced slowdown of their economies. In a world
economy characterized by higher volatility and uncertainty (see next section),
the heightened dependence on external financing could become increasingly
problematic for the growth prospect of these economies. Thus, one of the
challenges faced by the LDCs is to decrease their dependence on external
financing, which can only be achieved by improving their domestic resource
mobilization.


Another dimension of the heightened dependence on external financing
is an increase in the debt burden. Since the international financial institutions
increased their lending to LDCs during the triple crisis, the level of indebtedness
of the LDCs has also gone up. The increase in indebtedness of LDCs is indeed
a worrying tendency. The total debt stock as a percentage of GNI had been
declining steadily until the triple crisis partly because of the high economic
growth recorded during the boom period. This resulted in a larger denominator,
reducing the indicator from the average of 60.2 per cent of GNI in 2004—2006
to 33.1 per cent in 2008. Debt relief initiatives such as HIPC and MDRI also
helped lower that indicator in eligible LDCs during the 2000s.


In 2009, however, the total debt stock as a percentage of GNI increased
to 34.8 from 33.1 in 2008. It was an outcome of higher growth in the debt
stock, mainly from international financial institutions and a significant slowdown
in economic growth in 2009. A similar trend was recorded in other developing
countries during the boom period, but the reversal in 2009 was smaller than
that of the LDCs, mainly because they did not have to rely on financing by
international financial institutions as much as the LDCs.


Country data for the LDCs indicate that there were four countries with a
total debt stock higher than their GNI in 2009. In addition, 11 countries had
that indicator ranging between 50 per cent and 100 per cent of GNI. These
countries should be vigilant and monitor their debt indicators closely to avoid
debt accumulating to unsustainable levels. As the total debt stock of the LDCs
expands, other indicators of debt burden, such as debt stock and debt service
as a percentage of exports, will also increase. The sharp increase in fuel and
food prices will likely put new strains on the finances of many net fuel- and food-
importing LDCs and worsen their balance of payments position. Therefore, the
debt situation of a number of LDCs is likely to deteriorate further.


UNCTAD (2010) pointed out that there were 10 LDCs in a situation of debt
distress and 10 were at high risk of debt distress in 2010. A combination of
lower growth rates and higher interest rates in the future could worsen the debt
sustainability in many other LDCs. This finding is similar to that of Leo (2009),
who examined the issue of lending by international financial institutions and the
potential risk of renewed debt accumulation by countries that have only recently
completed HIPC or MDRI and concluded that debt distress is on the rise and
that new debt relief might be necessary in the future.


The analysis in this section suggests that high rates of economic growth
during the boom period of the 2000s in LDCs are unlikely to be repeated in the
present decade. The external conditions are currently such that lower growth
rates and diminished export dynamism of LDCs should be expected. They are
also characterized by more volatility, especially in commodity prices, and most
worryingly for many LDCs, high fuel and food prices. The trends also portend
somewhat weaker private external capital inflows and possibly less aid. As the
LDC economies have become more open and more specialized in the production
and export of commodities in the previous period, they have also become more


Owing to continuous fiscal problems
in traditional donor countries and the
adoption of large fiscal consolidation


programmes, it is unlikely that aid
to the LDCs in the near future will


attain the level reached
in 2008 and 2009.


Country data for the LDCs indicate
that there were four countries with
a total debt stock higher than their
GNI in 2009, and 11 countries had
that indicator ranging between 50
per cent and 100 per cent of GNI.


The external conditions are currently
such that lower growth rates and
diminished export dynamism of


LDCs should be expected.




21CHAPTER 1. Recent Trends and Outlook for the LDCs


vulnerable to sudden reversals of fortune when external conditions change for
the worse. The recovery from the triple crisis is partial at best in the LDCs, and
the current world situation and the mid-term outlook are not promising either.


C. The current world economic situation,
the outlook for the coming decade


and implications for LDCs


1. LDC PROSPECTS IN THE CHANGING GEOGRAPHY
OF THE WORLD ECONOMY


Since the onset of the new millennium, the global economy has witnessed
the emergence of strong and sustainable growth poles in the South, and the
intensification of South—South economic linkages through trade, capital,
technology and labour flows (UNCTAD, 2011d). Such a rise of the South, as it
is sometimes referred to, has resulted in shifts of balance in the world economy.
These economic and geostrategic changes in the world economy during the
2000s were characterized by OECD (2010) as “shifting wealth”. The main
argument is that the centre of gravity of the world economy is shifting to the East,
namely to Asia. Given the substantial difference in the rate of economic growth
recorded after the 2008—2009 crisis, China and other dynamic economies like
India, Brazil, South Africa and the Russian Federation, would continue to narrow
the gap with advanced economies even faster than in the previous decade. The
recent news that China has become the world’s second largest economy is
symbolic of the depth and significance of these shifts.4


These changes, however, are not confined to the above-mentioned
economies. For example, the GDP of the seven largest developing economies,
adjusted for purchasing power parities, grew from 10.5 per cent of the GDP
of OECD countries in 1980 to 21 per cent in 2010. Although the common
perception is that the surge of Southern growth poles is largely an Asian
phenomenon, Africa, Latin America and Western Asia also managed to expand
their share of global output in the last 10 years. Similarly, a growing number of
developing countries have been catching up with advanced economies, thanks
to their faster GDP growth rates (OECD, 2010).


This tendency has become even stronger in the aftermath of the global
recession because developed and transition economies suffered deeper
contractions of GDP during the 2008—2009 period, and their recovery is still
uneven and extremely fragile, unlike that of a number of developing countries.
The latest available forecasts at the time of writing (IMF, 2011) suggest that the
South, particularly the Asian economies, is likely to increase its importance in
the future (chart 8).5 There is every indication that the South’s importance in the
world economy will continue increasing in the foreseeable future.


The shifting balance in the global economy has been mirrored in the growing
importance of the South in world trade and investment flows (UNCTAD, 2011f;
OECD, 2010). In the last two decades, other developing economies, not including
LDCs, have succeeded in increasing their shares of global merchandise imports
and exports, as well as strengthening their role as a source of outward FDI (chart
9). South—South trade grew, on average, 12 per cent per year from 1996 to
2009, that is, 50 per cent faster than North—South trade. In 2010, the share of
developing and transition economies in the world’s total FDI has for the first time
reached that of developed economies (UNCTAD, 2011f). The intensification of


The recovery from the triple crisis
is partial at best in the LDCs, and


the current world situation and the
mid-term outlook are not promising


either.


Since the onset of the new
millennium, the global economy has
witnessed the emergence of strong
and sustainable growth poles in the


South, and the intensification of
South—South economic linkages
through trade, capital, technology


and labour flows.


This tendency has become
even stronger recently because
developed economies suffered


deeper contractions of GDP during
the 2008—2009 period, and


their recovery is still uneven and
extremely fragile, unlike that of a
number of developing countries.




The Least Developed Countries Report 201122


Chart 8. Contribution to world GDP growth by region, 2002–2016
(Percentage)


P
er


ce
nt


ag
e


Advanced economies


CIS, Central and Eastern EuropeDeveloping Asia


Latin America and the CaribbeanMiddle East and North Africa


Sub-Saharan Africa


-3.0


-2.0


-1.0


0.0


1.0


2.0


3.0


4.0


5.0


2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016


Source: UNCTAD secretariat calculations based on IMF, World Economic Outlook, September 2011.
Note: Data for 2011–2016 are forecasted.


Chart 9. The “rise of the South”: Developing countries, excluding LDCs, 1980–2009


P
er


ce
nt


ag
e


0


5


10


15


20


25


30


35


40


45


1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008


Outward FDI flows (share of world total) Merchandise imports (share of world total)
Merchandise exports (share of world total)


Source: UNCTAD secretariat calculations based on UNCTADstat database.




23CHAPTER 1. Recent Trends and Outlook for the LDCs


South—South trade and investment flows is thus a fairly broad-based trend that
has rendered the world economy considerably more interdependent.


These processes are already exerting far-reaching effects on the world
economy in terms of the economic size of national economies, economic
growth and global demand patterns, and incomes and demographic trends.
If the current trends continue, these effects will be even stronger in the future.
Most importantly, they will likely result in significant breakdowns of the dominant
position of the United States of America. Long-entrenched features of the
economic, political and even ideological landscape will likely be further disrupted
and reconfigured in the process. This is also an opportunity for the LDCs to
reassess their national development strategies, rethink their global alliances and
reposition themselves in the evolving international division of labour.


Given that the world economy is now much more complex, more integrated
and more interdependent than ever before, a more developed and encompassing
global economic governance regime is required in order to ensure its smooth
functioning. However, the current governance regime has been formed under the
assumption of the efficient-market hypothesis. As such, it lacks the appropriate
institutions and mechanisms to regulate international financial flows and manage
global macroeconomic imbalances.


And yet, the new world order that is slowly, but inexorably emerging, will require
much more global macroeconomic coordination, that goes beyond the recent
efforts by the Group of Twenty, to avoid a repetition of the Great Depression that
occurred between the two world wars. Alternatives to the present world order,
as well as the new institutions that would have to accompany it, will remain less
than fully defined and will take time to develop and become consolidated.


2. THE CRISIS CONTINUES TO AFFECT THE WORLD ECONOMY


During the financial crisis of 2008—2009 and the resulting global recession,
fiscal and monetary policies and instruments, including unorthodox ones such
as quantitative easing, were widely used in many countries to support economic
activity and to reduce or eliminate disruptions affecting the financial and real
sectors. A repetition of a widespread dislocation of economic activity similar to
the one that occurred during the Great Depression of the 1930s was successfully
averted. However, one of the legacies of these policies is a partial substitution
of private-sector indebtedness by public-sector indebtedness. In effect, public
sectors have taken on the bad debts, most notably of banks, but also of other
sectors. While this has relieved the pressure of the excessive indebtedness from
the private sector, the burden has merely been shifted to the public sector.


The socialization of private losses, coupled with the effects of automatic
fiscal stabilizers — higher expenditures and lower tax receipts during the crisis
— has resulted in a swelling of public-sector debts in the developed economies.
Public deficits close to 10 percentage points of GDP in the United States and
the United Kingdom in 2010, for example, will result in rapid increases of the
ratio of public debt to GDP. UN-DESA (2011) estimates that the average public
debt ratio for developed countries will surpass 100 per cent of GDP in 2011.
Therefore, while the global recession in a technical sense is over, the crisis itself
is continuing in a different form as a sovereign debt crisis.


Turning to the advanced economies at large, the short-term economic
outlook is hobbled by problems in all four components of aggregate demand.
The de-leveraging process of the private sector (reduction of debt levels) in
these countries triggered by the financial crisis is still under way. The post-
recession period in most advanced economies is characterized by weak wage
growth, persistently high unemployment and continuous weakness of the real


This is also an opportunity for the
LDCs to reassess their national
development strategies, rethink


their global alliances and reposition
themselves in the evolving


international division of labour.


In 2010, the share of developing
and transition economies in the
world’s total FDI has for the first
time reached that of developed


economies.


While the global recession in a
technical sense is over, the crisis
itself is continuing in a different
form as a sovereign debt crisis.


The short-term economic outlook of
the advanced economies is hobbled
by problems in all four components


of aggregate demand.




The Least Developed Countries Report 201124


estate sector. Consumption, the most important element of aggregate demand,
will thus remain sluggish for several years, as consumers cannot pay off their
debts and increase consumption at the same time. Investment in developed
economies will likely underperform in the medium-term, since there is still some
unutilized capacity available and the final demand is weak.


In 2009 and 2010, government spending provided much-needed support
for economic activity in developed and developing countries alike. However, as
these measures resulted in a substantial deterioration of fiscal accounts in the
former, their fiscal policy has now changed towards a more conservative stance.
Most plans to reduce fiscal deficits rely heavily on cuts in fiscal expenditure.
Thus, the economic austerity of the public sector in the developed countries
is going to further subtract from the aggregate demand for a prolonged period
(UNCTAD, 2011e). The fourth component of aggregate demand is net export
(exports minus imports). The weakness of other components of the aggregate
demand in developed economies suggests that there would be increased
pressure to use exports as a means to make economic activity more dynamic.
However, it is a fallacy of composition to think that all developed economies
could substantially increase their exports at the same time, as there is currently
no effective demand for them. Summing up the four components of aggregate
demand, it is clear that developed economies will not provide the needed level
of aggregate demand for the world economy to grow faster.


The sluggish, erratic and jobless recovery in the advanced economies will
continue to have adverse effects on the LDCs. Moreover, since it is likely that
the economic activity of the developed countries would remain below the
potential growth rate for some time, the demand for imports from the LDCs will
be sluggish. As a result, the potential for export-led growth in the LDCs will be
diminished. It is important to emphasize that the LDCs have a trade surplus with
developed countries and a trade deficit with developing countries (see chapter
2). The two-track world economy will thus tend to deteriorate the trade balance
of the LDCs, since the countries with which LDCs have trade surplus are likely
to underperform.


In addition, the sovereign debt crisis will most probably hinder investment in
productive capacities and put a cap on the future growth of the world economy
— and of the LDCs in particular — by biasing investment decisions away from
long-term, productive capacity-enhancing projects towards short-term, quick-
profit ones. Given the dependence of the LDCs on external sources of financing,
this could particularly hurt their prospects for the decade. Data concerning
global FDI flows, for example, show that in 2010 flows amounted to only $1.24
trillion, nearly 37 per cent below the pre-crisis peak (UNCTAD, 2011f).


Another adverse channel may be ODA for LDCs. Traditional donors are
already beginning to reduce fiscal expenditure, which means they might not be
able to continue to provide ODA at previous levels. It is likely that ODA will be
reduced as the pressure to contain fiscal expenditure in developed countries
intensifies further. The LDCs should, therefore, seek alternative sources of
financing, including, but not limited to, official finance from other developing
countries, and strengthen the domestic mobilization of resources.


In the medium term — three to five years — a rebalancing of the world
economy will be needed. The pre-crisis world economy can be portrayed in a
simplified manner as one in which the United States functioned as the consumer
of last resort for the world. Africa and Latin America produced and exported
commodities, Asia manufactured final consumption goods and the European
Union and the United States produced capital goods. That arrangement resulted
in increasing levels of private indebtedness in the United States, and to a lesser
extent in the European Union, and is now seriously undermined.


Consumption will remain sluggish
for several years, as consumers
cannot pay off their debts and
increase consumption at the


same time. Investment will likely
underperform since there is still


some unutilized capacity available
and the final demand is weak.


The economic austerity of the
public sector in the developed


countries is going to further subtract
from the aggregate demand for a


prolonged period.


The weakness of other components
of the aggregate demand in


developed economies suggests that
there would be increased pressure
to use exports as a means to make
economic activity more dynamic.




25CHAPTER 1. Recent Trends and Outlook for the LDCs


A rebalancing of the world economy could provide a way out of the current
malaise. However, it would require substantial changes in both the surplus and
deficit economies. In surplus economies, it will require a substantial increase in
wages (Germany, Japan and China) and in social redistribution schemes (China).
These changes will take time, as it is possible to carry them out only gradually.
Moreover, even if China, for example, succeeds in introducing the necessary
changes fairly quickly, the impact of this additional demand on overall global
demand would be relatively small, since today the Chinese economy is equivalent
to only one third of the size of the United States economy. In deficit countries,
rebalancing would require structural reforms to increase their competitiveness,
accompanied by expenditure-switching policies and a reduction in overall
indebtedness. Again, it is unlikely that these changes can be implemented
rapidly. Thus, the rebalancing of the world economy is likely to be a protracted
process that would have to rely on politically difficult structural reforms.


Some studies indicate that the impact of the rebalancing on the LDCs could
be negative. Mayer (2011) estimated the impact of rebalancing on trade and
employment in the LDCs, concluding that the world exports would decline or
grow less than before, with the largest impact on exports of industrial goods.
Another global result would be a sizeable adverse impact on employment
worldwide. Both effects might especially affect LDCs specializing in labour-
intensive manufactures, while commodity-exporting LDCs would not be
affected as much. In addition, the trade balance of most LDCs would most likely
deteriorate.


The rebalancing of some of the large developing economies, in particular
China, from exports towards domestic consumption may have a negative effect
on the exports of developing countries into these regions. For example, a recent
study (Akyuz, 2010) estimated that the import intensity of Chinese exports is in
the range of 40—50 per cent. In contrast, the import intensity of the investment
is only 15—20 per cent, while that of consumption is less than 10 per cent.
This means that a rebalancing of the Chinese economy may decrease Chinese
imports by a substantial amount. This, in turn, may have adverse effects on the
exports of developing countries, including the LDCs, who have been increasingly
reorienting their trade to China and more broadly to the South (see chapter 2 for
more details).


The rebalancing of the world economy could also have positive effects on
the LDCs. If a universal social safety net is established and wages are increased
in China, one of the results would be a more costly labour input, which will
make Chinese production more expensive. That, in turn, could be beneficial for
LDCs, mostly characterized by very low labour costs. Conceivably, parts of the
manufacturing industries from China would then seek to relocate to some LDCs,
given the increase in labour costs at home.


The ongoing analysis suggests that the world economy will be fragile and
unstable, as well as hobbled by a two-speed recovery in the coming years. It
is also likely that the rebalancing of the global economy will only be partial in
the next several years. Various sources also suggest that international trade will
remain depressed for some time (IMF, 2011; UN-DESA, 2011). Thus, the outlook
for the world economy is not positive and is surrounded by great uncertainty.
Needless to say, the primary responsibility to drive recovery, revitalize growth
and rebalance the world economy in a more inclusive and sustainable direction,
lies with the advanced economies.


This more complex and challenging economic environment will put strains
on policymakers in the LDCs, as many of the effects will be negative for their
economies. With a more subdued demand for their LDC goods and services
in developed countries, LDCs would have to seek opportunities elsewhere.


The sluggish, erratic and jobless
recovery in the advanced economies


will undoubtedly have adverse
effects on the LDCs.


The rebalancing of the world
economy is likely to be a protracted
process that would have to rely on
politically difficult structural reforms


Some studies indicate that the
impact of the rebalancing of the


world economy on the LDCs
could be negative.




The Least Developed Countries Report 201126


Large and dynamic developing countries, such as China, India, Brazil and South
Africa, could be a priority in that reorientation. Likewise, regional partners, both
within and beyond formal integration groupings, could prove to be additional
outlets for LDC exports.


3. FAR-REACHING CHANGES IN OTHER DEVELOPING COUNTRIES


The political changes that started in early 2011 in Western Asia and North
Africa could have important consequences for the world economy. These
countries possess close to 50 per cent of the world’s oil reserves and are thus
crucially important for today’s oil-based world economy. It is too early to say what
longer-term consequences the changes in Western Asia and North Africa could
have on the world economy, but in the short-term, a 20 per cent increase in oil
prices during the first half of 2011 has already added to inflationary pressures in
many countries.


Beyond that, several effects of these events on the LDCs can already be
envisioned. One of the most important causes of the changes in these regions
has been the lack of opportunities for young people. In particular, the high youth
unemployment rate has become a structural characteristic of these economies
(Economic and Social Commission for Western Asia, 2011; International Labour
Organization (ILO), 2011a). As a result, it is very likely that they would try to tackle
the unemployment by diversifying towards more labour-intensive activities. That
will put pressure on those LDCs basing their development strategy on labour-
intensive activities. In addition, as mentioned earlier, these countries are hosts
to many migrants from LDCs; therefore, workers’ remittances are likely to be
affected as these economies slow down because of the political turmoil.


Economic inequality was also a powerful motivation for the upheaval and
changes in these regions. As poorer citizens struggled to make ends meet,
the images of the opulence of the elites, coupled with the doubts about the
way these riches have been accumulated, had a powerful mobilizing effect on
citizens. The message for the LDCs is very clear: aspiring to achieve sustained
economic growth alone is not sufficient. That growth should ultimately generate
productive employment, social investment and inclusive development. It should
also be accompanied by political representation of all segments of society,
especially of those that have been politically marginalized so far.


D. The Istanbul Programme of Action:
The importance of productive capacities
and structural transformation for LDCs


1. SELECTED HIGHLIGHTS OF THE ISTANBUL PROGRAMME OF ACTION


LDC-IV was held in Istanbul, Turkey, from 9—13 May 2011. The Conference
adopted the Istanbul Programme of Action (IPoA) as its principal document. It
represents the international community’s main document in relation to the LDCs
for the 2011—2020 period. In effect, it is a mutually agreed compact between
LDCs and their development partners.


The IPoA provides an overall direction for the international community’s
strategy on LDCs. It outlines specific measures to be adopted by the LDCs
themselves and their development partners, and joint actions to be taken by
both. The Programme of Action contains a total of 47 goals and targets and


LDC-IV was held in Istanbul,
Turkey, from 9—13 May 2011. The
Conference adopted the Istanbul
Programme of Action (IPoA) as its


principal document.


With a more subdued external
demand for their goods and services


in developed countries, LDCs
would have to seek opportunities


elsewhere. Large and dynamic
developing countries as well as


regional partners could prove to be
additional outlets for LDC exports.


The message for the LDCs is very
clear: aspiring to achieve sustained


economic growth alone is not
sufficient. That growth should
ultimately generate productive


employment, social investment and
inclusive development.




27CHAPTER 1. Recent Trends and Outlook for the LDCs


recommends 252 actions to be implemented by the LDCs and their development
partners. It is a comprehensive document that should inform and guide both
LDCs and the international community on LDC-specific issues in the next 10
years.


The IPoA reviews the implementation progress of its predecessor — the
Brussels Programme of Action (BPoA) — and stresses that certain goals have
not been fully achieved. One of the central goals of the BPoA was to achieve
growth rates of 7 per cent per annum or more. Although LDC economies
as a group grew by 6.9 per cent between 2001 and 2010, there was broad
heterogeneity in the achievements of individual countries. Most importantly, only
15 LDCs achieved the targeted growth rate. Ten of these are African LDCs, four
are Asian LDCs and one is an island LDC. Notably, all oil-exporting LDCs except
Yemen reached the targeted rate. On the other end of the spectrum are eight
countries with real GDP growth rates that are lower than their population growth
rates. In other words, these eight countries had a negative per capita growth
rate during the decade.


Another important goal of the BPoA was an investment rate equal to 25 per
cent of GDP. Given that investment increased from 19.5 per cent of GDP in 2001
to 23.2 per cent in 2008, the goal for the LDC group as a whole was not met.
Instead, only a handful of countries — again, mostly oil exporters — met the
target. Gross fixed capital formation, which excludes inventory accumulation,
was even slower during the decade. Moreover, in 19 LDCs the gross fixed
capital formation declined during the decade of implementation of the BPoA.
Poverty reduction, discussed later in this section in more detail, was another
BPoA target with only limited achievements.


The ODA targets of development partners were generally not met. While the
aggregate ratio of ODA to GNI for Development Assistance Committee (DAC)
members increased from 0.05 per cent in 2000 to 0.09 per cent in 2008, this
is way below the target range of 0.15—0.20 per cent of GNI. Moreover, an
analysis of international support measures for the LDCs indicates that they have
a symbolic, rather than real, developmental impact on LDCs (UNCTAD, 2010).


The overarching goal of the IPoA is to overcome the structural challenges
faced by the LDCs in order to eradicate poverty, achieve internationally agreed
development goals and enable graduation from the LDC category. More
specifically, national policies and international support measures should focus on
enabling half of LDCs to meet the criteria for graduation by 2020 (United Nations
Conference on the Least Developed Countries, 2011, paras. 27–28). Despite
this surprisingly ambitious goal, the IPoA contains far fewer quantitative targets
than the BPoA, and fewer means to achieve it. In addition, the commitments
of the development partners contained in the IPoA are less numerous, and of
a more general nature, and they emphasize technical assistance and capacity-
building support rather than policy commitments. The common interpretation
of the IPoA, however, is that it builds on the commitments and targets of its
predecessor, especially those that have not been fulfilled.


The logic behind the IPoA could be summarized schematically as in chart
10. The target of enabling half of the LDCs to meet the criteria for graduation
by 2020 has three dimensions: achieving a graduation threshold level of income
per capita by growing at least 7 per cent per annum; building human capacity
by fostering sustained equitable and inclusive human and social development,
gender equality and the empowerment of women; and reducing vulnerability by
strengthening resilience to crises and shocks.


The IPoA focuses on eight priority areas of action and establishes goals and
targets, as well as tangible deliverables and commitments. The eight priority areas
are as follows: (a) productive capacity; (b) agriculture, food security and rural


The overarching goal of the IPoA
is to overcome the structural


challenges faced by the LDCs in
order to eradicate poverty, achieve
internationally agreed development
goals and enable graduation from


the LDC category. More specifically,
national policies and international


support measures should focus on
enabling half of LDCs to meet the


criteria for graduation by 2020.


It is a comprehensive document that
should inform and guide both LDCs


and the international community
on LDC-specific issues in the


next 10 years.




The Least Developed Countries Report 201128


Chart 10. Schematic presentation of the Istanbul Programme of Action


Source: UNCTAD secretariat, based on the IPoA.


The IPoA also contains some
new elements. Most notably,


there is a whole section devoted
to the complementary role of


South—South cooperation in its
implementation.


development; (c) trade; (d) commodities; (e) human and social development; (f)
multiple crises and other emerging challenges; (g) mobilizing financial resources
for development and capacity-building; and (h) good governance at all levels.
The last two could be considered as means that would enable the LDCs to
achieve the overall goals of the Programme of Action.


The IPoA also contains some new elements. Most notably, there is a whole
section devoted to the complementary role of South—South cooperation
in its implementation. Chart 10 thus depicts South—South cooperation in a
separate column to emphasize that it differs in many ways from the action of
the traditional development partners, and that it should play an important role
in the implementation of the Programme of Action. This section also points
out that South—South cooperation should not be seen as ODA, but as a
partnership among equals based on solidarity, and that it includes initiatives in
the social, economic, environmental, technical and political realms. Moreover, it
should not be regarded as a substitute for, but rather a complement to North—
South cooperation (para. 134). Hence, South—South cooperation has been
highlighted in the IPoA.


Another new element is the active engagement of civil society, private-sector
and legislative bodies in the preparation, discussion and implementation of the




29CHAPTER 1. Recent Trends and Outlook for the LDCs


IPoA. This is of great importance in mainstreaming the LDC-specific issues in
the broader political and economic agenda in both developed and developing
countries. It could also help tackle the global governance deficit stemming from
the overrepresentation of developed countries and the underrepresentation of
LDCs — or the lack of representation — in many formal and informal global
governance institutions, organizations and bodies.


In addition, the IPoA has much more seriously taken up the issue of science,
technology and innovation (STI) for LDCs, which UNCTAD has promoted
vigorously (see UNCTAD 2007 and 2010). The key decision is to establish a
technology bank and an STI supporting mechanism in order to improve scientific
research, technological development and innovation in LDCs (para. 52 (1)). The
Government of Turkey announced that it would host an International Science,
Technology and Innovation Centre devoted to LDCs.


The IPoA also recommended that development partners should consider
the provisioning of concessional start-up financing for LDC firms that invest in
new technologies (para. 52 (3c)). In other words, the IPoA contains the Spark
Initiative that is promoted and championed by UNCTAD (UNCTAD, 2010).


In addition, the IPoA recommends strengthening international commercial
collaboration, most notably through FDI, in order to go beyond the dominant
resource extraction and commodity production and export. The aid for
investment concept was proposed in the form of home-country measures to
boost incentives for investment in non-traditional areas in the LDCs, especially
in those sectors that are likely to build up a diversified production base, to
encourage linkages with domestic production activities and create jobs.


There are many positive elements in the IPoA. However, there is a contrast
between the very ambitious overall target of enabling half of the LDCs to meet
the criteria for graduation by 2020 and the lack of new financial commitments
that would help achieve that target. Only three countries — Botswana, Cape
Verde and Maldives — have graduated from the LDC category in the last three
decades. Given the poor graduation record, attaining such an ambitious goal
would require a radical shift in development partnership,6 which unfortunately is
not contained in the IPoA.


Further, the IPoA contains fewer recommendations for actions of development
partners and generally shifted the burden of responsibility for action to LDCs
themselves. Whereas the BPoA called on LDCs to implement 156 actions,
and development partners to implement 181, the IPoA lists 126 actions by the
former and only 110 by the latter. It also includes 16 joint actions.


The IPoA includes neither a fuller discussion of the existing international
supporting mechanisms for LDCs, nor proposes new ones, except for the STI
area discussed earlier. Moreover, very little consideration was given to the global
economic regimes that affect the economic performance of LDCs and the need
for their reform. For example, the section on commodities, although included as
one of the priority areas for LDCs, recommends no joint actions by development
partners and LDCs, meaning there are no actions to address these issues at the
global level.


Even more surprisingly, the early harvest of the Doha round on trade issues
directly affecting the LDCs, which was first proposed by the Sixth Least
Developed Countries Trade Ministers’ Meeting in Dar es Salaam in 2009, was
not adopted in Turkey. In other words, the goal of integrating LDCs more fully,
effectively and beneficially into the international trading system has not been
matched by specific actions. Other areas considered to be important by the
LDCs, but that have not received sufficient attention in the IPoA, are climate
change and green growth.


The IPoA has much more seriously
taken up the issue of science,


technology and innovation (STI) for
LDCs, which UNCTAD has promoted


vigorously. The key decision is to
establish a technology bank and
an STI supporting mechanism in


order to improve scientific research,
technological development and


innovation in LDCs.


There are many positive elements
in the IPoA. However, there is a


contrast between the very ambitious
overall target of enabling half of
the LDCs to meet the criteria for
graduation by 2020 and the lack


of new financial commitments that
would help achieve that target.




The Least Developed Countries Report 201130


Finally, there is no rethinking of the development model for LDCs in the
IPoA. This lack of questioning of the underlying model of development of LDCs,
based on the Poverty Reduction Strategy Paper (PRSP) blueprint, means that
it subscribes to the business-as-usual approach in many respects. This stands
in sharp contrast with the fundamental change contained in the IPoA, namely,
its major emphasis on the concept of productive capacities and structural
transformation.


2. THE IMPORTANCE OF PRODUCTIVE CAPACITIES AND STRUCTURAL
TRANSFORMATION FOR LDCS IN THE ISTANBUL PROGRAMME OF ACTION


The IPoA notes that the performance of LDCs improved substantially in
terms of economic growth and international trade during the 2000s. However,
that has not translated into a sustained catching-up process of the LDCs with
the rest of the world, as can be illustrated by several examples.


First and foremost, it is worth noting that while LDCs represent a significant
and increasing share of world population — 12 per cent in 2009 — their
contribution to global output remains below 0.9 per cent, considerably lower
than in the mid-1970s (see chart 11, panels A and B). In other words, one eighth
of the world’s population produces less than one hundredth of the world’s total
GDP. Similarly, LDCs benefited only modestly from the expansion of world trade
in the 2000s: their share of world merchandise exports hovered around 0.6
per cent between the 1980s and the early 2000s, and then climbed to 1 per
cent more recently (panel C). The bulk of the recent improvement, however, is
accounted for by fuels; excluding that product line, LDCs accounted for only
0.53 per cent of world exports in 2009. The weight of LDCs as exporters of
services is even more reduced in the world economy and has been shrinking for
the past 30 years. In 2009, they barely accounted for 0.6 per cent of the world
total.


The position of LDCs looks marginally better with regard to FDI flows: in 2009
their economies received around 2.5 per cent of total FDI inflows worldwide
(panel D). This does indeed represent a small improvement, compared with the
last couple of decades, but should be considered against the global context
of surging FDI flows to developing countries, and growing demand for primary
commodities.


Real GDP per capita in LDCs has been decreasing relative to other country
groups (developed economies and developing economies, excluding the LDCs)
from the early 1970s until the mid-1990s (chart 12). In that period, the LDCs
went from over 2 per cent of the real GDP per capita of developed economies
to only 1 per cent. As regards the real GDP per capita of other developing
countries, the LDCs fell from almost 40 per cent in 1970 to less than 20 per cent
in the mid-1990s.


The increased dynamism of LDC economies during the 2000s has reverted
somewhat the decline relative to the real GDP of developed economies; they
thus stood at 1.5 per cent in 2009. In contrast, there has been no improvement
of the real GDP per capita of LDCs relative to other developing countries. Even
with the growth performance they recorded during the 2000s, LDCs were not
able to begin closing the gap with other developing economies. To embark on a
sustained catching-up path, the LDCs would have to substantially improve their
performance.


A large body of evidence shows that LDCs continue to play a very marginal
role in the world economy, and that their growing integration in the global market
was accompanied by very limited advances (if any) in their relative position,


There is no rethinking of the
development model for LDCs


in the IPoA.


LDCs represent a significant and
increasing share of world population


(one eighth of the world’s
population), but produce less than
one hundredth of the world’s total


GDP.


A large body of evidence shows
that LDCs continue to play a very


marginal role in the world economy




31CHAPTER 1. Recent Trends and Outlook for the LDCs


Chart 11. LDCs in the world economy, 1970–2009


0


2


4


6


8


10


12


14


1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2008 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2008


1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2008


A. Share of world total population


0.0


0.2


0.4


0.6


0.8


1.0


1.2


1.4
B. Share of world total GDP


0.0


0.2


0.4


0.6


0.8


1.0


1.2


1980 1984 1988 1992 1996 2000 2004 2008


C. Share of world total exports


P
er


ce
nt


ag
e


Merchandise Merchandise excluding fuels Services


0.0


0.5


1.0


1.5


2.0


2.5


3.0
D. Share of world total inward FDI


P
er


ce
nt


ag
e


P
er


ce
nt


ag
e


P
er


ce
nt


ag
e


Source: UNCTAD secretariat calculations based on UNCTADstat database.


compared with the rest of the world (for a similar evaluation, see United Nations
Conference on the Least Developed Countries (2011), sections I, II and III). From
a long-term perspective, it appears that their marginalization is in many ways
worse than in the early 1970s when the LDC category was created, despite some
modest improvements during the last 10 years. More generally, the picture that
emerges from the data is that the LDCs, in spite of substantial improvements in
economic growth and international trade, have not been able to develop their
productive capacities and beneficially integrate with the world economy.


The IPoA also recognizes that “the improved economic performance in some
least developed countries had a limited impact on employment creation and
poverty reduction” (para. 18). In other words, the growth was not inclusive.
Instead, it was unbalanced and the gains were distributed unevenly. The
issue of inclusive growth has gained policy prominence recently. Given that
comprehensive data on inequality in the LDCs is lacking, poverty could be used
as a proxy to analyse where the LDCs stand in terms of inclusive growth.


UNCTAD’s assessment of poverty reduction trends and MDG achievements
(see the Least Developed Country Report 2010, chapter 1) indicates that
progress is certainly being made in the LDCs, with an acceleration of achievement
since 2000. Poverty reduction is, however, particularly weak, and most LDCs
are off-track to meet most human development MDGs. Overall progress is very
slow.


The IPoA also recognizes that “the
improved economic performance
in some least developed countries


had a limited impact on employment
creation and poverty reduction”.




The Least Developed Countries Report 201132


Chart 12. Real GDP per capita in LDCs relative to other country groups, 1970–2009


0


5


10


15


20


25


30


35


40


0


0.5


1.0


1.5


2.0


2.5


1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008


Developed economies (left scale)


P
er


ce
nt


ag
e


P
er


ce
nt


ag
e


Other developing economies (right scale)


Source: UNCTAD secretariat calculations based on UNCTADstat database.


Even with the growth performance
during the 2000s, LDCs were not
able to begin closing the gap with


other developing economies.


The main feature of poverty in
LDCs remains its all-pervasive and


persistent nature: 53 per cent of the
population was living on less than


$1.25 a day, and 78 per cent on less
than $2 a day in 2007.


The main feature of poverty in LDCs remains its all-pervasive and persistent
nature: 53 per cent of the population was living on less than $1.25-a-day, and
78 per cent on less than $2-a-day in 2007. This implies that 421 million people
were living in extreme poverty in LDCs that year. The incidence of extreme
poverty was significantly higher in African LDCs, at 59 per cent, than in Asian
LDCs, at 41 per cent. For the $2-a-day poverty line, however, the difference was
less marked: 80 per cent in African LDCs and 72 per cent in Asian LDCs.


Notwithstanding rapid economic growth during the 2000s, the pace of
poverty reduction in the LDCs has been quite modest. Importantly, the LDCs
remain off-target to reduce poverty by half between 1990 and 2015. Moreover,
since the LDC population is very young and increasing rapidly, the number of
people living in extreme poverty continued to rise even during the boom, despite
the decline in headcount rates. Consequently, given the continuation of trends
since 2000 and not factoring in possible impact of the crisis, the number of
extreme poor living in LDCs by 2015 will be 439 million, while if the MDG target
were achieved it would be only 255 million.


Another way of looking at these trends is to compare the share of people
living in extreme poverty in developing countries (chart 13). China and India
together were the main locus of extreme poverty, accounting for 42 per cent
of the people living in extreme poverty in all developing countries in 2007.
This, however, is a significant reduction from 61 per cent of the total in 1990.
In contrast, 36 per cent of extremely poor people resided in the LDCs, and
22 per cent in other developing countries, excluding China and India, in 2007.
Given current trends in poverty reduction, as well as population dynamics, it is
clear that over time LDCs will become the major locus of extreme poverty in the
world. In 1990, only 18 per cent of the extreme poor lived in LDCs, while in 2000
the share was 27 per cent.




33CHAPTER 1. Recent Trends and Outlook for the LDCs


Chart 13. Distribution of people living in extreme poverty across developing countries, 1990, 2000 and 2007
(Below $1.25/day)


18%


61%


1990 2000


21%


21%


2007


China and India LDCs Other developing countries, excluding China and India


51%


27%


22%


36%42%


Source: UNCTAD, 2011c.


Another area where the performance of the LDCs was poor is employment.
The growth of employment during the 2000s reached 2.9 per cent (ILO, 2011b),
which was much slower than the GDP growth. The growth of employment was
thus insufficient to absorb the growing number of entrants in the labour market.
The employment opportunities in LDCs are not created in sufficient quantity
because of the type of specialization of production, mainly in commodities.
The elasticity of output growth has been relatively low, especially in African
LDCs, since the most dynamic sectors have been capital-intensive, enclave
sectors (Economic and Social Commission for Africa, 2010). In addition to low
employment elasticity, these sectors are characterized by very feeble linkages
with the rest of the economy, resulting in very few spillovers.


According to ILO data, the unemployment rate in LDCs had barely nudged
down during the boom period, from 6.1 per cent in 2000 to 5.7 per cent in
2007. This had been reversed by the crisis of 2008—2009, so the estimate for
2010 is that the unemployment rate has reached 5.8 per cent (ILO, 2011b). In
addition, the proportion of the working poor in total employment at 60 per cent
in LDCs is the highest in the world. Similarly, the rate of the so-called “vulnerable
employment”7 as a share of total employment in LDCs is the highest in the
world, 81 per cent.


The growth of employment during
the 2000s reached 2.9 per cent,
which was much slower than the


GDP growth.




The Least Developed Countries Report 201134


The inability of LDC economies to create a sufficient number of formal
jobs, coupled with a fast-growing labour force, has resulted in widespread
informal employment. As is well known, informal economic activities, as well
as subsistence agriculture, are characterized by low levels of productivity and
earnings. That explains why the share of the working poor in total employment in
LDCs is so high. However, these trends are likely to worsen in the future, as the
total population of the LDCs is bound to increase to 1 billion by 2017 from 880
million in 2009. Therefore, a big challenge for LDCs is how to create sufficient
productive employment for the fast-growing economically active population.


The failure to create a sufficient number of jobs in many LDCs, even when
economic growth was high, is related to another feature of these economies
during the 2000s, namely, the lack of structural transformation. As stated in
paragraph 18 of the IPoA, “in many least developed countries structural
transformation was very limited, and their vulnerability to external shocks has
not been reduced”.


However, that was not always the case in the LDCs. Structural transformation
was fairly rapid from the beginning of the 1970s to mid-1980s, when the
proportion of agriculture in GDP for LDCs declined on average from 85 per cent
to 41 per cent in just 17 years. This was clearly not a result of an absolute
decline of agricultural production, but of its slower rate of growth in comparison
with industry and services. In other words, the process of transformation of the
productive structure was swift.


In contrast, that process has been much slower since the mid-1980s. The
share of agriculture in GDP decreased from 41 per cent in 1987 to 27.2 per
cent in 2008. Inverse tendencies could be seen with the share of industry and
services in GDP. Industry accounted for only 5.4 per cent of GDP in 1970, but
recorded rapid growth in the next decade and a half to reach 18.6 per cent in
1987. From then on, however, the change has been much slower. The share of
industry in 2000 was 25.1 per cent of GDP and 30.8 per cent in 2008. Services
increased from 9.4 per cent in 1970 to 40.4 per cent in 1987 and to 42 per cent
in 2008.


A more detailed analysis, however, shows that structural transformation in
LDCs today is even more elusive than suggested previously. The category of
industry includes mining and quarrying, manufacturing, electricity, gas and water
supply, and construction. The increase in the share of industry in the 2000s
— five percentage points of GDP — has mainly resulted from the boom of
commodity prices and the concomitant rapid expansion of mining and quarrying.
The changes in manufacturing, in contrast, have been minimal.8 While in the first
period (1970 to 1987) its share increased from 2.7 per cent of GDP to 10.1 per
cent, in the next 20 years, it fluctuated around 10 per cent and even declined to
9.8 per cent in 2008 (chart 14).


When changes in GDP composition during the 2000s are examined, there was
a 4 percentage point decline in the share of agriculture, almost a 6 percentage
point increase in industry, and a small decline (less than two percentage points) in
services for all LDCs. The African LDCs recorded the largest increase in industry
during the decade (7.5 percentage points), brought about mainly by an increase
in mining and utilities. There was also a small decrease in the share of services
and a more pronounced decline in the share of agriculture. This suggests that
during the last decade, the African LDCs specialized even more in the production
of commodities, while the share of other activities either remained constant (for
example, manufacturing at 7.7 per cent of GDP), or declined.


In contrast, the Asian LDCs recorded less pronounced and more balanced
changes. The share of agriculture fell 4 percentage points, industry increased


The failure to create a sufficient
number of jobs in many LDCs, even
when economic growth was high,
is related to the lack of structural


transformation.


The inability of LDC economies
to create a sufficient number of
formal jobs, coupled with a fast-


growing labour force, has resulted in
widespread informal employment.




35CHAPTER 1. Recent Trends and Outlook for the LDCs


The increase in the share of industry
in the 2000s has mainly resulted


from the boom of commodity
prices and the concomitant rapid


expansion of mining and quarrying.
The changes in manufacturing, in


contrast, have been minimal.


Chart 14. Industrial activities as a percentage of GDP in LDCs, 1970–2008


5


0


10


15


20


25


30


35


1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008


Mining, utilities and construction


P
er


ce
nt


ag
e


Manufacturing


Source: UNCTAD secretariat calculations, based on UNCTADstat database.


almost 3 percentage points and services rose 1.5 percentage points. The
share of manufacturing, already much higher than that of the African LDCs
at the beginning of the decade, increased further to 14 percentage points.
Commensurate with that type of specialization, services that accompany
manufacturing also increased their share of GDP. Finally, the composition of
GDP of the island LDCs barely changed during the decade.


The IPoA recognizes that in terms of productive capacities, progress during
the previous decade was poor. Therefore, one of its major goals, deemed to be
necessary to achieve the halving of the number of LDCs in the next 10 years, is
to achieve growth rates of 7 per cent per annum:


“Achieve sustained, equitable and inclusive economic growth in least
developed countries, to at least the level of 7 per cent per annum, by strengthening
their productive capacity in all sectors through structural transformation and
overcoming their marginalization through their effective integration into the global
economy, including through regional integration” (United Nations Conference on
the Least Developed Countries (2011), para. 28 (a)).


Indeed, the first priority area of the IPoA is centered on the concept of
productive capacities. The importance of the transformation of productive
capacities for countries’ development has received growing attention through
various UNCTAD Least Developed Country Reports since 2006. These Reports
argue that national and international policies should focus on developing
productive capacities — and the related expansion of productive employment
— to achieve sustained development and poverty reduction in the LDCs.


UNCTAD’s definition of productive capacities states that they are essentially
a matter of what a country is able to produce efficiently and competitively.
Productive capacities are comprised of productive resources, entrepreneurial
capabilities and production linkages, which together determine a country’s
capacity to produce goods and services and enable it to grow and develop.
Productive capacities develop when a country’s abilities to efficiently and
competitively produce an increasing range of higher value-added goods and
services increase. This process occurs by expanding investment — in physical,




The Least Developed Countries Report 201136


human, social and environmental capital — and by engaging in technological
acquisition and innovation. The process is demonstrated in the diversification of
national economies, structural transformation and a more beneficial integration
into the global economy; these very changes facilitate the potential for further
investment and innovation in a virtuous circle (UNCTAD 2006 and 2011b).


A possible approach to assessing a country’s productive capacity is to
measure export diversification and the range of its export product mix. This
can be done by employing the method used in the analysis of productive
capacities of the least developed countries in the Asia-Pacific region by the
Economic and Social Commission for Asia and the Pacific (ESCAP) (2011), and
which is a revised version of the method of reflections proposed by Hidalgo
and Hausmann (2009). However, it is more like a measurement of the export
complexity and supply capacity of the country, and should thus be considered
only as a proxy for the measurement of productive capacities in the sense of the
UNCTAD definition.


The approach to measuring productive capacity developed by ESCAP
(2011) was used in the background paper prepared for this Report by Freire
(2011) to include all LDCs. It presents the productive capacity index of the LDCs
in comparison with the world’s average measured by the standard deviation of
the distribution of productive capacities. It takes a long-term view — 25 years
— since productive capacities do not change rapidly in a short period of time. A
striking feature of the LDCs in the last quarter of a century is that they have not
been able to develop productive capacities at the same pace as the rest of the
world. Only two countries, Uganda and the United Republic of Tanzania, have
managed to develop their productive capacities somewhat faster than the world
average (chart 15). This finding is another example of the marginal role of the
LDCs in the world economy.


Another way to measure the relative position of the LDCs is to compare their
productive capacity with some benchmarks in one year. A useful benchmark is
the United States, since it is the country with the most developed productive
capacities. Based on that index, chart 16 presents the productive capacities in
the LDCs in 2009. It shows that the productive capacity in these countries is in
general very low, representing a few percentage points of the productive capacity
of the United States. The LDCs with the highest levels of productive capacity are
Uganda (5.26), the United Republic of Tanzania (4.91) and Bangladesh (4.42).
The countries with the lowest are Tuvalu (0.14), Kiribati (0.17) and Guinea-Bissau
(0.27).


Both the analysis in this section and the evaluation contained in the IPoA
suggest that the productive structure of the LDCs has remained almost static,
even during the high economic growth of the 2000s. The LDCs still participate
in the global division of labour with what they already have in abundance:
commodities and low-skilled workers. The export-led growth of the last two
decades has resulted in their even stronger specialization according to their
static comparative advantages. Consequently, their productive capacities remain
underdeveloped, exports are concentrated in a narrow range of products and
structural vulnerabilities are very high. Therefore, the great emphasis of the IPoA
on the development of productive capacities in LDCs is more than warranted.
The main question, however, is how the IPoA will be implemented in the next
10 years, and whether it will be implemented with more vigour and commitment
than during the last decade.


UNCTAD’s definition of productive
capacities states that they are
essentially a matter of what a


country is able to produce efficiently
and competitively.


Productive capacities develop when
a country’s abilities to efficiently
and competitively produce an


increasing range of higher value-
added goods and services increase.
This process occurs by expanding
investment — in physical, human,


social and environmental capital —
and by engaging in technological


acquisition and innovation.


The great emphasis of the IPoA
on the development of productive
capacities in LDCs is more than
warranted. The main question,


however, is how the IPoA will be
implemented in the next 10 years.




37CHAPTER 1. Recent Trends and Outlook for the LDCs


Chart 15. Change in ESCAP index of productive capacity in LDCs, 1984–2009


Tuvalu
Kiribati
Liberia


Timor-Leste
Guinea-Bissau


Change in the distance of LDCs to the world average from 1984 to 2009, by country


Comoros
Gambia
Samoa
Djibouti


Equatorial Guinea
Solomon Islands


Bhutan
Somalia


Sao Tome & Principe
Vanuatu


Haiti
Central African Rep.


Rwanda
Chad
Benin


Burkina Faso
Burundi
Guinea


Mauritania
Togo
Sudan
Malawi


Mali


Niger
Angola
Yemen


Democratic Republic of the Congo
Myanmar


Ethiopia
Mozambique


Lao People’s Democratic Republic
Sierra Leone


Senegal
Zambia


Cambodia


Afghanistan
Madagascar


Nepal
Bangladesh


United Republic of Tanzania
Uganda


-0.25 -0.20 -0.15 -0.10 -0.05 0 0.05 0.10


Source: Freire, 2011.
Note: The ESCAP index is constructed by taking export complexity and supply capacity as proxy for productive capacity. See page 36 of this


Report.




The Least Developed Countries Report 201138


Chart 16. ESCAP index of productive capacities in LDCs, 2009
(United States = 100)


Tuvalu
Kiribati


Guinea-Bissau
Timor-Leste
Lesotho
Comoros
Equatorial Guinea
Samoa
Bhutan
Gambia
Solomon Islands
Sao Tome and Principe
Vanuatu
Somalia
Djibouti
Eritrea
Chad
Central African Republic
Rwanda
Benin
Burkina Faso
Burundi
Liberia


Mauritania
Guinea


Togo
Haiti


Malawi
Sudan


Niger
Mali


Angola
Yemen


Lao People’s Democratic Republic
Democratic Republic of the Congo


Ethiopia
Myanmar


Mozambique
Sierra Leone


Senegal
Cambodia


Zambia
Madagascar


Nepal
Bangladesh


United Rep. of Tanzania
Uganda


0 1 2 3 4 5 6


Global median = 2.7


Source: Freire, 2011.
Note: The ESCAP index is constructed by taking export complexity and supply capacity as proxy for productive capacity. See page 36 of this


Report.




39CHAPTER 1. Recent Trends and Outlook for the LDCs


E. Conclusions


The overarching goal of the IPoA is to overcome the structural challenges
faced by the LDCs in order to eradicate poverty, achieve internationally agreed
development goals and enable graduation from the LDC category. More
specifically, national policies and international support measures should focus
on enabling half of the LDCs to meet the criteria for graduation by 2020 (United
Nations Conference on the Least Developed Countries, 2011, paras. 27–28).
Will the LDCs be able to achieve that goal, given the present conditions of the
world economy and the outlook for the next several years? Will they continue to
play a marginal role in the world economy? Is the business-as-usual approach
to policymaking sufficient to place them on the path of more dynamic and
inclusive development? The experience of the previous decade indicates that
high economic growth is not sufficient to attain broad development goals.
The analysis in this chapter, as well as the evaluation contained in the IPoA,
suggests that the productive structure of the LDCs has remained almost static,
even during the high economic growth of the 2000s. The LDCs must promote
structural transformation and build their productive capacities to start catching
up with the rest of the world and to substantially reduce poverty.


The analysis in this chapter also suggests that the recovery from the triple
crisis in the LDCs is partial at best, and the current world situation and the
outlook in the mid-term are not promising either. The world economy is likely
to bring less propitious external conditions for the LDCs during the 2010s than
during the boom period of the last decade. The present decade is likely to bring
a great deal of instability and change. The risk of a protracted underperformance
in developed countries looms large; the outlook for the world economy and for
the LDCs is thus surrounded by great uncertainty. The slower and more volatile
growth in developed economies would adversely affect the growth prospects
of the LDCs. If a rebalancing of the world economy takes place, the net result
will likely be negative for the LDCs. Therefore, the outlook for growth in those
countries, as illustrated by the estimates of the IMF through 2016, is less buoyant
than during the boom period.


Nevertheless, there are indications that the international prices of
commodities could remain high during the present decade. This would be a
direct consequence of the so-called rise of the South. The question, then, is
the following: Will the LDCs miss another opportunity to translate temporary,
commodity-based prosperity into sustainable, inclusive economic development?
Will they be able to take advantage of opportunities opened up by the external
context, that is, to make the most of the Southern-fuelled commodity boom?
Will they have the wisdom to benefit from it in a more advantageous way than
in the 2000s? Finally, what kind of development strategy should the LDCs
implement to achieve the IPoA goals?


Another dimension of that same question, explored in more detail in the
following chapters, is the issue of South—South cooperation. Would the
enhanced South–South cooperation make it easier for the LDCs to catch-
up with the rest of the world? How could Southern engines of growth help
the LDCs create dynamic competitive advantages? Is the nature of relations
between the LDCs and other developing countries fundamentally different from
North—South relations? Is there something that could be called the “Southern
dividend”? If so, what would be the best way for the LDCs to benefit from it? To
use modern jargon, could South—South cooperation be a “game changer” for
the LDCs? In the light of these queries, the next chapter analyses more closely
the recent trends in economic relations between the LDCs and other developing
economies.


The LDCs must promote structural
transformation and build their
productive capacities to start
catching up with the rest of


the world and to substantially
reduce poverty.


What kind of development strategy
should the LDCs implement to


achieve the IPoA goals?


Would the enhanced South–South
cooperation make it easier for the
LDCs to catch-up with the rest of


the world?




The Least Developed Countries Report 201140


Notes


1 Equatorial Guinea, Angola, Samoa, Tuvalu, Vanuatu, Bhutan, Timor-Leste, Kiribati,
Djibouti, Sudan and Sao Tome and Principe.


2 Senegal, Zambia, Mauritania, Lesotho, Lao People’s Democratic Republic, Solomon
Islands and Cambodia.


3 See table 3.
4 Simple projections from the 2002—2008 boom should be considered with caution.


Moreover, a degree of caution is also needed when assessing the shifts in the balance
of the world economy, as even the fastest-growing emerging economies will likely
remain poorer than advanced countries on a per capita basis for considerable time.


5 The forecasts reported in the chart should be considered with caution, given the
strong headwinds the world economy has faced in 2011. Forecasts in the medium
-term are hence surrounded by substantial uncertainty and may turn out to be biased
upwards if circumstances worsen. Nonetheless, these risks are not expected to
reverse the long-term shift in economic weight towards Southern growth poles.


6 UNCTAD 2010 argued for such a radical change in development partnership in the
form of a new international development architecture, or NIDA, for LDCs.


7 Vulnerable employment is defined by the ILO as the sum of self-employed workers
and contributing family members; a high rate of vulnerable employment is indicative of
the informal nature of employment, the uncertainty of income and the limited choices
available to the individual.


8 Paragraph 19 of the IPoA states, “… the share of manufacturing, which has been
the driving force of economic development in many middle-income countries, has
increased only slowly”.


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2CHAPTER
THE RISE OF THE SOUTH:


DEVELOPMENT IMPLICATIONS
FOR THE LDCS




The Least Developed Countries Report 201144


A. Introduction


It is argued in chapter 1 that the ongoing reconfiguration of the world
economy and its consequences are of great significance for all countries. Any
developmental strategy designed to redress the persistent marginalization of the
least developed countries (LDCs) therefore has to take into account the broader
context of a shifting balance of economic and political power in the world.
This recognition is all the more necessary at the present juncture, as some key
developed partners face severe debt strains, while the recovery from the crisis
is still weak and continues to be extremely uneven and fraught with downside
risks.


Against this background, the primary aim of the present chapter is to shed
new light on the deepening of the LDCs’ economic ties with Southern countries,
which has been intensifying since at least a decade. The two Asian giants, China
and India, clearly lead this trend, having become respectively the first and fourth
largest market for LDC exports since 2009 – with the European Union and the
United States in second and third place respectively. Nonetheless, a broader
set of developing countries are involved in this multifaceted process of growing
South–South economic links. Drawing on available evidence, the chapter shows
that while developed economies remain very important partners for the LDCs,
South–South relations already play an important role in the LDCs’ integration
into the world economy, and are likely to intensify further in the future.


In the context of growing economic ties within the South, the key issue for
the LDCs is the extent to which this dynamism can serve as a springboard for
developing their productive capacities and fostering structural transformation,
intended not only as the quantitative expansion of production, but also as
its qualitative upgrading towards higher value-added and more knowledge-
intensive activities. In this respect, the chapter points to a wide set of related
opportunities and challenges. The poorest countries clearly benefit from the
boost in international demand for exports and from greater availability of cheap
manufactured imports. However, some of them also face heightened competition
in labour-intensive manufacturing sectors or risk that their commodity
dependence will be locked in by the emerging international division of labour. In
this respect, for instance, it is sobering to note that fuels accounted on average
for roughly 60 per cent of the LDCs’ exports to developing countries during
the 2000s. However, it is indisputable that the rise of the South is providing
LDCs with greater access to capital and development finance, and increasing
opportunities for technological transfer and localized learning.


How stronger economic ties with the South will affect the LDCs’ development
prospects will ultimately depend on the net result of many overlapping forces,
encompassing not only trade and investment, but also remittances, technology
and official flows. Overall, the emerging trends lend themselves to some cautious
optimism. The analysis of this chapter implies that policy should play a crucial
role in further leveraging these multidimensional relations to promote the LDCs’
long-term development objectives. Avoiding a passive attitude, the governments
of LDCs need to make use of the greater policy space opened to them by the
emergence of new partnerships, forging a clear engagement strategy to harness
the benefits of the ongoing recalibration of the world economy. This, in turn, will
require the setting up of a developmental State, as well as the reinforcement of
particular types of mutually beneficial South–South cooperation, as spelled out
in the rest of the report.


This chapter is structured as follows: Section B outlines a broad analytical
framework to account for the multipronged impacts of the rise of Southern


While developed economies
remain very important partners for
the LDCs, South–South relations
already play an important role in


the LDCs’ integration into the world
economy, and are likely to intensify


further in the future.


In the context of growing economic
ties within the South, the key issue
for the LDCs is the extent to which


this dynamism can serve as a
springboard for developing their


productive capacities and fostering
structural transformation.




45CHAPTER 2. “The Rise of the South”: Development Implications for the LDCs


engines of growth on LDC economies. Section C casts new light on the
emerging patterns of economic relations between LDCs and the South,
focusing on trade, foreign direct investment (FDI) remittances and official flows.
Special emphasis is placed on the broad array of partnerships that characterize
South–South economic integration and cooperation with different partners,
as well as on the elements of complementarity compared with the traditional
relationships LDCs have with developed countries. The chapter concludes with
some considerations on the need for LDC governments to forge a clear strategy
aimed at maximizing the benefits of emerging South–South partnerships, in the
context of their long-term development objectives.


B. Analytical frameworks for the changing
geography of the world economy


The nature of the LDCs’ integration in the world economy has been changing
rapidly over the last decade, in part owing to the wide-ranging effects triggered
by the emergence of some dynamic developing countries in a context marked
by increasing globalization. Broadly speaking, the period spanning 1975–2000
was characterized by the liberalization of worldwide trade and capital flows,
coupled with the growing fragmentation and internationalization of production
processes.1 These trends have translated into a sharp expansion of international
trade, particularly for what pertains to intermediate goods, and parts and
components (Jones et al., 2005). In this context, the LDCs, like most developing
countries, were confined to the role of raw materials suppliers to developed and
newly industrialized economies (NIEs), 2 which then processed these inputs into
final goods destined to their own domestic markets and, to a lesser extent, to be
exported to developing countries themselves (Ng and Yeats, 1999).


The continuation of the above trends, along with the eagerness of transnational
firms to exploit wage differentials and pursue vertical and horizontal integration,
has led to the fully fledged establishment of global production networks.3 Against
this background, the 2000s witnessed a gradual shift in the very geography
of the world economy, following the successful insertion of some dynamic
developing countries into regional and subregional supply chains. Through
the upgrading of their production structure and the resulting spur to economic
growth, these countries have emerged as key players in the world economic
arena. Particularly in the Asian region, the rise of these Southern growth poles
has been accompanied by their emergence as manufacturing powerhouses,
whose products were then mainly exported to developed economies, or, to a
lesser extent, to other developing countries.


From the LDCs’ point of view, the surfacing of the above pattern of global
production resulted into a sharp intensification of South–South trade and
investment flows, as fast-growing developing countries looked for additional
raw materials, intermediates, new export markets, or simply more profitable
investment opportunities. This, in turn, results in a twin process that entails
both tighter integration of the LDCs with other developing economies and
deeper integration into the global market. Before analysing the different aspects
through which this process manifests itself, it is useful to review a few analytical
frameworks that have been proposed in order to frame South–South economic
relations. The latter have long been regarded in the light of the commonalities
across developing countries in terms of structural characteristics, historical
legacies, development challenges, experiences and policy frameworks. Indeed,
these shared aspects provide a rationale to conceive South–South cooperation
as a partnership based on the principle of equality, as done, for instance, in


The nature of the LDCs’ integration
in the world economy has been
changing rapidly over the last
decade, in part owing to the
emergence of some dynamic


developing countries in a context
marked by increasing globalization.


This results in a twin process that
entails both tighter integration of
the LDCs with other developing


economies and deeper integration
into the global market.




The Least Developed Countries Report 201146


China’s well-known eight principles for economic aid and technical assistance to
other countries (1964).


Along with these common features, recent evidence has shown
that developing countries have become increasingly differentiated and
heterogeneous throughout the ongoing reconfiguration in the world economy.
While some Southern countries have embarked on catch-up growth and are
converging towards income levels of high-income countries, others seem to
have hit glass ceilings and seem to be locked at the middle-income status; yet
others, including numerous LDCs, are struggling with continuous poverty and
underdevelopment.4 The resulting asymmetries — with respect to economic
size, income level, structural conditions and technological sophistication —
inevitably shape the terms of market-driven economic relations within the South,
and thus need to be appropriately taken into account in any meaningful analytical
framework (UNCTAD, 2010a).


Flying geese – An insightful analytical framework that could be applied to
South–South economic relations originates from the so-called flying geese
paradigm. Originally developed by Kaname Akamatsu in the 1930s to explain
Japan’s catch-up vis-à-vis with western advanced economies, the flying geese
paradigm has later become the most influential explanation of the consecutive
waves of industrialization in East Asia through regional integration (Arrighi, 1996;
Kojima, 2000; Ozawa, 1993; 2003).5 At its core, the flying geese paradigm
explains the successes of NIEs by relating the life cycle of particular sectors over
their course of development, with the relocation of industries from more advanced
to less advanced countries in the region, in response to shifts in competitiveness
(UNCTAD, 1996; Kasahara, 2004; Chang, 2011; Fujita et al., 2011). Once they
manage to emulate the leader and establish themselves as exporters of a new
product, the followers are gradually encouraged by competitive pressures to
repeat the same pattern of relocation to their neighbours, giving rise to what
Arrighi called the snowball effect (Arrighi, 1996). Simultaneously, more advanced
economies do not only climb up the ladder of product sophistication, but also
function as export markets for the followers by allowing reverse import and
thereby fostering greater regional integration (Chang, 2011).


In this region-wide process of industrialization and structural change, trade
and FDI act as key vehicles for transferring new goods, capital, and technologies
from more advanced players to less developed and relatively more labour-
abundant ones. In turn, the search for competitive advantages on the part of
leading firms results in a constantly evolving regional division of labour, within a
group of economies all striving for the common goal of industrialization. Clearly,
though, the flying geese paradigm implies that this “dynamic process of shifting
comparative advantage” (UNCTAD, 1996: 75) results in a well-defined industrial
and locational hierarchy within the region. Consequently, different countries may
enjoy disproportionate benefits from the ensuing division of labour.


The flying geese paradigm is undoubtedly a meaningful framework to capture
the historical pattern of East Asian industrialization, taking off in Japan, then
spreading to the first generation of NIEs (Republic of Korea, Hong Kong (China),
Singapore and Taiwan Province of China) and finally reaching the second
generation of NIEs (Indonesia, Malaysia, Philippines and Thailand). Despite its
relevance to explain these consecutive waves of industrialization and regional
integration, the current applicability of the flying geese paradigm as a universal
pattern of development is debatable for three reasons (Chang, 2011).


(a) The process of emulation rests on the relatively smooth transfer of
technology between advanced and less developed economies, or between
advanced and backward firms. The presence of strong complementarities
between technologies and skills could, however, create frictions and make


An insightful analytical framework
that could be applied to South–


South economic relations originates
from the so-called flying geese


paradigm.


The flying geese paradigm explains
the successes of NIEs by relating
the life cycle of particular sectors
over their course of development,


with the relocation of industries from
more advanced to less advanced


countries in the region.


In the region-wide process of
industrialization and structural


change, trade and FDI act as key
vehicles for transferring new goods,
capital, and technologies from more
advanced players to less developed
and relatively more labour-abundant


ones.




47CHAPTER 2. “The Rise of the South”: Development Implications for the LDCs


this transfer increasingly difficult, particularly in the case of LDCs, where
specialized workers are often in scarce supply.


(b) The functioning of the flying geese paradigm hinges on the existence of
profitable export markets for successful emulators, that is, on the existence
of reverse imports as more advance countries climb up the product
sophistication ladder and phase out the domestic production of low-end
products. The extent to which today’s emerging economies are importing
consumer goods from other Southern partners, thereby providing alternatives
to the traditional export markets, is however rather limited (Bernard and
Ravenhill, 1995; Kasahara, 2004; Akyuz, 2010). In other words, the scope
for reverse import is partial, especially insofar as many developing countries
appear to be caught into a sort of middle-income trap that may hamper
further sophistication of their export structure (Kozul-Wright et al., 2011).6


(c) The wave of policy reforms enacted at the height of the Washington
Consensus has deeply modified the international context in which the
first generation of geese enjoyed their successes. These change actually
resulted in a more hierarchical division of labour and thus in more unevenly
distributed gains from regional integration, as dominant players attempted
to take advantage of uneven development across regional partners to
strengthen their market position.


In spite of all these reservations, the flying geese paradigm continues to draw
attention to the considerable scope for South–South cooperation in industrial
development and to the potentially enabling role played by strategic forms of
regional integration (UNCTAD, 1996; Bartels and Vinanchiarachi, 2009; Lin,
2011). Moreover, a proper interpretation of the East Asian experience points
to the crucial role of policy interventions in fostering the process of increasing
product sophistication, facilitating technological transfer and redressing the
series of market failures that typically hamper the investment and innovation
process.


New centre-periphery patterns – Another very distinct conceptual framework
views South–South economic relations through the lense of the increasing
differentiation among developing countries, and the replication within the South
of the centre-periphery patterns. The continued dependance of the LDCs on
primary commodity exports reinforces this concern. In line with this reasoning,
Bartels and Vinanchiarachi (2009: 19) note that “asymmetries in the patterns
of South–South and intra-South trade (…) are likely to persist in the absence
of aggressive competitive policies that change industrial structures”, and this is
likely to pose challenges for “heavily disadvantaged and marginalized developing
countries” (ibidem). Theoretically, this process of polarization may be triggered
by the same array of economic forces that lead to spatial agglomeration, and
could result in the formation of core-periphery patterns within the South (Fujita
et al., 2001).


In many cases, regional or interregional integration initiatives are led by the
economic interests of dominating economic actors — for example, corporations
— and do not take sufficiently into account the development needs and priorities
of the less developed country members of the integration schemes, for example,
the LDCs. This uneven position, coupled with LDCs’ long-term divergence from
other developing countries in terms of the gross domestic product (GDP) per
capita and more broadly of productive capacity development (UNCTAD, 2010a),
may possibly lock the LDCs at the lowest end of the regional or interregional
division of labour, thereby reproducing a centre-periphery pattern (Chang, 2011).


Growth poles – A third framework to conceptualize South–South economic
relations stems from the recognition that, in the context of increasing global


The flying geese paradigm continues
to draw attention to the considerable
scope for South–South cooperation


in industrial development and to
the potentially enabling role played


by strategic forms of regional
integration.


Another very distinct conceptual
framework views South–South
economic relations through the


lense of the increasing differentiation
among developing countries, and
the replication within the South of


the centre-periphery patterns.


A third framework to conceptualize
South–South economic relations
stems from the recognition that,


in the context of increasing global
interdependence, large and dynamic
developing countries have emerged


as growth poles for the world
economy at large.




The Least Developed Countries Report 201148


interdependence, large and dynamic developing countries have emerged as
growth poles for the world economy at large. This statement holds true also with
respect to LDCs, since Southern growth poles provide them with vibrant export
markets, cheap imports of intermediate and consumer goods and sources of
capital, technology and other financial flows (as shown below). Based on this
line of reasoning, for instance, Garroway et al. 2011 have shown that the impact
of China’s growth on low- and middle-income countries rose significantly during
the 2000s, contrary to that of the economies of the Organization for Economic
Development and Cooperation (OECD).


The above pattern is a reminder of Perroux’s (1950) growth pole theory.
The notion of growth pole refers to the concentration of highly innovative and
technically advanced industries that stimulate economic development in linked
businesses and industries. They are primary centres of economic growth,
which often exert positive spillovers on the economies of geographical areas
outside their immediate regions. According to this theory, the concentrations
of economic forces will develop in areas that can provide the material and
infrastructural resources necessary for the establishment, sustenance and
growth of key industries. These resources contribute to the economic growth
of this cluster of industries, allowing them to exert an economic thrust in related
businesses through “fields of (economic) forces”. This concept recognizes
the forces of polarization, as growth forces result in the polarization between
a dominant centre or core, and a subdominant periphery, regardless of
geographic or political boundaries. Perroux conceived a growth pole to be a
focus of economic development in an abstract economic space. Subsequently,
this formulation was mainly applied in the area of regional economies, but in the
present context of globalization, it can easily apply to the transnational spaces
that characterize global production networks.


Implications – Each of the above analytical approaches captures, to a greater
or lesser extent, some aspects of the multifaceted relationships between the
LDCs and their Southern development partners. Yet, the specificities of each
South–South relation, the channels through which the latter takes place and
the array of potential partners are so rich that no single narrative could possibly
account for all aspects, whether market-driven or policy-driven. The picture that
emerges, therefore, is a complex one, and the prevailing interpretation – not to
mention the developmental impact of increasing South–South economic ties – is
an empirical question that cannot be settled a priori.


In this context, the net result of the growing economic relations between
LDCs and Southern partners will depend on the interplay of multiple intertwined
forces and will also be contingent on the policies adopted by both sides to
harness the benefits of closer integration and cooperation. For this reason, it
is essential for the LDCs to forge a clear strategic approach towards Southern
growth poles, examining the channels through which South–South economic
relations can affect their development prospects and devising appropriate policy
frameworks to maximize the related opportunities and minimize the associated
risks. Additionally, it is important for the LDCs to coordinate their engagement
strategies at the regional level, exploiting greater economies of scale and
harnessing the complementarities inherent in the presence of a wide spectrum
of potential partnerships. Against this background, the next section assesses
the emerging patterns of South–South integration and cooperation of the LDCs,
with the aim of shedding light on the associated opportunities and challenges.


Southern growth poles provide the
LDCs with vibrant export markets,


cheap imports of intermediate
and consumer goods and sources
of capital, technology and other


financial flows.


The net result of the growing
economic relations between


LDCs and Southern partners will
depend on the interplay of multiple


intertwined forces and be contingent
on the policies adopted by both
sides to harness the benefits of


closer integration and cooperation.




49CHAPTER 2. “The Rise of the South”: Development Implications for the LDCs


C. The multifaceted economic relations
between the LDCs and the South


The intensification of the LDCs’ economic relations with other Southern
partners is a multifaceted process encompassing simultaneously market-driven
aspects – such as trade, investment, migration, remittances and technology
transfer – as well as policy-driven ones, such as official flows or political
representation in global forums. While these dimensions are conceptually
different from one another, they are often intertwined. Moreover, one of the
defining characteristics of South–South cooperation has been to coordinate
measures at various levels, thereby promoting stronger interlinkages across
trade, investment and aid flows (UN-OSAA, 2010). As a result, drawing a
distinction among the channels through which the intensification of South–South
economic relations takes place is somewhat challenging. With this preliminary
caveat, the traditional distinction between trade, investment, remittances and
development assistance will be followed throughout the rest of this section,
mainly for the sake of conceptual clarity.


1. LDC TRADE AND THE RISE OF THE SOUTH


As argued above, the extraordinary growth of large developing economies
during the last decade has boosted world demand, while simultaneously
providing LDCs with a greater access to cheap imports of both intermediates
and final goods. Judging from past experience, the likely continuation of these
trends, global crisis notwithstanding, can be expected to exert wide-ranging
consequences. Owing to its high resource intensity, the continuing boom of
Southern growth poles is likely to affect particularly the markets for hard and soft
commodities, especially if economic growth is associated with rapid urbanization
and large-scale infrastructural investments. Net exporters of commodities may
thus benefit from the resulting terms of trade shift (UNCTAD, 2010a; Kaplinsky
and Farooki, 2010; AfDB et al., 2011).7 However, this prospect could be a
double-edged sword for many LDCs (see also chapter 1). As painfully revealed
by the 2008 food and fuel price hikes, while the LDC group as a whole may
stand to gain from the sustained demand for commodities, this is not true for
many net importers, who conversely may face balance of payment difficulties
and greater food insecurity.8


The continued expansion of Southern markets may also result in distinct
patterns of demand, which are focused on less sophisticated products than
those sought by Northern consumers.9 This provides new opportunities for
LDCs to exploit larger economies of scale and pursue export diversification,
harnessing for instance potential complementarities in the cotton-textile or
leather-shoe value chains or in the processing of natural resources (Otsubo,
1998; Broadman, 2008; AfDB et al., 2011). Recent analyses also suggest that
greater South–South integration may stimulate intra-industry trade; however
this process is far from automatic. While it occurred in Asia, where the massive
expansion of South–South trade was accompanied by some degree of insertion
into global value chains, the same cannot be said for sub-Saharan Africa (box 2).
In that region, as in most low-income countries, the momentum of South–South
trade led to only limited increases in intra-industry trade. As a consequence,
regardless of incipient signs of diversification, the potential gains from scale
economies and intra-industry trade have so far not been realized.


However, the insertion of large developing economies in global value chains
has already started to intensify worldwide competition in labour-intensive
manufactures, and this effect will likely persist in the future (Kaplinsky and


Owing to its high resource intensity,
the continuing boom of Southern


growth poles is likely to affect
particularly the markets for hard and


soft commodities.


While the LDC group as a whole may
stand to gain from the sustained


demand for commodities, this is not
true for many net importers.


The continued expansion of
Southern markets may also result


in distinct patterns of demand
providing new opportunities for


LDCs to exploit larger economies
of scale and pursue export


diversification.




The Least Developed Countries Report 201150


Box 2. Intra-industry trade


Broadly speaking, the economic theory has identified two sets of factors explaining why countries trade with one another:
the Ricardian rationale and the so-called Linder hypothesis. The former holds that differential endowments of production
factors open the scope for mutually beneficial international trade, in line with the principle of comparative advantage. The
latter, instead, gave origin to the so-called “new trade theory”, which emphasizes the importance of economies of scale and
posits that significant gains can be obtained from the exchange of similar but differentiated products (Krugman, 1979, 1991).


Although these two principles underlying international trade are not necessarily alternative to one another – for instance,
the Ricardian rationale fits more closely to trade in primary products than in manufactures – it is clear that their implications
are somewhat different. If intra-industry trade prevails, the adjustment to trade liberalization can be expected to be smoother
than under the Ricardian rationale, since the composition of output is likely to remain broadly similar, and production factors
are reallocated mostly between different product lines within the same sectors.


Even more importantly from the viewpoint of South–South integration, the Ricardian rationale implies that countries with
similar production structures should have fewer reasons to trade with each other. Conversely, the “new trade theory” suggests
that a greater integration – even among countries at similar stages of development – could entail significant gains from intra-
industry trade and the associated learning by doing.


A close look at worldwide data suggests that intra-industry trade – as measured by the Grubel Lloyd indexa – has consistently
broadened its prominence in the last 20 years, particularly in view of the expansion of global value chains and outward
processing trade. The steady increase in the share of intra-industry trade in total trade is, however, largely a high-income and
middle-income phenomenon (Brülhart, 2008). Low-income economies started from extremely low levels of intra-industry trade
and have been mainly bypassed by this upward trend, both for what pertains their intraregional trade and their trade with
other groups of countries (box chart 3). Given the intrinsically low scope for intra-industry trade in primary products, this poor
outcome is arguably explained by the predominance of primary commodities in their overall export composition (Brülhart, 2008).


At the regional level, the above statements hold true, in particular for sub-Saharan Africa, where intra-industry trade has
historically been very limited. In spite of the proliferation of regional trade agreements, ongoing African integration schemes
appear to have stimulated only modestly the structural convergence in the composition of imports and exports within the
region. This suggests that globalization has left largely untapped the scope to harness the benefits of intra-industry trade in
the LDCs. Doing so, however, will ultimately involve the implementation of integrated macroeconomic and sectoral policies
that are capable of fostering diversification and channelling investments to higher productivity activities, especially in the
manufacturing sector.


Box chart 3. Intra-industry trade across income groups: Grubel-Lloyd index, 1990 and 2006
(Standard International Trade Classification, 5-digit level)


0 0.1 0.2 0.3 0.4


LIC–LIC


LIC–LMC


LIC–UMC


LIC–HIC


LMC–LMC


LMC–UMC


LMC–HIC


UMC–UMC


UMC–HIC


HIC–HIC


1990 2006


Source: UNCTAD secretariat calculations based on Brulhart 2008.
Abbreviations: LIC–Low-income countries, LMC–Lower-middle-income countries, UMC–Upper-middle-income


countries, HIC–High-income countries.


a The Grubel-Lloyd index is the most common measure of intra-industry trade and expresses the latter as a share of total bilateral trade in a
particular industry i:


where X cd, i and M cd, i represent country c’s exports and imports respectively, to and from country d. Besides being highly intuitive, the
Grubel-Lloyd index is widely used, for it can be easily aggregated across industries, trade partners and countries.




51CHAPTER 2. “The Rise of the South”: Development Implications for the LDCs


Farooki, 2010; Davies, 2010). Hence, there are concerns that the ongoing
developments may reinforce the commodity dependence of the LDCs, locking-
in a global division of labour in which they supply mainly raw materials or low-
value-added, standardized products. Empirical research broadly confirms that
firms in developing countries have suffered some displacement from the market
after the entry of competitors from fast-growing developing countries, who can
often tap vast pools of surplus labour (Amann et al., 2009; UN-OSAA, 2010;
Giovannetti and Sanfilippo, 2009).10 Unsurprisingly, the size of these adverse
effects varies across the countries and sectors considered, being particularly
harmful for the infrastructural and manufacturing sectors, notably textiles.


In line with the above considerations, data on export revenues of LDCs by
destination suggest that the rapid acceleration in their exports performance
throughout the 2000s has been driven by a mounting prominence of Southern
destination markets (chart 17). By 2009, LDC exports to Southern partners were
worth $62 billion, and nearly $6.5 billion were exported to NIEs; this compares
with $59 billion, and little more than $500 million exported to developed and
transition economies, respectively. In other words, developing countries in 2009
absorbed more than half of the LDCs’ merchandise exports, up from 40 per
cent at the beginning of the decade. Correspondingly, the relative importance
of developed economies has declined, even if export revenues for the LDC
as a group have been growing at a rate close to 20 per cent per year also in
these destination markets. In spite of its concentration in a few large developing
economies, the dynamism of Southern markets contributed to nearly half of
the growth in LDCs’ total merchandise exports over the past decade (chart
18). Moreover, as argued in chapter 1, these destinations are set to play an
even more crucial role in the near future, given the significant downside risks
looming on the recovery in developed economies, as well as the need for a
global rebalancing.


Chart 17. LDCs’ merchandise exports to main country groups, 1995–2009
(Millions of dollars)


0


20,000


40,000


60,000


80,000


100,000


120,000


140,000


160,000


180,000


1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Developed economies Transition economies


NIEs: first tier Developing countries (excluding LDCs and first-tier NIEs)
LDCs


M
illi


on
s


of
d


ol
la


rs


Source: UNCTAD secretariat calculations based on UNCTADstat database, May 2011.


However, the insertion of large
developing economies in global


value chains has already started to
intensify worldwide competition in


labour-intensive manufactures.


The rapid acceleration in LDC
exports performance throughout
the 2000s has been driven by a


mounting prominence of Southern
destination markets.




The Least Developed Countries Report 201152


The evolution of LDC exports has been paralleled by a simultaneous widening
of their merchandise imports bill, which rose from $42 billion in 2000 to almost
$144 billion in 2009, after peaking in 2008 at more than $169 billion (chart 19).
The relative weight of rich economies has, however, been steadily eroding,
as Southern partners expanded their market share by roughly 10 percentage
points in less than 10 years, and nowadays account for over half of LDCs total
merchandise imports (chart 20).


The combined result of the shifts in merchandise exports and imports flows
can be gauged by the evolution of merchandise trade balance.11 During the last
25 years, the LDC group — and the overwhelming majority of individual LDCs
other than oil exporters — has recorded a structural deficit in merchandise
trade. The only exception to this trend has been the period 2006–2008, when
the commodity boom boosted the export revenues of fuel and other commodity
exporters to the extent that the LDC as a group posted a surplus vis-à-vis the
rest of the world.


Disaggregating the trade balance by country groups reveals, however, a
more complex pattern of interdependence between LDCs and other regions
(chart 21). The fast growth of LDC exports to developed economies, coupled
with the relative sluggishness of their imports originating from rich economies,
translated into a steadily growing surplus with that group of countries since the
early 2000s.12 Conversely, the deficit the LDCs were recording in their trade with
other Southern countries, excluding NIEs, more than doubled between 2000
and 2009, as their imports from other developing countries, excluding NIEs, rose
much faster than their exports to the same markets.13 A direct consequence of
this trend is that South–South trade represents a growing leakage of aggregate
demand, from the LDCs’ point of view. In other words, the surge of global
imbalances since the onset of the new millennium has been accompanied by a
boost in LDCs’ net exports to rich deficit economies and by a widening of their
net imports from other Southern countries.14


Chart 18. Contribution to LDCs’ merchandise export growth, by main country groups, 1996–2009
(Annual percentage change)


P
er


ce
nt


ag
e


ch
an


ge


Developed economies Transition economies


NIEs: first tier Developing countries (excluding LDCs and first-tier NIEs)
LDCs


-30


-20


-10


0


10


20


30


40


1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009


Source: UNCTAD secretariat calculations based on UNCTADstat database, May 2011.


The dynamism of Southern markets
contributed to nearly half of the


growth in LDCs’ total merchandise
exports over the past decade.


In 2009, approximately 60 per cent
of LDCs merchandise imports were
sourced from Southern countries.




53CHAPTER 2. “The Rise of the South”: Development Implications for the LDCs


Chart 19. LDCs’ merchandise imports from main country groups, 1995–2009
(Millions of dollars)


M
illi


on
s


of
d


ol
la


rs


0


20,000


40,000


60,000


80,000


100,000


120,000


140,000


160,000


180,000


1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009


Developed economies Transition economies


NIEs: first tier Developing countries (excluding LDCs and first-tier NIEs)
LDCs


Source: UNCTAD secretariat calculations based on UNCTADstat database, May 2011.


Chart 20. Contribution to LDCs’ merchandise imports growth, by main country groups, 1996–2009
(Annual percentage change)


P
er


ce
nt


ag
e


Developed economies Transition economies


NIEs: first tier Developing countries (excluding LDCs and first-tier NIEs
LDCs


-20


-10


0


10


20


30


40


1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009


Source: UNCTAD secretariat calculations based on UNCTADstat database, May 2011.




The Least Developed Countries Report 201154


2. KEY FEATURES OF THE LDCS’ TRADE WITH SOUTHERN PARTNERS


Given the growing importance of Southern markets for LDCs, three key
questions arise. First, is the reorientation towards Southern partners common
across individual LDCs, or is it driven by a few large economies? Second, is
LDC trade with Southern partners geographically concentrated? Third, what
is the composition of the LDCs’ trade with developing country partners? The
answer to these three questions is crucial to assess the relevance of South–
South economic integration to the LDCs’ economic trajectory, as well as its
expected developmental impact. The latter, indeed, does not only depend on
the overall values of exports and imports, but also — and perhaps even more
fundamentally — on the qualitative aspects of trade relations between the
LDCs and other developing countries. In this respect, the degree of geographic
concentration (and the related asymmetries) influences the developmental
impact of South–South trade by affecting the relative importance of each side
for its counterpart, the attainable level of economies of scale and their respective
negotiating strength. On the other hand, the structural composition of South–
South trade flows has a direct bearing on the development prospects of the
LDCs, since these emerging relations entail opportunities — and challenges —
in terms of export diversification and expansion of their productive capacities.


(a) Reorientation of trade towards the South


The importance of Southern markets has been steadily on the rise, both
as destinations for exports and as sources of imports, not only for the LDCs
as a group, but also for the overwhelming majority of individual countries. In
the median LDC, the share of merchandise exports absorbed by Southern
markets climbed from approximately 34 per cent in 2000 to 54 per cent by
2009. Conversely, in 2000, the median LDC sourced 45 per cent of its imports
in Southern markets, while the same percentage had attained 59 per cent in
2009.


Chart 21. LDCs’ merchandise trade balance with other groups of countries, 1995–2009
(Millions of dollars)


M
m


illi
on


s
of


d
ol


la
rs


0


-30,000


-20,000


-10,000


10,000


20,000


30,000


40,000


1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009


Developed economies Transition economies


NIEs: first tier Developing countries (excluding LDCs and first-tier NIEs)
World


Source: UNCTAD secretariat calculations based on UNCTADstat database, May 2011.


The importance of Southern markets
has been steadily on the rise, both
as destinations for exports and as


sources of imports.




55CHAPTER 2. “The Rise of the South”: Development Implications for the LDCs


However, there is a great variation in the relative weight of Southern
markets across individual LDCs, owing primarily to their diverse geographic
characteristics. As shown in Chart 22A, countries such as Somalia, Bhutan,
Guinea-Bissau, Mali or Sudan export the overwhelming majority of their
merchandise to other developing countries. At the other end of the spectrum,
countries such as Bangladesh, Samoa, Cambodia and Chad still sell only 10 per
cent of their exports to Southern markets. The picture is similar with respect to
imports, with the additional caveat that Southern markets do not appear to be
significant sources of imports for most island LDCs (chart 22B). Notwithstanding
some heterogeneity, the two panels confirm that trade integration with Southern
markets has progressed rapidly across the whole spectrum of LDCs.15


(b) Geographic concentration


Several authors have observed that South–South trade is characterized
by a strong geographic concentration, with most major players located in
Asia (UNCTAD, 2010b; UN-OSAA, 2010). This holds true, with necessary
modifications, of LDCs’ trade with Southern partners. Furthermore, such a
concentration has remained virtually intact throughout the 2000s, in spite of the
remarkable expansion of the LDCs’ participation in South–South trade. While
at the beginning of the new millennium, the 10 biggest export markets in the
South, excluding NIEs, accounted for 83 per cent of LDC merchandise exports
to other developing countries, in 2009 they represented 84 per cent.16 Along the
same line, in 2000, the 10 main Southern import partners — except for NIEs —
supplied 74 per cent of LDC imports from other developing countries, while the
corresponding value in 2009 was 77 per cent.17 18


As emphasized in UNCTAD 2010a, such a geographic concentration is
coupled with huge asymmetries between individual LDCs and their main
Southern partners, in what refers to their economic size, as well as the
dependency on each other’s market. The importance of the main Southern
partners as a destination of exports or source of imports for individual LDCs
dwarfs the corresponding weight of the latter for developing country partners.


Another facet of geographic concentration pertains to the fact that LDCs’
exports to Southern markets are largely driven by a few (mostly resource-
rich) LDCs (UN-OSAA, 2010; UNCTAD, 2010a). Four of them, namely Angola,
Sudan, Yemen and Myanmar, account for roughly two thirds of all LDC exports
to Southern partners and their importance has been consistently on the rise in
recent years (table 7). While the importance of these four countries with respect
to Southern partners echoes their weight in LDCs’ exports to the whole world,
it also confirms the prominence of primary commodities in LDCs’ trade with
Southern partners.


The above points are further corroborated by the analysis of the LDCs’ trade
with their main Southern trade partners. Referring to chart 23, the evolution
of the LDCs’ export performance to their main Southern markets underscores
three key factors:


(a) The spectacular boom of the LDC’s exports to their main Southern markets,
largely pulled by buoyant demand in the two Asian giants;


(b) The growing importance of fuels in most of the 10 Southern markets (with
the obvious exceptions of Saudi Arabia, the United Arab Emirates and
Nigeria), as evidenced by the rightward shift of most bubbles from panel A
to panel B;


Notwithstanding some
heterogeneity, trade integration with
Southern markets has progressed
rapidly across the whole spectrum


of LDCs.


LDCs trade with Southern partners
is characterized by a strong


geographic concentration, with most
major players located in Asia.


LDCs’ exports to Southern markets
are largely driven by a few (mostly


resource-rich) LDCs. Angola, Sudan,
Yemen and Myanmar, account for


roughly two thirds of all LDC exports
to Southern partners.




The Least Developed Countries Report 201156


Chart 22A. Share of LDCs’ merchandise exports destined to Southern partners, 2000 and 2009
(Percentage)


0 10 20 30 40 50 60 70 80 90 100
Somalia


Bhutan


Guinea-Bissau


Mali


Sudan


Djibouti


Benin


Yemen


Afghanistan


Nepal


Solomon Islands


Gambia


Lao Peoples Dem. Rep.


Togo


Rwanda


Dem. Rep. of Congo


Myanmar


Timor-Leste


Eritrea


Maldives


Senegal


Uganda


Burkina Faso


Tuvalu


Ethiopia
Angola


United Rep. of Tanzania


Comoros


Central African Republic


Malawi


Zambia


Kiribati


Mauritania


Mozambique


Vanuatu


Liberia


Sao Tome and Principe


Guinea


Niger


Equatorial Guinea


Burundi


Haiti


Madagascar


Bangladesh


Samoa


Cambodia


Chad


Sierra Leone


Total LDCs


2000 2009


Source: UNCTAD secretariat calculations based on UNCTADstat database, May 2011.




57CHAPTER 2. “The Rise of the South”: Development Implications for the LDCs


Chart 22B. Share of LDCs’ merchandise imports originating from Southern partners, 2000 and 2009
(Percentage)


2000 2009


0 10 20 30 40 50 60 70 80 90 100


Timor-Leste


Somalia
Bhutan


Lao People's Dem. Rep.
Zambia


Equatorial Guinea


Nepal
Malawi


Djibouti
Eritrea


Mozambique
Uganda


Ethiopia
Sudan


Rwanda


Comoros
Madagascar


United Rep. of Tanzania
Myanmar


Sierra Leone
Togo


Mali
Gambia


Maldives
Dem. Rep. of the Congo


Guinea-Bissau


Cambodia
Burundi


Yemen
Bangladesh


Burkina Faso
Niger


Benin
Lesotho


Senegal
Guinea


Angola


Kiribati
Mauritania


Afghanistan
Central African Republic


Sao Tome and Principe
Tuvalu


Chad
Vanuatu


Solomon Islands


Haiti
Samoa


Liberia


Total LDCs


Source: UNCTAD secretariat calculations based on UNCTADstat database, May 2011.




The Least Developed Countries Report 201158


Table 7. Top 10 LDC exporters to Southern partners, various years


Millions of dollars Average annual growth rate (%)
Share of total LDCs


merchandise exports (%)
2000 2005 2008 2009 2000–2009 2000 2005 2008 2009


Angola 1,953.7 9,373.7 34,510.2 21,385.9 51.6 18.0 28.9 43.8 34.7
Sudan 1,107.9 3,836.7 8,599.2 7,869.6 39.6 10.2 11.8 10.9 12.8
Yemen 2,445.5 4,086.9 6,214.8 5,215.8 13.5 22.5 12.6 7.9 8.5
Myanmar 626.7 2,776.0 5,063.2 4,903.7 26.5 5.8 8.6 6.4 8.0
Equatorial Guinea 16.7 487.1 2,426.8 2,170.6 75.8 0.2 1.5 3.1 3.5
Bangladesh 284.8 800.3 2,064.3 1,974.0 26.3 2.6 2.5 2.6 3.2
Dem. Rep. of the Congo 324.7 1,949.5 2,723.0 1,877.2 30.2 3.0 6.0 3.5 3.0
Zambia 371.4 895.1 1,870.4 1,766.8 25.2 3.4 2.8 2.4 2.9
Mali 373.2 667.7 1,789.9 1,667.5 22.7 3.4 2.1 2.3 2.7
United Republic of Tanzania 217.6 905.1 1,683.6 1,538.6 26.0 2.0 2.8 2.1 2.5


Cumulated share of
10 main exporters


LDC total 10,853.6 32,423.1 78,768.7 61,556.2 27.5 71.1 79.5 85.0 81.8


Source: UNCTAD secretariat calculations based on UNCTADstat database, May 2011.
Note: Figures in this table exclude first tier NIEs; LDCs listed were the top 10 exporters to the South in 2009.


(c) The shrinking weight of manufactures in 9 of the 10 Southern markets
— Nigeria being the exception — as shown by the downward shift of the
corresponding bubbles.


For what attains the import side, instead, three symmetric considerations
emerge from chart 24:


(a) The impressive increase of the LDCs’ imports from their 10 main developing
country partners;


(b) The limited role played by primary commodities, with the exception of LDC
imports originating from Brazil and Malaysia;


(c) The overwhelming predominance of manufactures imports, particularly from
China, India, South Africa and Thailand.


(c) Composition


While the expansion of South–South trade clearly boosted LDC export
revenues and translated into a greater geographic diversification, the benefits
in terms of economic diversification have been more elusive. This bears
crucial implications for the development of the LDCs’ productive capacities,
as structural transformation and industrial upgrading are necessary to create
productive employment outside the agricultural and informal sector. The LDCs’
commodity dependence remained extremely high throughout the past decade,
with primary products accounting consistently for upwards of 70 per cent of
total merchandise exports. A breakdown of the LDCs’ export growth by product
category, as well as by destination, shows that the surge of fuels exports —
and to a lesser extent, mineral exports — played an important role in nearly all
destination markets (chart 25).


Notably, though, the prominence of the exports of hard commodities is
especially evident towards Southern markets other than the LDCs, where fuels
alone accounted for a 20 per cent annual increase in LDC export revenues.
Conversely, manufactures were the crucial drivers in the expansion of intra-
LDC and North–South exports, where their contribution to the increase of LDC
exports was respectively of 7 per cent and 5 per cent. Food, in turn, contributed
significantly to the expansion of merchandise exports destined to other LDCs or
to transition economies, but played a subdued role in other destination markets.


While the expansion of South–South
trade clearly boosted LDC export


revenues and translated into a
greater geographic diversification,
the benefits in terms of economic


diversification have been more
elusive.




59CHAPTER 2. “The Rise of the South”: Development Implications for the LDCs


Chart 23. Merchandise exports of LDCs to 10 main Southern partners, 2000 and 2009


-20 20 40 60 80 100


A. Merchandise exports in 2000


B. Merchandise exports in 2009


Brazil


Malaysia


Saudi
Arabia


Thailand Chile


Nigeria


South Africa


United Arab Emirates


-30


-10


10


30


50


70


0-20 20 40 60 80 100


Share of fuels in LDCs' total merchandise exports to the destination market


Share of fuels in LDCs' total merchandise exports to the destination market


S
ha


re
o


f m
an


uf
ac


tu
re


s
in


L
D


C
s'


to
ta


l m
er


ch
an


di
se


ex
po


rt
s


to
th


e
de


st
in


at
io


n
m


ar
ke


t
S


ha
re


o
f m


an
uf


ac
tu


re
s


in
L


D
C


s'
to


ta
l m


er
ch


an
di


se
ex


po
rt


s
to


th
e


de
st


in
at


io
n


m
ar


ke
t


China


-30


-10


10


30


50


70


0


Malaysia


China


Saudi
Arabia Chile


Nigeria


United Arab
Emirates


India


India
South
Africa


Thailand


Brazil


Source: UNCTAD secretariat calculations based on UNCTADstat database, May 2011.
Note: The size of the bubble is proportional to the LDCs’ merchandise exports to the destination market.




The Least Developed Countries Report 201160


Chart 24. Merchandise imports of LDCs from 10 main Southern partners, 2000 and 2009


A. Merchandise imports in 2000


A. Merchandise imports in 2009


-20 20 40 60 80 100


-20 20 40 60 80 100


Brazil


China


Côte d'Ivoire


Ind
ia Indonesia


Malaysia


Saudi Arabia


0


20


40


60


80


100


Share of primary commodities excl. fuels in total merchandise exports to LDCs


Share of primary commodities excl. fuels in total merchandise imports by LDCs


S
ha


re
o


f m
an


uf
ac


tu
re


d
go


od
s


in
to


ta
l


m
er


ch
an


di
se


im
po


rt
s


by
L


D
C


s
S


ha
re


o
f m


an
uf


ac
tu


re
d


go
od


s
in


to
ta


l
m


er
ch


an
di


se
im


po
rt


s
by


L
D


C
s


South
Africa


Brazil


China


Côte d'Ivoire


India


Indonesia


0


20


40


60


80


100


120


140


Malaysia


South
Africa


Saudi
Arabia


U.
A.


E.
Thailand


Th
aila


nd


U.A.E.


Source: UNCTAD secretariat calculations based on UNCTADstat database, May 2011.
Note: The size of the bubble is proportional to the LDCs’ merchandise imports originating in the country.




61CHAPTER 2. “The Rise of the South”: Development Implications for the LDCs


In contrast, LDC imports have been dominated by manufactures, food and
fuels, which accounted respectively for 65 per cent, 19 per cent and 12 per cent
of the total. In spite of the relative price changes and high commodity prices,
manufactures continued to be the key drivers of the LDCs’ import growth from
all origins, though their contribution to the growth of imports is indeed the
largest in the case of Southern partners (chart 26). In this two-way process, the
boom of Southern countries’ manufactured exports has, in turn, sustained their
demand for imported inputs, including not only hard but also soft commodities,
cotton being the best case in point.


The centrality of primary commodities in the LDCs’ export structure towards
Southern partners, except for NIEs, is further underscored by chart 27, which
shows the share of merchandise exports by product type to these destinations.
19 The growing importance of Southern markets for the LDCs has been
accompanied by two clear tendencies revealed by the chart.


(a) First, the composition of the LDCs’ merchandise exports to the South has
been skewed towards agricultural raw materials and fuels. This pattern of
specialization, however, has become even more pronounced in recent years,
to the extent that in 2009, 68 per cent of all LDC exports of agricultural raw
materials and 55 per cent of all exported fuels were sold to other Southern
partners, while the latter only accounted for 44 per cent of the LDCs’ total
export revenues;


Chart 25. Contribution to LDCs export growth in each country group, by product, 2000–2009
(Annual average percentage change)


0


5


10


15


20


25


30


Developed
economies


Transition
economies


NIEs:
first tier


Developing countries
(excluding LDCs and


first-tier NIEs)


LDCs


All food items Agricultural raw materials Ores, metals and precious stones
Fuels


P
er


ce
nt


ag
e


Manufactured goods Other goods n.e.s.


Source: UNCTAD secretariat calculations based on UNCTADstat database, May 2011.


The composition of the LDCs’
merchandise exports to the


South has been skewed towards
agricultural raw materials and fuels.




The Least Developed Countries Report 201162


(b) Secondly, manufactures are significantly and consistently underrepresented
in the structure of LDC exports to other developing countries, with very little
modification from one year to the other. While Southern partners by now
account for nearly half of the LDCs’ total merchandise exports, the share of
manufactures originating in the LDCs and sold to the South has consistently
hovered around 15 per cent of the total.


These findings point to the LDCs’ evident commodity dependence and
to related challenges in leveraging South–South trade to promote export
diversification. They should, however, be interpreted in light of the previous
discussion, and notably of the geographic concentration of the LDCs’ trade with
the South. At the level of individual countries, the share of primary commodities
in the LDCs’ exports to Southern destinations does not appear to be correlated
with the growth rates of such flows. In other words, while it is true that the quest
of natural resources is one of the main drivers of the LDCs’ exports boom to the
South — and indeed large resource-rich LDCs account for the slightly growing
share of these flows — such expansion has touched all LDCs regardless of
their export specialization. Secondly, the prominence of primary commodities in
LDCs’ export structure obscures the fact that manufacturing exports to Southern
markets has grown at about 18 per cent per year over the last decade. A similar
performance, albeit lower than that of total merchandise exports, suggests that
opportunities for structural transformation indeed exist.


Chart 26. Contribution to import growth of LDCs in each country-group by product, 2000–2009
(Annual average percentage change)


Developed
economies


Transition
economies


LDCs


P
er


ce
nt


ag
e


All food items Agricultural raw materials Ores, metals and precious stones
Fuels Manufactured goods Other goods n.e.s.


0


5


10


15


20


25


NIEs:
first tier


Developing countries
(excluding LDCs and


first-tier NIEs)


Source: UNCTAD secretariat calculations based on UNCTADstat database, May 2011.


The prominence of primary
commodities in LDCs’ export


structure obscures the fact that
manufacturing exports to Southern
markets has grown at about 18 per
cent per year over the last decade.




63CHAPTER 2. “The Rise of the South”: Development Implications for the LDCs


Overall, it is clear that South–South trade is not a panacea for the LDCs’
commodity dependence. Although hard commodities exporters appear to have
benefitted disproportionately, there are no doubts that the remarkable growth
of large Southern countries has boosted exports revenues across the board
— also providing new opportunities for structural transformation and economic
diversification. Whether the LDCs will be able to harness emerging opportunities
or replicate the old pattern of North–South relationships is likely to depend — at
least to some extent — on their capacity to devise an appropriate engagement
strategy and set up a policy framework to promote economic diversification.


3. SOUTHERN FOREIGN DIRECT INVESTMENT IN LDCS


The rise of Southern growth poles has not only boosted global trade, but
it has also translated into sharp increases of cross-border investments, partly
directed to other developing countries. Between 2000 and 2009, South–South
FDI worldwide more than tripled, attaining $140 billion in the latter year, when
they accounted for 14 per cent of world total (chart 28). Southern investors have
also proved more resilient than Northern ones in the wake of the financial crisis,
partly owing to the lower dependency on debt financing (Bhinda and Martin,
2009; UNCTAD, 2011a). Their significance is hence likely to remains on the rise
even in the near future.


The limitations of available FDI statistics hamper a detailed analysis of
flows and stocks by origin and destination, and can potentially lead to biased
estimations of South–South FDI flows. A further difficulty stems from the close
ties that characterize Southern partners’ engagements in FDI and in development
cooperation. As a result of the complex interaction between motives related
to investment and those related to solidarity, in practice it is often difficult to
disentangle FDI flows in the stricter sense from financial flows that are intrinsically
related to South–South development cooperation (UN-OSAA, 2010).


Chart 27. Share of LDCs’ merchandise exports destined to Southern markets, by product type, various years
(Percentage)


0


20


40


60


80
Total, all products


All food items


Agricultural
raw materials


Ores, metals and precious stones


Fuels


Manufactured
goods


1995 2000 2005 2009


Source: UNCTAD secretariat calculations based on UNCTADstat database, May 2011.


Between 2000 and 2009, South–
South FDI worldwide more than


tripled, attaining $140 billion in the
latter year, when they accounted for


14 per cent of world total.




The Least Developed Countries Report 201164


Nonetheless, it can be safely argued that the evolution of Southern FDI in
the LDC context parallels global trends. Between 2003 and 2010, when total
FDI inflows to LDCs were growing on an average of nearly 20 per cent per year,
the share of FDI projects accounted for by Southern investors climbed from
25 per cent to upwards of 40 per cent (chart 29). A similar expansion has not
redressed the LDCs’ marginalization — still less than 3 per cent of the world’s
total FDI flows is directed to the LDCs; yet, it clearly boosted access to capital
and foreign exchange. Moreover, while Northern investors still play a crucial role
in most LDCs, Southern players are becoming increasingly relevant. China and
India already have sizeable investments in the LDCs, and their FDI is featured
among the fastest growing in a number of Asian and African countries, while
investors from other developing economies such as Brazil, South Africa and
Turkey are following suit.


FDI from developed and developing countries alike have targeted LDCs
for natural-resource-seeking motives and are therefore largely concentrated
in resource-rich economies (UNCTAD, 2010a, 2011a).20 Leaving aside any
related environmental concerns,21 this tendency has exacerbated the LDCs’
specialization in primary commodities, resulting often in enclave-investments
with limited spillovers to the rest of the economy and narrow effects on
employment creation. Moreover, in view of the large informational asymmetries
that characterize extractive industries, public revenue collection has often proved
to be a challenging task for the weak capacities of public authorities (UNCTAD,
2009a, 2010a).


While the quest for natural resources remains one of the main drivers of
FDI inflows into the LDCs, chart 30, as well as various other studies, point to
some incipient diversification into other dynamic activities (Bhinda and Martin,
2009; UNCTAD, 2010a, 2011a). This is notably the case of banking or financial
services and telecommunications, sectors in which Southern companies are
expanding quickly, thanks to their better knowledge of regional markets in


Chart 28. South–South FDI flows, worldwide, 1990–2009


0


20


40


60


80


100


120


140


160


180


200


1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 0


2


4


6


8


10


12


14


16


B
illi


on
s


of
d


ol
la


rs


P
er


ce
nt


ag
e


Billions of dollars (left scale) Share of world total (right scale)


Source: UNCTAD secretariat calculations based on UNCTAD 2011a.


Between 2003 and 2010, the share
of FDI projects in LDCs accounted
for by Southern investors climbed


from 25 per cent to upwards of
40 per cent.


While the quest for natural resources
remains one of the main drivers of


FDI inflows into the LDCs, there are
incipient signs of diversification into


other sectors.




65CHAPTER 2. “The Rise of the South”: Development Implications for the LDCs


Chart 29. Regional distribution of FDI projectsa in LDCs, by source, 2003 and 2010


Source: UNCTAD 2011b.
a Include both mergers and acquisitions as well as greenfield FDI projects.


Chart 30. Value of greenfield FDI projects in LDCs, by sector, 2003–2010
(Millions of dollars)


0


10,000


20,000


30,000


40,000


50,000


60,000


70,000


2003 2004 2005 2006 2007 2008 2009 2010


M
illi


on
s


of
d


ol
la


rs


Primary Manufacturing Services


Source: UNCTAD secretariat calculations based on UNCTAD 2011b.




The Least Developed Countries Report 201166


developing countries. To cite just few examples, South African and Nigerian
banks, such as Standard Bank or United Bank for Africa, have rapidly acquired
a prominent role in the sub-Saharan African region, through both greenfield
projects, and mergers and acquisitions. Similarly, Southern companies such as
Telkom, Vodacom, ZTE or Dimension Data holding are successfully penetrating
the information and communication technology (ICT) compartment and telecom
business in a growing number of LDCs (see Aykut and Goldstein, 2006;
UNCTAD, 2011a). Additionally, an increasing number of investment projects in
LDCs — including those from Southern firms — are targeting the construction,
tourism and manufacturing sectors (Kopulande and Mulenga, 2011).


A useful case to illustrate this evolving situation is the impressive boom in
outward FDI from China, one of the few developing economies providing a
complete breakdown of its FDI by host country. In 2009, 40 LDCs received
Chinese FDI. These investments have skyrocketed over the last few years,
with total flows surpassing $1.5 billion in 2009, over seven times their value in
2003 (see chart 31).22 Interestingly, this boom has been accompanied by the
deepening of China’s presence in Asian LDCs, as confirmed also by table 8.
Along with resource-rich economies — such as Zambia, Myanmar, Sudan, the
Democratic Republic of Congo and Niger — Chinese investors have broadened
their activities in countries such as Cambodia, Lao People’s Democratic Republic
and Madagascar. This evolving pattern of localization underscores that Chinese
companies are still heavily engaged in the race for primary commodities, but
are rapidly expanding their interests to other businesses. As regards Zambia,
for example, Chinese investors are currently extending their operations beyond
extractive industries, to encompass agriculture, construction, manufacturing
and transport activities (box 3).


China and India are clearly more visible than other players: Their investors
operate in a vast range of LDCs, and while extractive industries still constitute
the backbone of their engagement, they are gradually extending their operations
to other sectors. Further, Chinese investments abroad tend to be vertically
integrated and are mostly carried out by large State-owned enterprises, often
with the financial support of the China EximBank and China Development
Bank (Brautigam, 2008; Broadman, 2008). Indian investors, instead, are mainly
private enterprises and less vertically integrated, and often rely on the network


Chinese FDI flows to LDCs have
surpassing $1.5 billion in 2009, over


seven times their value in 2003.


Chart 31. China’s outward FDI in LDCs, 2003–2009
(Millions of dollars)


M
illi


on
s


of
d


ol
la


rs


M
illi


on
s


of
d


ol
la


rs


A. FDI flows to LDCs


0


200


400


600


800


1'000


1'200


1'400


1'600


1'800


2003 2004 2005 2006 2007 2008 2009
African LDCs (database covering 27 countries)


Asian LDCs (database covering 7 countries)
Island LDCs (database covering 2 countries)


2003 2004 2005 2006 2007 2008 2009
African LDCs (database covering 27 countries)


Asian LDCs (database covering 7 countries)
Island LDCs (database covering 5 countries)


B. FDI stocks in LDCs


0


1'000


2'000


3'000


4'000


5'000


6'000


7'000


Source: UNCTAD 2011b.




67CHAPTER 2. “The Rise of the South”: Development Implications for the LDCs


Box 3 Chinese investment in Zambia: A case study


Throughout the 1990s, when its economy was struggling with erratic growth and high inflation, Zambia received limited
FDI inflows, even in comparison with neighbouring countries. The pickup only began in the early 2000s, as the Zambian
economy reaped the benefits of the commodity boom, but since then, FDI inflows have attained unprecedented levels. The
country has attracted investments originating not only from traditional sources, such as South Africa and the United Kingdom,
but also increasingly from new investors. In particular, Chinese FDI flows have been the fastest growing in the last few years,
increasing from $5.5 million in 2003 to $112 million in 2009. Further, some estimates suggest that Chinese FDI stocks had
surpassed $1 billion at the end of 2010.


Chinese investments in Zambia are still dominated by mining and processing minerals, but are gradually expanding to
other activities, ranging from agriculture, tourism and manufacturing to energy, communication, transport and construction.
The bulk of these operations are carried out by large State-owned enterprises; however, an increasing number of small- and
medium-sized private firms are entering the agricultural business, as well as the wholesale and retail trade. Zambia is host
to two of the eight special economic zones China has been developing in Africa since the 2006 FOCAC summit – the other
zones are located in Algeria, Egypt, Ethiopia, Mauritius, and Nigeria (two zones). Of the two zones located in Zambia, the
Chambishi one is specialized in value addition to refine copper and cobalt, while the Lusaka East Zone will engage in the
manufacturing of textiles, clothes, electronic goods, toys and plastics (see Davies, 2010).


With the exception of some copper mining and cotton processing firms, most Chinese investments (including the two
special economic zones) are still in the inception stage. There are signs that newly established firms may soon begin to
increase the range of goods produced domestically and thus lower the dependence on imported products, as has been the
case with steel bars. For the time being, however, there have been little effects in terms of export diversification, as investment
projects are still very recent.


The entrance of Chinese firms in the Zambian market appears to have exerted wide-ranging effects on the domestic
production structure. On the positive side, it contributed significantly to gross fixed capital formation, opened up additional
opportunities for suppliers through backward linkages and broadened consumer access to cheap manufacturing products.
Rough estimates also suggest that Chinese FDI has created about 30,000 jobs, with potentially greater effects in the future
once more firms begin their operation. Simultaneously, however, new entrants appear to have put some pressure on domestic
firms through price competitiveness and better customer relations, especially in wholesale and retail trade, in the construction
sector and among small and medium-sized poultry farmers.


The growing engagement of Chinese companies has resulted in some transfer of skills, especially in the construction,
tourism and agricultural sectors, with positive impacts on productivity and work attitude. In this respect, the key challenge for
Zambia will be to leverage the potential for technology transfer by fostering strong and systematic linkages between foreign
enterprises and Zambian universities, research institutes and firms. This applies particularly to the enterprises established in
the special economic zones, which are intended to catalyze efforts towards economic diversification. In that respect, one risk
to be avoided is that the minimum capital requirement to establish an enterprise in the special economic zones ($500,000)
may reduce the number of potential domestic firms benefiting from the spillovers of Chinese investors.


Regardless of the origin of FDI, generous tax incentives in sectors such as agriculture, ICT, tourism and firms based in
the special economic zones may entail considerable opportunity costs in terms of forgone public revenues. As for the mining
sector, which had traditionally enjoyed copious tax concessions, its fiscal regime was tightened in 2008, raising unprecedented
revenues of $415 million in just one fiscal year. In the wake of the global financial crisis, though, foreign mining companies
obtained a much more liberal revision of their regime. Thus, benefits from the viewpoint of public revenue mobilization are
expectedly limited to investments (Chinese or of other origin) in sectors that currently are not covered by tax concessions –
such as finance, transport, construction – or to small and medium-scale FDI that do not qualify for the exemptions granted
in the special economic zones.


Source: Kopulande and Mulenga (2011).


Table 8. Top 10 LDC destinations for China's outward FDI, 2007–2009
(Millions of dollars, period average)


Annual inflows FDI stock
Zambia 148.4 641.6
Myanmar 233.8 563.8
Sudan 7.2 555.7
Cambodia 161.6 397.3
Lao People's Democratic Republic 148.2 381.0
Democratic Republic of the Congo 102.8 212.0
United Republic of Tanzania 12.0 194.3
Ethiopia 32.4 172.9
Niger 46.9 151.7
Madagascar 39.0 139.6


Share of total FDI to LDC (%) 83.5 77.4


Source: UNCTAD secretariat calculations, based on China MOFCOM 2010.




The Least Developed Countries Report 201168


externalities offered by the widespread presence of Indian diasporas in many
LDCs (ibidem).


Beyond the Asian giants, the mounting presence of Southern investors in the
LDCs involves a wide array of other partners, notably Brazil, the Gulf Cooperation
Council countries, Malaysia, South Africa and Turkey. These Southern actors
differ widely from one another in terms of localization, strategic rationales,
comparative advantages and investment modalities. For instance, Brazilian
companies are strongly present in Lusophone African countries and focus
not only on resource extraction, but also on agriculture, telecommunications,
infrastructures and biofuels production (Lewis, 2011). South African companies,
conversely, operate mainly in the Southern African Development Community
(SADC), and engage predominantly in extractive industries, banking and finance,
ICT and light manufacturing. In view of these differences, Southern investors
provide LDCs with a broad range of potential partnerships, in many ways
complementary to the traditional relations established with Northern investors.


Moreover, numerous authors have emphasized how South–South FDI could
have a particularly promising developmental impact, for several reasons. First,
as evidenced in the wake of the global economic crisis (see chapter 1), the
geographic diversification of FDI sources could reduce their overall volatility, as
Southern flows are not necessarily correlated with Northern ones (UNCTAD,
2010a). Though the majority of FDI inflows to LDCs still originate in developed
countries, Southern FDI is becoming critical in some specific countries and
contexts. There are indications that Southern investors are relatively more willing
to assume the risks of post-conflict and other politically difficult situations: For
example, as of 2006, Chinese companies (including some privately owned
enterprises), were the only foreign investors in Sierra Leone in the aftermath
of the civil war; similarly, Indian and Chinese investors accounted for over
half of the FDI in Nepal (Aykut and Goldstein, 2006). Secondly, Southern FDI
tends to be well placed to facilitate technological transfers to LDCs, owing to
analogous climatic and social conditions, greater cultural proximity and more
comparable level of development between the two parties (UNCTAD, 2007;
Aykut and Goldstein, 2006; UN-OHRLLS, 2011).23 Thirdly, through their greater
knowledge of developing-country markets and business practices, Southern
actors are especially well positioned to engage in “frugal innovations”, adapting
products to the customers “at the bottom of the pyramid” (Prahalad and Hart,
2002). Tata’s $24 water filter and their $2,200 car, the Nano, to cite just a few
examples, are products explicitly designed to satisfy the needs of millions of
potential consumers (The Economist, 2010).


4. MIGRATION AND REMITTANCES


Migration-related issues have recently gained greater attention in the
international discourse, partly because of their rising importance in the political
arena — especially in rich countries — and partly owing to the recognition that
leveraging the developmental impact of migration is fundamental. Nevertheless,
implications of the rise of the South with regard to migration and remittances
have been often overlooked. A thorough understanding of these issues is
certainly constrained by the imperfect quality and coverage of available data,
particularly in the context of LDCs. In any case, the relevance of migration in the
context of intensifying South–South economic relations is indisputable.


In 2008, almost 22 million people left the LDCs to work abroad, roughly 2.9
per cent of the LDC population in the same year (World Bank, 2008). Numerous
recent studies have also emphasized the developmental impact of remittances
for the LDCs, be it for their stabilizing impact on the balance of payments, for
their potential to finance productive investment, or for their positive effects on


Southern FDI tends to be well
placed to facilitate technological


transfers to LDCs, owing to
analogous climatic and social


conditions, greater cultural proximity,
and more comparable level of


development.


Southern actors are especially well
positioned to engage in “frugal


innovations”, adapting products to
the customers “at the bottom of


the pyramid”.


Beyond the Asian giants, the
mounting presence of Southern
investors in the LDCs involves a


wide array of other partners, notably
Brazil, the Gulf Cooperation Council


countries, Malaysia, South Africa
and Turkey.




69CHAPTER 2. “The Rise of the South”: Development Implications for the LDCs


poverty reduction (see UNCTAD, 2010a; Melde and Ionesco, 2010). As a matter
of fact, remittances inflows to LDCs have grown by almost 17 per cent per
year over the last decade, reaching a record level of nearly $26 billion in 2010,
which is only slightly lower than FDI inflows. The relevance of remittances is
hence unquestionable, even if their significance varies widely across LDCs, with
countries such as Lesotho, Samoa, Nepal, Haiti, Bangladesh and Senegal being
very dependent, and others such as Laos, the United Republic of Tanzania or
Zambia, for which they play a negligible role compared with GDP.


The links between migration and South–South economic integration are
demonstrated by the ample evidence that the large majority of migrants tend
to move within the same region, even if workers with higher education are more
inclined to migrate to developed economies, triggering the well-known brain
drain (UNCTAD, 2007; United Nations Development Programme, 2009).24 It is
estimated that only one out of four people originating from the LDCs migrated to
a developed country, one out of five went to other LDCs, and approximately half
of all migrants went to other developing countries (Melde and Ionesco, 2010).
Therefore, it is clear that the predictable continuation of the rapid economic
growth in many Southern countries is likely to have wide-ranging effects on
migration. Southern growth poles will probably become more attractive for
potential migrants, and the expansion of their economies may simultaneously
allow migrants already working there to remit greater financial resources. The
significance of migration in the context of South–South economic integration
can hence be expected to rise.


According to World Bank estimates of bilateral remittances, in 2010, two
thirds of the nearly $26 billion of remittances inflows to the LDCs originated in
Southern countries, $15.3 billion in other developing countries and $1.3 billion in
other LDCs (chart 32). 25 Conversely, remittances sent to LDCs from developed
and transition economies accounted for a mere 35 per cent of the total, despite
the fact that migrants working in these countries typically remit greater sums of
money.


Chart 32. Remittances inflows to LDCs by region of origin, 2010
(Millions of dollars)




0


2,000


4,000


6,000


8,000


10,000


12,000


14,000


16,000


18,000


Other LDCs


M
illi


on
s


of
d


ol
la


rs


Other developing countries
(excluding LDCs)


Developed and transition
economies


Source: UNCTAD secretariat calculations based on World Bank Bilateral Migration and Remittance, 2010 datasets.


It is estimated that only one out of
four people originating from the
LDCs migrated to a developed


country, one out of five went to other
LDCs, and approximately half of all
migrants went to other developing


countries.


In 2010 two thirds of the nearly
$26 billion of remittances inflows


to the LDCs originated in Southern
countries.




The Least Developed Countries Report 201170


The aggregation for the whole LDC group hides considerable variability
across individual countries (chart 33). Large recipients — including the three
largest ones, namely Bangladesh, Nepal and Sudan — tend to depend more
heavily on remittances sent from other Southern countries, particularly India,
Saudi Arabia and other countries of the Gulf countries.26 Similarly, various
African LDCs receive a large proportion of their inflows from other countries in
the region, notably from South Africa and Cote d’Ivoire. At the other end of the
spectrum, countries such as Cambodia, Ethiopia, Kiribati, Samoa and Vanuatu,
whose diaspora communities are largely concentrated in advanced economies,
depend more heavily on the latter for their remittances inflows. Even taking into
account this heterogeneity, the significance of South–South remittances for the
LDCs development prospects should not be overlooked.


5. SOUTHERN OFFICIAL FLOWS TO LDCS


Along with more market-driven economic relationships, South–South
development cooperation represents a major aspect of the LDCs’ deepening
interactions with other developing countries. Initiatives driven by the principle of
solidarity among developing countries are nothing new: Indeed their origin dates
back to the Bandung Conference in 1955, and became more institutionalized in
1964, with the establishment of the Group of 77 in the context of the first United
Nations Conference on Trade and Development and the subsequent calls for a
New International Economic Order (Kragelund, 2010). The real change during the
past decade has rather been the sharp resurgence of South–South cooperation
in the international arena, after 20 years in which large developing countries
were chiefly concerned with domestic development issues. This evolution, as
recognized also in the Istanbul Programme of Action, can improve the LDCs’
prospects for access to finance, providing their governments with a broad array
of potential partnerships and a wider range of cooperation modalities.


Before starting the discussion of South–South development cooperation
in the context of the LDCs, an observation on the definition of official flows is
required. Southern countries’ designation of development assistance is different
from that of the OECD Development Assistance Committee (DAC), which in
turn informs the practice of traditional donors. Some degree of overlap indeed
exists, especially with respect to the overall long-term objectives, but figures are
not directly comparable. Some Southern countries openly utilize development
cooperation as a catalyst for other commercial and financial interests (Brautigam,
2008; UNCTAD, 2010a). Because of this, however, they typically regard
development assistance “as an integral part of other financial flows, thereby
blurring the overall picture” (Kragelund, 2010: 5). As shown in United Nations
(2008), this does not imply that the degree of concessionality associated with
these flows is lower than that applied by traditional donors, but simply that the
definitions of what is considered development assistance vary. For this reason,
hereafter the term “official flow” is used to designate the resources provided by
Southern partners for development purposes, with the understanding that not
all of them necessarily meet the conditions for eligibility as official development
assistance (ODA).


A related measurement problem stems from the lack of systematic and
reliable data on the size, allocation and sectoral distribution of South–South
official flows. Most Southern development partners — including the largest ones
— do not disclose in a systematic way all the assistance provided. They often
use in-kind contribution — whose cost evaluation is subject to a number of
difficulties — and typically perform their activities through distinct entities (United
Nations, 2008; Brautigam, 2008; Kragelund, 2010; AfDB et al., 2011). Moreover,
there is a widespread use of pledges rather than actual disbursements in some
analyasis of the revived interest in South–South development cooperation. As a


Along with more market-driven
economic relationships, South–
South development cooperation
represents a major aspect of the


LDCs’ deepening interactions with
other developing countries.


Some Southern countries openly
utilize development cooperation as
a catalyst for other commercial and


financial interests.


Estimates of the total official flows of
Southern partners vary considerably
from one study to the other, and it


is extremely difficult to quantify how
much of their support is channelled


to LDCs.




71CHAPTER 2. “The Rise of the South”: Development Implications for the LDCs


Chart 33. Share of remittance inflows, by region of origin, 2010


0 20 40 60 80 100
Lesotho


Burkina Faso


Niger


Benin


Yemen


Sudan


Mozambique


Bangladesh


Nepal


Mali


Guinea


Burundi


Rwanda


Uganda


Malawi


Togo


Myanmar


Mauritania


Zambia


Maldives


United Rep. of Tanzania


Sao Tome and Principe


Senegal


Liberia


Sierra Leone


Guinea-Bissau


Solomon Islands


Djibouti


Haiti


Kiribati


Vanuatu


Ethiopia


Samoa


Lao PDR


Comoros


Gambia


Cambodia


Madagascar


Other LDCs Other developing countries Developed and transition economies


Source: UNCTAD secretariat calculations, based on World Bank Bilateral Migration and Remittances, 2010.


result, estimates of the total official flows of Southern partners vary considerably
from one study to the other, and it is extremely difficult to quantify how much of
their support is channelled to LDCs.27


Notwithstanding the opacity of the corresponding statistics, the growing
significance of South–South development cooperation is unanimously recognized
by both academia and policymakers (United Nations, 2008; Brautigam, 2008;




The Least Developed Countries Report 201172


Kragelund, 2010). As for the LDCs, the increase of South–South official flows
is confirmed by the data provided by the few Southern countries that report
to OECD-DAC, whose figures are thus directly comparable with the standard
ODA data. Developing countries reporting to OECD-DAC include the Republic
of Korea, Thailand, Turkey, the United Arab Emirates, and other Arab countries
and multilateral institutions.28 As shown in chart 34, their ODA disbursements to
LDCs have grown four times in real terms over the last decade and surpassed
$900 million in 2009.


Although these flows reported to OECD-DAC represent a minor fraction
of those granted by traditional donors (slightly above 2 per cent of total aid
to LDCs), their evolution suggests a pronounced expansion of South–South
development cooperation in the LDCs. The upward trend becomes even
clearer if one takes into account the massive scale-up in Southern official flows
provided by large developing countries that do not report to OECD-DAC – for
example, China, India, Brazil and South Africa (United Nations, 2008; Brautigam,
2008; Kragelund, 2010). Though the precise estimates of such expansion
are contrasting, all available evidence suggests that Southern partners have
stepped up their cooperation initiatives during the last decade (see also chapter
4). In particular, large scale-ups have followed the establishment of dedicated
platforms for South–South development cooperation, such as the Forum on
China-Africa Cooperation (FOCAC), established in 2000; the Africa-India Forum
Summit (2008) or the India, Brazil and South Africa (IBSA) Partnership (2003).29


From the viewpoint of the LDCs, the surge of Southern official flows is a
key factor boosting the availability of development finance, whose role remains
crucial in view of the LDCs’ weak capacities to mobilize domestic resources. In
this context, South–South official financial resources are all the more welcome
at the present crossroads, as they may help cushion the possible slump in aid
receipts from traditional donors, currently engulfed by a fragile recovery and
debt problems. Beyond its growing magnitude, the peculiar attractiveness of
South–South development cooperation to recipient governments stems also
from its features and modalities, which may render it complementary to North–
South cooperation, as acknowledged by the IPoA. Moreover, the multiplicity of
Southern actors provides the LDCs with a broad range of potential partners,


Chart 34. Net ODA disbursements to LDCs by Southern countries reporting to OECD-DAC, 2000–2009
(Constant 2009 dollars, excluding debt relief)


0


200


400


600


800


1,000


2000 2001 2002 2003 2004 2005 2006 2007 2008 2009


M
illi


on
s


of
d


ol
la


rs


Korea Arab agencies Thailand Turkey United Arab Emirates Arab countries


Source: UNCTAD secretariat calculations based on OECD-DAC International Development Statistics, online database.


The surge of Southern official
flows is a key factor boosting the


availability of development finance,
and may help cushion the possible


slump in aid receipts from traditional
donors, currently engulfed by a


fragile recovery and debt problems.


Beyond its growing magnitude, the
peculiar attractiveness of South–


South development cooperation to
recipient governments stems also
from its features and modalities,


which may render it complementary
to North–South cooperation.




73CHAPTER 2. “The Rise of the South”: Development Implications for the LDCs


each with a specific geographical focus, comparative advantage and strategic
approach to South–South cooperation.


First and foremost, Southern countries openly found their partnership
on the principles of equality, solidarity, mutual benefit and non-interference in
internal policy. These principles are typically mirrored in the absence of policy
conditionalities, thereby enhancing ownership and broadening the policy space
available to recipient countries (Oya, 2006; Kragelund, 2010). This contrasts
with the practices of traditional donors, which acknowledge the importance of
country ownership, but in some cases continued to apply policy conditionalities
even in the aftermath of the global financial crisis (Weisbrot et al., 2009; Van
Waeyenberge et al., 2010; UNCTAD, 2010a).


Criticism has been levelled against some Southern development partners for
allegedly weakening the pressure on recipient governments to tackle corruption
and enforce human rights (Brautigam, 2008; Kragelund, 2010). However,
there is no systematic evidence substantiating this claim (AfDB et al., 2011).
Moreover, the international aid regime is not well institutionalized with regard to
the respect for human rights, and the unresponsiveness of aid allocation to good
governance is certainly not unique to South–South cooperation (Brautigam,
2010; Mold, 2009). Econometric studies, such as Svensson (2000) and Alesina
and Weder (2002), found no evidence that donors systematically penalized
corrupt governments. In general “political and strategic considerations, as well
as trade and investment opportunities, have been stronger motives for delivery
of assistance than human rights” (United Nations, 2008: 20).


Some Southern partners make use of non-policy conditionalities, sometimes
linking the disbursements of official flows to the access to natural resources, or
to the purchase of goods and services from their own national firms (UNCTAD,
2010b). This notwithstanding, Southern partners are often seen by recipient
countries as more responsive to their needs than traditional donors (AfDB et
al., 2011). Moreover, South–South official flows are often perceived as more
cost-effective and more rapidly disbursed than North–South aid, and are thus
appreciated by the policymakers of recipient countries (Kragelund, 2010; United
Nations, 2008).


A second key aspect in which South–South development cooperation can
complement North–South cooperation refers to the time horizon and modalities
involved. The initiatives of Southern partners are characterized by the valorization
of geographic and cultural proximity and by a strong preference for project-
support modalities; in addition, they are typically seen by recipient counterparts
as having a longer-term horizon.30 However, their fragmentation, the modest
degree of harmonization across Southern partners – with the exception of Arab
donors – and the lack of transparency have been regarded as factors undermining
the effectiveness of South–South development cooperation. Traditional donors,
conversely, have somewhat reduced aid fragmentation by increasingly resorting
to a sector-wide approach and budget support; however, the predictability of
their disbursements remains a source of concern, and progress on untying aid
is also sluggish (UNCTAD, 2010a). Further, while South–South cooperation
has almost entirely been government-to-government, traditional donors have
paid more attention to involving the civil society and the non-governmental
organizations.


A third element of complementarity between South–South and North–South
development cooperation refers to the sectors targeted, and the instruments
utilized. Unlike traditional donors, who focus mostly on social issues, Southern
partners devote a significant share of their assistance to infrastructure and
productive sectors (UNCTAD, 2010a; Foster et al, 2008; United Nations, 2008;
Kragelund, 2010). As argued repeatedly in past The Least Developed Countries


Southern countries openly founded
their partnership on the principles


of equality, solidarity, mutual
benefit and non-interference.
These principles are typically


mirrored in the absence of policy
conditionalities.


Some Southern partners make
use of non-policy conditionalities,


sometimes linking the
disbursements of official flows to the


access to natural resources, or to
the purchase of goods and services


from their own national firms.


Southern partners are often seen
by recipient countries as more
responsive to their needs than


traditional donors.




The Least Developed Countries Report 201174


Reports, this allocation strategy responds in specific terms to the LDCs’ long-
standing infrastructural gap, particularly in Africa, where the financing requirement
to close the infrastructure deficit amounts to $93 billion annually until 2020 (AfDB
et al., 2010). Similarly, the support to the productive sectors tackles at the core
the long-standing weakness of domestic small and medium-sized enterprises
(the so-called “missing middle”), that have long been underfinanced by traditional
North–South cooperation. Historically, technical assistance programmes have
also featured prominently in South–South cooperation initiatives. This trend
is likely to persist in the future, as developing country partners have acquired
world-class experience in areas of immediate relevance for LDCs, and are better
placed to transfer this knowledge to their counterparts, owing to their cultural
and geographic proximity.


A good example of this is provided by Brazil-Africa technical cooperation
in agriculture, conducted by the Empresa Brasileira de Pesquisa Agropecuária
– EMBRAPA. Through this entity, Brazil has put its successful experience on
agricultural development at the service of the “Cotton-4 countries” (Benin,
Burkina Faso, Chad and Mali) and made its know-how available to several
African countries willing to develop their agro-energy sector (UNCTAD, 2010b;
Lewis, 2011). Similarly, China and India have trained a growing number of
professionals coming from LDCs, while Cuba and the Bolivarian Republic of
Venezuela have provided doctors and teachers to Haiti and other developing
countries (UN-OSAA, 2010; United Nations, 2008).


Moving to the instruments through which official flows are disbursed,
Southern partners deliver their official finance through a range of instruments,
including grants, concessional loans and mixed loans.31 For projects related
to infrastructural provision, official finance has been often channelled through
export-import banks and backed by natural resources: the so-called “Angola
mode”. There have been concerns that in some cases increased lending by
Southern partners may jeopardize the debt sustainability of recipient countries,
or simply free-ride on debt relief efforts of traditional partners (Reisen, 2007;
Brautigam, 2008). Controversial deals have indeed occurred in the past,32 and
greater transparency is certainly necessary on both the lender and borrower
sides (Kragelund, 2010; AfDB et al., 2011). Nevertheless, the above concerns
seem, in general, misplaced for three reasons. First, insofar as Southern financing
improves infrastructural provision and supports productive sectors, it removes
binding constraints on the LDCs’ economic growth, thereby contributing to
overall debt sustainability. Secondly, a closer analysis of the role of China’s official
financial flows suggests that they have contributed to improve debt sustainability
ratios in African countries, mainly by boosting exports and economic growth in
borrowing countries (Reisen, 2007; Reisen and Ndoye, 2008). Thirdly, a growing
number of Southern partners, led by China, the Republic of Korea and India,
have actually embarked on bilateral debt relief initiatives and hence cannot be
accused of free-riding on the efforts of other creditors (United Nations, 2008).


Overall, the expansion of South–South development cooperation has already
changed the perception of poor countries, while its innovative modalities are
starting to influence the behaviours of Northern donors, and vice versa (AfDB
et al., 2011). The practices of Southern development partners generally diverge
from OECD norms and standards. Both are evolving, and as Brautigam (2010:
44) notes “across the board, there is much room for improvement from all the
major players in the global aid and development finance regime”. Examples of
triangular cooperation are also gaining increasing attention, although they are
not yet very numerous and are mostly focused on small-scale training and
capacity-building programmes. With this evolving landscape, the strategies of
the LDCs are all the more crucial in harnessing the diversity of approaches to
development cooperation, leveraging the complementarities among different
partners to better attain their development objectives.


Unlike traditional donors, who focus
mostly on social issues, Southern
partners devote a significant share
of their assistance to infrastructure


and productive sectors.


Southern partners deliver their
official finance through a range
of instruments, including grants,


concessional loans and mixed loans.
For projects related to infrastructural
provision, official finance has been
often channelled through export-


import banks and backed by natural
resources: the so-called “Angola


mode”.


Overall, the expansion of South–
South development cooperation has
already changed the perception of
poor countries, while its innovative
modalities are starting to influence
the behaviours of Northern donors,


and vice versa.




75CHAPTER 2. “The Rise of the South”: Development Implications for the LDCs


D. The regional dimension and
South–South relations


The prominent role of major developing countries in the LDCs’ growing ties
with the South should not obscure the fact that South–South relationships
encompass multiple layers of partnerships, not only at the global level, but also
at the regional and subregional levels. This multiplicity creates the scope for
potential synergies across the whole array of international relations. Particularly
in light of the asymmetries between individual LDCs and their main Southern
partners, the regional dimension becomes crucial (UNCTAD, 2010a; AfDB et al.,
2011).


Regional integration can be supportive to deeper South–South economic
relations by offering greater opportunities for export diversification, despite
the fact that regional markets have generally expanded at a slightly slower
pace than the main Southern markets. Manufactured goods tend to play a
significantly bigger role in the LDCs’ exports to regional partners than in those
destined to major developing countries, whose economic growth tends to
be highly resource-intensive (see also UNCTAD, 2010a). In the case of Asian
LDCs, the insertion into regional and subregional production networks is already
proving capable of spurring the establishment of labour-intensive manufacturing
firms. For example, the growth of the garment industry in countries such as
Bangladesh, Cambodia and the Lao People’s Democratic Republic, owes
much to the participation to contract manufacturing arrangements for regional
firms producing for international clients, favoured by the preferential access to
developed countries’ markets (Chang, 2011; UNCTAD, 2011b).33 Interestingly,
though, the regional market provides ample scope for export diversification
also in the case of African LDCs, with potential benefits for several commodity-
dependent economies (see box 4).


The regional dimension is equally important with respect to FDI and other
investment flows, whether from the North or South. Owing to the limited size of
LDC economies, deeper regional integration is critical to attract market-seeking
as well as efficiency-seeking investors. At the same time, a greater degree of
policy coordination at the regional level is necessary to acquire a critical mass
for negotiations and avoid a “race to the bottom” in the competition for FDI
(UNCTAD, 2010a). Regionally coordinated initiatives, in addition, are also likely to
enhance the developmental impact of remittances and investment flows, insofar
as they can reduce transaction costs and foster a smoother technology and
knowledge transfer, leveraging on the synergies and complementarities across
neighbouring countries. For example, regional initiatives could be devised in
order to facilitate the establishment of joint ventures or the use of project co-
financing.


With respect to South–South cooperation and official flows, the relevance
of the regional dimension appears clearly from the analysis of the engagement
strategies of major emerging partners. Even though South–South development
cooperation takes place predominantly on a bilateral basis, the agenda for regional
integration is often explicitly supported by emerging partners, for example, at
the 2006 FOCAC or the India-Africa Summit in 2008. Against this background,
it is critical for poorer countries to coordinate a shared engagement strategy
concerning major Southern partners at the regional level, thereby achieving a
critical weight for negotiating purposes. This, in turn, could prove particularly
useful in leveraging the peculiarities of South–South development cooperation
to pave the way for more effective regional integration. For example, one way
in which South–South development cooperation and regional integration could
be mutually supporting would be to strengthen the provision of hard and soft
regional infrastructures.


The prominent role of major
developing countries in the LDCs’
growing ties with the South should
not obscure the fact that South–
South relationships encompass


multiple layers of partnerships, not
only at the global level, but also at


the regional and subregional levels.
This multiplicity creates the scope
for potential synergies across the


whole array of international relations.


Manufactured goods tend to play a
significantly bigger role in the LDCs’
exports to regional partners than in
those destined to major developing


countries.


A greater degree of policy
coordination at the regional level is
necessary to acquire a critical mass
for negotiations and avoid a “race
to the bottom” in the competition


for FDI.




The Least Developed Countries Report 201176


Box 4. Economic diversification and regional trade integration in Africa


Regional integration in Africa has traditionally received wide support from African policymakers and the international
community, and the political momentum towards this goal was revamped with the establishment of the African Economic
Community in 1991.a The share of intraregional trade, however, has so far remained far lower than in Asia or Latin America.


While the regional market is still characterized by a limited size — intra-African exports were roughly 12 per cent of Africa’s
exports to the rest of the world — in the last decade it displayed a robust dynamism, growing at about 16 per cent per year.
Equally interesting from a developmental point of view, intra-African exports are more evenly distributed among fuels, non-
fuel primary products, and food and manufactured goods, compared with the continent’s exports to the rest of the world.b


Looking at the period 1995–2009, the growth rates of manufactures and non-manufacturing exports originating in African
countries are positively correlated with one another, regardless of the destination market. Chart 20 shows, however, that
the correlation is much stronger in relation to intra-African exports, than to exports towards the rest of the world (Fortunato
and Valensisi, 2011). As illustrated in box 2, it would be misleading to interpret these dynamics as evidence of growing intra-
industry trade within Africa. Nonetheless, box chart 4 suggests that the expansion of Africa’s intraregional trade could bring
significant benefits to economic diversification, and this could in turn boost per capita income and employment creation, given
the importance of export composition for long-run growth (Hausmann et al., 2007).


With the aim of promoting intra-African trade, a key policy priority is to strengthen the provision and the quality of hard and
soft infrastructures, which constrain import-export activities within the regional market, by raising transport and time costs
(Longo and Sekkat, 2004; Geda and Kibret, 2008; UNCTAD, 2009b). Better infrastructure provision would be particularly
crucial for LDCs and other landlocked countries, which are disproportionately affected by these bottlenecks.


A second challenge for intra-African trade stems from the complexities caused by the overlapping membership of most
countries of distinct regional economic communities (the so-called “spaghetti bowl” situation). Against this background, a
rationalization of the regional integration process to simplify the trade-related legal framework could contribute to a more
enabling business environment (UNCTAD, 2010a). In this respect, common preferential schemes for all African countries may
be preferable to the current scenario.


Thirdly, the African market is dominated by few big regional players, but it plays a prominent role, be it as a source of
imports or as a destination for exports, for a larger number of other economies. Therefore, it is crucial that regional powers
take the leadership in identifying a shared strategy towards greater regional integration, instead of acting in their narrow
national interests (Draper, 2010).


a The Abuja Treaty (1991) envisions the establishment of the African Economic Community as a six-step process, based on the gradual
deepening of economic integration within the main regional blocs, followed by a further harmonization of trade provisions at the continental
level.


b Interestingly, intraregional exports present a more diversified composition, that is, one that is relatively skewed more towards manufactured
goods and food items; this holds true even without considering the South African market.


Box chart 4. Growth rates of African countries’ exports by destination, 1995–2009


y = 0.2897x + 0.0455
R2 = 0.1299


y = 0.5201x + 0.0491
R2 = 0.3343


-30


-20


-10


0


10


20


30


40


50


-30 -20 -10 0 10 20 30 40 50 60


Total non-manufactured exports


M
an


uf
ac


tu
re


d
ex


po
rt


s


Rest of world Intra-African Linear (Rest of world) Linear (Intra-African)


Source: Fortunato and Valensisi, 2011.




77CHAPTER 2. “The Rise of the South”: Development Implications for the LDCs


One lesson to be drawn from the East Asian experience is that regional
integration can play a crucial role in fostering structural transformation by
integrating less developed countries into regional and subregional production
networks. As highlighted in a study by UNCTAD, the Commonwealth Secretariat
and the Centre for WTO Studies (2010), opportunities for industrial upgrading at
the regional level are indeed numerous, in spite of the fierce competition in the
division of labour within global value chains (see box 5). The regional integration
agenda needs, however, a renewed impetus and should be pursued in parallel
with the growing integration in the South. In this respect, one of the legacies of
the flying geese paradigm is that policy can and should play a significant role in
shaping the terms of integration of the LDCs into global production networks.
This role is all the more important nowadays, as the international context has
evolved in a way that has rendered production networks increasingly hierarchical,
intensifying the competition in the global division of labour (Chang, 2011). A
stronger policy framework at the national and regional levels is therefore needed
to prevent countries with less industrial capacity from being confined to low-end
productions.


E. Conclusions


The previous analysis has shown how, in the span of a decade, economic
relations with Southern partners have become an important dimension for the
LDCs’ development prospects, and one which is likely to become even more
prominent in the future. As a result of the increased interdependence at the
global level, the emergence of Southern growth poles will continue to have strong
spillover effects on the LDC economies, not only through trade and investment,
but through technology diffusion, migration and South–South development
cooperation. Through all these channels, the ongoing recalibration of the world
economy provides the LDCs with a broad array of emerging partnerships, which
can be complementary to traditional North–South partnerships.


In line with the emphasis placed by the existing literature, the evidence
presented here suggests that several LDCs have benefitted from the worldwide
quest for natural resources, particularly on the part of large and fast-growing
developing countries, whose growth and urbanization are highly resource-
intensive. The resulting patterns of trade and FDI flows, to some extent
reminiscent of the centre-periphery dynamic, have increased the resources
available to these countries — especially where fuel and mineral exporters are
concerned — broadening in many ways the policy space available for them
to redress their commodity dependence. The undeniable prominence of hard
commodities, though, should not obscure the fact that the rise of the South
has simultaneously boosted — albeit to a lesser degree — the demand for
other LDCs’ exports, including manufactures. There are also signs that vibrant
South–South trade is broadening the LDCs’ access to low-priced consumer
and intermediate goods, with unambiguous benefits for final consumers and
firms using those inputs, and some potentially detrimental effects on import-
competing industries.


Beyond trade, the emergence of Southern growth poles has provided many
LDCs with broader access to financial resources, through workers’ remittances,
private and official flows and greater opportunities for technological upgrading.
Partly in line with the flying geese paradigm, then, the incipient insertion of some
LDCs into regional and subregional production networks may open up new
opportunities of structural transformation, skills acquisition, and technological
upgrading.


One lesson to be drawn from
the East Asian experience is that


regional integration can play a
crucial role in fostering structural
transformation by integrating less
developed countries into regional


and subregional production
networks.


Achieving a critical weight for
negotiating purposes could prove


particularly useful in leveraging
the peculiarities of South–South


development cooperation to pave
the way for more effective regional


integration.


The specificities of each country,
the multiple channels through which


South–South relations take place
and the array of potential partners
are so rich that no single narrative


could possibly explain the complex
dynamics of the recent development


experiences.


The deepening of economic
relations between the LDCs and


their Southern partners are creating
a broader set of opportunities,


but also pose challenges.




The Least Developed Countries Report 201178


As argued in this chapter, each of the above-mentioned findings and each
related analytical framework capture some dimensions of the multifaceted
relationships between the LDCs and their Southern partners. Yet, the specificities
of each country, the multiple channels through which South–South relations take
place and the array of potential partners are so rich that no single narrative could
possibly explain the complex dynamics of the recent development experiences.
The key question, from the standpoint of the LDCs’ development objectives, is
to what extent these emerging partnerships can be leveraged to promote the
development of productive capacities and the diversification of their economies.
In this respect, the previous analysis shows that the deepening of economic
relations between the LDCs and their Southern partners are creating a broader
set of opportunities, but also pose challenges. Notably, if the LDCs clearly benefit
from the boost in exports, FDI and development finance, there is also a risk that
their commodity dependence will be locked in by the emerging international
division of labour and the fierce competition in labour-intensive manufacturing.


Ultimately, the interaction between each country’s structural conditions and
the specific terms of engagement with Southern partners will determine the
developmental outcome of this complex process. Overall, if distinct opportunities
seem to emerge for the LDCs, the net result of the overlapping forces reviewed
in this chapter will be contingent on the implementation of appropriate policies
to maximize the benefits and minimize the risks. For this reason, it is essential
for the LDCs to forge a proactive and strategic approach to their integration
with developing country partners, leveraging synergies and complementarities
across them. Where appropriate, LDC governments should also coordinate their
engagement strategies at the regional level to harness the scope for fostering
an inclusive pattern of structural transformation within regional markets, and
to avoid a race to the bottom for FDI, trade agreements and development
cooperation. These tasks in turn will require the setting up of an enabling policy
framework, as spelled out in the rest of the report.


Box 5. The potential of regional supply chains: The case of textiles and clothing sector in South Asia


Frequently trade opportunities among developing countries, even from a same region or subregion, are hampered by
the lack of information thereon on the side of firms that are the potential beneficiaries. An example in that respect has been
highlighted by a joint report carried out by UNCTAD, the Commonwealth Secretariat and the Centre for WTO Studies (2010)
on the potential of regional supply chains for South Asian textiles and the clothing industry.


To assess the potential of integrating into regional supply chains, the study maps out the production and export structures
of the textiles and clothing industry in various South Asian countries, tracking the flow of inputs leading to export products
and identifying the potential cross-border linkages at the regional level that are currently unexploited. Using disaggregated
data at the six-digit level of the Harmonized System of Trade Classification, the report finds that in Bangladesh, 15 unique
tariff lines were identified as final products for global exports that can be manufactured using regional supply chains alone.
The comparable numbers for India are 37, for Pakistan, 29, and for Sri Lanka, 8, demonstrating that the scope for integrating
into regional supply chains is wide for all countries reviewed. Again focusing on Bangladesh – the only LDC covered by the
study – it was found that 19 “first-stage inputs” and 47 “primary inputs” could potentially be sourced within the region, to
then lead to global exports of textiles and clothing.


However, Bangladesh’s total imports of the identified inputs comprised only around 18.3 per cent of South Asia’s
corresponding exports, indicating that the region’s supply chain capacity was sufficient to meet potential demand. In addition,
a comparative assessment of unit value prices of the products supplied by South Asian countries compared with other leading
global suppliers also reveal that in many of the items identified, the former may actually be lower-cost suppliers.


Since 2005, Bangladesh’s imports of the identified inputs for its clothing industry have increased steadily from the region,
especially from Pakistan and India. The share of the region in Bangladesh’s total imports of textiles increased from 14 per cent
in 2005 to 24 per cent in 2007. India’s share in cotton imports from Bangladesh increased from 10–12 per cent in 2005–2006
to 30 per cent in 2009–2010. Imports of cotton yarn and woven fabrics from Pakistan have also been rising steadily. It can
hence be argued that Bangladesh’s textiles and clothing industry appears to be integrating more and more into the region’s
supply chain. The scope for integrating more closely is, however, still largely untapped, and South Asian countries could
further enhance their global competitiveness through effective regional collaboration.


Source: UNCTAD-Commonwealth Secretariat-Centre for WTO Studies, 2010.


If the LDCs clearly benefit from
the boost in exports, FDI and
development finance, there is


also a risk that their commodity
dependence will be locked in by the


emerging international division of
labour.


For this reason, it is essential for
the LDCs to forge a proactive


and strategic approach to their
integration with developing country
partners, leveraging synergies and
complementarities across them.




79CHAPTER 2. “The Rise of the South”: Development Implications for the LDCs


Notes


1 The main drivers of this process identified in the literature include: (a) the separability
of the manufacturing process into different stages, with distinct characteristics and
requirements; (b) technological changes, which have reduced communication and,
to a lesser degree, transport costs between different locations; (c) large labour
cost differences among countries; (d) trade policy measures, for example, outward
processing regimes, and the Multi-Fibre Arrangement, which expired in 2005; (e)
developing country policies to attract FDI and improve their infrastructures and skills
endowment; (f) services becoming cheaper and more readily available (Arndt and
Kierzkowski, 2001; Yeats, 1997; Jones et al., 2005).


2 Strictly speaking, NIEs – the Republic of Korea, Hong Kong (China), Singapore and
Taiwan Province of China – are also developing countries. However, when appropriate
for the purpose of the chapter they have been singled out from the South in view of
the markedly different structure of their economies.


3 According to Henderson et al. (2002: 445), the concept of global production networks
is defined as “the nexus of interconnected functions and operations through which
goods and services are produced, distributed and consumed”. Correspondingly,
global production networks are characterized by three key dimensions: (a) the value
created and distributed across different firms and agents (e.g. workers) according
to their power, but also according to the institutional framework; (b) the power:
corporate, institutional (e.g. national States, regional trade agreements, multilateral
financial and trade organizations), collective (business associations, trade unions); and
(c the embeddedness, intended as the degree to which global production networks
are connected to a given location through business linkages (forward, backward)
and policy measures (e.g. tax and education policies), but also to the solidity of the
linkages between the different agents (firms and so forth) of the production networks.


4 Wolfensohn, 2007 refers to this differentiation as the “four-speed world”, the fourth
group being that of developed economies (refer also to OECD, 2010).


5 In its original version, the flying geese paradigm was named after “the graphic
presentation of three time-series curves for a particular product, with time dimension
on the horizontal axis” (Kasahara, 2004: 2). This pattern basically described the fact
that the volume of import, production and export of particular products, in a late
developing process, all follow an inverse-V pattern as time goes by, with the three
variables peaking in sequence. In other words, at the initial stage of industrialization, a
late industrializing country needs to import manufactured goods from more developed
economies until local firms gradually gain the capacity to compete with imported
goods, replace them in the domestic market and eventually export them.


6 For instance, Chang (2011) notes that the second-tier NIEs benefitted from a much
lower degree of reverse import in their advanced regional trading partners than that
enjoyed by the first generation of NIEs a decade earlier. Moreover, such a reverse
import was mostly limited to labour-intensive products such as textiles, garments and
low-end electronics parts.


7 The importance of such a long-term trend for commodity-dependent LDCs,
especially in Africa, is further reinforced by the fact that many of them possess large
untapped reserves of fuels and metals (UN-OSAA, 2010).


8 According to UNCTADstat data, in 2009, 40 LDCs were net food importers and 39
of these were net energy importers (these figures include Maldives, which graduated
only after the period reviewed).


9 Consumers from the rising middle class in emerging economies tend to prefer cheap
and undifferentiated products, unlike those of rich economies; hence, the emergence
of Southern growth poles may favour the LDCs’ integration into global value chains
with lower standard intensity than those destined to Northern markets (Kaplinsky and
Farooki, 2010).


10 Giovannetti and Sanfilippo (2009) provide an interesting literature review of this
problématique.


11 Trade in services also deserves to be mentioned, in light of the sharp boom it
underwent during the last decade, but also of the key role it plays in a number of LDC
economies, small islands in particular. Lacking hard evidence on services trade by
partner, however, any analysis on this topic cannot but rely on specific case studies
and anecdotal evidence. Even the latter seem sufficient to claim that LDCs have been
intensifying their trade in services with Southern partners. This statement is valid in
particular for tourism, business and financial services, as documented by the World
Bank (2010) and the World Trade Organization (WTO) (2011).


12 Note that the global crisis of 2009 reduced such “bilateral” surplus to its 2006 levels,
but did not reverse the trend mentioned above.




The Least Developed Countries Report 201180


13 China represents a notable exception to the above general trend, in that it recorded
a deficit vis-à-vis the LDC group because of the large bilateral deficit with oil exporters
such as Angola and Sudan.


14 While the above analysis holds true for the LDCs as a group, the heterogeneity
of individual LDCs makes the story significantly more complex and blurred at the
country level. Interestingly, however, the LDCs’ growing net-exports to developed
countries is not only ascribed to the performance of fuels – or mineral exporters – but
also to large Asian countries, such as Bangladesh, Cambodia, Laos and Myanmar.
Similarly, the net deficit of these countries as opposed to other Southern markets,
excluding NIEs, has increased steadily except in the case of Myanmar.


15 This finding implicitly underlies the growing importance of regional integration from
the point of view of the individual LDCs as a springboard to overcome the constraints
imposed by their limited market size, as well as to successfully integrate with more
dynamic Southern partners.


16 Excluding NIEs, the 10 main Southern export markets for the LDCs include Brazil,
Chile, China, India, Malaysia, Nigeria, Saudi Arabia, South Africa, Thailand and the
United Arab Emirates.


17 Excluding NIEs, the 10 main Southern import partners for the LDCs include Brazil,
China, Côte d’Ivoire, India, Indonesia, Malaysia, Saudi Arabia, South Africa, Thailand
and the United Arab Emirates.


18 It is interesting to note that an increasing number of developing countries, including
some of the LDCs’ main trading partners, have recently provided improved market
access schemes for products originating from the LDCs. These countries include,
among others Brazil, China, India, and Republic of Korea (UNCTAD 2010b; UN-
OHRLLS 2010).


19 Note that the chart compares the share of LDC exports by more or less
homogeneous product types; hence the influence of relative price movements over
time is considerably reduced.


20 Angola is the best case in point, as it accounted alone for some 40 per cent of FDI
inflows to all LDCs in the 2000–2009 period; similarly, Sudan received in the same
period approximately 11 per cent of the LDCs’ total FDI inflows. Interestingly, though,
AfDB et al. 2011 notes that in the African region, FDI from emerging partners are less
concentrated in oil-rich countries than that of traditional partners.


21 Concerning FDI-related environmental concerns, the interested reader is referred to
Kopulande and Mulenga, 2011, which provides a brief review of the issue in the case
of Zambia.


22 While the magnitude of this boom may be partly due to improved data coverage
towards the end of the year, this is arguably a negligible bias. Considering only those
15 LDCs with complete data series (which account for two thirds of total Chinese
FDI inflows to LDCs), the increase in FDI inflows between 2003 and 2009 has been
tenfold.


23 South–South transfers of technologies are expected to play an even more prominent
role in the future, in light of the increasing engagements of some large developing
countries in R&D activities. OECD, 2010 notes, for instance, that China and – to
a lesser extent – India feature already among the top countries for R&D spending,
and number of researchers. Leveraging these opportunities could be crucial for
technological upgrading and TFP growth in the LDCs, and may simultaneously have
significant impacts in terms of human development, insofar as the process touches
key sectors, such as agricultural R&D and pharmaceuticals technologies (UN-OSAA,
2010).


24 Docquier and Marfouk, 2006 estimate that the rate of emigration from LDCs to
developed countries was more than 10 times higher among skilled workers than
across the whole labour force.


25 It should be borne in mind, though, that these figures are likely underestimated, owing
to the large flows of remittances transferred to LDCs through informal channels.


26 This circumstance had a part in explaining why during the global financial and
economic crisis remittances inflows to LDC – particularly to the largest recipients –
displayed a greater resilience than remittances to other developing countries.


27 At a worldwide level, United Nations, 2008 estimates that South-South development
assistance made up between 8 and 10 percent of the total aid flows in the 2006 --
2008 period.


28 Data for Arab countries cover Saudi Arabia and Kuwait, while so-called Arab agencies
include multilateral institutions such as the Arab Bank for Economic Development in
Africa, the Islamic Development Bank and the like. Data for Thailand are provided only
from 2006 onwards.


29 Other examples of official platforms for South–South development cooperation
include the Republic of Korea-Africa Forum (established in 2006), the Turkey-Africa




81CHAPTER 2. “The Rise of the South”: Development Implications for the LDCs


Cooperation Summit (2008), as well as interregional ones such as the Africa-South-
America Strategic Partnership (2006), the New Asian-African Strategic Partnership
(2005) or the Afro-Arab Cooperation Forum (1977). In some cases, development
funds have also been established as spin-offs of the above South–South initiatives,
as for instance, the China-Africa Development Fund (CADF), with an expected capital
of $5 billion, or the IBSA Trust Funds.


30 Non-traditional donors typically channel their funds directly to the contracted
Southern firms, thereby strengthening the incentive for the successful and timely
completion of turnkey projects and reducing the risk of misappropriation. While this
modality usually allows for a period of loss financing and may even include some kind
of maintenance, it is mostly tied to the utilization of donor country firms, especially
when funds are granted through export and import banks.


31 Mixed loans are intended as financing packages that combine concessional and
market rate loans.


32 One such example is the Sicomines deal between China and the Democratic
Republic of the Congo. After negotiations, the initial terms of this resource-backed
loan for infrastructure were re-structured to make them acceptable under the joint
International Monetary Fund (IMF)-World Bank debt sustainability framework (see
Davies, 2010 and Brautigam, 2010).


33 In the case of Cambodia, 95 per cent of exports in the garment industry are by
foreign firms, mostly Southern transnational corporations from China, Hong Kong
(China), Indonesia, Malaysia, the Republic of Korea, Singapore and Taiwan Province
of China. These companies employed around 300,000 people in 2009, accounting
for nearly 50 per cent of Cambodia’s manufacturing employment (UNCTAD, 2011b).




The Least Developed Countries Report 201182


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3CHAPTER
ACTIVATING THE


DEVELOPMENTAL STATE
IN LDCS: THE ROLE OF


SOUTH–SOUTH COOPERATION




The Least Developed Countries Report 201186


The most effective way for
LDCs to do this is to realize the


developement opportunities is to
build a catalytic developmental


State (CDS) tailored to LDC
circumstances.


New modalities and structures
are required to strengthen the


interdependence between the CDS
and South–South cooperation in the
post-crisis environment, particularly


developmental regionalism.


A. Introduction


The objective of this chapter is to examine how least developed countries
(LDCs) and their Southern partners can enhance the development impact,
and realize the development opportunities, of South-South cooperation. The
chapter argues that the most effective way for LDCs to do this is to build a
catalytic developmental State (CDS) tailored to LDC circumstances. Building
a developmental State in LDCs is not a simple matter, as discussed in the
Least Developed Countries Report 2009. However, this chapter argues that
South–South cooperation has features which make it more likely to support
and encourage such State–building than the traditional forms of development
cooperation currently do. It is thus possible to create a positive interaction
between building developmental States in LDCs and South–South cooperation.
New modalities and structures are required to strengthen the interdependence
between the two phenomena in the post-crisis environment. In this regard,
developmental regionalism is particularly important, as well as mechanisms to
address the financial resource challenges of effective developmental States.


The chapter is organized in four sections. Section B introduces the notion
of the catalytic developmental State. In earlier Least Developed Countries
Reports, we have examined the issue of development governance and argued
that it is necessary to adapt the governance practices of the developmental
State to an LDC context and the twenty-first century. In this Report, we argue
further that the best way to tailor the notion of the developmental State to LDC
circumstances is to build a CDS which addresses the specific developmental
challenges of LDCs. Section C examines how the CDS can benefit from South–
South cooperation, and how it can, in turn, make the most out of South–South
cooperation. Section D presents some preliminary evidence on the effects of
South–South integration on the changes in the level of productive capacities in
the LDCs. Section E focuses on how developmental regionalism can support
both the developmental State and South–South cooperation.


The concluding section summarizes the main argument, while the next
chapter takes up the issue of financing the developmental State, examining in
more detail how LDCs and Southern partners might address this issue within
the framework of a developmental State, using developmental regionalism and
enhancing the solidarity mechanisms of South–South cooperation.


B. The catalytic developmental State


Since 2000, most LDCs have prepared and implemented Poverty Reduction
Strategy Papers (PRSPs) as a policy framework for ensuring and attracting official
development assistance (ODA) and promoting development. The PRSPs have
evolved over time (see Least Developed Countries Report 2008, 2009). However,
in general, their implicit development strategy has been close integration with the
global economy through removing trade barriers, both at and behind the border,
the liberalization and deregulation of domestic financial markets, and increased
aid-financed social expenditure to achieve the Millennium Development Goals
(MDGs). As shown in chapter 1 of this Report, the overall outcome of these
policies was accelerated gross domestic product (GDP) growth in LDCs but
little structural transformation. Poverty rates have been falling but only slowly, as
insufficient productive and decent employment opportunities have been created
for the rapidly growing population. As a result, the number of extremely poor
people in LDCs increased during the economic boom years of 2002–2007.




87CHAPTER 3. Activating the Developmental State in LDCs: The Role of South–South Cooperation


The opportunity for rapid poverty
reduction in LDCs through the


development of productive
capacities and associated expansion


of productive employment is real
and significant.


There is no unique way to combine
these elements into a single correct


strategy for inclusive growth. A
cohesive, strong, catalytic and


effective State responsive to the
needs of its constituents is one of
the prerequisites for defining the


content of a long-term development
strategy.


The Report defines the
developmental State as a set of
institutions, tools, capacities and
capabilities committed to national
development with a capacity to


implement its articulated economic
and social strategies.


It proposes a model of the
developmental State — the catalytic
developmental State (CDS) — which


is especially tailored for LDCs.


The global financial crisis and subsequent global recession further exposed
the weaknesses of this development model. It revealed in particular the risks
and vulnerabilities of integration with the global economy dominated by finance,
through the process of so-called financialization of the real economy. Most
LDCs experienced a sharp slowdown in 2009, with GDP per capita declining
in 19 LDCs. Although growth has subsequently recovered, it is clear that new
development paths are now required for sustainable and more inclusive growth
which meets the immense challenge of productively employing the millions of
young people who are now entering the labour force in LDCs.


This Report is based on the view that the opportunity for rapid poverty
reduction in LDCs through the development of productive capacities and
associated expansion of productive employment is real and significant. It can
emerge from (a) mobilizing underutilized resources, as well as the addition
of new capacity through investment in agricultural productivity, plant and
equipment; (b) the diffusion of available technologies; (c) public spending on
infrastructure, skills and capabilities; and (d) the creation of new products and
markets. There is no unique way to combine these elements into a single correct
strategy for inclusive growth. However, if history is any guide, a cohesive, strong,
catalytic and effective State responsive to the needs of its constituents is one of
the prerequisites for defining the content of a long-term development strategy
suitable to discovering what works in a particular context of individual countries.


The modalities, role and reach of the State in national economic management
have tended to fluctuate over time. However, in all dynamic developing
economies and in all countries now classified as developed market economies,
the government has played an influential role in promoting and supporting
economic development. In this context, the coordinating function of the
developmental State is stressed, as well as its role in formulating a development
vision and creating the policy space required to combine and integrate policy
measures in support of structural transformation.


The Report defines the developmental State as a set of institutions, tools,
capacities and capabilities committed to national development with a capacity
to implement its articulated economic and social strategies. But within this
broad definition, it is possible to identify a number of different visions of the
developmental State (see Fine, 2011 and box 1).


This Report argues that, due to the specific vulnerabilities and structural
constraints of LDCs and their initial conditions, none of the approaches to the
developmental State described in box 1 fully reflects the special challenges facing
the LDCs and the roles and functions a developmental State should have at its
disposal to meet these challenges. It proposes a model of the developmental
State — the catalytic developmental State (CDS) — which is especially tailored
for LDCs.


1. THE CATALYTIC DEVELOPMENTAL STATE FOR LDCS


The CDS traces its intellectual origins in part, to the Structuralist school and
in part to the East Asian developmental State (see box 6). It focuses on creating
new productive capacities rather than “re-allocating” given resources and putting
given productive capacities to more efficient use. In other words, its focus is on
creating dynamic comparative advantage, and ensuring financial resources for
long-term investment and for evolution of new productive capacities (Hirschman,
1958; Least Developed Countries Report, 2009).


Each CDS will need to choose the trajectory of development suited for its own
economy, ranging from the traditional path toward “modernity” through Rostow’s




The Least Developed Countries Report 201188


Box 6.The nature of the developmental State


The developmental State literature can be usefully divided into three separate schools: (a) The East Asian model; (b) the
Institutionalist model (developmental State); and (c) the Structuralist model.


The East Asian model of the developmental State, in its heyday, is most associated with accelerated industrialization
experiences, particularly of Republic of Korea and Taiwan Province of China, to identify the critical constraints on late
industrialization and design policies to overcome them (Akyuz, 1999). This approach looks at appropriate regulatory policy
framework, incentive structure, fiscal policy regime, and particularly active industrial policies, in order to galvanize the development
process. It is based on the idea that markets do not work perfectly, in the presence of given economies of scale and scope,
investment complementarities within and across sectors, and various positive and negative externalities, of such an approach.


The Institutionalist developmental State finds its disciplinary origins mainly from within political science, and in part, from
a strand of New Institutional Economics. It is often remarkably aloof from consideration of the economy itself and the nature
of the policies required to bring about development. Rather, it is concerned with the nature of the State apparatus itself and
whether it has the potential, in general, and the independence, in particular, to adopt the necessary policies more or less
irrespective of what these might be. Here, emphasis is placed upon the necessity for the developmental State to be free
of capture by particular (or class-defined) interests, and so to be able to adopt developmental policies concerning national
interest at large. Posing this in terms of the independence of the State from economic or other interests has itself presumed
an analytical approach in which society is structured along the lines of the State as opposed to the market, with the addition
of civil society to fill out the remaining economic, political and ideological space. In this way, not only is the (developmental)
State seen as potentially “autonomous” from the economy and from the dominant landed, commercial, or industrial classes,
but it is also perceived to evolve interests of its own that may prevail over those of the market and the ruling classes civil
society, especially where these conflict with developmentalism-oriented policies. This approach of the Institutionalist school
is admirably captured in the notion of Evans, Rueschemeyer and Skocpol (1985) as an agent of development in its own right.


Across both the East Asian and the Institutionalist approaches, there is a predilection to set up an opposition between
State and market. For the East Asian model, the State overrules the market in the area of industrial development and so is
able to improve upon it. For the Institutional school, the State needs to stand detached of the market, and the economic
interests found within it to forge a broader national interest.


The Structuralist model, a third approach to the developmental State, is premised on the idea that the economy is inflexible
and economic change is constrained by obstacles, bottlenecks and other rigidities. For instance, factors of production tend
to be immobile and consequently, economic actors may not respond to price changes in the “right” way. Hence, the market
alone cannot solve development problems. While there are differences in the perception of Structuralist writers, most of them
focused on the role of bottlenecks, external economies, and complementarities between sectoral investments in particular.
Albert Hirschman (1958: 5), for example, believed that “development depended not so much on finding optimal combinations
of resources and factors of production as on calling forth and enlisting for development purposes, resources and abilities
that are hidden, scattered or badly utilized”. The Structuralist approach addressed the long-term determinants of economic
growth, highlighting the importance of increasing productivity and reducing supply constraints.


The Economic Commission for Latin America and the Caribbean’s (ECLAC’s) theory of underdevelopment, articulated
by Latin American economists in the 1950s and 1960s, shares some features with other Structuralist analyses. It includes a
historical analysis of capitalist development through the relations between the developed Centre and the backward Periphery
that are structurally different. The Centre is homogeneous and diversified, whereas the Periphery is heterogeneous and
specialized in terms of technical knowledge. From this perspective, the choice of the countries at the periphery of the world
economy is between a passive, market-driven, static-comparative-advantage type of integration into the world economy and
an active, selective and strategic integration that attempts to create dynamic competitive advantage. The latter implies a much
stronger role for the State. Thus, the developmental State has to actively generate resources and fill various gaps in order to
change the structural conditions in the economy. The process of economic change through industrialization demanded an
active role for the State, although there was little analytical research on the nature of the State itself.


In spite of its insights, the Structuralist approach was criticized because of its concentration on the promotion of the
industrial sector that resulted in an insufficient analysis of the informal sector and the development of agriculture. In addition,
the developmental State in the Structuralist approach was a category without a solid theory of State intervention. On the
one hand, there was little consideration of the weak administrative apparatus of developing countries. On the other hand, it
neglected a deeper consideration of the nature of the State that should include particular interests of civil servants and politicians.




89CHAPTER 3. Activating the Developmental State in LDCs: The Role of South–South Cooperation


The CDS’ focus is on creating
dynamic comparative advantage,


and ensuring financial resources for
long-term investment and evolution


of new productive capacities.


In order to accelerate growth,
the CDS will need to carry out


significant shifting and reallocating
of national and possibly international
assets and resources to the growth-


enhancing sectors. The State in
LDCs should engage in a more


strategic type of integration into the
global economy.


well-established stages of development, including, industrialization via textile
and garments and other labour-intensive commodities, toward technological
leapfrogging into services or skill-intensive capital goods. The CDSs must identify
and promote the type of industrialization which is best suited for the particular
LDC. This type of search makes up a key component of the new functions of the
CDS, and requires policy space. Rather than taking industrialization as a given
trajectory for all LDCs, the CDS “searches” (tries, experiments pragmatically) for
the optimal path of development in its own economy, including choosing the
optimal form of productive and development trajectories.


The CDS approach is more holistic and integrated, encompassing both
economic and social development, and needs to ensure that such development
is served by finance rather than the other way around. Both the internal and
external conditions that existed in East Asia in the 1950s and 1960s no longer
exist. The internal conditions which characterized East Asian States simply do not
exist in most LDCs today, for example, (a) close alliances between State and the
private sector; (b) general consensus or a “development contract” to implement
public policies; (c) expansionary macroeconomic conditions; (d) lower degree of
openness and integration with the global economy; (e) high level of education of
the population; (f) the attitudes of the elite toward national development; (g) the
absence of the national development project; (h) the institutional development of
the State itself; and (i) other factors. The absence of all these factors accounts
for the difficulties in applying the East Asian model to LDCs today.


At early stages of development, the initiatives of the CDS will not rely solely
on market forces to generate the desired structural change and economic
transformation. In order to accelerate growth, the CDS will need to carry
out significant shifting and reallocating of national and possibly international
assets and resources to the growth-enhancing sectors. For this purpose, the
catalytic developmental State in LDCs, should engage in a more strategic type
of integration into the global economy that would enable these countries to
integrate in a manner which is in their interest to do so, rather than pursuing
rapid trade liberalization based on current and given comparative advantage.
The CDS should assist LDCs in achieving an optimal degree of economic
openness according to their own needs and circumstances as well as the form
of their integration into the global economy (Cripps, Izurieta and Singh, 2011).


Rather than arguing that LDCs should integrate with the world economy and
produce according to their static comparative advantage, (see Lin and Zhang,
2009), the analytical foundation behind the CDS is associated with the classical
economic perspective, which claims that productive structure is not endogenous
to the countries’ endowment structure (in terms of its relative abundance of
labour, skills capital or natural resources), but that comparative advantage is
very much influenced and co-determined by interactions between internal and
external environment in which it is operating.


While the mainstream model of the State is underpinned by the paradigm
of free trade and free capital movements as being the optimal strategy for
the world economy, the analytical underpinnings of the CDS define their own
optimal degree of openness, implying that structural changes arise from shifts
in the world economy, over which most developing countries have little if any
influence. The optimal degree of openness is not defined by the free trade
regime but through emphasis on acquisition of dynamic comparative advantage
that can be attained through deliberate and strategic upgrading of products and
processes and as well as its ability to generate productive employment. This is
an alternative approach to development that is consistent with the paradigm
of classical economics, including not only Ricardo, but also Alfred Marshall
(Marshall, 1926: 386).




The Least Developed Countries Report 201190


The CDS model is thus underpinned by the theory of openness within a
managed trade policy that may enable a country to concentrate its relatively
scarce resources in areas of production where world demand is highly income-
and price-elastic; additionally from this analytical perspective, it needs to
promote the diffusion of knowledge of the kind of learning needed for continuous
upgrading of the quality of all of the local factors of production. Essentially, trade
needs to be managed in order to gain all of the above-mentioned benefits,
especially in the context of low-income economies which are overly specialized
on natural resources.


2. THE IMPORTANCE OF DEVELOPMENT GOVERNANCE


The success of the CDS will depend on good development governance
(Least Developed Countries Report 2009) or in particular, the existence of
what Mushtaq Khan calls growth-enhancing governance capacities, namely
the capacity to achieve and sustain high rates of investment and to implement
policies that encourage the acquisition and learning of new technologies. In all
cases, the allocation of public investment is the primary function of the CDS,
along with setting up of a pro-investment regulatory framework that would
enable rapid catch-up growth that could accelerate economic development
along the lines discussed in previous Least Developed Countries Reports.
Moreover, the State needs legitimacy and to be a truly representative State,
which will largely depend on the State’s legitimacy to ensure a consensus for
the development drive. This is a question of political will that involves what the
Report calls “development contracts” or a social consensus in support of the
development drive. A further important governance capacity is the ability to
absorb external shocks.


The precise nature of the relationship between growth strategies and
governance capabilities varies widely amongst countries and national
conditions, including the composition and the nature of the State itself. While
certain conditions may work very well in some countries, they may not work well
in others; for example, India did reasonably well with liberalization by using some
of the capacities developed during the previous growth strategies, while some
countries in Latin America did rather less well, in terms of growth, following
liberalization, and allowed markets to guide resource allocation to areas of
current comparative advantage (Khan, 2009). This aspect requires further
research in the LDC context. But in general, to accelerate catch-up growth, it
is necessary that the CDS possesses appropriate governance capabilities, both
to create additional incentives and rents for investment and acquire mastery
over advanced technologies but also to ensure that the non-performers, in the
targeted sectors, are prevented from retaining implicit rents.


C. The catalytic developmental State
and South–South cooperation


The basic argument of this chapter is that the benefits of South–South
cooperation will be greatest when a dynamic dialectical relationship is established
in which policies carried out by CDSs in LDCs and South–South cooperation
reinforce each other in a continual process of change and development. In such
a dynamic relationship, South–South cooperation supports both the building of
the CDS in LDCs and the successful achievement of its objectives. The CDS in
LDCs in turn enhances and shapes the benefits of South–South cooperation.


The CDS model is underpinned
by the theory of openness within
a managed trade policy that may


enable a country to concentrate its
relatively scarce resources in areas
of production where world demand
is highly income- and price-elastic.


The success of the CDS will
depend on the existence of growth-
enhancing governance capacities,
namely the capacity to achieve and


sustain high rates of investment
and to implement policies that
encourage the acquisition and


learning of new technologies. In
all cases, the allocation of public


investment is a key function of the
CDS, along with setting up of a pro-


investment regulatory framework
that would enable rapid catch-up


growth.


To accelerate catch-up growth, it is
necessary that the CDS possesses


appropriate governance capabilities,
both to create additional incentives


and rents for investment and
acquire mastery over advanced


technologies.




91CHAPTER 3. Activating the Developmental State in LDCs: The Role of South–South Cooperation


This section considers firstly how such positive synergies can be created, and
secondly the mutual advantages between the LDCs and their Southern partners
which can motivate their activation.


1. POSITIVE SYNERGIES


Action is required by both the LDCs and by their Southern cooperation
partners to create positive synergies between the CDS and South–South
cooperation.


(a) What LDCs can do


For LDCs, domestic ownership and leadership of policies is a sine qua non
for enhancing the development benefits of any kind of development cooperation,
whether North–South or South–South. Mainstreaming South–South cooperation,
both interregional and intraregional, into the national development strategies of
LDCs is thus a necessary condition to ensure that South–South cooperation
promotes rather than hinders the achievement of the development goals of the
LDCs. For the CDS, as argued above, the question of strategic integration into
the global economy is a critical issue. Thus, from the policy perspective, the
issue would be whether South–South cooperation enables a different kind of
integration into the global economy, which is more developmentally effective.
Mainstreaming South–South cooperation into national development strategies
would thus involve strategically shaping the integration into the global economy
in a way which supported national development goals through South–South
cooperation.


It is clear that, with current policies, globalization has not fostered the
desirable kind of structural change in LDCs that could pull labour from less to
more productive activities. A CDS in LDCs would seek to use South–South
cooperation to re-shape its integration into the global economy in ways which
would enable the structural transformations necessary for creating decent
and productive employment opportunities and achieving substantial poverty
reduction.


Two central objectives of the CDS in LDCs should be to promote learning
and enhance resilience. Openness works positively only if the phenomenon
of learning is suitably institutionalized on the policy side, involving appropriate
government interventions that would make the domestic economy more
responsive to change. In general, managed South–South cooperation has the
potential to facilitate openness and learning in a far more rational and efficient
way than the unmanaged global market is doing and the CDS in LDCs should
seek to capitalize on this.


Intensifying South–South integration is also likely to be a valuable strategy
for the CDS because the diversification of markets and investment sources
enables greater resilience. The differential responses of LDCs in the global
recession of 2009 clearly demonstrated how strategic Southern integration can
affect volatility. Those LDCs which were relying more on regional markets were
buffered somewhat from the sharp downturn in Northern markets.


Mainstreaming South–South cooperation into national development
strategies of CDSs will have both regional and interregional dimensions.
However, the CDS will, in particular, seek to integrate a regional dimension into
national policymaking. This issue will be taken up in more detail in section E of
this chapter, which addresses developmental regionalism. However, it can be
noted that there are a number of benefits which LDCs can gain from regional
cooperation. First, most LDCs lack a sufficiently large and diverse home market


The benefits of South–South
cooperation will be greatest when
a dynamic two-way relationship
is established in which policies


carried out by CDSs in LDCs and
South–South cooperation reinforce
each other in a continual process of


change and development.


From the policy perspective, the
issue would be whether South–


South cooperation enables a
pattern of integration that is more


developmentally effective.


Two central objectives of the CDS in
LDCs should be to promote learning


and enhance resilience.




The Least Developed Countries Report 201192


(that could allow diversification of the industrial structure), and thus regional
markets provide an important economic space within which learning over time
can take place. Second, there are major opportunities for the achievement of
economies of scale through the provision of various kinds of regional public
goods which would benefit LDCs and other developing countries within regional
groupings. Such regional public goods include various kinds of physical
infrastructure supporting transport, communications and energy, as well as
regional science and technology infrastructure, and regional innovation systems.


In addition, with regard to the agricultural constraints to development in
LDCs, reflected in their inability to generate surplus and to guarantee food
security for all, joint adaptive research with neighbouring countries, regional
storage facilities and coordinated investment programmes at the regional level
can all make a difference. Finally, financial deepening can also have a strong
regional dimension, as will be discussed in the last chapter.


Although intensified South–South economic relationships are likely to become
a central element of the approach of the CDS in shaping its strategic integration
into the global economy, this should not be treated as a simple substitute for
traditional North–South relationships. The latter remain very important for most
LDCs. Thus the challenge for LDCs is to maximize the developmental benefits
of both North–South and South–South cooperation and to articulate them in a
positive way. This is a challenging task, particularly given the different modalities of
cooperation. However, the new alternative opportunities associated with South–
South cooperation should enable greater policy space for LDC governments.


To use this policy space effectively, it is important that LDCs develop
institutions which allow them to integrate different forms of cooperation at the
national level. As discussed in earlier Least Developed Countries Reports, one
possible tool is the establishment of an aid management policy, which includes
both an information system for tracking both North–South ODA flows and
South–South official financial flows, as well as regular national forums in which
LDC governments discuss with their cooperation partners the development
effectiveness of their support.


(b) What Southern partners can do


While LDCs themselves must exercise leadership to make the most out of
South–South cooperation, it is clear that South–South cooperation has certain
features which can particularly support the building of developmental State
capacities in LDCs and also help to overcome the constraints facing CDSs.
Southern cooperation partners can best support the LDCs if their cooperation
efforts accentuate these features.


Two features are particularly important. Firstly, given the development
experience of major development partners in the South, South–South
cooperation is more likely to support and encourage developmental State–
building than traditional forms of development cooperation. Secondly, building
productive capacities has been much more integral to South–South cooperation
than traditional development assistance. Thus, South–South cooperation can
not only support developmental State–building, but also support the objectives
of developmentally effective States.


(i) Developmental State-building


Building a developmental State in LDCs is not an easy task. It is constrained,
in part, by the damaging institutional legacy of neoliberal adjustment policies
that have seriously weakened State capacity and left it vulnerable to capture by
narrow interest groups (Mkandawire, 2001); and in part, by the failure of their


South–South relationships should
not be treated as a substitute, but
a complement to traditional North–


South relationships.


To use the policy space effectively,
it is important that LDCs develop


institutions which allow them
to integrate different forms of


cooperation at the national level.


LDCs themselves must exercise
leadership to make the most out


of South–South cooperation.


The challenge for LDCs is to
maximize the developmental


benefits of both North–South and
South–South cooperation and to
articulate them in a positive way.




93CHAPTER 3. Activating the Developmental State in LDCs: The Role of South–South Cooperation


own elites to support a strong State able to endogenize virtuous and inclusive
circles of growth. The resulting failure to effectively mobilize domestic resources
has restricted the capacity of LDCs, and left them too heavily dependent on
resources from abroad which often come with policy conditions and have led
at best to the persistence of resource gaps and at worst a vicious cycle of
economic stagnation and institutional decay.


This problem has been exacerbated by an anti-State rhetoric that has often
come with development cooperation, whether attached to financial assistance
from multilateral or bilateral sources or the conditions that come with trade
agreements of one kind or another. This rhetoric employs a language that implies
the State is somehow external or foreign to the market economy and that it
“intervenes” or “meddles” in matters that should be none of its business. This
ignores the fact that the State has always been an important actor in the market
economy and indeed an integral part of it. Historically, the State has always
been an instigator of innovation in successful economies: it was institutional
development by the State that laid the basis for the “efficient set of markets
that make possible the growth of exchange and commerce” (North, 1990:130).
Ignoring this obscures the real problem for developing countries, which is not so
much to roll back the State as far as possible but to transform it in to an effective
developmental institution.


In the Least Developed Countries Report 2009, it was argued that building
developmental State capabilities in LDCs would take time but “(they)… can build
incrementally through policy learning and institutional experimentation, focusing
initially on extending the experience of islands of excellence within administration
and executive agencies and aiming to build governance capabilities required to
relax binding constraints on the development of productive capacities” (Least
Developed Countries Report 2009: 50–51). It was also argued that policy space
is necessary to allow policy pluralism and experimentation.


Against this background, South–South cooperation can play an important
role in supporting LDCs to build developmental State capabilities. This can
happen through three main channels: (a) supporting capacity–building efforts;
(b) sharing policy lessons; and (c) providing alternative sources of finance.


The great potential for knowledge-sharing which supports policy learning
and institutional experimentation in LDCs is rooted in the fact that all developing
countries face similar challenges. Thus, even the larger Southern economies
face problems with respect to poverty levels, technological gaps and non-level
playing fields, similar to those which LDCs face, though to a much less severe
degree. On top of this, successful developing economies continue to formulate
and implement developmental policies and to build developmental institutional
arrangements.


More advanced developing economies have different kinds of relevant
experience. First, they have successfully employed a mix of policies and
institutions to expand their productive capacities and promote wider and
deeper linkages between the export sector and the rest of the economy, which
redefined their development paths, industrial strategies and trade priorities.
Thus, for example, developing countries such as China, India, Brazil and the
Republic of Korea, among others, have gained useful experience by employing
the purchasing power of the State to promote the creation of small and
medium-sized enterprises and local suppliers. Second, they have introduced
poverty reduction schemes which integrate poverty reduction with productive
transformation. In this regard, it is worth mentioning Brazil’s Bolsa Familia and
India’s rural employment guarantee scheme, as well as the role of China’s
Spark Initiative in generating rural non-farm employment within town and village
enterprises in the 1980s.


South–South cooperation can play
an important role in supporting
LDCs to build developmental


State capabilities. This can happen
through three main channels: (a)


supporting capacity–building efforts;
(b) sharing policy lessons; and (c)
providing alternative sources of


finance.


Even the larger Southern economies
face problems with respect to


poverty levels and technological
gaps.


The great potential for knowledge-
sharing which supports policy


learning and institutional
experimentation in LDCs is rooted in
the fact that all developing countries


face similar challenges.




The Least Developed Countries Report 201194


In short, policy–learning based on experiences from the more advanced
developing countries may help LDCs to create new instruments and institutions
to develop their productive capacities in a way which promotes structural
transformation, employment generation and poverty reduction.


Policy learning can be encouraged in various ways including (a) the
organization of seminars and round tables; (b) sponsoring internships and
visits of LDC officials in key development planning institutions and ministries;
and (c) enabling academic exchange on development policies and strategies
between research institutions and universities of LDCs and Southern partners.
However, it should be noted that this requires resources and commitment. In
2000, as part of its preparations for the Third United Nations Conference on
LDCs, UNCTAD, together with the International Labour Organization, undertook
a study of desirability and feasibility of adopting the Brazilian Bolsa Escola
scheme in African LDCs, recommending its relevance (ILO and UNCTAD, 2001).
However, this idea, which was ahead of its time in terms of the South–South
diffusion of the Brazilian policy innovation, subsequently was not transferred to
LDCs, owing to under-resourcing. In general, technical capacity-building should
be pursued as well as South–South policy dialogues to draw policy lessons from
experience.


The provision of alternative sources of finance is another major channel
through which South–South cooperation can support the building of the CDS in
LDCs. Financing public investment, particularly in social sectors and for physical
and technological infrastructure, is a critical function of the developmental State.
At present, the effectiveness of the State in LDCs is handicapped by a scarcity
of public resources.


Some figures can illustrate the scale of the challenge of financing governance
in LDCs by examining national accounts statistics. They show that the average
GDP per capita per day in LDCs in 2009 was $1.59 and that household
consumption per capita per day was $1.14. What this means is that, on average,
the LDCs had 45 cents per person per day as domestic resources available
for financing both public and private investment, and also for running the
government, including paying the wages and salaries of all government workers
and also purchasing the goods and services required to operate the economy
smoothly. These numbers are in market prices and at current exchange rates,
and obviously there are purchasing power differences which allow money to go
further. But there is only 45 cents per person per day for all investment needs,
as well as running the police, judicial system and administration at local and
national levels.


In practice, the national accounts show that government final consumption
expenditure (i.e. expenditures on wages and salaries of government workers
and purchases of goods and services) in the LDCs in 2009 was actually 20
cents per person per day in LDCs, compared with $20 per person per day
in developed countries. The developed countries spent a higher percentage of
their GDP (19 per cent) on governance than the LDCs (12 per cent). But even
if the LDCs increased the share of GDP spent on governance to the developed
country level, this would only mean that they would be able to spend 30 cent
per person per day. What kind of developmentally effective governance can this
amount buy?


As a result of this situation, LDCs are highly dependent on traditional donors.
But as discussed in the Least Developed Countries Report 2009, this is not at
present working to create developmentally effective States in LDCs. It is, rather,
focused on a specific good governance agenda which limits the developmental
role of the State.


Policy–learning based on
experiences from the more


advanced developing countries
may help LDCs to create new
instruments and institutions to


develop their productive capacities
in a way which promotes structural


transformation, employment
generation and poverty reduction.


The provision of alternative sources
of finance is another major channel


through which South–South
cooperation can support the


building of the CDS in LDCs. The
effectiveness of the State in LDCs


is handicapped by a scarcity
of public resources.




95CHAPTER 3. Activating the Developmental State in LDCs: The Role of South–South Cooperation


One ironic aspect of this is that ODA which is rhetorically justified as
supporting a private sector approach to development has been more related
to donor demands than to the interests of the local business class. Mkandawire
(2001: 309) has suggested that one of the main constraints of the practice of
structural adjustment policies has been the failure to develop the private sector.
As he puts it:


“Wanton liberalization of markets without careful consultation with business
classes, privatization that provides no special privilege to local capitalists,
cessation of directed credit or ‘development finance’, high interest rates,
all these underscore the distancing of the State from local capitalist interests
and the preeminent position of international financial institutions’ interests and
perceptions in policymaking.”


More recently, the PRSP process has continued this marginalization of the
business perspective in policy formulation and implementation. The shift from
aid to support production sectors towards aid to support social sectors, noted in
earlier Least Developed Countries Reports, is an aspect of this marginalization.


It is possible that the understanding by traditional donors of what it means
to have a developmentally effective State in an LDC context is now shifting
somewhat after the global financial crisis. However, South–South cooperation
can also loosen the key financial resource constraints which limit developmental
State action, and also enhance LDCs’ room for maneuver.


Finance from other developing countries can directly enable policy initiatives
in LDCs which do not correspond with the preferences of traditional donors.
Moreover, new demand for natural resources from Southern partners can help
to boost natural resource rents in LDCs which can also support domestic
resource mobilization. Helping to lift the financial resource constraint of LDC
governments, either directly or through indirect effects on domestic resource
mobilization, can be as important a form of South–South cooperation as helping
to lift the technical capacity constraint through support for policy learning.


Finally, in this context, it must be stressed that an important feature of official
finance from Southern partners is that, though it is often commercially tied, it
does not come with policy conditionalities. This is critically important in opening
policy space and the possibilities for policy initiatives and experimentation in
LDCs, which are the basis for developing domestic ownership of policies and
institutional learning.


(ii) Building productive capacities


A second important basis for positive synergies between CDSs in LDCs
and South–South cooperation arises because South–South cooperation
is often oriented to building productive capacities and at the same time the
development of productive capacities is one of the primary objectives of the
CDS. As a result, South–South cooperation can not only support the building of
catalytically effective States in LDCs, but also the achievement of the objectives
of such States.


There are three main channels through which South–South cooperation
potentially supports the development of productive capacities in LDCs: (a)
through official financial flows for production and economic infrastructure;
(b) through technology transfer and support for technological learning at the
enterprise level in LDCs; and (c) through the provision of preferential market
access in a manner which permits, or even promotes, learning. Currently, the
first is most important while the second is developing.


Finance from other developing
countries can directly enable policy


initiatives in LDCs which do not
correspond with the preferences


of traditional donors.


An distinct feature of official finance
from Southern partners is that,
though it is often commercially


tied, it does not come with policy
conditionalities. This is critically


important in opening policy space
and the possibilities for policy
initiatives and experimentation


in LDCs, which are the basis for
developing domestic ownership of
policies and institutional learning.




The Least Developed Countries Report 201196


Although official financial flows from Southern partners to LDCs covers a
wide range of activities, they tend to focus more on infrastructure and productive
sectors compared with traditional donors who increasingly target the social
sectors. The situation is particularly striking in Africa, where China, India and
Arab countries are all active in the provision of infrastructure finance to African
LDCs (see Least Developed Countries Report 2010).


South–South technology transfer is also an important channel for developing
productive capacities in LDCs. Technologies available in Southern countries are
often more suitable to the needs and requirements of LDCs, at similar level of
development, thereby confirming the scope for technology transfer. Moreover,
the necessary human capital requirements for utilizing and adopting the new
technologies, originating in the South, may be more absorbable, cost-effective,
and generally more available in other developing countries than in the North.
Joint adaptive research and development, especially in agriculture holds much
promise for South-South cooperation.


A good example is the way that Brazil has been providing technical
assistance to the Cotton-4 countries — Benin, Burkina Faso, Chad and Mali
— through its agency EMRAPA. The main objective of this project is to increase
productivity as well as production in the cotton sectors of the recipient countries
through the transfer of Brazilian technology. Similarly, China has helped Benin to
build a ginnery with capacities to process cotton from Benin and other Cotton-4
countries, thereby helping these countries to move up the cotton value chain.


Another good example of a Southern initiatives to promote technology transfer
is Turkey’s initiative, announced during the Fourth United Nations Conference
on the Least Developed Countries (LDC–IV), to host an International Science,
Technology and Innovation Centre dedicated to LDCs, which will also serve as a
“technology bank” to help LDCs access and utilize critical technologies. Its aim
will be to foster the adoption of technologies and create a culture of innovation,
as well as to advance technology transfer programmes to LDCs.


While the focus of South–South cooperation on productive sectors, physical
infrastructure and technological transfers and acquisition are current features of
South–South cooperation, the provision of enhanced market access for LDCs
in a way which encourages learning by LDC enterprises is nascent. However,
it could become more important as a channel through which South–South
cooperation could support the objectives of the CDS through developing
productive capacities.


This is in contrast to past experience, which shows that some forms of
market access which are tied to input provision from the final market encourage
a maquiladora type of integration in which technological upgrading is limited.
The classic example is found in the Caribbean Basin (see Mortimer, 1999).
Limited product coverage in preferential market access schemes can also
stymie diversification and upgrading.


Another way in which Southern partners have been enabling learning in
LDCs is through specially designed regional and bilateral free trade agreements
in a way which provides LDCs with breathing space — extra time to liberalize —
so that they have the time to help their domestic enterprises develop necessary
capabilities to compete. In recent years, various Southern countries have started
preferential trade schemes for LDCs in the form of duty-free, quota-free market
access provisions. A critical issue is whether these schemes will provide a
training ground for LDC enterprises to upgrade production. As will be discussed
below, this is not likely to be automatic. Thus, designing these schemes in such
a way that can realize the nascent potential of South–South trade to support
learning and upgrading is important.


There are three main channels
through which South–South


cooperation potentially supports
the development of productive
capacities in LDCs: (a) through


official financial flows for production
and economic infrastructure; (b)
through technology transfer and


support for technological learning at
the enterprise level in LDCs; and (c)
through the provision of preferential
market access in a manner which


permits, or even promotes, learning.


Joint adaptive R&D, especially in
agriculture holds much promise for


South-South cooperation.




97CHAPTER 3. Activating the Developmental State in LDCs: The Role of South–South Cooperation


2. TOWARDS MUTUAL ADVANTAGE BETWEEN
LDCS AND SOUTHERN PARTNERS


While a dynamic two-way relationship can be established between CDSs in
LDCs and South–South cooperation, it is clear that, for this to occur in practice,
the relationship between LDCs and their Southern partners should not only be
valuable to the former but also lead to mutual advantage.


In this regard, the fundamental principles of solidarity and mutual respect which
underpin South–South cooperation are important. Given their shared histories of
colonialism and neo-colonialism, similar initial conditions and familiar economic
and political constraints, there are strong reasons to believe that South–South
cooperation and integration can avoid reproducing the asymmetries and biases
that have overshadowed traditional development cooperation. However, South–
South cooperation should not be thought of as a panacea for development and
should not be romanticized. While the donor–recipient relationship characteristic
of aid and development is absent in the context of South–South cooperation,
this does not mean that all can participate on an equal basis. South–South trade,
investment and development aid include both complementary and competitive
relations between the domestic interests of LDC nations and those of investors
and exporters from more advanced developing countries.


A further aspect of the current situation is that, in successful developing
economies, South–South cooperation tends to be subordinate to the objectives,
strategies, orientations and priorities of foreign policy of national governments.
In most of these economies, it is used as a foreign policy tool to support the
realization of national objectives. This is not in itself bad. But this works in an
unequal way when, as is now the case in many LDCs, it is often unclear what
the objectives of national governance systems are owing to dearth of strong
States.


Nevertheless it is possible to identify a number of reasons why Southern
partners may be motivated to engage in the types of cooperation suggested
above and mutual advantages obtained with LDCs.


Firstly, there is a potential to create mutually beneficial market gains and
opportunities for both partners. Market–seeking is one of the main determinants
of trade relationships and outward investment of leading Southern economies
in other less developed countries, notably LDCs. In this context, South–South
cooperation should be seen as a policy tool that can facilitate the building of
new markets both in terms of production and consumption.


Secondly, LDCs offer access to natural resources which their Southern
partners need. Southern investment in LDCs in exploitation of these resources
can be mutually beneficial for both parties provided the policy framework focuses
on its developmental impact.


Thirdly, regional prosperity and regional stability cannot be achieved without
the participation of all the countries in the region, including the LDCs. Strategic
geopolitical interests also play an important rational that provides motivation for
cooperation with LDCs.


Fourthly, the LDCs can work jointly with Southern partners to better articulate
their common voice and exercise their collective influence in all forums. Other
Southern partners could also gain from broadening the voice and participation
of a larger membership of countries, in order to better articulate the needs of
developing countries in general, and their collective bargaining power vis-à-vis
the transnational corporations (TNCs), in particular.


Relationship between LDCs and
their Southern partners should not
only be valuable to the former but


also lead to mutual advantage.


The fundamental principles of
solidarity and mutual respect which
underpin South–South cooperation
are important. Given their shared
histories of colonialism and neo-


colonialism, similar initial conditions
and familiar economic and political


constraints, there are strong
reasons to believe that South–South


cooperation and integration can
avoid reproducing the asymmetries
and biases that have overshadowed
traditional development cooperation.


Southern partners may be
motivated to engage in the types


of cooperation where there is
a potential to create mutually


beneficial market gains and market
seeking. LDCs offer access to
natural resources which their


Southern partners need.




The Least Developed Countries Report 201198


D. South–South integration and
the development of productive capacities


Assessing the effects of South–South integration on the changes in the levels
of productive capacities of the LDCs is a complex task. However, this section
provides some evidence on the potential of the South as a training ground for
firms in LDCs to upgrade their production.


This issue can be addressed by assessing the level of complexity of new
exports. The importance of South–North and South–South trade to the current
levels of productive capacity can be estimated through the analysis of the
difference between the average complexity of the new products exported to
Southern countries and the average complexity of the new products exported
to Organization for Economic Cooperation and Development (OECD) countries
(North). New products are here defined as products that were not exported in
the previous two years, and products are considered more complex if they are
exported on average by more diversified countries producing more exclusive
goods.


The result of such analysis highlights that, in terms of the effect of South–
South integration on the productive capacity of the LDCs, there is no one–size–
fits–all. This is illustrated in chart 35, which shows the difference between the
average product complexity of new imports directed to the South and to the
North. Higher values of the difference between the average product complexities
are represented by higher values in the horizontal axis (right side), and indicate
that the South–South trade presents more opportunities to increasing the
complexity of the product-mix and, in consequence, the increase of productive
capacity.


The evidence depicted in chart 35 shows that for about half of the LDCs
the complexity of new products exported to the South was greater that the
complexity of new products exported to the North, during the period 2008-
2009. This illustrates the potential for learning and diversification that can be
gained from South-South trade. Rwanda, Togo and Chad are the countries
that benefitted more from South–South trade as a training ground to more
complex products during this period; conversely, Haiti, Niger, Equatorial Guinea
and Bangladesh are the countries that made most use of South–North trade to
diversify their production structure and move towards more complex products.


This evidence suggests that simplistic generalizations regarding the impact
of South–South trade on the productive capacities should be avoided; however
the results suggest that South–South trade can be used as a training ground for
diversification towards more complex products. In the end, what will determine
the effect of South–South integration on the increase of productive capacities
is not the direction of the integration but the conditions in which the least
developed countries engage in the integration (Frieire, 2011).


Regional prosperity and regional
stability cannot be achieved without
the participation of all the countries
in the region, including the LDCs.


The LDCs can work jointly with
Southern partners to better


articulate their common voice and
exercise their collective influence


in all forums.


The evidence suggests that
simplistic generalizations regarding
the impact of South–South trade


on the productive capacities should
be avoided and that South–South


trade can be used as a training
ground for diversification towards


more complex products, but it is not
a panacea that can guarantee the
productive transformation of their


economies.




99CHAPTER 3. Activating the Developmental State in LDCs: The Role of South–South Cooperation


Chart 35. Comparative complexity of new products exported to the South and to the North by LDCs, 2009


Haiti
Niger


Equatorial Guinea
Bangladesh


Sudan
Samoa


Nepal
Sao Tome and Principe


Myanmar
Tuvalu


Cambodia
Afghanistan
Madagascar


Mali
Senegal


Timor-Leste
Comoros
Lao PDR


Mauritania
Solomon Islands


Djibouti
Benin


Central African Republic
Ethiopia
Sierra Leone


Somalia
Democratic Rep. of the Congo


Lesotho
Guinea-Bissau
Eritrea
Kiribati
Angola


Vanuatu
Zambia
Mozambique
Guinea


Gambia
Bhutan
Burkina Faso


Burundi
Malawi


United Rep. of Tanzania
Uganda


Yemen
Liberia


Chad
Togo


Rwanda


-0.4 -0.3 -0.2 -0.1 0.0 0.1 0.2 0.3 0.4


Difference between average product complexity of new products exported to the South and to the North


Source: Freire, 2011.




The Least Developed Countries Report 2011100


E. Developmental regionalism and South–South
cooperation: Integration beyond liberalization


1. THE NATURE OF DEVELOPMENTAL REGIONALISM


Developmental regionalism can be understood as a development-led
regionalism that accepts globalization as a historical trend, but rejects the
market-led approach to globalization. Developmental regionalism aims at
maximizing the benefits of regional cooperation with the goal of achieving an
advantageous insertion of the members’ economies into world markets. This
goal is not an end by itself, but only a means to accelerate economic, social and
human development.


Developmental regionalism is concerned with both the (a) internal economic
development and domestic integration, while at the same time, with (b)
strategic integration of the regional trading blocs into the world economy. As
is the case with other forms of regionalism, the most basic level of cooperation
covered by developmental regionalism is that of trade. However, the concept
of developmental regionalism goes beyond the domain of trade per se, and
includes other, more ambitious forms of intervention, such as industrial policy.
The term “industrial policy”, in the context of developmental regionalism, is to be
interpreted in the broadest possible sense. As such, it can involve a variety of
policy tools, and not only those traditionally associated to trade policies proper
–– from tariff and non-tariff barriers, to subsidies, concessional loans, direct
provision of infrastructure and other public goods (UNCTAD, 2007), promotion
of research and development and science and technology activities, State-
owned enterprises and State-controlled mixed enterprises, and many others.
For greatest impact and efficiency, these policies should be harmonized and
coordinated among participating countries in the regional association.


Under developmental regionalism, trade amongst regional partners is
favoured with respect to extra regional trade, implementing strategic trade
policies consistent with each member State’s domestic industrial policies.
Strategic trade policies may include traditional or less traditional tools — such
as tariffs, import and exports quotas and bans, and technical and phytosanitary
standards. In tandem with its holistic vision of development, regional trade
can also be promoted through coordination of investment to strategic
areas such regional transport and other ancillary infrastructure. Prioritizing
investment in strategic areas of common interest and common constraints
can help to overcome the pre-existing bias against regional trade caused by
the colonial legacy that characterizes many LDCs and other poor countries.
As many developing countries are better connected to other continents than
to neighbouring countries, they cannot fully benefit from the potential gains
of regional integration. In this context, “Regional trade facilitation projects can
directly reduce the transport costs of intraregional trade and unleash a virtuous
circle of increasing trade and economies of scale in the transport sector, and
reducing transport costs, which in turn may further stimulate intraregional trade”
(UNCTAD, 2007: 183). While, as noted above, a strong developmental State
is an asset that LDCs usually lack, this weakness represents a constraint that
can progressively be overcome. In order to speed up in a harmonious fashion
economic and social development, the promotion of developmental regionalism
should go hand-in-hand with strengthening the structures, institutions,
capabilities typical of the developmental State at the national level.


This kind of developmental regionalism aims at fostering industrialization
and accelerating economic and social development of member countries both


Development-led regionalism
accepts globalization as a historical


trend, but rejects the market-led
approach to globalization.


Developmental regionalism goes
beyond the domain of trade per se,
and includes other, more ambitious


forms of intervention, such as
industrial policy.


For greatest impact and efficiency,
these policies should be


harmonized and coordinated among
participating countries


in the regional association.




101CHAPTER 3. Activating the Developmental State in LDCs: The Role of South–South Cooperation


as goals per se, and as a means of successfully integrating their economies
in the global web of market relations. In the context of globalization, new
developmental regionalism strives to exploit to the maximum extent the benefits
that can stem from negotiating with other blocks and economic powers from a
position of relative strength, such the one allowed by member States’ collective
ability to act as a single player. The expanded regional market generated
through inter-State cooperation, along with temporary protection policies for
domestic capital, contributes to secure benefits for domestic firms over their
foreign competitors. In fact, developmental regionalism assumes the need for
gradual and sequenced trade liberalization together with conscious and planned
policy actions are enacted to build up productive capacities. The existence of
such productive capacities is seen as a necessary condition that will eventually
enable domestic businesses to participate in global market activities (Bowles,
2000; Nesadurai, 2002, 2003; Chandra, 2009).


2. EXAMPLES OF SUCCESSFUL DEVELOPMENTAL REGIONALISM


The experience of developmental regionalism is still in its infancy in most of
the developing world. African countries, supported by the AfDB and the NEPAD
as well as other partners, are also embarking into similar initiatives to promote
the creation of development corridors, and redress long-standing infrastructural
gaps. Although in general these initiatives are at a more incipient stage than
those in the Asian region, notable examples are: the North South corridor, which
connects Durban and Dar es Salaam, and the Maputo corridor linking South
Africa’s northern and eastern regions to the port of Maputo. So far, the most
successful examples of its practical realization can be found in Asia. Indeed, the
region where these processes are most advanced is East Asia, a region where a
positive, proactive view of integration has been prevailing for a long time (Taga,
1994; Fujita; Kuroiwa and Kumagai, 2011). Some examples are:


First, the recent experience of trilateral economic cooperation between
China, the Republic of Korea and Japan constitutes a successful example of
development regionalism. Trilateral cooperation in North-east Asia began in
2000, and has been focusing particularly on environment protection, transport
and logistics, and finance, and research and development. In the manufacturing
area, particular attention was devoted to the IT sector. The latter covered several
areas, from telecom service policy to network and information security. Yet, the
main strategic goal was the joint development of new technologies such as next-
generation Internet, open source software, and radio frequency identification
(RFID) sensor network. The three North-east Asian countries were aware of the
key role of IT for overall economic upgrading and industrial competitiveness.


China, Japan and the Republic of Korea adopted proactive government
commitments in order to generate synergy effects in technological development
and, more broadly, to enhance their firms’ international competitiveness. In the
North-east Asian cooperation context, developmental regionalism adopted an
Aikido-like approach, as it did not resist globalization as a whole, seeking rather
to use its own momentum to carve for its members a solid position in the global
marketplace, fostering proactive integration, cooperation, coordination and
harmonization (Doidge, 2007; Yoshimatsu, 2008).


Second, since the mid-2000s, the Asian Development Bank (ADB) has
been playing a catalyst role for of regional cooperation and integration in East
Asia. To this purpose, the Bank established in 2005 a new Office of Regional
Economic Integration. The ADB faces various challenges in effectively promoting
regional cooperation and integration, due to inadequate resources to address
capacity-related constraints (Hamilton-Hart, 2003), other technical and political
difficulties, and the accusation of focusing too much on East Asian integration to


Developmental regionalism aims
at fostering industrialization and


accelerating economic and social
development of member countries


both as goals per se, and as a
means of successfully integrating
their economies in the global web


of market relations.


Since the mid-2000s, the Asian
Development Bank (ADB) has been
playing a catalyst role for of regional


cooperation and integration
in East Asia.




The Least Developed Countries Report 2011102


the detriment of the other constituent regional groupings. However, the ADB has
been able to make an increasingly effective contribution to regional cooperation
and integration initiatives and activities, especially those aimed at enhancing
productive capacity in the less developed countries of the region (Dent, 2008).


The ADB supports proactive integration, rather than passive integration.
While the latter does not go beyond the removal or reduction of trade, focusing
exclusively on economic liberalization and deregulation, proactive integration
implies a far more comprehensive range of forms of policy cooperation,
coordination and harmonization. The ADB stance stems from two main sources
of inspiration: (a) its mandate of providing development capacity assistance
to the region’s less developed countries; and (b) the persisting influence of
Japanese developmentalism, that still pervades the policy approach of both the
Bank and of East Asian governments (Taga, 1994).


Third, the Brunei-Indonesia-Malaysia-Philippines East ASEAN Growth Area
(BIMP-EAGA) is one of the subregional “growth polygons” that were established
since the early 1990s to foster the process of regional integration among the
member States of the Association of Southeast Asian Nations (ASEAN). As these
subregional zones include very poor countries, they face significant challenges.
The BIMP-EAGA has tried to overcome these challenges by adopting the
principles of developmental regionalism, promoting activities aimed at enhancing
the economic capacity and prospects of lesser-developed countries in order to
foster their integration into the regional economy. The BIMP-EAGA initiative has
achieved a measure of success, yet progress towards substantial subregional
development cooperation is still inadequate (Dent and Richter, 2011).


3. THE IMPORTANCE OF REGIONAL SUPPORT MECHANISMS
WITHIN DEVELOPMENTAL REGIONALISM:


THE CASE OF THE ADB COORDINATED GMS PROGRAM


The ADB-coordinated Greater Mekong Subregion (GMS) Program (see chart
36) can also be considered a successful example of developmental regionalism.
However, this case of good practice also illustrates the importance of an
integrated regional development approach to ensure that LDCs also benefit. The
GMS, which started in 1992, involves all the major actors around the Greater
Mekong area, such as Thailand, China, and all the LDCs in the region, ASEAN
and ASEAN’s development partners including Japan. It is the only regional
cooperation programme specifically targeting all LDCs in the region. The core of
GMS is to enhance the infrastructure of industrial development in the region by
implementing programmes in areas of transport, telecommunications, energy,
tourism, trade facilitation, investment, human resource development and
agriculture (Chang, 2011) . The basic strategy is to attract private investment
to the region and facilitate cross-border trade, investment and tourism by
strengthening infrastructure linkages. To enhance transportation linkage over
the region covering three East Asian LDCs, Thailand, Viet Nam and Yunnan
Province as well as Guangxi Zhuang Autonomous Region of the PRC, the GMS
programme introduced three economic corridor projects: (a) the East-West
Economic Corridor (Myanmar, Thailand, the Lao People’s Democratic Republic
and Viet Nam); (b) the North–South Economic Corridor (China – Yunan, Guangxi,
the Lao People’s Democratic Republic, Thailand, Viet Nam and Myanmar); and
(c) the Southern Economic Corridor (Cambodia, Thailand and Viet Nam). As of
2009, the GMS Program had completed 44 projects with total investment of
$11 billion (Chang, 2011).


The basic strategy is to attract
private investment to the region and


facilitate cross-border trade and
investment and human resource
development by strengthening


infrastructure linkages.


The GMS Program involves powerful
actors operating far beyond the
GMS region who tend to have
major control over the flows of


goods, investment and technology.
The interests of those international
players often contradict the wider
developmental goals of LDCs and


people’s immediate needs within the
subregion.




103CHAPTER 3. Activating the Developmental State in LDCs: The Role of South–South Cooperation


Chart 36. Economic corridors in the Greater Mekong Subregion


Source: www.adb.org/GMS/Economic-Corridors/default.asp




The Least Developed Countries Report 2011104


The formation of the GMS region and the project itself involves powerful
actors operating far beyond the GMS region, and it is these actors who tend
to have major control over the flows of goods, investment and technology
(Glassman, 2010). The interests of those international players often contradict
the wider developmental goals of LDCs and people’s immediate needs within
the subregion. Therefore, simple exchange of comparative advantages runs
the risk of, rather than facilitating subregional cooperation, through which
participating countries collectively satisfy the needs of people in the subregion,
simple substitution of LDCs into roles that primarily enhance the power and
economic influence of either the big players in the region or of TNCs from
outside the GMS. There is undeniably a danger that, as the second phase of
the GMS project is marked by promoting private sector participation and cross-
border trades by them, the final product of the GMS may become simply island
industrial zones dominated by transnational players, connected by and taking
advantage of public-funded infrastructure (Chang, 2011).


Serious attempts to devise public initiatives that can maximize this new
infrastructure and of the potential extension of regional production networks
should be made to take advantage of the booming private investment into the
region for more strategic long-term goals of development of LDCs other than
recycling the usual cheap labour advantage. For that purpose, it is necessary
to evolve regional support mechanisms (RSMs) — regionally planned and
coordinated sets of policies that allow LDCs to benefit from regional cooperation
and integration by collectively addressing the structural weakness of LDCs,
including limited access to regional markets, weak human resources, poor
physical infrastructure, low technological capabilities, excessive dependence on
external sources of growth, low share of manufacturing in GDP, high levels of debt
and chronic deficit balance of trade. In East Asia, ASEAN’s Initiative for ASEAN
Integration and Early Harvest Schemes for LDCs in free trade agreements (like
the China–ASEAN Free Trade Agreement) are examples of RSMs, although these
policies are limited in scope. More comprehensive RSMs would include not only
policies improving market access for LDCs through tariff cuts, but also regionally
coordinated industrial policy supporting productive capacity of LDCs through
protecting LDCs producers, promoting technology transfer and assistance and
facilitating inverse import to more advanced economies of the region.


Without coupling infrastructure building with proper RSMs, equipped with
industrial policies that can support the process of productive capacity building
of LDC players, ADB’s plan to develop the region’s poor countries by building
an environment for more trade and industrial investment through mega scale
infrastructure building may not lead to prosperity for all. When considering the
poor, whose livelihoods are being affected by massive infrastructure building and
commercialization of agriculture, promoted by the project, the need for policy
intervention that is sensitive to the needs of the LDCs, is even more urgent
(Chang, 2011).


Leaving the development of LDCs and coordination of regional integration
entirely to free-market schemes is unlikely to guarantee balanced regional
development as it hampers the development of RSMs and deeper South–
South cooperation through which increasing intraregional trade and investment
can promote industrial capacity of LDCs and address the needs of LDCs.
Properly coordinated regional intervention for development of LDCs has even
more significant implications for the poor in LDCs. Political and institutional
infrastructure for more South–South cooperation and RSMs is indeed available
as a consequence of the contradictory unfolding of regional integration, even
though the process was driven by TNCs. Thus, a regional development
framework that is carefully and thoroughly designed to minimize the development
gap between the key actors should be an important feature of developmental
regionalism which includes LDCs.


It is necessary to evolve regional
support mechanisms (RSMs) —


regionally planned and coordinated
sets of policies that allow LDCs to
benefit from regional cooperation


and integration by collectively
addressing the structural weakness


of LDCs.


A regional development
framework that is carefully and


thoroughly designed to minimize
the development gap between


the key actors should be an
important feature of developmental


regionalism.




105CHAPTER 3. Activating the Developmental State in LDCs: The Role of South–South Cooperation


F. Conclusions


An important feature of the Istanbul Programme of Action (IPoA) is the
complementary role of South–South cooperation in supporting development
and poverty reduction in the LDCs (section 5). Its basic message is that South–
South cooperation could substantially enhance the achievement of the goals
of the IPoA. It emphasizes shared experiences and objectives of developing
countries, as well as the potential of South–South cooperation to build upon
them. Most notably, the IPoA recognizes that South–South cooperation
could substantially contribute to its implementation in areas such as human
and productive capacity–building, technical assistance and exchange of best
practices, particularly on issues relating to health, education, professional
training, agriculture, environment, science and technology, trade and investment
(para. 131).


This chapter has discussed how South–South cooperation could best
support the achievement of development and poverty reduction in the LDCs. It
has made three basic points.


First, it has argued that South–South cooperation will work best in the
context of effective States in LDCs which take leadership of the development
process and catalyse development processes. Such a catalytic developmental
State would actualize one of the key principles of the new Programme of
Action, which is “balanced role of the State and market consideration, where
the Government in least developed countries commits to design policies and
institutions with a view to achieving sustainable and inclusive economic growth
that translates into full employment, decent work opportunities and sustainable
development” (section III: 8).


Second, it has argued that South–South cooperation can and should support
the building of catalytically-effective States in LDCs and that the benefits of
South–South cooperation will be greatest when there is an interactive relationship
in which South–South cooperation supports the building of developmental
State capacities and the objectives of developmental States in LDCs, while the
developmental State in turn generates the benefits and augments the catalytic
impact of South–South cooperation.


Third, it has argued that developmental regionalism is an important
mechanism through which the catalytic developmental State and developmental
regionalism can reinforce each other. There are various successful examples
of developmental regionalism, particularly in Asia, which illustrate the potential.
However, past experience shows that the benefits of regionalism can be
unequally shared. LDCs will benefit through a concept of regional integration
which goes beyond liberalization — or integrated regional development through
trade, finance, investment, technology and employment. This may need specific
regional support measures.


South–South cooperation should not be romanticized or seen as a panacea.
But it can be a win–win strategy for LDCs and their Southern partners. Moreover,
as LDCs become more developmentally effective, this will also contribute to
improving the effectiveness of North–South development cooperation. In
the Least Developed Countries Report 2010, South–South cooperation was
identified as one of the key elements for the constitution of a new international
development architecture for LDCs. This chapter has outlined a conceptual and
policy framework showing how this might be turned into reality.


South–South cooperation
could substantially enhance


the achievement of the goals of
the IPoA. It emphasizes shared
experiences and objectives of
developing countries, as well


as the potential of South–South
cooperation to build upon them.


South–South cooperation will
work best in the context of


effective States in LDCs which
take leadership of the development
process and catalyse development


processes.


South–South cooperation can
and should support the building
of catalytically-effective States
in LDCs. However, it should not
be romanticized as a panacea.


But it can be a win–win strategy
for LDCs and their Southern


partners. As LDCs become more
developmentally effective, this


will also contribute to improving
the effectiveness of North–South


development cooperation.




The Least Developed Countries Report 2011106


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4CHAPTER
LEVERAGING


SOUTH–SOUTH FINANCIAL
COOPERATI0N FOR


LDC DEVELOPMENT




The Least Developed Countries Report 2011110


A. Introduction


One of the most fundamental challenges in implementing the new Istanbul
Programme of Action (IPoA) for least developed countries (LDCs) will be to
mobilize financial resources and direct them to productive use in a way which
leads to sustainable and inclusive growth. This chapter discusses specific ways
in which South–South financial cooperation could contribute to addressing this
challenge (see boxes 1 and 2). As expressed in paragraph 12 of the IPoA:


“Guided by the spirit of solidarity with least developed countries, developing
countries, consistent with their capabilities, will provide support for the
effective implementation of the programme of Action in mutually agreed areas
of cooperation within the framework of South–South cooperation, which is a
complement to, but not a substitute for, North–South cooperation”.


The chapter argues, firstly, that regional and subregional development banks
should play a larger role in supporting LDCs and also financing developmental
regionalism. It then goes on to make a novel proposal aimed at mobilizing
untapped resources of Southern partners in order to boost the provision of
development finance through regional and subregional development banks. The
central idea underlying this proposal is to channel a very small part of the foreign
exchange reserves increasingly held by developing countries towards regional
and subregional development banks. These banks would, in turn, intermediate
these financial resources in support of development-oriented investments in the
provision of regional, and also national, public goods, thereby enabling the LDCs
to build and strengthen their productive capacities.


As expressed in the IPoA, these proposals must not be seen as a substitute
for North–South development assistance. They are rather intended to improve
the diversity and efficacy of development financing in LDCs. The proposals are
intended to generate additional external resources. Moreover, they need to
take into account of the development challenges facing Southern partners, in
particular poverty.


The chapter is organized in four sections. Section B broadly discusses the
financial vulnerability of LDCs and situates South–South financial cooperation
as one policy option. Section C discusses the importance, and role of regional
and subregional development banks. Section D describes the relatively new
phenomenon of foreign reserve accumulation in the South and the emergence
of sovereign wealth funds in developing countries. Section E sets out a policy
proposal to channel resources from Southern sovereign wealth funds to regional
and subregional development banks. The conclusion summarizes key elements
of the argument.


B. LDCs’ financial vulnerability


Despite high economic growth between 2002 and 2008, the economic
performance in the LDCs continues to be characterized by a high reliance on
foreign savings and a limited domestic capacity to mobilize financial resources
for productive investments (see chapter 1 of this Report and also the Least
Developed Countries Report 2010 (UNCTAD, 2010a)). The weaknesses of the
domestic financial systems, in this respect, add a heavy burden to economic
activities. Standard indicators of financial development suggest that, in the
LDCs, financial intermediation remains extremely shallow and underdeveloped,
by international standards (see table 9). In particular, the limited access to


The chapter argues that regional
and subregional development


banks should play a larger role in
supporting LDCs and also financing


developmental regionalism and
makes a novel proposal aimed at
mobilizing untapped resources of


Southern partners in order to boost
the provision of development finance


through regional and subregional
development banks.


.... These banks would, in turn,
intermediate these financial


resources in support of
development-oriented investments


in the provision of regional, and
also national, public goods, which
would enable the LDCs to build
and strengthen their productive


capacities.


Standard indicators of financial
development suggest that, in the


LDCs, financial intermediation
remains extremely shallow and


underdeveloped, by international
standards.


One of the most fundamental
challenges in implementing the


new Istanbul Programme of Action
(IPoA) for least developed countries
(LDCs) will be to mobilize financial


resources and direct them to
productive use in a way which leads
to sustainable and inclusive growth.




111CHAPTER 4. Leveraging South–South Financial Cooperation for LDC Development


credit (evidenced by both the small amount of credit extended in relation to
GDP, as well as the high interest rate spread) is amongst the most binding
factors constraining firms’ capitalization and productive investments. While
large enterprises can sometimes escape these constraints by resorting to
international capital markets, the domestic small and medium-sized enterprise
(SME) sector is particularly affected by the weaknesses of the financial system,
which exacerbate the so-called “missing middle” (Least Developed Countries
Report 2006).


Moreover, LDCs’ intrinsic financial fragility, high level of indebtedness and
dependence on foreign capital inflows make them exceptionally exposed to
external shocks. The lack of domestic resources to cope with their impact is a
fundamental source of their vulnerability.


The persistence of LDCs’ extreme financial vulnerability was acknowledged
in the context of the Fourth United Nations Conference on the Least Developed
Countries (LDC–IV). For instance, in one of the pre-conference events,
participants “highlighted the persistent structural constraints faced by the
LDCs and their extreme vulnerability to external and internal shocks… These
constraints should all be taken into account when designing support measures
for LDCs… Donors should also bear in mind that alternative financial resources,
such as domestic resources, were limited in LDCs” (United Nations Office of the
High Representative for the Least Developed Countries, Landlocked Developing
Countries and Small Island Developing States (UN-OHRLLS), 2011).


Addressing the development finance challenge of the LDCs needs a multi-
dimensional and multi-partner approach. LDCs should, firstly, promote domestic
resource mobilization in order to decrease their dependence on external
financial sources. Strengthening the domestic financial sector, broadening
its outreach, diversifying the spectrum of available financial instruments, and
building up financial resilience should become key priorities in any meaningful
policy framework for future development of LDCs. Given the very low level of
financial development, public development banks — at national and regional
levels — have a fundamental role to play. Whilst promoting domestic resource
mobilization, LDCs also need to work with traditional donors to ensure that
they get more aid and more of that aid is oriented towards the development
of their productive capacities. At the same time, they should explore the
emerging opportunities to diversify their array of partners, thereby expanding
their resource envelope and decreasing their heavy dependency on traditional
financial sources.


As indicated in chapter 2, official flows from Southern partners to LDCs,
though still relatively small in relation to those of traditional donors, have been
increasing rapidly in recent years. The growing prominence of South-South
cooperation has been characterized by a multiplicity of actors and a plurality
of forms (see boxes 7 and 8). The rest of this chapter discusses, specifically,
possibilities for enhancing Southern financing as a complement, not as a
substitute, to traditional official development assistance (ODA).


Table 9. Selected indicators of financial development: LDCs and other country groups, various years
Domestic credit to private


sector (% of GDP)
Money and quasi money (M2)


as % of GDP
Interest rate spread (lending
rate minus deposit rate, %)


1990–
1992


2000–
2002


2007–
2009


1990–
1992


2000–
2002


2007–
2009


1990–
1992


2000–
2002


2007–
2009


World 105.8 128.2 133.4 .. 103.4 112.0 6.0 7.1 6.4
High income countries 115.9 145.5 160.1 .. 113.2 126.0 4.4 4.5 ..
Upper middle income countries 36.4 30.9 44.6 28.3 38.2 47.7 7.3 7.8 6.1


LDCs 11.9 14.8 19.1 21.0 26.9 31.1 8.2 12.5 10.0


Source: UNCTAD secretariat calculations, based on World Bank, World Development Indicators, online, June 2011.


LDCs’ intrinsic financial fragility,
high level of indebtedness and
dependence on foreign capital


inflows make them exceptionally
exposed to external shocks.


Addressing the development finance
challenge of the LDCs needs a


multi-dimensional and multi-partner
approach.




The Least Developed Countries Report 2011112


Box 7. South–South cooperation — multiplicity of actors and plurality of forms


From its political beginnings in the 1950s, the concept of South–South cooperation has evolved rapidly into intense trade
and investment links among developing countries. While there was less activity in the 1980s and 1990s, the new millennium
has witnessed a rejuvenation of South–South cooperation based on the resurgence of growth in a number of developing
countries. As the evidence throughout this Report indicates, this “rise of the South” is not only changing the economic reality
towards a more multi-polar world economy, but is also intensifying economic relations among developing countries through
trade, investment, migration, technology transfer and other channels. Developing countries increasingly find that it is in their
best interest to help promote development in other developing countries. As most of the countries of the South are pursuing
export-led growth, it is in their interest to intensify economic relations with countries capable of purchasing their exports, and
of providing them with imports they need. Increasingly, these partners are other developing countries.


As a consequence, one of the most important characteristics of South–South cooperation today is its overwhelming
focus on the development of productive capacities. For example, large, dynamic Southern economies are rapidly becoming
a driving force for infrastructure development in LDC countries. Through South–South cooperation, they provide investment
in key sectors such as transportation and energy. Given the fact that the traditional donors mostly target social sectors, the
emphasis of South–South cooperation on productive sectors makes it complementary to that of the former. In addition, it
increases the policy space and the room for manoeuvre of developing countries. Finally, it may entice the traditional donors
to shift the emphasis from social to productive sectors. According to Cook and Gu (2009), traditional donors have already
responded by again engaging in infrastructure projects in Africa.


A second important characteristic of current South–South cooperation is the multiplicity of actors. While the development
assistance of China, India, Brazil and South Africa has attracted the most attention, there are many other developing countries
that provide different forms of cooperation. Some are between middle-income developing countries such as the Promesa
project (Argentina–Peru), or the Development of Modern Greenhouse Practice (Turkey–Uzbekistan). Others are between
middle-income countries and the LDCs, such as the Pro-Huerta project (Argentina–Haiti), or the Kollo project (Tunisia–Niger).
LDCs also cooperate among themselves, as the Centre Songhai (Benin–Zambia) demonstrates. The list of countries engaging
in South–South cooperation is long, but in addition to those already mentioned, it is worth pointing out that the Bolivarian
Republic of Venezuela, Cuba and Saudi Arabia are also very active.


As these examples indicate, the bulk of South–South cooperation is of a bilateral nature. However, there are examples
of a regional cooperation as well. The Growth Triangle Initiative of Zambia, Malawi and Mozambique is one such example of
regional cooperation among countries at a similar level of development. Another one is the SMART School Project involving
Malaysia, Myanmar and the Lao People’s Democratic Republic. There are also types of cooperation that resemble the hub
and spoke relations where one pivotal country provides several countries with expertise, technology, investment and the
like. The Health Care for sub-Saharan Africa programme (Turkey–African countries) and the technical agricultural assistance
of Egypt to cotton-producing African countries illustrate that modality. Triangular cooperation is also present, either with a
developed country (Japan financing the training of nurses provided by Malaysia for Cambodian hospitals, for example) or with
an international organization (the UNCTAD TrainForTrade Programme).


The leading actors in South–South cooperation, however, are the largest Southern economies: China, India, Brazil and
South Africa. The importance of South–South cooperation for these countries is exemplified by the fact that all of them have
established special forums to enhance cooperation, either among them or with other developing countries. The examples
are the India–Brazil–South Africa Dialogue Forum (IBSA), the Forum for China–Africa Cooperation (FOCAC), and Africa–South
America Cooperation Forum (see UNCTAD, 2010b).


India has prioritized capacity–building and economic assistance to the LDCs, focusing on agriculture, infrastructure,
telemedicine, energy, banking and information technology implemented by its outstanding Indian Technical and Economic
Cooperation Programme. In addition, the country supplied nearly $5 billion credit lines to LDCs since 2003. It is important
to note that Indian private companies are very active, the leading example being the Tata Group in transportation, energy,
communications and pharmaceuticals, already operating in 14 African countries.


The Africa–India Forum provides a blueprint for India–Africa engagement in the twenty-first century. The Second Africa–India
Forum Summit, held in Addis Ababa in 2011, announced credit lines to Africa of around $5 billion for the next three years.
Building upon the achievements of the Pan-African E-Network Project launched in 2004, the establishment of an India–Africa
Virtual University and India–African clusters for food processing and textiles were also proposed.


India’s cooperation with LDCs in Asia and Pacific includes the leading role in the South Asian Association for Regional
Cooperation with four LDC members (Bhutan, Nepal, Bangladesh and Afghanistan) and growing relations with ASEAN as well
with its three LDCs (Myanmar, Lao People’s Democratic Republic and Cambodia). This cooperation includes investments,
finance, trade, technology transfer and human capital formation.


The cooperation of Brazil with LDCs over past decades has focused mainly on African Portuguese-speaking LDCs. In the
new millennium, however, a new page in Brazil’s economic and trade cooperation with the South has been turned. In trade
terms, Africa is already the fourth most important partner for Brazil. At over $20 billion in 2010, it has recorded considerable
growth, but is still far behind the figures for Africa’s trade with China (over $100 billion) or India ($32 billion).


Agriculture is one of the key sectors in Brazil’s cooperation with Africa, and a first Brazil–Africa Dialogue on Food Security,
Combating Hunger, and Rural Development was held in Brasilia in 2010. The issues of production of biofuels from sugar cane
have gained the prominence, given the high price of petroleum in the last several years.




113CHAPTER 4. Leveraging South–South Financial Cooperation for LDC Development


Brazil is increasingly involved in African infrastructure development. For example, Vale do Rio Doce, the leading Brazilian
mining company, is investing $1.7 billion in coal mining to start exporting over 11 million tons per year from the region of
Moatize, Mozambique. The project is the largest-ever investment in the Portuguese-speaking country and is expected to
increase the country’s GDP by several percentage points in the medium term and create 7,500 jobs, mainly for nationals. A
600 kilometres long railway from Moatize to the port of Beira is being rehabilitated by an Indian consortium and another railway
line is planned by Vale in the northern region of Mozambique, to connect Moatize with Nacala, the only deep-water port in the
country. The railway will cross Malawi, and is expected to boost economic and social development of that landlocked country.


Along with Nigeria, Brazil took the leadership in setting the Africa–South America Cooperation Forum, first held in Abuja in
2006, and then in Caracas in 2009. The forum has become a platform for dialogue and cooperation in a number of sectors
between the two regions with a series of economic and cooperation agreements being signed on trade, investment, tourism,
transport, mining, energy, agriculture, the environment and telecommunications.


Brazil’s activities with Haiti and East Timor are also worth mentioning. In Haiti, Brazil leads the MINUSTAH, the peace
mission of the United Nations. As one of the leading contributors to the Union of South American Nations, Brazil has played a
crucial role in the establishment of the $300 million fund to aid Haiti’s recovery. Moreover, Embrapa is implementing series of
projects to revitalize sustainable family farming agriculture in Haiti. In East Timor, Brazil participates in a triangular cooperation
project with Indonesia.


South Africa is also an important actor in South–South cooperation, but with almost exclusive emphasis on Africa. The
country has spearheaded the New Partnership for Africa’s Development (NEPAD) and has worked to promote Africa in the rest
of the world as a place to do business. South Africa plays an important role in the regional context and provides development
assistance to its less developed neighbours. The country is also very active in capacity–building, post-conflict reconstruction
projects and humanitarian assistance in many African countries.


Box 8. China’s cooperation with the LDCs


China’s growing involvement in South–South cooperation, particularly vis-à-vis African countries, has been the subject
of numerous recent studies.a Far from a comprehensive review of this literature, the present box intends to emphasize some
key features of the Chinese development cooperation, in its multiple intertwined facets. These characteristics – which partly
reflect China’s own development experience – are of paramount importance from the point of view of the development of
LDCs’ productive capacities, and render in many ways the partnership between LDCs and China potentially complementary
to that with traditional donors.


While China’s engagement in development cooperation dates to the 1950s, it has recently gained renewed momentum,
mainly at a bilateral level, but also with the establishment of the Forum on China–Africa Cooperation (FOCAC) in 2000 and
the strengthening of its ties with the Association of Southeast Asian Nations (ASEAN). China’s engagement in South–South
cooperation has remarkably strengthened during the last decade, touching an increasing number of countries, including some
that tended to be neglected by traditional donors. According to China’s Information Office of the State Council (2011), LDCs
receive nearly 40 per cent of China’s development assistance.


With an eye to the development of LDCs’ productive capacities, a salient feature of Chinese development assistance is the
prominence accorded to infrastructures’ provision. Such an emphasis is strongly complementary to the choices of traditional
donors – who have long privileged the support to social sectors – and well-tailored to LDCs’ long-standing infrastructural gaps.
In Africa, for instance, where the infrastructural funding gap is on the order to $10 billion per year, it is estimated that in 2007
the Chinese financial commitments to infrastructure projects totaled $4.5 billion (Foster et al., 2008). Improved infrastructures
are all the more crucial for LDCs in so far as they favor the emergence of intersectoral linkages in rural areas, as well as foster
regional integration, thereby overcoming the constraints posed by limited market size. Chinese projects have focused largely
on power and transport sectors (especially hydropower and railroads), and to a lesser extent information and communication
technology (mainly in the form of equipment supply); besides, they have typically been implemented as “turn-key projects”.


Infrastructural financing is mostly provided by China’s Eximbank (along with China Development Bank and China Agricultural
Development Bank) through grants and loans with variable degree of concessionality. Moreover, funds are usually tied to the
use of Chinese companies, which directly receive the accredited funds upon completion of the agreed works. In several LDCs,
the financing occurs in the form of resource-backed loans, the so-called “Angola mode”, although not all these projects are
classified as “development assistance” by Chinese authorities.


In addition, it is worth noting that China’s development cooperation pays great attention to productive sectors, again
complementing in that respect the traditional North–South assistance. Chinese projects have recently also touched the
industrial sector — notably through the setting up of Special Economic Zones, under the 2006 FOCAC framework. Three
of these Special Economic Zones are located in LDC countries — two in Zambia (see chapter 1) and one in Ethiopia – while
the others are located in Algeria, Egypt, Mauritius and Nigeria (two). Along the same lines, several recent projects aim at
promoting the domestic value addition by providing support to the transformation of primary commodities (fuel and sugar
refineries, paper mills, etc). Scholarships, trainings and technical assistance are also receiving growing attention on the parts
of Chinese authorities.


Box 7 (contd.)




The Least Developed Countries Report 2011114


China also provides assistance to the LDCs and other developing countries through triangular cooperation. In this respect,
it is interesting to note the growing number of tripartite cooperation projects, including through combining multilateral and
bilateral interventions. Notable examples, in this context, are the establishment of the International Poverty Reduction Centre
in China in partnership with the United Nations Development Programme (UNDP), the collaboration between the latter and
the Chinese African Business Council (CABC), the partnership with the Food Security Programme of the Food and Agriculture
Organization of the United Nations and the setting up of small-scale hydropower systems in 10 African countries (including 6
LDCs) in collaboration with the United Nations Industrial Development Organization (UNIDO) (UNDP, 2009). Similar initiatives,
aimed at knowledge and information sharing as well as projects co-financing, have recently been initiated with the World
Bank and the African Development Bank (Brautigam, 2010).


a The interested reader can refer to Broadman (2007), Brautigam (2008 and 2010), Foster et al. (2008), Davies (2010), Kragelund
(2010), Kaplinsky and Farooki (2010) and Berthelemy (2011).


C. The role of regional and subregional
development banks in regional


financial cooperation


1. TYPES OF REGIONAL FINANCIAL COOPERATION


Regional financial cooperation covers a wide spectrum of activities, including
(a) regional payments systems which provide financial incentives to intraregional
trade; (b) regional monetary systems which can provide liquidity finance to
cushion against external shocks; and (c) regional and subregional development
banks which provide long-term finance — development finance — to support
private and public investment.


Regional payments systems save foreign reserves and reduce the transactions
costs associated with the use of such reserves. But they can do more: they
can (a) provide short-term credit to deficit countries; (b) include dispositions that
ensure that both surplus and deficit countries contribute to a more balanced
position; and (c) create incentives for exchange rate coordination. In case of a
shortage of international currency, the existence of a regional payment system
can reduce — as it did during the debt crisis in the 1980s in Latin America — the
negative impact on regional trade.


Regional monetary funds can pool reserves and organize swap arrangements
among central banks, immobilizing a smaller volume of financial resources. They
can be instrumental in avoiding uncontrolled exchange devaluations that may
compromise the integration process. It might be argued that a regional reserve
pool would not work if an external shock affects the whole region. However,
external shocks often strike firstly and more intensely one or two countries. If the
stability of these countries — the weakest link in the chain — can be defended,
this may reduce the possibility of contagion to the other cooperating countries
(Ocampo and Titelman, 2009).


Regional and subregional development banks play an important role in
regional financial cooperation, as they are an important source of development
finance for regional member countries. Beyond providing increased development
finance at concessional terms, regional development banks can also facilitate the
establishment of innovative financial instruments, such as GDP-linked bonds or
diaspora bonds. By providing technical assistance in tailoring these instruments
to the specificities and needs of the various countries, and by acting as “market
makers” to facilitate the trading of innovative securities, regional development
banks could effectively reduce the cost of financing LDCs.


Box 8 (contd.)


Regional financial cooperation
covers a wide spectrum of activities


including (a) regional payments
systems; (b) regional monetary
systems; and (c) regional and


subregional development.


This Report focus on the potential
of regional development banks


in channelling finance to support
development in LDCs.




115CHAPTER 4. Leveraging South–South Financial Cooperation for LDC Development


These different types of regional financial cooperation described above can
contribute to the reduction of the financial fragility derived from high transaction
costs associated with the use of foreign reserves and the so-called currency
mismatch, issuing bonds and making loans in local currencies or helping to
introduce other financial assets. This Report focuses on one aspect of these
different type of regional financial cooperation — regional development banks —
and the potential of these banks in channelling finance to support development
in LDCs.


2. REVITALIZING REGIONAL AND SUBREGIONAL DEVELOPMENT BANKS


Important regional development banks for LDCs include (a) the Inter-American
Development Bank, created in 1959; (b) the African Development Bank, created
in 1964; and (c) the Asian Development Bank, created in 1966. In general, the
regional and subregional development banks in Asia and Latin America supply a
much greater share of total multilateral ODA within their respective regions than
the regional and subregional development banks in Africa do. Also, regional
development banks provide a relatively low share of total multilateral ODA
disbursements to LDCs (see table 10).


The Monterrey Consensus of the International Conference on Financing for
Development (United Nations, 2002) emphasized the crucial role which regional
and subregional banks can play “in serving the development needs of developing
countries and countries with economies in transition”. It also stressed that they
should “contribute to providing an adequate supply of finance to countries that
are challenged by poverty and should also mitigate the impact of excessive
volatility of financial markets”. Equally importantly, the Monterrey Consensus
argued that “Strengthened regional development banks and subregional financial
institutions add flexible financial support to national and regional development
efforts, enhancing ownership and overall efficiency. They can also serve as a
vital source of knowledge and expertise on economic growth and development
for their developing member countries.”1 This accumulated knowledge is an
important source of learning for LDCs about what works and what does not.


Revitalizing and strengthening the role of regional and subregional
development banks is an important component of the agenda of reforming
the international financial architecture (see Griffith-Jones and Ocampo, 2010;
Griffith-Jones, Griffith-Jones and Hertova, 2008; United Nations Department of
Economic and Social Affairs (UN-DESA), 2005) and such banks should play an
increasing role in financing development in the LDCs.


There are a number of advantages of regional and subregional development
banks. First, because of their regional ownership structure, regional development
banks can facilitate a stronger voice to developing country borrowers, as


Table 10. Multilateral ODA to LDCs, gross disbursements, 2005–2009
(Millions of 2009 dollars, constant price)


2005 2006 2007 2008 2009


Total Multilateral donors 13'787.0 46'875.2 16'074.0 15'894.6 18'812.0
Main regional development banks 1'783.4 6'942.9 2'089.3 2'273.0 3'468.2


African Development Bank 173.6 177.2 152.6 149.7 148.9
African Development Fund 1'017.8 5'967.4 1'088.5 1'114.8 1'852.2
Asian Development Fund 510.3 723.9 731.5 886.5 896.7
Caribbean Development Bank .. .. .. 10.8 14.2
Inter-American Development Bank, Special Fund 81.6 74.4 116.7 111.3 556.3


Main regional development banks
as a share of total multilateral (%)


12.9 14.8 13.0 14.3 18.4


Source: UNCTAD secretariat calculations, based on OECD-DAC database, September 2011.


The Monterrey Consensus
emphasized the crucial role which


regional and subregional banks can
play “in serving the development


needs of developing countries
and countries with economies in


transition”.


Revitalizing and strengthening the
role of regional and subregional


development banks is an important
component of the agenda of


reforming the international financial
architecture.




The Least Developed Countries Report 2011116


well as enhance regional ownership and control. Second, they can be more
effective because they tend to govern more through informal peer pressure
rather than imposing conditionality. Third, information asymmetries are smaller
at the regional level, given proximity as well as close economic and other ties.
In this regard, Helleiner (2010) has proposed that there should be a conscious
effort to translate the principle of “subsidiarity” into the practice of development
finance. That is to say, where development investments aspire to global or
transregional objectives, there is an obvious rationale for a global institution
to play the dominant role. But where investments seek to meet national or
regional objectives, there is less need for a global institution to be the key player.
Accumulation of development-related knowledge and expertise better occurs
and is utilized closer to the ground. In a similar vein, Birdsall and Rojas-Suarez
(2004) argue that regional development banks’ ability to transmit and use region
specific knowledge can make them particularly helpful to countries designing
policies most appropriate to their economic needs.


Regional or subregional development banks can be particularly valuable for
small and medium-sized countries, such as LDCs, which are unable to carry
much influence in global institutions. Their voice can be better heard and their
needs better met by regional and subregional institutions rather than global
institutions.


Regional and subregional development banks may also be particularly
suitable for provision of regional public goods. Since industrial development
occurs increasingly within regional production networks, the provision of “social
overhead capital” — such as infrastructures, energy, or telecommunication
networks — at the regional level is likely to become more and more critical.
Regional development banks, in this context, appear to be the most appropriate
institutions to oversee the financing and implementation of such large-scale
investments projects, while ensuring that the interests of even the smallest
country involved are adequately taken into account.


3. SOME POLICY ISSUES


It is important to note that regional development banks have had an uneven
record of success. Against this background, three policy issues should be
addressed.


First, regional development banks’ activities cannot take place in a policy
vacuum. The argument of this Report is that they need to become an integral
part of a broader developmental regionalism framework, supported by a
catalytic developmental State (see chapter 3). Indeed they should be regarded
as a key instrument of developmental regionalism through which the benefits of
integration accrue to least developed member countries.


Second, even though it is clear that regional development banks have tended
to give a higher priority to regional integration projects than the international
financial institutions, the evidence shows that they still tend to underfund such
projects (Birdsall, 2006). It may be necessary to develop particular facilities to
promote the financing of regional integration projects as public goods.


Thirdly, an important factor affecting the working of both multilateral and
regional development banks is their ownership structure. Some regional banks
have both developed and developing country members, in varying proportions;
others, notably subregional development banks such as the Andean
Development Corporation, have a membership composed almost exclusively
of developing countries. This matters because banks tend to respond to the
political agendas of their major shareholders.


Regional or subregional
development banks can be


particularly valuable for small and
medium-sized countries, such as
LDCs, which are unable to carry


much influence in global institutions.


Regional and subregional
development banks may also be
particularly suitable for provision


of regional public goods.


Regional and subregional
development bank should be


regarded as a key instrument of
developmental regionalism through


which the benefits of integration
accrue to least developed member


countries.




117CHAPTER 4. Leveraging South–South Financial Cooperation for LDC Development


Experience indicates that regional and sub-regional banks have worked
particularly well where their shareholders are also their clients. One good
example is the European Investment Bank. It provided a significant financial
mechanism to make economic integration in Europe equitable, providing grants
and guarantees for building regional infrastructure in less developed areas
(Griffith-Jones and Hertova, 2008). The Andean Development Corporation
(Corporación Andina de Fomento (CAF)) is also a good example. It is a regional
development bank exclusively owned by developing countries and its features
include the great average speed with which loans are approved and the absence
of conditionality.


At the present time, non-borrowing countries still have a strong position in
most regional development banks. However, if an increasing share of the banks’
financial resources comes from Southern countries, the relations of power inside
the banks is likely to change, with Southern countries being entitled to much
higher quotas of capital and more governing board members. Such a change
in the legal ownership of regional development banks could in itself powerfully
enhance the sense of political ownership of the programmes and projects
financed by the banks on the part of beneficiary countries. How it could occur is
discussed in the next section.


D. Reserve accumulation in the South and
Sovereign Wealth Funds as instruments


of foreign exchange reserves


It has traditionally been assumed that, under normal circumstances, capital
would flow from developed, capital-rich countries to poorer, capital-poor
countries. But this has never quite been the case, as net capital transfers
from developing to developed countries have often been the rule rather than
the exception. In particular, in the last decade, some developing countries
have increased their domestic savings significantly. Furthermore, they have
accumulated vast foreign exchange reserves, on a historically unprecedented
scale, part of which are invested in their Sovereign Wealth Funds (SWFs) (see
Griffith-Jones, 2011).


Between December 2001 and the end of 2010, the value of global reserves
increased from $2.05 trillion to $9.3 trillion (chart 37). The bulk of the increase
was due to reserves accumulated by developing countries which, as a whole,
accounted for more than 80 per cent of global reserve accumulation during this
period. By the end of 2010, their reserves approached $6.1 trillion.


Broadly speaking, there are two groups of developing countries that
presently hold large foreign exchange reserves. The first group is constituted
by commodity exporters, and by oil exporters in particular, who have been
accumulating foreign exchange reserves thanks to the boom in commodity
prices. Some of these commodity exporters are LDCs. As a result, the size of
total reserves held by LDCs more than quadrupled in nominal terms between
2000 and 2009 (table 11)2.


The second group is constituted by large and medium-sized manufacturing
exporters, who have for many years enjoyed trade and balance of payments
surpluses. This group is made up by a small number of Asian developing
countries.


Such an extraordinary process of reserve accumulation is without parallel in
recent history. A significant proportion of those assets has been accumulated


Experience indicates that regional
and sub-regional banks have


worked particularly well where their
shareholders are also their clients.


If an increasing share of the banks’
financial resources comes from


Southern countries, the relations
of power inside the banks is likely


to change, with Southern countries
being entitled to much higher quotas
of capital and more governing board


members.


Some developing countries have
increased their domestic savings
significantly. Furthermore, they
have accumulated vast foreign


exchange reserves, on a historically
unprecedented scale, part of which


are invested in their Sovereign
Wealth Funds.




The Least Developed Countries Report 2011118


Chart 37. World total foreign exchange reserves, 2000–2010
($ million)


0


1,000,000


2,000,000


3,000,000


4,000,000


5,000,000


6,000,000


7,000,000


8,000,000


9,000,000


10,000,000


2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010


Advanced economies Emerging and developing economies


Source: Griffith-Jones, 2011.


Table 11. Reserve accumulation across LDCs, various years
1980 1990 2000 2005 2006 2007 2008 2009


Total
reserves
(including
gold) in
$ million


All LDCs 4'018.6 5'889.0 15'396.1 33'688.7 44'364.6 53'549.5 62'737.5 67'526.6
Max 940.0 659.6 2'914.0 6'141.1 8'598.6 11'196.8 17'869.4 13'664.1
Min 1.0 0.0 0.3 25.4 25.4 34.3 57.9 146.0
Median 48.7 80.6 160.0 249.5 439.7 552.8 650.7 790.0
No. of LDCs with available data 33 40 44 45 43 41 40 37


Total
reserves in
months of
imports


LDCs weighted average 5.71 3.15 4.70 4.84 5.18 4.84 4.09 4.90
Max 12.20 8.59 8.29 9.51 9.70 8.39 7.03 7.43
Min 0.08 0.09 0.64 0.23 0.46 0.74 0.84 0.96
Median 1.25 1.91 2.74 3.65 4.01 3.97 3.72 5.29


No. of LDCs with available data 31 35 33 34 32 30 28 21


Source: UNCTAD secretariat calculations, based on World Development Indicators, online, June 2011.


Such an extraordinary process of
reserve accumulation is without


parallel in recent history.


in SWFs, which are generally run independently from traditional reserve
management by central banks and/or finance ministries (Griffith-Jones, 2011;
SWF Institute, 2011)3.


The main reason behind the accumulation of foreign assets in SWFs on the
part of commodity exporters was the boom in commodity prices, particularly oil.
Oil-producing countries’ SWFs account for nearly three quarters of total assets
under management by these funds. A second reason for the development of
SWFs is the accumulation of international assets by non-commodity-exporting
countries that are running persistent current account surpluses (Aizenman and
Glick, 2007). Many countries seem to have more reserves than needed for
precautionary motives, and have transferred part of them to special investment
vehicles to maximize their returns. This is the case of East Asian countries, which
have combined SWFs in excess of $800 billion, to be added to their massive
foreign exchange reserves.


Total SWF assets are estimated to be valued at $4.3 trillion, of which $3.5
trillion are owned by developing and emerging countries (SWF, 2011)4. It is
interesting that three LDCs – East Timor, Kiribati and Mauritania – have SWFs,




119CHAPTER 4. Leveraging South–South Financial Cooperation for LDC Development


Table 12. Sovereign Wealth Funds in emerging and developing countries, March 2011


Fund name
Assets


($ billion)
Inception Origin


United Arab Emirates –
Abu Dhabi


Abu Dhabi Investment Authority 627 1976 Oil


Saudi Arabia SAMA Foreign Holdings 439.1 .. Oil
China SAFE Investment Company 347.1 1997 Non-commodity
China China Investment Corporation 332.4 2007 Non-commodity
China, Hong Kong Hong Kong Monetary Authority Investment Portfolio 292.3 1993 Non-commodity
Kuwait Kuwait Investment Authority 260 1953 Oil
Singapore Government of Singapore Investment Corporation 247.5 1981 Non-commodity
China National Social Security Fund 146.5 2000 Non-commodity
Singapore Temasek Holdings 145.3 1974 Non-commodity
Russian Federation National Welfare Fund 142.5a 2008 Oil
Qatar Qatar Investment Authority 85 2005 Oil
Libya Libyan Investment Authority 70 2006 Oil
Algeria Revenue Regulation Fund 56.7 2000 Oil
United Arab Emirates –
Abu Dhabi


International Petroleum Investment Company 48.2 1984 Oil


Kazakhstan Kazakhstan National Fund 38.6 2000 Oil
Republic of Korea Korea Investment Corporation 37 2005 Non-commodity
Malaysia Khazanah Nasional 36.8 1993 Non-commodity
Brunei Brunei Investment Agency 30 1983 Oil
Iran, Islamic Republic of Oil Stabilisation Fund 23 1999 Oil
Chile Social and Economic Stabilization Fund 21.8 1985 Copper
Azerbaijan State Oil Fund 21.7 1999 Oil
United Arab Emirates – Dubai Investment Corporation of Dubai 19.6 2006 Oil
United Arab Emirates –
Abu Dhabi


Mubadala Development Company 13.3 2002 Oil


Bahrain Mumtalakat Holding Company 9.1 2006 Oil
Brazil Sovereign Fund of Brazil 8.6 2009 Non-commodity
Oman State General Reserve Fund 8.2 1980 Oil & gas
Botswana Pula Fund 6.9 1994 Diamonds & minerals
Timor-Leste Timor-Leste Petroleum Fund 6.3 2005 Oil & gas
Mexico Oil Revenues Stabilization Fund of Mexico 6.0 2000 Oil
Saudi Arabia Public Investment Fund 5.3 2008 Oil
China China-Africa Development Fund 5.0 2007 Non-commodity
Trinidad & Tobago Heritage and Stabilization Fund 2.9 2000 Oil
United Arab Emirates –
Ras Al Khaimah


RAK Investment Authority 1.2 2005 Oil


Venezuela FEM 0.8 1998 Oil
Vietnam State Capital Investment Corporation 0.5 2006 Non-commodity
Nigeria Excess Crude Account 0.5 2004 Oil
Kiribati Revenue Equalization Reserve Fund 0.4 1956 Phosphates
Indonesia Government Investment Unit 0.3 2006 Non-commodity
Mauritania National Fund for Hydrocarbon Reserves 0.3 2006 Oil & gas
United Arab Emirates –
Federal


Emirates Investment Authority .. 2007 Oil


Oman Oman Investment Fund .. 2006 Oil


United Arab Emirates –
Abu Dhabi


Abu Dhabi Investment Council .. 2007 Oil


Source: Griffith-Jones, 2011.
a Figure includes Russia’s oil stabilization fund.


Total SWF assets are estimated to
be valued at $4.3 trillion, of which


$3.5 trillion are owned by developing
and emerging countries.


with total assets of $7 billion. The largest by far is East Timor’s SWF, with total
assets of $6.3 billion (see table 12)5.


Such high levels of foreign exchange reserves and SWFs have some
undesirable consequences. At the national level, especially for poor countries
such as LDCs, high reserves inherently carry a heavy opportunity cost in terms of
development spending and foregone imports. As noted by Ghosh, “the external
reserve build-up (which reflected attempts by developing countries to prevent
their exchange rates from appreciating and to build a cushion against potential
crises) proved quite costly for the developing world, in terms of interest rate




The Least Developed Countries Report 2011120


differentials and unused resources”. (Ghosh, 2008: 5; see also Least Developed
Countries Report 2008). At the global level, however, developing countries’ large
reserves accumulation may have a positive effect in terms of a potential for
expanded South–South financial links and cooperation.


E. Sovereign Wealth Funds as policy tools
to promote South–South financial cooperation


Without underestimating the economic, institutional and political difficulties
that such an initiative would entail, one promising way in which Southern
countries could strengthen the role of regional financial institutions could be
through channelling towards them a small share of the financial resources
presently managed by their SWFs6. This proposal would provide the SWFs with
an opportunity to diversify their long-term financial position — currently held
mainly in developed countries — and to match their maturity with the long-term
maturity of regional development banks’ liabilities.


Assessing the viability of such an initiative is beyond the scope of this Report
and would require a full-fledged feasibility study; however, a “back-of-the-
envelope calculation” suggests that this strategy could significantly boost the
role of regional development banks, leading to large increases in the availability
of development finance. If only 1 per cent of Southern SWF assets were
invested into regional development banks, for example, this would increase
their paid-in capital by $35 billion. Assuming a conservative ratio of authorized
capital to paid-in capital of 2.8 (the value which is actually applied by CAF7 to
its own financial operations), this would translate into an additional $98 billion
of authorized capital, corresponding to an additional annual lending capacity of
over $84 billion. This figure would be higher than the total lending disbursements
to developing countries by all multilateral and regional development banks —
including the World Bank and the European Investment Bank — in 2009, the
year when their lending activities peaked (at $64 billion) due to the extraordinary
credit requirements caused by the global financial crisis.


A similar boost in regional development banks’ lending capacities could
clearly play a central role in financing the provision of regional wide infrastructures
(thereby facilitating regional trade integration), as well as supporting the
development of domestic productive capacities, particularly in the LDCs.


Two important caveats must be taken into account, however, when promoting
the development of South–South financial cooperation. First, it is important to
distinguish the growing opportunities for South–South financial cooperation
from the long-standing responsibilities underlying the traditional development
cooperation framework. As stated in the introduction, South–South financial
cooperation should be viewed as a complement, rather than as a substitute for,
traditional North–South cooperation. The second caveat is that it is important
that Southern partners can actively use this new modality for mutual advantage.
Increased financial support should go hand-in-hand with increased voice in the
governance of regional development banks.


Developing countries’ large reserves
accumulation may have a positive
effect in terms of a potential for
expanded South–South financial


links and cooperation.


One promising way in which
Southern countries could strengthen


the role of regional financial
institutions could be through


channelling towards them a small
share of the financial resources


presently managed by their SWFs.


If only 1 per cent of Southern SWF
assets were invested into South–


South regional development banks,
this would increase their paid-in


capital by $35 billion.


South–South financial cooperation
should be viewed as a complement,


rather than as a substitute for,
traditional North–South cooperation.
It is important to convince Southern
partners of the value of a small part
of their reserve funds going towards


financing regional development
banks’ activities, particularly


in LDCs.




121CHAPTER 4. Leveraging South–South Financial Cooperation for LDC Development


F. Conclusions


This chapter has put forward a proposal linking regional development banks
to SWFs in order to promote the development of productive capacities in
LDCs in a regional context. The proposal would adequately capitalize regional
development banks, enabling them to promote the social and industrial
infrastructure in LDCs. Regional development banks can play a catalytic role
as intermediaries, channelling financial resources held by the emerging and
developing countries towards productive capacity-enhancing investments in
the LDCs. The rationale of the proposal is twofold. First, the very existence of
these reserves in the South is a rather new phenomenon, and the opportunity
to exploit their potential as a tool to harness LDCs development should not be
missed. Second, the South–South cooperation framework can be particularly
suitable to relax the financial constraints limiting LDCs’ policy space, as it is less
bound by conditionalities with respect to the practices of traditional donors.


Since the beginning of the twenty-first century, several developing countries
have accumulated vast foreign exchange reserves. Between December 2001
and the end of 2010, global reserves quadrupled. Developing countries as a
whole accounted for more than 80 per cent of global reserve accumulation
during this period. An important part of foreign exchange assets is being placed
into SWFs. Total SWFs assets worldwide were estimated at about $4.3 trillion
at the end of 2010. The vast majority ($3.5 trillion) of these assets are held by
developing countries, among them some LDCs.


Regional development banks, in particular, have a series of advantages
as public financial instruments utilized by governments to promote productive
capacity-enhancing investments in a regional South–South cooperation
framework. Thanks to their public nature and to their relatively ample policy
space, they can overcome those market failures and gaps that make private
banks reluctant to lend to the poorest countries — especially in sectors that
are crucial for national development, such as infrastructure, the green economy,
research and development, and SMEs — as investment in these domains entails
relatively long maturities and high risks. Regional development banks can also
engage in counter-cyclical lending, providing additional liquidity during crises
and securing long-term finance to long-maturing investment projects.


Under plausible assumptions, channelling only 1 per cent of developing and
emerging country SWF assets to regional development banks would provide
$84 billion of additional annual lending capacity, equal to more than the total
lending disbursements to developing countries by all multilateral and regional
development banks in 2009.


Reserves-holding developing countries might consider the option of financing
regional development banks convenient, as expected growth rates in LDCs are
likely to remain higher than those of the developed economies for the immediate
future. Moreover, the long-term profile of development-oriented projects can be
suitable to the risk-averse time preferences of fund managers.


Yet, due mainly to its very novelty, this option could be seen by some policy-
makers in emerging countries as both financially and politically risky, at least in
the beginning. In this respect, it is important that the new opportunities for South–
South cooperation are not confused with the long-standing responsibilities
surrounding traditional development cooperation, thereby risking weakening
those responsibilities. In this context, international initiative aimed at cementing
reciprocal trust between LDCs, traditional donors, and new Southern would-be
financers would be welcome.


This chapter has put forward
a proposal linking regional


development banks to SWFs in
order to promote the development
of productive capacities in LDCs


in a regional context.


Regional development banks
can play a catalytic role as


intermediaries, channelling financial
resources held by the emerging


and developing countries towards
productive capacity-enhancing


investments in the LDCs.


Channelling only 1 per cent of
developing and emerging country


SWF assets to regional development
banks would provide $84 billion of
additional annual lending capacity.


It is important that the new
opportunities for South–South


cooperation are not confused with
the long-standing responsibilities


surrounding traditional development
cooperation.




The Least Developed Countries Report 2011122


Notes


1 Monterrey Consensus, paragraph 45.
2 In months of imports terms, LDCs’ reserves merely stagnated (table 3).
3 It should be noted that some of the reserves accumulated by developing countries


are borrowed reserves.
4 See also table 3 for list of developing and emerging country SWFs and their levels of


assets; the three LDC assets are marked in dark black in table 4.
5 It is by itself admirable that an LDC commits to build for the future rather than to spend


today: a bid to make sure there’s something left for the country when the oil runs out.
Yet, in such a poor country, there are (quite understandably) major controversies on
the trade-offs, between saving for the future and spending on development in the
present.


6 The World Bank has also called for the use of 1 per cent of SWFs for the purpose of
development (Zoellick, 2008; and Ochoa and Keenan, 2010).


7 CAF, one of the few South–South banks that have been in existence for a long period,
is owned mainly by the Andean countries of Latin America.


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ANNEX


STATISTICAL TABLES
ON THE LEAST DEVELOPED


COUNTRIES




The Least Developed Countries Report 2011126


1. Indicators on least developed countries’ development ................................................................................. 129


2. Real GDP per capita and population: Levels and growth .............................................................................. 130


3. Real GDP, total and per capita: Annual average growth rates ....................................................................... 131


4. Agricultural sector: Shares and production, total and per capita: annual average growth rates ..................... 132


5. Food production, total and per capita: Annual average growth rates ............................................................ 133


6. The manufacturing sector: Shares in GDP and annual average growth rates ................................................ 134


7. Gross fixed capital formation: Shares in GDP and annual average growth rates ........................................... 135


8. Indicators on area and population, 2009 ...................................................................................................... 136


9. Indicators on demography ........................................................................................................................... 137


10. Indicators on health, 2009 ........................................................................................................................... 138


11. Indicators on nutrition and sanitation ............................................................................................................ 139


12. Indicators on education and literacy ............................................................................................................. 140


13. Indicators on communication and media ...................................................................................................... 141


14. Indicators on transport and transport network ............................................................................................. 142


15. Indicators on energy, environment and natural disasters .............................................................................. 143


16. Status of women in LDCs ............................................................................................................................ 144


17. Leading merchandise exports of all LDCs, 2008–2010 ................................................................................ 145


18. Total merchandise exports: Levels and annual average growth rates ............................................................ 146


19. Total merchandise imports: Levels and annual average growth rates ............................................................ 147


20. Main markets for exports of LDCs: Percentage share in 2010 ...................................................................... 148


21. Main sources of imports of LDCs: Percentage share in 2010 ....................................................................... 149


22. Merchandise trade indices ........................................................................................................................... 150


23. Total service exports: Levels and annual average growth rates ..................................................................... 151


24. Total service imports: Levels and annual average growth rates ..................................................................... 152


25. Indicators on tourism in LDCs ...................................................................................................................... 153


26. Financial flows to LDCs in current and constant dollars ................................................................................ 154


27. Distribution of financial flows to LDCs and to all developing countries .......................................................... 155


28. Share of LDCs in financial flows to all developing countries, by type of flow ................................................. 156


29. Net ODA from individual DAC member countries to LDCs ............................................................................ 157


30. Bilateral ODA from DAC, non-DAC member countries and multilateral agencies to LDCs............................. 158


31. Net ODA to LDCs from DAC member countries and multilateral agencies mainly financed by them:


Distribution by donor and shares allocated to LDCs in total ODA to all developing countries ........................ 159


32. Total financial flows and ODA from all sources to individual LDCs ................................................................. 160


33. Bilateral and multilateral net ODA disbursements to individuals LDCs ........................................................... 161


34. Total official flows and private grants, gross disbursements, by sector ......................................................... 162


35. Foreign direct investment: inflow to and outflow from LDCs ......................................................................... 163


36. External debt and debt service by source of lending .................................................................................... 164


37. Total external debt and debt service payments of individual LDCs ................................................................ 165


38. Indicators of debt sustainability .................................................................................................................... 166


Contents
Page


Explanatory notes ...............................................................................................................................................127


Abbreviations ......................................................................................................................................................128


Tables




127ANNEX. Statistical Tables on the Least Developed Countries


Explanatory notes


Country groupings used in this Report


As of 1st January 2011, the United Nations category of least developed countries comprises 48 countries, one less
than in 2010. Maldives was in this category until its graduation on 1 January 2011.


As the data in this report do not refer beyond the year 2010, the least developed countries covered in this report
consist of all the countries in that category in 2010. Maldives is therefore included although it has now graduated.


Least developed countries


Afghanistan, Angola, Bangladesh, Benin, Bhutan, Burkina Faso, Burundi, Cambodia, Central African Republic, Chad, Comoros,
Democratic Republic of the Congo, Djibouti, Equatorial Guinea, Eritrea, Ethiopia, the Gambia, Guinea, Guinea-Bissau, Haiti,
Kiribati, Lao People’s Democratic Republic, Lesotho, Liberia, Madagascar, Malawi, Maldives, Mali, Mauritania, Mozambique,
Myanmar, Nepal, Niger, Rwanda, Samoa, Sao Tome and Principe, Senegal, Sierra Leone, Solomon Islands, Somalia, Sudan,
Timor-Leste, Togo, Tuvalu, Uganda, United Republic of Tanzania, Vanuatu, Yemen, Zambia.


LDCs geographical classification


African LDCs (and Haiti): Angola, Benin, Burkina Faso, Burundi, Central African Republic, Chad, Democratic Republic
of the Congo, Djibouti, Equatorial Guinea, Eritrea, Ethiopia, the Gambia, Guinea, Guinea-Bissau, Haiti, Lesotho, Liberia,
Madagascar, Malawi, Mali, Mauritania, Mozambique, Niger, Rwanda, Senegal, Sierra Leone, Somalia, Sudan, Togo, Uganda,
United Republic of Tanzania, Zambia (32).


Asian LDCs: Afghanistan, Bangladesh, Bhutan, Cambodia, Lao People’s Democratic Republic, Myanmar, Nepal and Yemen (8).


Island LDCs: Comoros, Kiribati, Maldives, Samoa, Sao Tome and Principe, Solomon Islands, Timor-Leste, Tuvalu and Vanuatu
(9).


Major economic areas


The classification of countries and territories according to main economic areas used in this document has been adopted
for purposes of statistical convenience only and follows that in UNCTAD’s Handbook of International Trade and Development
Statistics 2011. Countries and territories are classified according to main economic areas as follows:


Developed economies: Andorra, Australia, Austria, Belgium, Bulgaria, Bermuda, Canada, Cyprus, Czech Republic, Denmark,
Estonia, Faeroe Islands, Finland, France, Germany, Gibraltar, Greece, Greenland, Holy See, Hungary, Iceland, Ireland, Italy,
Israel, Japan, Latvia, Lithuania, Luxembourg, Malta, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Saint
Pierre and Miquelon, San Marino, Slovakia, Slovenia, Spain, Sweden, Switzerland, United Kingdom, United States.


European Union: Andorra, Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany,
Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia,
Slovenia, Spain, Sweden, United Kingdom.


Transition economies: Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Croatia, Georgia, Kazakhstan,
Kyrgyzstan, Montenegro, Republic of Moldova, Russian Federation, Serbia, Tajikistan, the former Yugoslav Republic of
Macedonia, Turkmenistan, Ukraine, Uzbekistan.


All developing countries: All other countries, territories and areas in Africa, Asia, America, Europe and Oceania not specified
above.


Other developing countries: All developing countries excluding LDCs.


Major petroleum exporters (developing economies): Algeria, Angola, Bahrain, Brunei Darussalam, Iran (Islamic Republic
of), Iraq, Kuwait, Libya, Nigeria, Oman, Qatar, Saudi Arabia, United Arab Emirates, Venezuela (Bolivarian Republic of), Yemen.


Newly industrialized economies, 1st tier: Hong Kong (Special Administrative Region of China), Republic of Korea,
Singapore, Taiwan Province of China.


Newly industrialized economies, 2nd tier: Indonesia, Malaysia, Philippines, Thailand.


Other country groupings


DAC member countries: The countries of the OECD Development Assistance Committee are Australia, Austria, Belgium,
Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, Luxembourg, Netherlands, New Zealand,
Norway, Portugal, Republic of Korea, Spain, Sweden, Switzerland, United Kingdom, United States.


Non-DAC member countries reporting to the OECD-DAC: Czech Republic, Hungary, Iceland, Mexico, Poland, Slovak
Republic, Turkey, Thailand and Arab Countries (Algeria, Islamic Republic of Iran, Kuwait, Libya, Qatar, Saudi Arabia, United
Arab Emirates).


Other notes


Calculation of annual average growth rates: In general, they are defined as the coefficient b in the exponential trend function
yt = aebt where t stands for time. This method takes all observations in a period into account. Therefore, the resulting growth
rates reflect trends that are not unduly influenced by exceptional values.
Population growth rates are calculated as exponential growth rates.
The term “dollars” ($) refers to United States dollars, unless otherwise stated.
Details and percentages in tables do not necessarily add to totals because of rounding.
The following symbols have been used:
A dash (–) indicates that the item is not applicable.
Two dots (..) indicate that the data are not available or are not separately reported.
A zero (0) means that the amount is nil or negligible.
Use of a hyphen (-) between dates representing years, e.g. 1980–1990, signifies the full period involved, including the initial
and final years.




The Least Developed Countries Report 2011128


Abbreviations
AfDF African Development Fund
AsDF Asian Development Fund
CarDB Caribbean Development Bank
CDP United Nations Committee for Development Policy
CRED Centre for Research on the Epidemiology of Disasters
DAC Development Assistance Committee
EIA Energy Information Administration
ESAF Enhanced Structural Adjustment Facility
EVI Economic Vulnerability Index
EU European Union
FAO Food and Agriculture Organization of the United Nations
FAOSTAT FAO statistical database
FDI Foreign Direct Investment
GAVI Global Alliance for Vaccines and Immunisation
GDP Gross Domestic Product
GEF Global Environment Facility
GNI Gross National Income
HAI Human Assets Index
HDI Human Development Index
HIPC Heavily Indebted Poor Countries
HIV Human Immunodeficiency Virus
IDA International Development Association
IDB Inter-American Development Bank
IEA International Energy Agency
IFAD International Fund for Agricultural Development
ILO International Labour Organization
IMF International Monetary Fund
IPU Inter-parliamentary Union
ITU International Telecommunication Union
LDC Least Developed Country
MPI Multidimensional Poverty Index
ODA Official Development Assistance
OECD Organization for Economic Cooperation and Development
OFDA Office of US Foreign Disaster Assistance
PRGF Poverty Reduction and Growth Facility
SAF Structural Adjustment Facility
SITC Standard International Trade Classification
TNC Transnational Corporation
UN DATA United Nations Data Access System
UNAIDS Joint United Nations Programme on HIV/AIDS
UN DESA United Nations Department of Economic and Social Affairs
UNCTAD United Nations Conference on Trade and Development
UNCTADSTAT UNCTAD Statistical Database
UNDP United Nations Development Programme
UNESCO United Nations Educational, Scientific and Cultural Organization
UNFPA United Nations Population Fund
UIS UNESCO Institute for Statistics
UNICEF United Nations Children’s Fund
UNTA United Nations Technical Assistance
UNWTO United Nations World Tourism Organisation
UPU Universal Postal Union
USAID United States Agency for International Development
WFP World Food Programme
WHO World Health Organization
WTTC World Travel an Tourism Council




129ANNEX. Statistical Tables on the Least Developed Countries


1. Indicators on least developed countries’ development


Country


GNI per
capita


(current
dollar)a


Economic
Vulnerability
Indexb (EVI)


Human
Assets
Indexc
(HAI)


Income level


Human
Development
Index (HDI)


Multi-
dimensional


Poverty Index
(MPI)e


Value Rank Value
2010 CDP 2009 review July 2011 2010 2008


Afghanistan 457d 39.5 15.2 Low income 0.35 155 ..
Angola 3,960 49.8 26.0 Lower middle income 0.40 146 0.452
Bangladesh 640 23.2 53.3 Low income 0.47 129 0.291
Benin 750 42.5 41.1 Low income 0.44 134 0.412
Bhutan 1920 52.9 58.6 Lower middle income .. .. ..
Burkina Faso 550 43.8 33.2 Low income 0.31 161 0.536
Burundi 160 56.8 22.1 Low income 0.28 166 0.53
Cambodia 760 55.6 57.8 Low income 0.49 124 0.263
Central African Republic 460 45.1 27.2 Low income 0.32 159 0.512
Chad 600 53.5 20.0 Low income 0.29 163 0.344
Comoros 820 56.9 48.2 Low income 0.43 140 0.408
Dem. Rep. of the Congo 180 49.3 22.6 Low income 0.24 168 0.393
Djibouti 1,280d 51.2 44.5 Lower middle income 0.40 147 0.139
Equatorial Guinea 14,680 60.5 49.5 High income: non-OECD 0.54 117 ..
Eritrea 340 55.5 36.2 Low income .. .. ..
Ethiopia 380 32.0 28.4 Low income 0.33 157 0.582
Gambia 440 56.3 42.6 Low income 0.39 151 0.324
Guinea 380 27.9 37.4 Low income 0.34 156 0.505
Guinea-Bissau 540 60.5 33.8 Low income 0.29 164 ..
Haiti 650 52.2 39.8 Low income 0.40 145 0.306
Kiribati 2,010 75.3 87.6 Lower middle income .. .. ..
Lao People's Democratic Republic 1,000 59.9 62.3 Lower middle income 0.50 122 0.267
Lesotho 1,080 49.9 61.9 Lower middle income 0.43 141 0.22
Liberia 190 65.5 30.6 Low income 0.30 162 0.484
Madagascar 440 37.2 45.5 Low income 0.43 135 0.413
Malawi 330 55.9 46.2 Low income 0.38 153 0.384
Maldives 4,270 58.2 87.5 Upper middle income 0.60 107 ..
Mali 600 42.3 32.6 Low income 0.31 160 0.564
Mauritania 1,060 47.1 54.6 Lower middle income 0.43 136 0.352
Mozambique 440 48.7 27.5 Low income 0.28 165 0.481
Myanmar 380d 37.4 66.0 Low income 0.45 132 0.088
Nepal 490 33.6 58.3 Low income 0.43 138 0.35
Niger 360 45.8 22.8 Low income 0.26 167 0.642
Rwanda 540 55.0 33.0 Low income 0.39 152 0.443
Samoa 2,930 64.3 92.2 Lower middle income .. .. ..
Sao Tome and Principe 1,200 55.0 72.1 Lower middle income 0.49 127 0.236
Senegal 1,050 37.6 40.7 Lower middle income 0.41 144 0.384
Sierra Leone 340 50.7 20.4 Low income 0.32 158 0.489
Solomon Islands 1,030 58.0 64.1 Lower middle income 0.49 123 ..
Somalia 2,11d 62.6 9.4 Lower middle income .. .. 0.514
Sudan 1,270 52.9 51.4 Lower middle income 0.38 154 ..
Timor-Leste 2,220 56.7 54.0 Lower middle income 0.50 120 ..
Togo 440 42.8 42.6 Low income 0.43 139 0.284
Tuvalu 2,749d 79.7 88.4 Lower middle income .. .. ..
Uganda 490 51.9 51.3 Low income 0.42 143 ..
United Republic of Tanzania 530 31.0 40.6 Low income 0.40 148 0.367
Vanuatu 2,760 62.3 72.3 Lower middle income .. .. ..
Yemen 1,060 44.9 52.1 Lower middle income 0.44 133 0.283
Zambia 1,070 52.8 40.7 Lower middle income 0.39 150 0.325
Source: United Nations Committee for Development Policy (CDP) database, 2009 Review; World Bank, World Development Indicators database, May 2011;
United Nations, Undata database, May 2011; UNDP Human Development Report 2010, May 2011; World Bank economies income classification, July


2011.
a GNI current $ Atlas method, World Bank, World Development Indicators database, August 2011.
b EVI:higher values indicate higher vulnerablity. See explanotory notes at http://www.un.org/en/development/desa/policy/cdp/cdp_


publications/2008cdphandbook.pdf
c HAI: lower values indicate weaker human asset development. See explanotory notes at http://www.un.org/en/development/desa/policy/cdp/


cdp_publications/2008cdphandbook.pdf
d 2009 data for Afghanistan, Djibouti, Myanmar, Somalia and Tuvalu. Source: Undata, National accounts main aggregates database, August 2011.
e MPI : higher values indicate population multidimensionally poor. See explanatory notes for HDR composite indices at http://hdrstats.undp.org/images/


explanations/PSE.pdf




The Least Developed Countries Report 2011130


2. Real GDP per capita and population: Levels and growth


Country


Real GDP per capita


Annual average
growth rates of


real GDP per
capita


Population


Constant 2005 dollars Percentage
Level


(Millions)
Annual average
growth rates (%)


1990 2000 2005 2008 2009 2010a
1980–
1990


1990–
2000


2000–
2010


2010
1980–
1990


1990–
2000


2000–
2010


Afghanistan 280 120 248 303 362 382 -0.3 -7.2 12.3 31.4 -1.3 5.8 3.1


Angola 1 037 873 1 206 1 779 1 723 1 702 0.3 -0.8 8.8 19.1 3.1 3.0 3.2


Bangladesh 265 341 410 477 501 525 1.1 2.6 4.5 148.7 2.7 2.1 1.3


Benin 480 547 571 595 593 591 0.5 1.4 0.7 8.8 2.8 3.2 3.1


Bhutan 608 979 1 221 1 533 1 603 1 682 7.6 5.4 5.7 0.7 2.8 0.0 2.4


Burkina Faso 258 325 382 400 400 411 -0.1 2.5 2.3 16.5 2.6 2.8 3.0


Burundi 204 152 148 153 154 156 1.0 -3.8 0.2 8.4 3.2 1.2 2.9


Cambodia 219 324 471 593 571 598 2.3 3.6 7.1 14.1 4.1 2.7 1.2


Central African Republic 323 333 336 394 393 398 -1.6 0.6 2.0 4.4 2.6 2.4 1.7


Chad 348 358 600 555 532 544 3.1 0.2 4.5 11.2 2.8 3.2 3.1


Comoros 673 600 602 570 562 559 -0.2 -1.3 -0.9 0.7 2.9 2.5 2.7


Dem. Rep. of the Congo 287 118 126 138 138 144 -1.4 -7.8 2.5 66.0 3.0 3.1 2.9


Djibouti 974 846 878 964 994 1 019 -4.5 -1.2 2.0 0.9 5.3 2.6 1.9


Equatorial Guinea 881 4 149 11 856 16 259 16 652 16 061 -3.4 19.7 13.2 0.7 5.6 3.4 3.0


Eritreab _ 264 245 201 202 201 _ 3.8 -3.4 5.3 _ 1.8 3.6


Ethiopiac _ 137 165 212 228 241 _ 2.2 6.3 82.9 _ 3.0 2.3


Gambia 427 440 419 463 471 484 -1.0 0.0 0.8 1.7 4.5 2.9 2.9


Guinea 291 299 325 331 340 339 0.6 0.6 1.1 10.0 2.6 3.8 1.8


Guinea-Bissau 466 419 419 418 422 428 0.5 -1.6 0.1 1.5 1.9 2.0 2.0


Haiti 638 474 426 436 443 415 -2.0 -2.7 -0.9 10.0 2.3 2.0 1.4


Kiribati 962 1 190 1 148 1 162 1 137 1 139 -1.9 2.1 -0.3 0.1 2.8 1.5 1.7


Lao People's Dem. Rep. 261 379 476 628 665 706 2.4 4.0 6.8 6.2 2.7 2.4 1.5


Lesotho 486 592 641 708 711 720 1.6 2.2 2.1 2.2 2.3 1.9 1.0


Liberia 243 227 161 176 176 178 -6.0 0.6 -2.5 4.0 1.0 3.2 3.6


Madagascar 336 293 282 308 284 271 -1.5 -1.1 0.1 20.7 2.7 3.1 3.0


Malawi 193 210 215 251 262 270 -2.1 1.2 3.3 14.9 4.4 1.7 2.9


Maldives 1 304 2 168 2 540 3 369 3 196 3 406 8.1 5.5 5.2 0.3 3.5 2.2 1.4


Mali 311 356 416 437 443 449 2.0 1.9 2.0 15.4 1.8 2.7 3.1


Mauritania 530 533 572 717 692 707 -1.1 0.1 3.9 3.5 2.8 2.9 2.7


Mozambique 173 237 317 367 374 391 -1.8 4.0 5.0 23.4 1.0 3.1 2.5


Myanmar 83 145 258 352 366 383 -1.2 5.6 10.9 48.0 1.8 1.4 0.6


Nepal 224 285 303 320 335 344 2.2 2.4 1.8 30.0 2.4 2.5 2.0


Niger 266 245 259 270 258 268 -4.3 -0.2 0.7 15.5 2.8 3.5 3.6


Rwanda 241 220 281 338 348 359 -1.7 -1.1 5.3 10.6 3.6 1.3 2.5


Samoa 1 624 1 909 2 416 2 498 2 445 2 436 0.6 1.8 2.6 0.2 0.4 0.9 0.3


Sao Tome and Principe 739 707 861 1 010 1 033 1 061 -3.1 -0.3 4.5 0.2 2.0 2.0 1.6


Senegal 708 729 801 820 816 828 0.1 0.6 1.4 12.4 3.0 2.7 2.7


Sierra Leone 452 197 289 317 323 332 0.1 -8.9 4.8 5.9 2.4 0.2 3.5


Solomon Islands 1 042 945 874 1 040 993 1 024 -0.9 0.2 2.1 0.5 3.2 2.9 2.6


Somalia 395 267 277 280 281 282 1.6 -4.3 0.5 9.3 0.0 1.1 2.3


Sudan 473 739 916 1 094 1 115 1 142 -2.6 4.7 4.5 43.6 2.8 2.6 2.5


Timor-Lested _ _ 346 389 410 425 0.0 0.0 2.8 1.1 _ _ 2.6d


Togo 495 415 390 397 401 406 -1.4 -0.9 0.0 6.0 3.3 2.7 2.3


Tuvalu 1 401 2 059 2 366 2 463 2 507 2 507 5.5 3.2 1.9 0.0 1.2 0.4 0.4


Uganda 211 301 353 405 419 427 0.1 4.1 3.8 33.4 3.4 3.2 3.3


United Rep. of Tanzania 269 303 373 421 434 448 -0.4 1.0 4.1 44.8 3.1 2.9 2.8


Vanuatu 1 849 2 084 1 925 2 168 2 233 2 228 3.1 0.7 1.5 0.2 2.4 2.3 2.7


Yemene 609 801 866 896 903 946 0.8 3.7 1.5 24.1 3.7 e 4.0 3.1


Zambia 685 564 634 703 707 727 -2.1 -2.1 2.7 13.1 3.1 2.6 2.5


LDCs 301 329 404 473 484 497 -0.4 1.2 4.5 832.6 2.6 2.6 2.3
African LDCs and Haiti 334 334 403 472 476 484 -1.0 0.4 4.1 526.1 2.8 2.8 2.7


Asian LDCs 246 315 398 467 489 513 1.0 2.7 5.2 303.1 2.3 2.4 1.6


Island LDCsf 1 090 1 226 979 1 110 1 091 1 117 0.8 1.4 -0.8 3.4 2.6 2.3 6.2


Other developing countries 1 416 1 943 2 362 2 786 2 822 3 000 1.6 3.3 4.8 4 712.5 2.1 1.6 1.2
All developing countries 1 276 1 722 2 080 2 445 2 474 2 624 1.5 3.1 4.7 5 545.1 2.1 1.7 1.4
Source: UNCTAD, UNCTADstat database, August 2011.
a 2010, preliminary data; b Eritrea, data start in 1992; c Ethiopia, data start in 1992; d Timor-Leste, data start in 2003;
e Yemen, prior 1990 include Yemen (former Arab Republic) and Yemen (former Democratic).
f Timor-Leste, data start in 2003, thereby causing a break in the series.




131ANNEX. Statistical Tables on the Least Developed Countries


3. Real GDP, total and per capita : Annual average growth rates
(2005 dollars, percentage)


Country
Real GDP Real GDP per capita


1980–
1990


1990–
2000


2000–
2009


2007 2008 2009 2010a
1980–
1990


1990–
2000


2000–
2009


2007 2008 2009 2010a


Afghanistan -1.6 -1.8 15.9 16.2 2.3 22.5 8.2 -0.3 -7.2 12.3 13.3 -0.1 19.6 5.4
Angola 3.4 2.2 12.3 20.3 13.2 -0.4 1.6 0.3 -0.8 8.8 16.7 10.0 -3.2 -1.2
Bangladesh 3.8 4.7 5.9 6.4 6.2 6.0 6.0 1.1 2.6 4.5 5.2 5.1 4.9 4.8
Benin 3.3 4.6 3.8 4.6 5.0 2.7 2.5 0.5 1.4 0.7 1.5 2.0 -0.2 -0.4
Bhutan 10.6 5.4 8.3 19.7 5.0 6.3 6.7 7.6 5.4 5.7 17.3 3.0 4.5 4.9
Burkina Faso 2.5 5.4 5.4 3.6 4.5 3.2 5.8 -0.1 2.5 2.3 0.6 1.4 0.2 2.7
Burundi 4.2 -2.6 3.1 3.2 4.3 3.5 3.9 1.0 -3.8 0.2 0.1 1.2 0.6 1.2
Cambodia 6.5 6.4 8.4 10.2 6.7 -2.7 6.0 2.3 3.6 7.1 9.0 5.5 -3.8 4.8
Central African Republic 1.0 3.0 3.8 8.7 5.5 1.7 3.3 -1.6 0.6 2.0 6.7 3.5 -0.2 1.4
Chad 6.0 3.4 7.8 0.1 0.3 -1.6 5.1 3.1 0.2 4.5 -2.6 -2.3 -4.1 2.3
Comoros 2.7 1.2 1.8 0.5 1.0 1.1 2.1 -0.2 -1.3 -0.9 -2.2 -1.7 -1.5 -0.5
Dem. Rep. of the Congo 1.6 -4.9 5.5 6.3 6.2 2.8 7.2 -1.4 -7.8 2.5 3.3 3.3 0.0 4.4
Djibouti 0.6 1.3 4.0 4.8 5.8 5.1 4.5 -4.5 -1.2 2.0 2.8 3.8 3.1 2.6
Equatorial Guinea 2.0 23.7 16.6 23.2 15.2 5.3 -0.8 -3.4 19.7 13.2 19.7 12.0 2.4 -3.5
Eritreab _ 5.7 0.2 1.4 -9.8 3.6 2.2 _ 3.8 -3.4 -1.8 -12.5 0.5 -0.8
Ethiopiac _ 5.3 8.8 11.1 11.3 9.9 8.0 _ 2.2 6.3 8.7 8.9 7.5 5.7
Gambia 3.5 3.0 3.7 6.3 6.1 4.6 5.7 -1.0 0.0 0.8 3.3 3.2 1.7 2.9
Guinea 3.2 4.4 2.9 1.8 4.7 4.9 1.9 0.6 0.6 1.1 -0.1 2.7 2.7 -0.3
Guinea-Bissau 2.4 0.4 2.1 0.3 3.5 3.0 3.5 0.5 -1.6 0.1 -1.7 1.4 0.9 1.3
Haiti 0.2 -0.8 0.6 3.3 0.8 2.9 -5.1 -2.0 -2.7 -0.9 2.0 -0.5 1.6 -6.3
Kiribati 0.8 3.7 1.4 -0.5 3.4 -0.7 1.8 -1.9 2.1 -0.3 -2.0 1.8 -2.2 0.2
Lao People's Dem. Rep. 5.1 6.5 8.5 18.2 7.8 7.5 7.7 2.4 4.0 6.8 16.4 6.2 5.9 6.2
Lesotho 3.9 4.0 3.1 2.3 4.4 1.4 2.4 1.6 2.2 2.1 1.3 3.3 0.4 1.4
Liberia -5.0 3.9 0.9 9.4 7.1 4.6 5.1 -6.0 0.6 -2.5 4.3 1.8 -0.3 1.0
Madagascar 1.2 2.0 3.2 6.3 7.1 -5.0 -2.0 -1.5 -1.1 0.1 3.2 4.0 -7.8 -4.8
Malawi 2.2 2.9 6.3 8.6 9.0 7.5 6.6 -2.1 1.2 3.3 5.5 5.8 4.3 3.3
Maldives 11.9 7.8 6.7 6.1 6.3 -3.9 8.0 8.1 5.5 5.2 4.7 4.9 -5.1 6.6
Mali 3.8 4.6 5.2 4.3 5.0 4.4 4.5 2.0 1.9 2.0 1.1 1.8 1.3 1.3
Mauritania 1.6 3.0 6.8 1.0 3.7 -1.1 4.7 -1.1 0.1 3.9 -1.6 1.1 -3.5 2.2
Mozambique -0.8 7.2 7.7 7.3 6.7 4.3 7.0 -1.8 4.0 5.0 4.7 4.2 1.9 4.6
Myanmar 0.6 7.0 11.6 12.0 10.1 4.8 5.3 -1.2 5.6 10.9 11.3 9.4 4.1 4.5
Nepal 4.6 4.9 3.9 3.2 4.7 6.5 4.6 2.2 2.4 1.8 1.2 2.8 4.6 2.7
Niger -1.6 3.3 4.3 3.3 5.9 -0.9 7.5 -4.3 -0.2 0.7 -0.3 2.2 -4.4 3.8
Rwanda 1.8 0.1 8.0 7.7 11.6 6.0 6.5 -1.7 -1.1 5.3 4.7 8.3 2.8 3.4
Samoa 0.9 2.8 2.9 6.4 -3.0 -1.8 0.0 0.6 1.8 2.6 6.1 -3.3 -2.1 -0.4
Sao Tome and Principe -1.1 1.6 6.2 5.2 5.8 4.0 4.5 -3.1 -0.3 4.5 3.6 4.2 2.3 2.7
Senegal 3.1 3.3 4.2 4.9 3.3 2.2 4.2 0.1 0.6 1.4 2.1 0.6 -0.5 1.5
Sierra Leone 2.6 -8.8 8.6 6.4 4.3 4.4 5.0 0.1 -8.9 4.8 3.4 1.8 2.1 2.7
Solomon Islands 2.3 3.0 4.7 11.8 7.3 -2.2 5.6 -0.9 0.2 2.1 9.0 4.7 -4.5 3.1
Somalia 1.6 -3.2 2.9 2.6 2.6 2.6 2.6 1.6 -4.3 0.5 0.4 0.4 0.4 0.3
Sudan 0.1 7.4 7.1 10.2 6.8 4.5 5.1 -2.6 4.7 4.5 7.4 4.2 1.9 2.5
Timor-Lested _ _ 5.4 16.2 6.8 7.4 6.0 _ _ 2.8 13.8 4.9 5.4 3.7
Togo 1.8 1.8 2.3 2.1 2.4 3.3 3.4 -1.4 -0.9 0.0 -0.1 0.2 1.1 1.2
Tuvalu 6.7 3.6 2.4 2.0 2.0 2.0 0.2 5.5 3.2 1.9 1.7 1.7 1.8 0.0
Uganda 3.5 7.4 7.2 8.1 9.2 7.1 5.2 0.1 4.1 3.8 4.6 5.7 3.7 1.9
United Rep. of Tanzania 2.8 4.0 7.0 7.1 7.4 6.2 6.2 -0.4 1.0 4.1 4.2 4.3 3.2 3.1
Vanuatu 5.5 3.1 4.2 6.7 6.3 5.6 2.2 3.1 0.7 1.5 4.0 3.7 3.0 -0.3
Yemene 4.6 7.9 4.7 4.4 4.7 3.9 8.0 0.8 3.7 1.5 1.2 1.5 0.7 4.8
Zambia 1.0 0.5 5.3 6.3 6.0 3.4 5.7 -2.1 -2.1 2.7 3.6 3.2 0.6 2.8
LDCs 2.2 3.9 6.9 8.6 7.0 4.6 5.1 -0.4 1.2 4.5 6.2 4.7 2.3 2.8
African LDCs and Haiti 1.7 3.2 7.0 9.1 7.6 3.7 4.3 -1.0 0.4 4.1 6.2 4.8 0.9 1.6
Asian LDCs 3.4 5.2 6.9 7.7 6.1 6.2 6.3 1.0 2.7 5.2 6.2 4.7 4.7 4.8
Island LDCsf 3.4 3.7 5.9 7.1 4.5 0.3 4.5 0.8 1.4 -0.8 4.9 2.5 -1.7 2.4
Other developing countries 3.7 4.9 6.1 8.0 5.3 2.5 7.5 1.6 3.3 4.8 6.7 4.0 1.3 6.3
All developing countries 3.7 4.9 6.1 8.0 5.3 2.5 7.4 1.5 3.1 4.7 6.5 3.9 1.2 6.0
Source: UNCTAD, UNCTADstat database, August 2011.
a 2010, preliminary data; b Eritrea, data start in 1992; c Ethiopia, data start in 1992; d Timor-Leste, data start in 2003;
e Yemen, prior to 1990 include Yemen (former arab republic) and Yemen (former democratic);
f Timor-Leste, data start in 2003, thereby causing a break in the series.




The Least Developed Countries Report 2011132


4 . Agricultural sector: Shares and production, total and per capita
(Annual average growth rates)


Country


Percentage share of
agriculture in:


Total
agricultural productiona


Per capita
agricultural productiona


Total
labour force


Share of
GDP


Annual average growth rates Annual average growth rates


1990 2009 1990 2009
1990-
1999


2000-
2009


2007 2008 2009
1990-
1999


2000-
2009


2007 2008 2009


Afghanistan 68.0 60.1 35.7 37.3 5.2 2.6 9.5 -12.0 20.3 -0.3 -1.0 5.7 -15.1 16.5
Angola 74.5 69.5 18.0 8.6 4.1 6.6 6.9 1.5 20.7 1.1 3.6 4.0 -0.8 17.8
Bangladesh 65.0 46.3 31.5 18.6 2.3 3.5 5.1 7.6 -2.9 0.3 1.9 3.7 6.3 -5.0


Benin 63.2 45.3 35.4 35.0 6.5 0.4 -5.3 10.5 -0.1 3.1 -2.9 -8.0 7.5 -3.5
Bhutan 93.1 93.0 39.0 20.6 3.0 7.4 -2.1 -0.6 -0.6 3.3 4.8 -3.8 -2.3 -2.4
Burkina Faso 92.4 92.1 28.8 34.6 4.2 4.1 -18.4 24.4 -3.0 1.4 0.6 -21.4 20.7 -6.3
Burundi 92.0 89.4 61.9 45.5 -1.7 1.1 1.0 -2.3 0.0 -3.0 -1.7 -2.1 -4.3 -3.4
Cambodia 73.7 66.3 56.5 32.7 5.1 8.2 5.2 9.0 4.6 2.2 6.4 3.6 7.0 3.3
Central African Republic 80.1 64.2 47.6 58.4 3.9 1.7 3.9 2.0 2.3 1.3 -0.2 2.0 0.0 1.0
Chad 82.9 66.8 39.2 20.6 4.9 1.9 -8.3 11.0 0.6 1.7 -1.3 -10.6 8.3 -2.2
Comoros 77.3 69.9 40.4 48.2 2.1 1.4 3.9 0.0 0.0 -0.8 -1.1 1.1 -2.1 -2.2
Dem. Rep. of the Congo 67.5 57.8 31.8 41.9 -2.7 -0.1 0.6 -0.4 -0.4 -5.9 -3.1 -2.5 -2.5 -3.9
Djibouti 81.9 74.7 3.1 3.7 -0.5 4.5 11.8 0.0 0.0 -3.0 2.6 9.4 -1.6 -1.6
Equatorial Guinea 74.1 65.1 61.9 3.2 -0.1 -0.9 1.4 -1.4 -2.2 -3.4 -3.6 -1.3 -3.9 -4.1
Eritreab _ 74.1 _ 24.2 6.3 5.0 8.0 0.7 0.0 4.4 1.2 4.4 -2.1 -3.2
Ethiopiac _ 77.9 41.1 46.7 4.9 4.7 0.6 5.5 3.8 1.8 2.0 -2.6 2.7 1.7
Gambia 82.1 76.2 15.4 27.7 1.8 0.8 -29.5 44.7 18.5 -2.0 -2.2 -31.3 41.8 15.4
Guinea 87.1 80.2 19.5 24.7 3.4 3.3 3.1 4.0 1.4 0.0 1.2 0.9 1.9 -0.9
Guinea-Bissau 85.4 79.7 44.6 44.9 3.2 2.6 1.4 0.2 0.5 0.6 0.2 -1.0 -1.9 -2.0
Haiti 68.5 59.3 35.8 26.8 -0.6 1.7 9.9 -3.8 0.0 -2.6 0.0 8.3 -5.8 -1.0
Kiribati 30.3 23.4 28.0 27.1 4.2 3.6 2.2 -2.9 0.0 2.7 1.8 1.8 -5.3 -0.9
Lao People's Dem. Rep. 78.3 75.1 61.2 31.6 3.5 4.1 9.0 9.7 1.4 0.8 2.4 7.2 7.6 0.0
Lesotho 44.4 39.5 18.6 8.5 2.0 -2.4 2.5 -20.2 0.0 0.4 -3.4 1.2 -20.7 0.0
Liberia 72.3 62.7 53.4 63.7 3.8 2.1 10.2 0.9 0.1 1.6 -1.5 5.9 -4.4 -3.5
Madagascar 78.8 70.6 31.8 26.8 1.0 2.2 -4.6 1.7 0.0 -2.0 -0.6 -7.1 -1.1 -2.2
Malawi 86.9 79.6 41.6 29.1 5.1 4.1 12.6 2.9 0.0 3.1 1.2 9.1 0.0 -2.8
Maldives 33.3 15.9 14.3 4.9 3.5 -0.1 -2.8 -1.9 -4.0 1.0 -1.5 -4.2 -3.3 -5.6
Mali 85.1 75.6 47.8 39.2 3.5 5.2 4.4 10.9 11.3 1.5 2.8 1.9 8.3 8.5
Mauritania 54.9 50.4 37.0 18.4 1.6 1.6 1.0 0.2 1.4 -1.1 -1.0 -1.0 -2.1 -1.1
Mozambique 84.4 80.8 37.1 27.9 7.5 2.8 -6.3 6.8 0.0 4.2 0.3 -8.6 4.2 -2.0
Myanmar 73.4 67.4 57.3 48.0 4.6 6.0 3.6 -0.7 -0.5 3.2 5.2 3.4 -1.9 -1.3
Nepal 93.4 93.0 48.4 32.6 2.7 2.8 -0.6 6.2 3.4 0.2 0.7 -2.9 4.9 0.9
Niger 88.4 83.2 34.0 43.6 5.1 7.3 4.4 25.7 -0.1 1.7 3.4 0.9 20.9 -4.3
Rwanda 92.0 89.6 43.1 36.1 -2.0 3.1 0.1 3.3 0.6 -1.9 0.7 -2.7 0.9 -2.8
Samoa 42.9 28.1 20.5 11.7 2.0 1.4 3.1 -0.3 0.6 1.1 1.3 2.8 0.0 0.0
Sao Tome and Principe 68.6 58.2 27.6 16.7 6.0 1.0 5.5 -3.5 2.2 4.1 -0.7 4.2 -5.0 0.0
Senegal 76.4 70.6 19.1 18.5 1.4 3.6 -12.4 56.7 6.9 -1.3 0.9 -14.3 53.0 4.0
Sierra Leone 70.9 60.6 46.9 58.2 -1.3 9.5 -1.8 -0.1 0.1 -1.2 5.8 -4.9 -2.6 -2.0
Solomon Islands 75.2 68.1 45.5 35.6 3.2 2.5 2.4 0.8 0.4 0.4 -0.1 0.0 -2.0 -2.1
Somalia 74.1 66.1 69.3 60.2 2.0 0.4 -0.5 0.0 0.0 1.1 -1.9 -2.2 -2.3 -2.3
Sudan 68.7 52.5 40.6 28.8 5.9 1.6 0.1 -0.7 2.1 3.3 -0.6 -2.9 -3.0 0.0
Timor-Lested _ 79.8 _ 30.5 _ 0.5 -5.2 2.6 0.0 _ -3.3 -8.0 -1.2 -2.5
Togo 65.6 54.0 37.9 47.2 4.6 1.4 3.9 3.0 0.0 1.7 -1.2 1.1 1.1 -3.3
Tuvalu 33.3 25.0 25.6 17.5 0.1 1.6 3.0 0.0 0.0 0.0 1.6 2.8 0.0 0.0
Uganda 84.5 75.4 42.5 23.0 2.3 0.8 2.6 2.9 1.0 -0.9 -2.3 0.0 -1.2 -2.4
United Republic of Tanzania 84.5 76.4 33.1 30.2 1.2 3.7 1.8 1.0 -0.2 -1.9 1.0 -0.9 -1.8 -2.8
Vanuatu 43.7 31.2 22.5 21.3 1.3 1.9 1.9 -0.7 -1.0 -1.1 -0.8 -1.1 -3.3 -3.4
Yemen 56.3 39.8 23.7 10.0 3.6 4.2 9.4 4.5 3.1 -0.5 1.3 6.8 0.9 0.9
LDCs 75.4 65.7 34.8 26.3 2.8 3.5 2.0 4.5 1.5 0.2 1.1 -0.3 2.1 -0.8
African LDCs and Haiti 79.7 71.5 34.0 27.7 2.5 2.9 0.1 5.3 2.3 -0.3 0.1 -2.5 2.5 -0.4
Asian LDCs 69.7 57.0 36.6 24.0 3.4 4.4 4.5 3.5 0.5 1.0 2.6 2.7 1.8 -1.1
Island LDCs 68.8 60.2 29.7 22.7 2.0 1.6 0.9 0.1 0.0 -0.2 -5.6 -1.5 -2.2 -2.3
Other developing countries 58.8 46.6 13.3 9.2 3.9 3.3 3.4 3.0 0.4 2.3 1.9 2.1 1.8 -0.8
All developing countries 60.8 49.3 14.2 9.7 3.8 3.3 3.2 3.1 0.5 2.0 1.8 1.8 1.7 -0.9
Source: FAO, FAOSTAT database, online, May 2011; UNCTAD, UNCTADstat database, August 2011.
a Based on Agricultural Production Index total and per capita, base year =1999–2001; b Eritrea, data start in 1992; c Ethiopia, data start in 1992;
d Timor Leste, data start in 2003; Agricultural Production Index data, base year 1999–2001, estimated.




133ANNEX. Statistical Tables on the Least Developed Countries


5 . Food production, total and per capita: Annual average growth rates
(Percentage)


Country
Total food productiona Net per capita food productiona


1990-
1999


2000-
2009


2007 2008 2009
1990-
1999


2000-
2009


2007 2008 2009


Afghanistan 5.3 2.6 10.1 -12.5 21.0 -0.2 -0.9 6.8 -16.0 17.7
Angola 4.3 6.7 6.6 1.9 20.7 1.2 3.7 4.0 -0.8 17.7
Bangladesh 2.4 3.7 5.9 7.9 -2.9 0.4 2.0 3.7 6.3 -4.2
Benin 5.7 1.2 -7.0 9.4 0.0 2.3 -2.0 -9.7 7.1 -3.3
Bhutan 3.1 7.5 -1.9 -0.6 -0.6 3.3 4.8 -3.8 -2.3 -1.6
Burkina Faso 3.7 3.5 -10.2 20.2 -0.7 0.8 0.1 -12.5 15.4 -3.8
Burundi -1.5 1.3 2.7 -2.7 0.0 -2.7 -1.6 0.0 -5.4 -2.3
Cambodia 5.2 8.3 5.2 8.6 4.5 2.2 6.5 3.6 6.9 3.2
Central African Republic 4.0 2.1 4.4 1.7 1.7 1.4 0.2 2.0 0.0 0.0
Chad 4.9 2.5 -9.0 11.7 0.8 1.7 -0.7 -11.1 9.1 -2.1
Comoros 2.1 1.4 3.7 0.0 0.0 -0.8 -1.0 2.2 -3.2 -2.2
Dem. Rep. of the Congo -2.7 0.0 1.0 -1.0 1.0 -5.8 -3.0 -2.5 -2.5 -2.6
Djibouti -0.5 4.5 12.2 0.0 0.0 -3.0 2.6 9.4 -1.6 -1.6
Equatorial Guinea 0.6 -0.9 1.1 -1.1 -3.3 -2.7 -3.6 0.0 -5.2 -4.1
Eritreab 6.5 5.0 7.8 0.8 0.0 4.6 1.2 4.4 -2.1 -3.2
Ethiopiac 5.0 4.8 -0.7 6.7 4.9 2.1 2.1 -3.4 3.5 1.7
Gambia 2.0 0.8 -29.9 45.6 18.2 -1.8 -2.1 -31.3 41.8 15.4
Guinea 3.3 3.6 2.5 4.8 1.5 0.0 1.5 0.9 2.8 -0.9
Guinea-Bissau 3.2 2.6 0.8 0.8 0.0 0.8 0.2 -1.0 -1.9 -2.0
Haiti -0.5 1.6 8.5 -2.6 0.0 -2.4 -0.2 7.4 -3.9 -2.0
Kiribati 4.2 3.6 2.4 -2.3 0.0 2.7 1.8 1.8 -5.3 -0.9
Lao People's Dem. Rep. 4.2 4.1 6.3 8.1 1.4 1.5 2.3 3.5 6.7 0.0
Lesotho 2.5 -2.9 3.4 -21.7 0.0 0.8 -3.9 1.2 -22.4 0.0
Liberia 2.1 3.6 12.0 8.3 0.0 0.0 -0.1 8.0 3.2 -4.1
Madagascar 1.2 2.4 -5.1 1.8 0.0 -1.8 -0.5 -7.1 -1.1 -2.2
Malawi 6.8 3.6 15.8 -2.3 0.0 4.6 0.7 12.5 -4.6 -2.9
Maldives 3.5 0.0 -1.9 -2.0 -4.0 1.0 -1.5 -4.2 -3.3 -5.6
Mali 2.5 7.4 9.8 13.7 10.2 0.4 4.8 7.8 10.5 8.0
Mauritania 1.6 1.6 0.9 0.0 1.8 -1.1 -1.0 -1.0 -2.1 -1.1
Mozambique 7.4 0.7 -8.2 1.0 0.0 4.2 -1.9 -10.6 -1.2 -2.4
Myanmar 4.6 6.1 3.8 -1.2 0.0 3.2 5.3 2.6 -1.3 -1.3
Nepal 2.7 2.8 -0.8 6.8 3.2 0.2 0.7 -2.9 3.9 1.9
Niger 5.1 7.4 4.2 25.7 0.0 1.6 3.5 0.9 20.7 -4.3
Rwanda -1.9 3.1 0.0 3.1 0.0 -1.8 0.7 -1.8 0.0 -2.8
Samoa 2.0 1.4 3.7 -0.9 0.9 1.2 1.3 2.8 0.0 0.0
Sao Tome and Principe 6.1 1.0 5.7 -3.6 2.8 4.1 -0.7 4.2 -5.0 0.0
Senegal 1.8 3.8 -12.2 57.0 8.1 -1.0 1.1 -15.6 55.4 5.0
Sierra Leone -1.2 9.8 -2.0 0.0 0.0 -1.1 6.1 -4.8 -2.5 -2.0
Solomon Islands 3.2 2.5 2.6 0.9 0.8 0.4 -0.1 0.0 -2.0 -2.1
Somalia 2.1 0.4 0.0 0.0 0.0 1.1 -1.9 -2.2 -2.3 -2.3
Sudan 6.4 1.7 0.0 0.9 1.7 3.6 -0.5 -2.0 -2.0 0.0
Timor-Lested _ 0.9 -6.1 3.7 0.0 _ -2.9 -8.8 0.0 -3.6
Togo 4.5 3.9 3.3 5.6 0.0 1.4 1.3 1.0 2.9 -2.8
Tuvalu 0.1 1.6 2.7 0.0 0.0 0.0 1.6 2.8 0.0 0.0
Uganda 1.9 0.9 1.9 1.9 1.8 -1.4 -2.4 -2.3 -1.2 -1.2
United Republic of Tanzania 1.3 3.6 0.0 1.5 0.0 -1.7 0.8 -2.7 -0.9 -2.8
Vanuatu 1.4 1.9 1.9 -0.9 -0.9 -1.1 -0.8 -1.1 -3.3 -3.4
Yemen 3.4 4.1 9.0 5.3 2.9 -0.7 1.2 6.9 1.8 0.0
Zambia 1.1 3.0 -2.5 0.0 14.4 -1.7 0.7 -4.8 -2.0 11.2
LDCs 3.8 3.6 2.2 4.4 1.7 1.1 1.2 -0.2 2.0 -0.6
African LDCs and Haiti 4.0 3.0 0.3 5.2 2.7 1.2 0.2 -2.4 2.4 0.0
Asian LDCs 3.5 4.5 4.6 3.4 0.5 1.1 2.7 2.8 1.7 -1.1
Island LDCs 1.9 1.7 0.9 0.1 0.0 -0.3 -5.5 -1.5 -2.2 -2.3
Other developing countries 4.2 3.2 3.4 3.3 0.4 2.5 1.9 2.1 2.0 -0.8
All developing countries 4.2 3.3 3.3 3.4 0.5 2.3 1.8 1.8 1.9 -0.9
Source: FAO, FAOSTAT database, May 2011.
Notes: Country groups: weighted averages;
a based on Food Production Index total and per capita, base year =1999–2001;
b Eritrea, data start in 1993; c Ethiopia, data start in 1993;
d Timor Leste, data start in 2003; Food Production Index data, base year 1999–2001, estimated.




The Least Developed Countries Report 2011134


6. The manufacturing sector: Shares in GDP and annual average growth rates
(Percentage)


Country
Share in GDP (current dollar) Annual average growth rate (constant 2005 dollar)


1980 1990 2000 2009 1980–1990 1990–2000 2000–2009 2007 2008 2009
Afghanistan 21.4 20.3 16.9 17.0 -3.7 -4.8 14.7 5.1 4.5 40.0
Angola 9.4 4.9 3.0 0.9 -3.3 -0.3 12.2 17.1 13.8 0.1
Bangladesh 17.0 13.4 15.2 17.9 2.8 7.0 7.8 9.7 7.2 5.9
Benin 7.3 7.5 8.9 8.1 5.3 5.6 2.0 2.6 3.3 4.5
Bhutan 2.9 8.4 8.4 8.4 12.9 8.9 9.3 25.1 12.9 -0.1
Burkina Faso 12.7 14.3 13.1 12.0 2.0 3.9 7.3 4.5 2.5 4.2
Burundi 5.2 10.2 10.4 9.7 14.0 -4.4 2.1 0.5 -1.5 8.4
Cambodia 6.2 5.3 16.9 18.2 6.7 13.8 11.7 8.9 3.1 0.0
Central African Republic 11.3 11.3 7.0 7.0 0.6 0.7 -1.5 -7.4 1.5 10.5
Chad 13.4 14.6 9.1 5.8 7.9 0.2 3.2 -4.7 4.4 -2.5
Comoros 3.9 4.1 4.5 4.1 4.8 1.2 1.4 0.5 1.0 1.1
Dem. Rep. of the Congo 15.2 9.1 4.8 5.7 -2.4 -8.8 4.6 5.1 2.7 5.5
Djibouti 9.7 3.6 2.6 2.7 3.1 -2.0 3.5 5.3 5.6 5.0
Equatorial Guinea 1.3 1.6 0.2 0.2 2.8 4.7 9.3 16.5 22.5 11.0
Eritreaa _ _ 11.2 5.8 _ 9.8 -8.5 -6.1 -0.7 -0.2
Ethiopiab _ _ 5.5 4.4 _ 7.9 7.3 8.3 7.1 13.7
Gambia 9.0 7.6 6.6 5.8 3.3 1.3 3.3 1.4 12.1 2.4
Guinea 3.0 3.0 3.0 7.1 3.1 3.7 2.9 -0.1 4.0 3.2
Guinea-Bissau 11.1 7.4 9.7 11.9 -1.3 2.8 5.4 -8.7 0.5 8.5
Haiti 19.1 15.5 7.2 7.3 -1.6 -6.3 0.8 1.3 -0.1 3.7
Kiribati 5.4 9.6 4.9 5.8 4.3 1.9 4.5 17.1 4.4 -4.6
Lao People's Dem. Rep. 9.6 10.0 7.8 10.5 6.6 11.7 11.2 21.6 9.4 6.8
Lesotho 4.6 9.6 13.7 19.8 10.1 7.8 6.5 1.2 3.2 5.1
Liberia 9.2 11.2 0.3 7.2 -2.0 -37.9 23.9 25.0 1.7 6.5
Madagascar 16.1 12.2 12.2 14.5 0.7 2.4 3.6 8.2 6.4 -5.2
Malawi 17.3 19.5 11.4 10.0 3.6 0.1 9.7 3.6 12.2 7.2
Maldives 7.5 8.8 7.7 6.6 11.9 4.9 3.6 3.4 2.8 -2.5
Mali 4.3 8.1 7.2 5.6 8.8 7.1 0.2 -12.0 -14.4 1.0
Mauritania 5.6 8.9 7.4 5.4 4.3 4.9 2.8 2.0 0.4 0.7
Mozambique 24.4 12.7 12.0 14.7 -3.8 8.6 8.3 3.1 1.0 9.7
Myanmar 9.5 7.8 7.2 11.8 -0.1 7.9 17.4 21.2 17.8 -2.2
Nepal 4.5 6.0 9.2 6.8 9.3 8.9 0.9 2.6 0.2 -2.1
Niger 3.6 6.4 6.4 5.5 -1.8 1.0 1.1 -7.2 -7.3 3.2
Rwanda 15.8 12.1 7.4 6.8 2.7 -2.4 8.2 0.8 5.6 3.1
Samoa 19.2 19.2 15.0 8.4 0.9 0.2 -1.5 17.5 -17.5 -20.4
Sao Tome and Principe 7.1 7.1 6.9 6.4 -0.8 1.5 4.5 4.7 7.9 2.8
Senegal 14.2 17.3 14.7 13.0 4.6 3.1 1.9 6.6 -1.8 -1.0
Sierra Leone 8.3 4.6 3.5 1.8 -4.3 -14.1 3.0 2.1 1.2 -6.9
Solomon Islands 3.8 3.7 6.3 5.3 3.8 6.3 -0.1 15.7 5.9 -2.4
Somalia 4.7 2.0 2.5 2.5 -1.8 0.6 4.2 3.3 3.0 2.1
Sudan 8.5 8.7 5.6 6.4 2.9 7.5 6.8 6.0 7.0 5.8
Timor-Lestec _ _ _ 2.5 _ _ -1.3 10.1 24.6 -1.1
Togo 8.0 10.5 9.2 8.8 3.5 0.4 2.9 2.2 8.1 -6.5
Tuvalu 1.0 3.1 3.2 3.6 24.4 -2.3 3.8 3.4 2.0 0.9
Uganda 5.8 5.3 7.5 7.5 2.9 13.4 6.3 7.6 6.9 8.8
United Rep. of Tanzania 13.2 12.0 9.2 8.4 -0.7 3.7 8.8 8.5 9.9 10.8
Vanuatu 4.0 5.2 4.8 3.9 11.8 0.6 1.2 -0.6 14.0 3.3
Yemend 7.6 7.8 5.6 7.5 7.0 16.4 5.9 6.2 3.5 4.0
Zambia 18.3 36.1 10.8 9.3 4.1 0.8 4.5 3.0 3.6 0.7
LDCs 12.7 11.0 9.8 9.5 1.1 4.3 7.3 7.7 6.1 5.5
African LDCs and Haiti 12.1 10.7 7.4 6.6 0.6 2.1 5.6 4.9 4.8 4.5
Asian LDCs 14.2 11.8 12.7 14.4 2.0 7.2 8.9 10.1 7.3 6.4
Island LDCs 7.3 8.7 11.1 7.1 4.0 2.7 1.8 9.2 -1.4 -6.2
Other Developing countries 21.1 22.1 23.0 24.8 5.5 6.7 7.6 10.5 5.6 2.5
All Developing countries 20.7 21.7 22.6 24.3 5.4 6.7 7.6 10.5 5.6 2.5
Source: UNCTAD, UNCTADstat database, May 2011.
a Eritrea, data start in 1992;
b Ethiopia, data start in 1992;
c Timor-Leste, data start in 2003;
d Yemen: prior to 1990, include Yemen (former arab republic) and Yemen (former democratic).




135ANNEX. Statistical Tables on the Least Developed Countries


7. Gross fixed capital formation: Share in GDP and annual average growth rates
(Percentage)


Country
Share in GDP (current dollar) Annual average growth rate (constant 2005 dollar)


1980 1990 2000 2009 1980–1990 1990–2000 2000–2009 2007 2008 2009
Afghanistan 13.2 13.4 14.3 24.6 -1.6 -1.1 12.1 2.9 -9.9 9.0
Angola 18.5 11.0 12.1 16.6 -6.3 8.6 16.3 48.7 28.1 9.9
Bangladesh 21.3 20.2 23.0 24.2 3.1 9.2 7.8 8.5 1.8 5.7
Benin 21.9 13.4 18.0 24.4 -4.7 6.3 6.6 6.0 8.3 23.8
Bhutan 32.5 31.8 50.0 41.7 6.5 9.5 -0.4 3.9 0.0 15.5
Burkina Faso 19.2 17.7 19.2 21.4 4.9 4.1 9.0 29.9 2.2 9.0
Burundi 10.7 13.8 8.3 13.7 4.9 -10.5 10.1 -5.4 0.2 3.5
Cambodia 9.3 8.3 18.3 15.0 5.4 15.3 9.8 10.1 -3.6 -16.4
Central African Republic 6.9 11.8 11.1 11.8 6.9 -2.2 5.9 6.6 27.3 -0.3
Chad 8.1 7.2 15.2 19.3 6.0 4.4 7.8 -1.7 -4.7 25.7
Comoros 28.5 12.2 10.1 13.4 -6.6 -1.6 3.9 12.9 29.1 -4.8
Dem. Rep. of the Congo 19.6 13.6 3.5 19.4 0.0 -8.8 10.3 7.0 6.2 2.8
Djibouti 12.9 27.2 12.2 16.0 3.1 -9.4 27.8 35.7 29.1 -15.2
Equatorial Guinea 13.0 58.1 61.9 25.7 11.6 54.3 3.7 24.4 86.7 -11.6
Eritreaa _ _ 22.0 9.1 _ 14.1 -23.0 -45.3 -0.5 -36.9
Ethiopiab _ _ 20.3 22.4 _ 5.7 12.2 24.6 -3.4 15.0
Gambia 23.6 29.7 36.7 34.1 10.8 4.7 -0.1 2.6 -2.0 12.9
Guinea 20.1 34.3 35.4 24.3 8.1 2.6 12.3 -4.1 34.5 19.9
Guinea-Bissau 25.1 14.7 11.3 11.0 1.7 -10.4 6.3 75.2 2.7 30.7
Haiti 17.9 14.3 12.9 12.9 -0.1 4.1 1.5 3.1 2.8 3.2
Kiribati 44.0 92.4 47.9 82.6 5.9 1.2 9.6 -3.0 3.1 -1.0
Lao People's Dem. Rep. 7.4 11.3 28.3 31.1 10.7 14.8 13.4 51.1 -2.7 -11.6
Lesotho 37.4 55.7 43.2 29.9 3.8 1.4 0.9 23.0 5.9 10.8
Liberia 21.4 10.5 7.3 20.0 -13.8 3.2 18.9 9.4 7.1 4.6
Madagascar 22.8 17.0 16.2 23.5 4.9 3.4 13.8 25.7 56.0 -28.5
Malawi 31.6 24.4 17.5 22.6 -3.0 -2.6 13.0 7.8 23.6 4.2
Maldives 31.5 31.5 26.3 57.4 11.9 8.0 15.0 12.2 11.4 -37.9
Mali 17.4 20.0 18.9 19.8 4.2 2.1 6.8 15.2 -0.8 11.5
Mauritania 20.5 13.1 22.4 24.9 -2.8 3.4 7.6 -9.2 25.2 -10.1
Mozambique 7.6 14.7 31.0 21.1 2.3 10.1 3.7 5.8 11.2 2.0
Myanmar 18.7 14.7 11.8 15.4 -2.7 15.2 20.9 27.2 18.8 2.1
Nepal 15.9 16.6 19.5 21.3 4.5 6.4 4.1 1.9 6.0 -0.3
Niger 25.3 12.8 15.1 29.1 -10.1 3.0 10.3 4.2 19.8 3.6
Rwanda 10.8 10.9 14.2 21.6 5.0 1.1 15.6 25.3 32.1 2.7
Samoa 25.9 22.4 13.9 9.0 0.3 -4.6 -2.6 -0.6 -8.1 4.3
Sao Tome and Principe 11.4 31.3 35.8 65.0 3.1 3.6 15.5 7.5 9.2 6.8
Senegal 16.3 16.1 22.4 23.7 4.3 6.2 6.4 7.7 7.3 -7.3
Sierra Leone 14.0 9.6 8.0 6.2 -3.7 -11.6 11.8 -4.1 -3.5 4.4
Solomon Islands 18.8 17.4 18.3 12.7 4.2 3.0 -0.6 0.0 13.1 -1.9
Somalia 9.8 23.0 20.4 20.0 1.8 -4.7 1.5 1.4 2.2 3.3
Sudan 19.7 10.4 9.7 19.2 -1.6 12.7 20.6 7.4 5.9 6.0
Timor-Lestec _ _ _ 24.0 _ _ 4.4 57.8 -12.0 11.2
Togo 29.4 14.6 15.1 16.4 -1.3 1.3 4.8 -12.3 12.2 21.8
Tuvalu 61.5 53.0 52.0 8.2 5.6 1.5 -21.3 1685.6 -15.4 -35.5
Uganda 6.2 13.5 17.8 21.1 11.7 9.5 12.3 15.4 6.7 9.7
United Rep. of Tanzania 22.0 41.1 16.3 27.0 1.1 -1.2 11.6 14.7 3.7 -6.6
Vanuatu 23.7 32.3 23.8 26.1 6.2 3.9 11.4 1.6 48.6 -13.1
Yemend 31.1 11.8 0.0 0.0 -6.8 14.1 1.6 9.5 -6.2 -8.7
Zambia 18.2 13.5 17.2 22.7 -9.0 5.7 26.3 16.2 12.1 -3.1
LDCs 18.4 16.5 18.6 21.4 0.6 6.2 9.9 12.9 9.0 1.9
African LDCs and Haiti 17.6 15.9 17.1 21.0 0.5 4.4 11.2 14.4 14.0 2.5
Asian LDCs 20.2 17.6 20.5 21.8 0.7 9.2 7.9 10.7 1.1 1.8
Island LDCs 24.3 26.3 22.5 32.1 3.3 3.1 11.5 11.5 11.9 -19.8
Other Developing countries 25.2 23.1 23.4 29.7 2.0 6.1 9.0 11.5 7.4 7.1
All Developing countries 24.9 22.8 23.3 29.4 2.0 6.1 9.1 11.6 7.4 7.0
Source: UNCTAD, UNCTADstat database, May 2011.
a Eritrea, data start in 1992;
b Ethiopia, data start in 1992;
c Timor-Leste, data start in 2003;
d Yemen: prior to 1990, include Yemen (former Arab Republic) and Yemen (former Democratic) .




The Least Developed Countries Report 2011136


8. Indicators on area and population, 2009


Country


Area Population


Land area


Arable
land and


land under
permanent


crops


Land area
covered
by forest


Density Urban Labour participation rate


(‘000 km2) (%) (pop./km2) (%) Male Female Total
Afghanistan 652.2 12.1 2.1 43 24.4 84.5 33.1 59.8
Angola 1,246.7 3.4 47.0 15 57.6 88.4 74.5 81.3
Bangladesh 130.2 65.7 11.1 1,127 27.6 82.5 58.7 70.7
Benin 110.6 24.9 41.7 79 41.6 77.9 67.4 72.7
Bhutan 38.4 2.6 84.3 18 35.7 70.6 53.4 62.7
Burkina Faso 273.6 21.8 20.9 57 20.0 90.8 78.2 84.4
Burundi 25.7 48.7 6.8 298 10.7 87.5 91.0 89.3
Cambodia 176.5 23.0 57.9 82 22.2 85.6 73.6 79.3
Central African Republic 623.0 3.3 36.3 7 38.7 86.7 71.6 79.0
Chad 1,259.2 3.4 9.2 9 27.1 78.2 62.7 70.4
Comoros 1.9 75.2 1.8 467 28.0 85.4 73.7 79.6
Democratic Republic of the Congo 2,267.1 3.3 68.1 28 34.6 85.6 56.5 70.8
Djibouti 23.2 0.1 0.2 37 87.7 78.7 61.5 70.1
Equatorial Guinea 28.1 7.2 58.4 24 39.5 92.0 39.7 65.5
Eritrea 101.0 6.9 15.2 43 21.1 83.4 62.5 72.6
Ethiopia 1,000.0 15.0 12.4 75 17.2 90.3 80.7 85.4
Gambia 10.0 40.5 47.8 151 57.4 85.2 70.6 77.8
Guinea 245.7 14.4 26.8 41 34.8 89.2 79.2 84.2
Guinea-Bissau 28.1 19.6 72.3 45 29.9 83.8 59.6 71.5
Haiti 27.6 49.0 3.7 362 48.3 82.9 57.5 69.9
Kiribati 0.8 42.0 15.0 121 43.9 .. .. ..
Lao People's Democratic Republic 230.8 6.4 68.6 27 32.0 78.9 77.7 78.3
Lesotho 30.4 11.2 1.4 68 26.1 77.7 70.8 74.0
Liberia 96.3 6.3 45.3 36 60.8 75.8 66.6 71.1
Madagascar 581.5 6.1 21.7 33 29.8 88.7 84.2 86.4
Malawi 94.3 39.5 34.7 129 19.3 78.8 75.0 76.8
Maldives 0.3 23.3 3.0 1,030 39.2 77.0 57.1 67.1
Mali 1,220.2 5.3 10.3 10 32.7 67.0 37.6 51.9
Mauritania 1,030.7 0.4 0.2 3 41.2 81.0 59.0 70.0
Mozambique 786.4 6.7 49.9 29 37.6 86.9 84.8 85.8
Myanmar 653.5 18.6 49.1 74 33.2 85.1 63.1 73.8
Nepal 143.4 17.6 25.4 199 17.7 80.3 63.3 71.5
Niger 1,266.7 11.8 1.0 12 16.6 87.5 38.9 62.7
Rwanda 24.7 64.0 17.2 380 18.6 85.1 86.7 86.0
Samoa 2.8 22.6 60.4 63 22.9 75.4 37.9 57.5
Sao Tome and Principe 1.0 57.3 28.1 170 61.3 76.0 44.5 59.8
Senegal 192.5 20.3 44.2 64 42.6 88.6 64.8 76.4
Sierra Leone 71.6 17.0 38.3 79 38.0 67.5 65.4 66.4
Solomon Islands 28.0 2.7 79.3 18 18.2 50.0 24.2 37.5
Somalia 627.3 1.6 10.9 14 37.0 84.7 56.5 70.3
Sudan 2,376.0 8.6 29.5 17 44.4 73.9 30.8 52.3
Timor-Leste 14.9 15.1 50.7 76 27.7 82.8 58.9 71.0
Togo 54.4 43.8 5.6 117 42.7 85.7 63.6 74.4
Tuvalu 0.03 60.0 33.3 333 50.0 .. .. ..
Uganda 199.8 44.3 15.4 136 13.1 90.6 78.3 84.5
United Republic of Tanzania 885.8 13.0 38.2 46 25.9 90.6 86.3 88.4
Vanuatu 12.2 11.9 36.1 20 25.0 88.3 79.3 83.9
Yemen 528.0 2.8 1.0 45 31.2 73.5 19.9 46.8
Zambia 743.4 4.6 66.8 17 35.5 79.2 59.5 69.2
LDCs 20,166.3 8.5 29.9 40 29.0 83.9 63.3 73.5
African LDCs and Haiti 17,551.5 7.9 30.3 29 30.0 85.1 68.0 76.4
Asian LDCs 2,553.0 15.0 26.8 121 27.4 82.4 56.7 69.5
Island LDCs 61.8 12.1 58.7 56 29.0 76.8 55.9 66.5
Other Developing countries 56,592.5 13.3 28.4 81 47.4 79.6 49.3 64.6
All Developing countries 76,758.8 12.1 28.8 70 44.6 80.1 51.2 65.8
Source: FAO, FAOSTAT, August 2011; World Bank, World Development Indicators, June 2011.
Note: Land area: country area excluding inland water.




137ANNEX. Statistical Tables on the Least Developed Countries


9. Indicators on demography


Country


Under-5
mortality rate


Infant
mortality rate


Average life expectancy at birth
Crude


birth rate
Crude


death rate


(Per 1,000 live births) Male Female Total (Per 1,000 population)


1990 2009 1990 2009 1990 2009 1990 2009 1990 2009 1990 2008 1990 2009
Afghanistan 250 199 167 134 41.4 44.3 41.2 44.3 41.3 44.3 51.5 46.1 22.8 19.2
Angola 258 161 153 98 40.2 45.6 43.8 49.6 42.0 47.6 52.7 42.3 22.7 16.5
Bangladesh 148 52 102 41 53.4 65.5 54.8 67.7 54.1 66.6 34.6 21.0 12.1 6.5
Benin 184 118 111 75 52.5 60.7 55.0 63.0 53.8 61.8 45.5 39.0 14.5 8.9
Bhutan 148 79 91 52 51.1 64.7 54.2 68.4 52.6 66.5 38.6 21.1 13.9 7.0
Burkina Faso 201 166 110 91 46.6 52.0 48.2 54.7 47.4 53.3 47.7 46.8 17.5 12.7
Burundi 189 166 114 101 44.7 49.4 48.0 52.4 46.3 50.9 46.5 34.3 18.7 13.7
Cambodia 117 88 85 68 53.2 59.7 56.6 63.4 54.9 61.5 43.6 24.7 12.3 8.2
Central African Republic 175 171 115 112 46.8 45.9 51.9 48.8 49.3 47.3 41.2 34.9 16.7 16.7
Chad 201 209 120 124 49.5 47.7 53.1 50.2 51.2 48.9 47.5 45.3 16.2 16.5
Comoros 128 104 90 75 54.5 63.6 58.4 68.1 56.4 65.8 36.8 31.9 10.9 6.5
Dem. Rep. of the Congo 199 199 126 126 46.0 46.2 49.6 49.4 47.7 47.8 50.6 44.3 17.9 16.8
Djibouti 123 94 95 75 49.4 54.4 52.4 57.2 50.8 55.7 42.0 28.0 14.3 10.9
Equatorial Guinea 198 145 120 88 45.2 49.5 48.4 51.8 46.7 50.6 49.0 37.9 19.9 14.7
Eritrea 150 55 92 39 46.0 57.6 50.3 62.2 48.1 59.9 40.5 36.4 15.8 8.3
Ethiopia 210 104 124 67 45.5 54.3 48.5 57.1 46.9 55.7 48.1 37.7 18.3 11.6
Gambia 153 103 104 78 49.8 54.6 52.7 58.0 51.2 56.2 43.9 36.3 15.1 11.1
Guinea 231 142 137 88 46.9 56.4 49.7 60.4 48.3 58.3 46.6 39.2 17.9 10.7
Guinea-Bissau 240 193 142 115 42.4 46.7 45.3 49.8 43.8 48.2 42.1 40.8 20.3 16.9
Haiti 152 87 105 64 53.5 59.7 56.3 63.2 54.9 61.4 37.3 27.3 12.9 9.0
Kiribati 89 46 65 37 54.6 58.9 59.1 63.1 56.8 60.9 32.2 26.6 10.5 8.7
Lao People's Dem. Rep. 157 59 108 46 53.1 64.0 55.6 66.9 54.3 65.4 41.4 27.1 13.1 6.9
Lesotho 93 84 74 61 57.4 45.0 61.0 45.7 59.2 45.4 36.4 28.6 10.7 16.8
Liberia 247 112 165 80 46.7 57.3 50.4 60.1 48.5 58.7 46.7 37.8 17.5 10.2
Madagascar 167 58 102 41 49.7 59.2 52.1 62.5 50.9 60.8 45.2 35.3 15.5 8.9
Malawi 218 110 129 69 48.1 52.9 50.5 54.7 49.2 53.8 50.1 39.7 17.4 11.8
Maldives 113 13 80 11 60.9 70.4 59.7 73.6 60.3 72.0 40.0 18.8 9.3 4.5
Mali 250 191 139 101 42.5 48.1 43.5 49.5 43.0 48.8 46.7 42.3 21.3 15.4
Mauritania 129 117 81 74 53.9 55.0 57.4 59.0 55.6 57.0 39.9 33.1 11.5 10.2
Mozambique 232 142 155 96 41.8 47.4 44.9 48.8 43.3 48.1 43.4 38.3 20.5 15.7
Myanmar 118 71 84 54 57.0 59.9 60.8 64.4 58.9 62.1 26.9 20.3 10.5 9.6
Nepal 142 48 99 39 54.2 66.4 53.7 67.8 54.0 67.1 38.5 24.9 12.9 6.3
Niger 305 160 144 76 41.3 51.1 41.9 52.9 41.6 52.0 55.7 53.2 23.6 14.5
Rwanda 171 111 103 70 30.8 48.8 34.7 52.5 32.7 50.6 45.4 41.0 32.2 14.2
Samoa 50 25 40 21 61.8 68.9 68.4 75.2 65.0 72.0 34.3 22.8 6.8 5.3
Sao Tome and Principe 95 78 62 52 60.8 63.9 63.6 67.7 62.2 65.8 37.8 31.5 10.1 7.3
Senegal 151 93 73 51 50.8 54.4 53.4 57.5 52.0 55.9 44.2 38.0 13.9 10.6
Sierra Leone 285 192 166 123 38.3 46.7 41.7 49.2 40.0 47.9 42.4 39.9 23.7 15.4
Solomon Islands 38 36 31 30 56.4 65.7 57.1 67.7 56.7 66.7 39.7 29.8 11.5 6.0
Somalia 180 180 109 109 43.0 48.7 46.1 51.5 44.5 50.1 45.5 43.7 19.6 15.5
Sudan 124 108 78 69 51.1 57.0 54.1 60.1 52.5 58.5 41.1 30.7 13.8 10.1
Timor-Leste 184 56 138 48 45.0 60.7 46.6 62.5 45.8 61.6 43.0 40.1 18.0 8.5
Togo 150 98 89 64 55.7 61.2 59.9 64.6 57.7 62.9 42.4 32.4 11.4 8.0
Tuvalu 53 35 42 29 .. .. .. .. .. .. .. .. .. ..
Uganda 184 128 111 79 46.1 52.8 49.8 54.1 47.9 53.4 49.5 45.8 16.7 12.3
United Republic of Tanzania 162 108 99 68 49.0 55.5 52.7 57.1 50.8 56.3 44.1 41.3 14.8 11.0
Vanuatu 40 16 33 14 61.8 68.7 64.7 72.6 63.2 70.6 36.8 29.8 7.3 4.9
Yemen 125 66 88 51 53.7 61.8 55.0 65.1 54.3 63.4 51.3 36.4 12.7 7.0
Zambia 179 141 108 86 49.4 45.8 52.8 46.9 51.1 46.3 44.0 42.4 14.7 16.6
LDCs 179 121 112 78 49.9 54.7 52.4 57.5 51.1 56.1 42.2 34.2 15.6 10.7
African LDCs and Haiti 195 137 117 85 46.9 52.1 50.0 54.8 48.4 53.4 46.4 39.9 17.6 12.9
Asian LDCs 149 81 103 60 52.1 60.8 54.0 63.5 53.0 62.1 36.4 25.0 12.9 8.3
Island LDCs 121 57 89 45 50.6 51.3 53.1 54.2 51.8 52.7 39.3 31.5 12.6 6.6
Other developing countries 85 51 61 38 61.7 62.2 66.4 66.6 64.0 64.2 27.2 19.4 8.1 7.3
All developing countries 103 67 71 48 55.8 58.5 59.4 62.1 57.5 60.1 29.2 21.7 9.1 7.8
Source: UNICEF, Child info, September 2010, Child Mortality database; World Bank, World Development Indicators, June 2011; UNSD, Population Division,


World Population Prospect, Rev. 2008.




The Least Developed Countries Report 2011138


10. Indicators on health, 2009a


Country


Infants
with low


birthweight


Births with
skilled


attendant at
delivery


1-year-old children
immunized against:


Estimated
number of
children


living with
HIV


Estimated
number of


people living
with HIV


Estimated
adult HIV


prevalence
rate


TB DPT3 Measles (0–14 years) (0+ years) (15+ years)
(%) (Thousands) (%)


Afghanistan .. 14.3 82 83 76 .. .. ..
Angola 12 47.3 83 73 77 22 200 2.0
Bangladesh 22 24.4 99 94 89 .. 6.3 <0.1
Benin 15 74 99 83 72 5.4 60 1.2
Bhutan 9 71.4 96 96 98 .. <1.0 0.2
Burkina Faso 16 53.5 92 82 75 17 110 1.2
Burundi 11 33.6 98 92 91 28 180 3.3
Cambodia 9 43.8 98 94 92 .. 63 0.5
Cape Verde 6 77.5 99 99 96 .. .. ..
Central African Republic 13 43.7 74 54 62 17 130 4.7
Chad 22 14.4 40 23 23 23 210 3.4
Comoros 25 61.8 80 83 79 .. <0.5 0.1
Dem. Rep. of the Congo 10 74 80 77 76 .. .. ..
Djibouti 10 92.9 90 89 73 .. 14 2.5
Equatorial Guinea 13 64.6 73 33 51 1.6 20 5.0
Eritrea 14 28.3 99 99 95 3.1 25 0.8
Ethiopia 20 5.7 76 79 75 .. .. ..
Gambia 20 56.8 94 98 96 .. 18 2.0
Guinea 12 46.1 81 57 51 9 79 1.3
Guinea-Bissau 24 38.8 89 68 76 2.1 22 2.5
Haiti 25 26.1 75 59 59 12 120 1.9
Kiribati 5 63 76 86 82 .. .. ..
Lao People's Dem. Rep. 11 20.3 67 57 59 .. 8.5 0.2
Lesotho 13 61.5 96 83 85 28 290 23.6
Liberia 14 46.3 80 64 64 6.1 37 1.5
Madagascar 16 43.9 73 78 64 .. 24 0.2
Malawi 13 53.6 95 93 92 120 920 11.0
Maldives 22 84 99 98 98 .. <0.1 <0.1
Mali 19 49 86 74 71 .. 76 1.0
Mauritania 34 60.9 81 64 59 .. 14 0.7
Mozambique 15 55.3 87 76 77 130 1400 11.5
Myanmar 15 63.9 93 90 87 .. 240 0.6
Nepal 21 18.7 87 82 79 .. 64 0.4
Niger 27 32.9 78 70 73 .. 61 0.8
Rwanda 6 52.1 93 97 92 22 170 2.9
Samoa 4 100 94 72 49 .. .. ..
Sao Tome and Principe 8 81.7 99 98 90 .. .. ..
Senegal 19 51.9 97 86 79 .. 59 0.9
Sierra Leone 14 42.4 95 75 71 2.9 49 1.6
Solomon Islands 13 70.1 81 81 60 .. .. ..
Somalia .. 33 29 31 24 .. 34 0.7
Sudan 31 49.2 82 84 82 .. 260 1.1
Timor-Leste 12 18.4 71 72 70 .. .. ..
Togo 12 62 91 89 84 11 120 3.2
Tuvalu 5 97.9 99 89 90 .. .. ..
Uganda 14 41.9 90 64 68 150 1200 6.5
United Rep. of Tanzania 10 43.4 93 85 91 160 1400 5.6
Vanuatu 10 74 81 68 52 .. .. ..
Yemen 32 35.7 58 66 58 .. .. ..
Zambia 11 46.5 92 81 85 120 980 13.5
LDCs 16 41 84 79 77 1100 9700 2.0
All Developing countries 15 64 88 81 80 2500 29800 0.9
Source: UNICEF, The State of World's Children 2011;UNICEF, Child Info, Monitoring the situation of children and women, 2011, http://www.unicef.org/sowc2011/


statistics.php
a 2009 or latest year available.




139ANNEX. Statistical Tables on the Least Developed Countries


11. Indicators on nutrition and sanitation


Country
Total Food Supply
(Kcal/capita/day)


% of population using improved
drinking water sources


% of population using adequate
sanitation facilities


Total Urban Rural Total Urban Rural
1990 2007 2008


Afghanistan .. .. 48 78 39 37 60 30
Angola 1,590 1,973 50 60 38 57 86 18
Bangladesh 1,960 2,281 80 85 78 53 56 52
Benin 2,214 2,533 75 84 69 12 24 4
Bhutan .. .. 92 99 88 65 87 54
Burkina Faso 2,400 2,677 76 95 72 11 33 6
Burundi 1,864 1,685 72 83 71 46 49 46
Cambodia 1,810 2,268 61 81 56 29 67 18
Cape Verde 2,352 2,572 84 85 82 54 65 38
Central African Republic 1,887 1,986 67 92 51 34 43 28
Chad 1,606 2,056 50 67 44 9 23 4
Comoros 1,887 1,884 95 91 97 36 50 30
Dem. Rep. of the Congo 2,206 1,605 46 80 28 23 23 23
Djibouti 1,734 2,291 92 98 52 56 63 10
Equatorial Guinea .. .. .. .. .. .. .. ..
Eritrea .. 1,605 61 74 57 14 52 4
Ethiopia 1,556a 1,980 38 98 26 12 29 8
Gambia 2,521 2,385 92 96 86 67 68 65
Guinea 2,384 2,568 71 89 61 19 34 11
Guinea-Bissau 2,239 2,306 61 83 51 21 49 9
Haiti 1,735 1,870 63 71 55 17 24 10
Kiribati 2,592 2,899 .. .. .. .. .. ..
Lao People's Dem. Rep. 2,036 2,240 57 72 51 53 86 38
Lesotho 2,325 2,476 85 97 81 29 40 25
Liberia 2,072 2,204 68 79 51 17 25 4
Madagascar 2,268 2,160 41 71 29 11 15 10
Malawi 1,914 2,172 80 95 77 56 51 57
Maldives 2,349 2,685 91 99 86 98 100 96
Mali 2,201 2,614 56 81 44 36 45 32
Mauritania 2,551 2,841 49 52 47 26 50 9
Mozambique 1,829 2,067 47 77 29 17 38 4
Myanmar 1,865 2,465 71 75 69 81 86 79
Nepal 2,158 2,360 88 93 87 31 51 27
Niger 2,116 2,376 48 96 39 9 34 4
Rwanda 1,709 2,085 65 77 62 54 50 55
Samoa 2,619 2,886 .. .. .. 100 100 100
Sao Tome and Principe 2,227 2,684 89 89 88 26 30 19
Senegal 2,231 2,348 69 92 52 51 69 38
Sierra Leone 1,942 2,170 49 86 26 13 24 6
Solomon Islands 2,081 2,422 .. .. .. .. 98 ..
Somalia .. .. 30 67 9 23 52 6
Sudan 1,890 2,282 57 64 52 34 55 18
Timor-Leste – 2,066 69 86 63 50 76 40
Togo 2,010 2,161 60 87 41 12 24 3
Tuvalu .. .. 97 98 97 84 88 81
Uganda 2,331 2,211 67 91 64 48 38 49
United Republic of Tanzania 2,121 2,032 54 80 45 24 32 21
Vanuatu 2,561 2,740 83 96 79 52 66 48
Yemen 1,961 2,068 62 72 57 52 94 33
Zambia 2,042 1,873 60 87 46 49 59 43
LDCs 1,892 2,063 62 80 54 36 50 31
All Developing countries 2,406 2,610 84 94 76 52 68 40
Source: FAO, FAOSTAT database, online, June 2011; UNICEF, The State of World's Children, 2011.
a Former Ethiopia: includes Eritrea.




The Least Developed Countries Report 2011140


12. Indicators on education and literacy


Country


Adult literacy rate Youth literacy rate School enrolment ratio (%)


(%) Primary Secondary Tertiary


2009a 2009a 2010b 2010b 2010b


Male Female Total Male Female Total Male Female Total Male Female Total Male Female Total


Afghanistan .. .. .. .. .. .. .. .. .. 38.2 14.6 26.8 5.7 1.4 3.6
Angola 82.9 57.6 70.0 80.8 65.5 73.1 .. .. .. .. .. .. .. .. 2.8
Bangladesh 60.7 51.0 55.9 74.1 76.8 75.5 82.9 89.9 86.3 40.4 42.6 41.5 10.0 5.6 7.9
Benin 54.2 29.1 41.7 64.9 43.4 54.3 97.0 86.4 91.8 .. .. .. .. .. 5.8
Bhutan 65.0 38.7 52.8 80.0 68.0 74.4 86.3 88.5 87.4 46.0 49.0 47.5 8.2 4.8 6.6
Burkina Faso 36.7 21.6 28.7 46.7 33.1 39.3 67.1 59.4 63.3 18.1 14.1 16.1 4.6 2.2 3.4
Burundi 72.6 60.9 66.6 76.9 76.3 76.6 98.2 99.6 98.9 10.1 8.1 9.1 3.2 1.4 2.7
Cambodia 85.1 70.9 77.6 89.4 85.5 87.5 90.4 86.7 88.6 36.2 31.7 34.0 9.1 4.9 7.0
Central African Republic 69.1 42.1 55.2 72.2 57.3 64.7 79.0 59.1 69.0 11.8 7.1 9.4 3.5 1.5 2.5
Chad 44.5 23.1 33.6 53.5 39.0 46.3 .. .. .. .. .. .. 3.4 0.6 2.0
Comoros 79.7 68.7 74.2 85.8 84.7 85.3 90.7 83.8 87.3 .. .. .. 3.0 2.3 5.2
Dem. Rep. of the Congo 77.4 56.6 66.8 69.1 61.7 65.4 .. .. .. .. .. .. 7.5 2.7 6.0
Djibouti .. .. .. .. .. .. 46.8 42.1 44.4 28.4 20.4 24.4 4.1 2.8 3.5
Equatorial Guinea 97.0 89.8 93.3 97.7 98.2 97.9 54.3 53.8 54.1 .. .. .. .. .. ..
Eritrea 77.9 56.0 66.6 91.6 85.8 88.7 38.1 33.2 35.7 31.6 23.1 27.4 3.0 1.0 2.0
Ethiopia 41.9 18.0 29.8 55.9 33.3 44.6 85.2 80.1 82.7 .. .. .. 5.5 1.7 3.6
Gambia 57.6 35.8 46.5 71.0 60.0 65.5 66.1 68.2 67.2 .. .. .. 2.0 - 4.6
Guinea 50.8 28.1 39.5 68.1 53.8 61.1 77.9 67.8 72.9 35.4 21.7 28.7 13.7 4.6 9.2
Guinea-Bissau 66.9 38.0 52.2 78.2 63.6 70.9 .. .. .. .. .. .. .. .. 2.9
Haiti 53.4 44.6 48.7 74.4 70.5 72.3 .. .. .. .. .. .. .. .. ..
Kiribati .. .. .. .. .. .. .. .. .. 64.4 70.7 67.5 .. .. ..
Lao People's Dem. Rep. 82.5 63.2 72.7 89.2 78.7 83.9 84.1 80.7 82.4 38.5 33.5 36.0 15.0 11.7 13.4
Lesotho 82.9 95.3 89.7 85.7 98.1 92.0 71.2 75.0 73.1 21.9 35.7 28.8 3.3 3.9 3.6
Liberia 63.7 54.5 59.1 70.4 80.9 75.6 .. .. .. .. .. .. .. .. ..
Madagascar 67.4 61.6 64.5 65.9 64.0 64.9 98.1 98.9 98.5 23.3 24.4 23.8 3.8 3.4 3.6
Malawi 80.6 67.0 73.7 86.9 86.0 86.5 88.5 93.2 90.8 25.7 24.4 25.0 0.7 .. ..
Maldives 98.4 98.4 98.4 99.2 99.4 99.3 97.3 95.1 96.2 .. .. 69.4 .. .. ..
Mali 34.9 18.2 26.2 47.4 30.8 38.8 81.0 68.6 74.9 38.8 26.1 32.5 8.5 3.5 6.0
Mauritania 64.5 50.3 57.5 70.9 64.3 67.7 73.9 78.8 76.3 17.3 15.2 16.3 5.3 2.2 3.8
Mozambique 70.1 41.5 55.1 78.1 63.7 70.9 95.0 89.7 92.3 17.0 15.3 16.1 1.9 1.0 1.5
Myanmar 94.7 89.5 92.0 96.1 95.3 95.7 .. .. .. 49.2 50.0 49.6 9.1 12.4 10.7
Nepal 72.0 46.9 59.1 86.9 76.7 82.0 .. .. .. .. .. .. 7.8 3.1 5.6
Niger 42.9 15.1 28.7 52.4 23.2 36.5 63.3 51.3 57.4 12.5 7.7 10.1 2.2 0.8 1.4
Rwanda 75.0 66.8 70.7 77.0 77.4 77.2 94.7 97.0 95.9 .. .. .. 5.5 4.1 4.8
Samoa 99.0 98.5 98.8 99.4 99.6 99.5 89.6 89.4 89.5 60.4 68.3 64.2 .. .. ..
Sao Tome and Principe 93.7 84.0 88.8 94.9 95.8 95.3 97.1 99.7 98.4 30.4 34.6 32.5 4.5 4.3 4.4
Senegal 61.8 38.7 49.7 74.2 56.2 65.0 71.7 74.4 73.1 23.6 18.0 20.8 10.2 5.9 8.0
Sierra Leone 52.7 30.1 40.9 67.6 48.1 57.6 .. .. .. .. .. .. .. .. ..
Solomon Islands .. .. .. .. .. .. 81.2 80.0 80.6 31.7 28.6 30.2 .. .. ..
Somalia .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..
Sudan 79.6 60.8 70.2 89.1 82.7 85.9 .. .. .. .. .. .. .. .. ..
Timor-Leste 58.5 42.5 50.6 .. .. .. 83.3 80.6 82.0 .. .. .. 17.7 12.5 15.2
Togo 70.3 44.4 56.9 84.9 67.9 76.5 97.4 88.4 92.9 .. .. .. .. .. 5.3
Tuvalu .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..
Uganda 81.4 62.1 71.4 87.3 81.1 84.1 90.9 93.6 92.2 21.8 20.5 21.2 4.5 3.6 4.1
United Rep. of Tanzania 79.0 66.9 72.9 78.5 76.4 77.4 95.8 97.0 96.4 .. .. .. 2.0 0.9 1.4
Vanuatu 83.7 80.3 82.0 93.9 94.1 94.0 98.2 96.3 97.3 40.7 35.3 38.1 5.9 3.5 4.8
Yemen 79.9 44.7 62.4 95.6 72.2 84.1 79.4 65.7 72.7 .. .. .. 14.3 6.0 10.2
Zambia 80.6 61.3 70.9 81.8 67.3 74.6 89.6 91.8 90.7 .. .. .. .. .. ..
LDCsc 67.9 51.6 59.6 75.4 67.8 71.6 85.5 84.3 84.9 33.3 30.9 32.2 7.2 4.0 5.6
All Developing countriesc 85.4 73.4 79.4 90.8 84.9 87.8 88.2 85.4 87.4 54.4 53.9 54.1 20.9 20.5 20.6
Source: UNESCO Institute for Statistics(UIS) database, June 2011.
a 2009 or latest year available;
b 2010 or latest year available;
c LDCs and All Developing economies weighted averages (weighted by group age population or by school age population (primary, secondary or


tertiary)).




141ANNEX. Statistical Tables on the Least Developed Countries


13. Indicators on communication and media


Country


Post
Offices


open to the
public


Radio
receivers


Television
sets


Telephone
mainlines


Mobile
users


Personal
computer


Internet
users


(Per 100,000
inhabitants)


(Per 1,000 inhabitants)


2008a 2009b


Afghanistan 1.7 129 80 4 426 3 36
Angola 0.3 81 140 6 438 7 33
Bangladesh 6.1 64 106 7 323 24 4
Benin 1.8 357 45 10 563 7 22
Bhutan 13.5 118 12 51 486 6 72
Burkina Faso 0.5 111 19 7 243 7 11
Burundi 0.6 166 36 4 101 8 19
Cambodia 0.5 .. 8 2 423 4 5
Central African Republic 0.6 111 10 2 136 3 5
Chad 0.4 103 9 1 204 2 15
Comoros 3.4 159 31 27 181 7 36
Dem. Rep. of the Congo 0.2 379 5 0 143 0 0
Djibouti 1.3 93 67 13 149 24 30
Equatorial Guinea 1.4 .. 0 16 296 18 21
Eritrea 1.4 433 67 8 28 8 0
Ethiopia 1.3 171 7 8 49 6 5
Gambia 1.6 147 14 29 840 33 76
Guinea 0.9 81 18 3 347 5 9
Guinea-Bissau 0.8 41 39 7 348 2 23
Haiti 0.6 208 104 15 364 52 100
Kiribati 25.9 89 41 46 10 10 80
Lao People's Dem. Rep. 5.7 .. 57 15 512 17 60
Lesotho 7.7 75 44 24 320 3 37
Liberia 0.5 0 0 0 213 0 5
Madagascar 2.9 121 37 5 320 5 16
Malawi 2.3 268 11 8 157 2 47
Maldives 70.7 102 131 110 1479 201 279
Mali 0.7 131 49 6 342 8 19
Mauritania 1.0 132 46 14 663 44 23
Mozambique 0.5 246 21 3 261 14 27
Myanmar 2.8 63 7 10 10 9 2
Nepal .. .. 21 18 191 5 20
Niger 0.3 62 12 2 170 1 8
Rwanda 0.2 143 8 3 243 3 45
Samoa 19.6 1025 122 109 844 23 50
Sao Tome and Principe 2.5 312 127 47 393 38 164
Senegal 1.3 106 44 24 551 21 145
Sierra Leone 0.9 278 13 5 204 0 3
Solomon Islands 32.1 132 12 16 57 46 19
Somalia .. 65 26 12 70 9 12
Sudan 0.5 443 370 15 363 115 0
Timor-Leste 0.3 .. 0 2 291 0 2
Togo 0.9 352 26 10 330 30 54
Tuvalu .. 1456 0 91 201 80 0
Uganda 1.1 155 22 3 287 17 98
United Rep. of Tanzania 0.8 398 41 4 399 9 16
Vanuatu 26.5 .. 13 32 527 14 71
Yemen 2.8 .. 344 43 353 28 100
Zambia 3.0 145 64 8 341 11 63
Source: UPU online, June 2011; ITU, World Telecom Indicators, May 2011.
a 2008 or latest year available.
b 2009 or latest year available.




The Least Developed Countries Report 2011142


14. Indicators on transport and transport network


Country


Road networks
2008a


Railways
2009a


Civil aviation
2009a


Total
(km.)


Paved
(%)


Density
(km/


1000 km2)


Network
(km.)


Density
(km./


1000 km2)


Freight
(million tons


per km.)


Passenger
(million


pass. per
km.)


Freight
(million tons


per km.)


Passenger
(thousands)


Afghanistan 42,150 29.3 64.6 .. .. .. .. 8 ..
Angola 51,429 10.4 41.3 .. .. .. .. 64 275
Bangladesh 239,226 9.5 1,661.3 2,835 19.7 870 5,609 0 1,409
Benin 19,000 9.5 168.7 758 6.7 36 .. .. ..
Bhutan 8,050 62.0 209.7 .. .. .. .. 0 49
Burkina Faso 92,495 4.2 337.3 622 2.3 .. .. .. 79
Burundi 12,322 10.4 442.8 .. .. .. .. .. ..
Cambodia 38,257 6.3 211.3 650 3.6 92 45 1 184
Central African Republic 24,307 .. 39.0 .. .. .. .. .. ..
Chad 40,000 .. 31.2 .. .. .. .. .. ..
Comoros 880 76.5 472.9 .. .. .. .. .. ..
Dem. Rep. of the Congo 153,497 1.8 65.5 3,641 1.7 182 35 7 ..
Djibouti 3,065 45.0 132.1 781 33.7 97 82 .. ..
Equatorial Guinea 2,880 .. 102.7 .. .. .. .. .. ..
Eritrea 4,010 21.8 34.1 .. .. .. .. .. ..
Ethiopia 44,359 12.8 38.4 .. .. .. .. 424 2,914
Gambia 3,742 19.3 331.2 .. .. .. .. .. ..
Guinea 44,348 9.8 180.4 .. .. .. .. .. ..
Guinea-Bissau 3,455 27.9 95.6 .. .. .. .. .. ..
Haiti 4,160 24.3 149.9 .. .. .. .. .. ..
Kiribati 670 .. 827.2 .. .. .. .. .. ..
Lao People’s Dem. Rep. 34,994 13.4 125.9 .. .. .. .. 2 303
Lesotho 5,940 18.3 195.7 .. .. .. .. .. ..
Liberia 10,600 6.2 95.2 .. .. .. .. .. ..
Madagascar 49,827 11.6 84.9 854 1.5 12 10 14 500
Malawi 15,451 45.0 130.4 797 6.7 33 44 1 157
Maldives 88 .. 290.0 .. .. .. .. 0 85
Mali 18,912 18.0 15.1 734 0.6 .. 208 .. ..
Mauritania 11,066 26.8 10.7 728 0.7 7,566 47 0 142
Mozambique 30,331 18.7 38.0 3,116 3.9 695 114 6 490
Myanmar 27,000 11.9 39.9 .. .. 885 4,163 3 1,527
Nepal 17,782 56.9 117.4 .. .. .. .. 6 484
Niger 18,948 20.7 15.0 .. .. .. .. 7 ..
Rwanda 14,008 19.0 531.8 .. .. .. .. .. ..
Samoa 790 14.2 820.0 .. .. .. .. 2 271
Sao Tome and Principe 320 68.1 333.3 .. .. .. .. 0 51
Senegal 14,805 29.3 69.0 906 .. 384 129 7 573
Sierra Leone 11,300 8.0 157.5 .. .. .. .. 8 22
Solomon Islands 1,391 2.4 48.1 .. .. .. .. 1 94
Somalia 22,100 11.8 34.7 .. .. .. .. .. ..
Sudan 11,900 36.3 4.7 4,508 1.8 766 34 42 607
Timor-Leste 0 .. .. .. .. .. .. .. ..
Togo 11,652 31.6 132.4 .. .. .. .. 7 ..
Tuvalu 0 .. .. .. .. .. .. .. ..
Uganda 70,746 23.0 293.5 259 0.3 218 .. 27 64
United Rep. of Tanzania 87,524 8.6 83.3 2,600 174.8 728 475 1 684
Vanuatu 1,070 23.9 87.8 .. .. .. .. 2 112
Yemen 71,300 8.7 135.0 .. .. .. .. 26 1,050
Zambia 66,781 22.0 88.7 1,273 1.7 .. .. 0 62
Source: World Bank, World Development Indicators, May 2011.
a Or latest year available.




143ANNEX. Statistical Tables on the Least Developed Countries


15. Indicators on energy, environment and natural disasters


Country


Electrifi-
cation
rate
(%)


Population
without


electricity
(thousand
people)


Total electricity
net consumption


per capita
(kilowatt-hours)


Total net installed
electricity
capacity


(kilowatt per
1000 inhabitants)


Renewable
net installed


electricity capacity
(share of total net
installed electricity


capacity, %)


Carbon Dioxide
emissions
per capita


(metric tons of
carbon dioxide)


Forest
area
(%


change)


Number of
natural


disastersc


2008a 2008a 1990 2000 2008 1990 2000 2008 1990 2000 2008 1990 2000 2009
1990-
2009


1990 2000 2010


Afghanistan 14.4 23,300 76 24 32 37 18 18 59.1 71.7 76.5 0.5 0.1 0.0 0.0 1 6 5
Angola 26.2 12,900 115 115 269 74 56 92 66.8 49.5 43.1 0.9 1.3 1.9 -3.9 1 6 3
Bangladesh 41.0 94,900 45 94 207 22 27 36 9.1 6.4 4.2 0.1 0.2 0.4 -3.3 8 15 6
Benin 24.8 7,000 35 59 77 3 8 7 0.0 1.9 1.7 0.1 0.2 0.4 -20.0 0 3 4
Bhutan .. .. 77 478 1,286 586 703 2,206 96.9 97.2 98.9 0.2 0.5 0.5 6.7 0 1 0
Burkina Faso 10.0 13,800 19 26 45 8 10 17 14.3 26.4 12.7 0.1 0.1 0.1 -16.6 1 0 2
Burundi .. .. 21 18 30 8 8 6 74.4 78.2 98.1 0.1 0.1 0.0 -39.9 0 5 4
Cambodia 24.0 11,200 15 31 112 5 11 28 22.2 7.7 4.7 0.0 0.2 0.3 -21.0 0 1 1
Central African Republic .. .. 28 25 32 14 10 10 51.2 47.2 54.3 0.1 0.1 0.1 -2.4 0 3 1
Chad .. .. 14 10 9 5 4 3 0.0 0.0 0.0 0.1 0.0 0.0 -11.5 0 2 5
Comoros .. .. 33 31 66 12 9 8 20.0 20.0 16.7 0.2 0.2 0.2 -71.7 0 0 0
Dem. Rep. of the Congo 11.1 57,000 113 88 91 73 48 37 97.9 98.7 98.7 0.1 0.1 0.0 -3.7 1 2 6
Djibouti .. .. 313 250 367 170 164 166 0.0 0.0 0.0 3.5 2.8 2.4 0.0 0 1 1
Equatorial Guinea .. .. 43 79 139 13 24 50 20.0 16.7 3.2 0.3 4.2 7.3 -11.9 0 0 0
Eritrea 32.0 3,400 .. 38 41 0 14 30 0.0 0.0 0.0 -- 0.2 0.1 -4.4 0 1 0
Ethiopia 15.3 68,700 21 23 41 8 8 11 92.1 90.4 85.2 0.1 0.1 0.1 -15.3 2 10 4
Gambia .. .. 65 75 118 18 21 31 0.0 0.0 0.0 0.2 0.2 0.2 8.2 0 1 2
Guinea .. .. 75 83 87 30 42 34 23.1 40.1 37.2 0.2 0.2 0.1 -9.4 0 2 2
Guinea-Bissau .. .. 35 40 43 11 16 14 0.0 0.0 0.0 0.3 0.3 0.3 -8.3 0 0 1
Haiti 38.5 6,000 67 34 22 20 28 25 39.4 25.8 25.8 0.1 0.2 0.2 -12.2 1 2 7
Kiribati .. .. 91 142 211 28 47 62 0.0 0.0 0.0 0.3 0.3 0.4 0.0 0 0 0
Lao People's Dem. Rep. 55.0 2,700 69 -25 181 61 118 118 89.8 97.3 93.1 0.1 0.2 0.2 -8.6 0 3 0
Lesotho 16.0 1,700 113 146 123 0 40 40 0.0 0.0 0.0 0.1 0.1 0.1 9.5 1 1 0
Liberia .. .. 131 110 91 117 72 58 0.0 0.0 0.0 0.3 0.2 0.2 -11.6 1 2 1
Madagascar 19.0 16,400 46 46 52 19 14 12 48.2 46.3 50.4 0.1 0.1 0.2 -7.9 1 3 2
Malawi 9.0 13,000 69 95 107 19 21 22 78.9 91.3 92.1 0.1 0.1 0.1 -16.1 1 2 1
Maldives .. .. 99 304 627 65 120 158 0.0 0.0 0.0 0.5 1.6 2.3 0.0 0 0 0
Mali .. .. 27 35 35 10 18 21 51.7 47.4 55.4 0.1 0.1 0.1 -10.7 0 1 3
Mauritania .. .. 64 85 167 55 58 83 58.1 56.6 38.3 0.5 1.3 0.9 -40.5 0 0 2
Mozambique 11.7 19,300 55 227 478 186 131 114 88.1 91.5 89.7 0.1 0.1 0.1 -9.6 2 7 3
Myanmar 13.0 42,800 43 70 89 27 24 35 23.5 29.3 32.6 0.1 0.2 0.2 -18.2 0 0 2
Nepal 43.6 16,100 41 58 90 14 16 25 84.7 85.9 92.1 0.0 0.1 0.1 -24.5 2 3 4
Niger .. .. 43 34 42 8 13 10 0.0 0.0 0.0 0.1 0.1 0.1 -37.5 1 4 5
Rwanda .. .. 24 24 23 5 5 6 88.2 83.3 55.2 0.1 0.1 0.1 33.6 0 2 2
Samoa .. .. 274 464 520 117 167 216 31.6 42.2 29.3 0.8 0.8 0.8 31.5 1 0 0
Sao Tome and Principe .. .. 120 185 226 52 101 83 33.3 43.9 42.9 0.6 0.7 0.9 0.0 0 0 0
Senegal 42.0 7,400 100 99 151 31 30 47 0.0 0.4 0.4 0.3 0.5 0.5 -8.9 0 1 2
Sierra Leone .. .. 46 22 11 30 14 10 1.6 7.3 7.7 0.3 0.2 0.3 -11.9 0 1 2
Solomon Islands .. .. 87 124 136 37 32 26 0.0 0.0 0.0 0.5 0.4 0.5 -4.5 0 0 0
Somalia .. .. 34 30 31 10 8 7 0.0 0.0 7.7 0.2 0.1 0.1 -17.6 0 8 3
Sudan 31.4 27,000 48 61 91 19 23 30 45.0 39.9 43.4 0.2 0.2 0.3 -8.4 2 2 3
Timor-Leste 22.0 900 .. .. .. 0 0 0 0.0 0.0 0.0 -- -- 0.3 -22.0 0 0 0
Togo 20.0 5,400 108 103 108 26 18 14 69.1 72.8 78.8 0.2 0.3 0.5 -55.2 0 0 3
Tuvalu .. .. .. .. .. 0 0 0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1 0 0
Uganda 9.0 29,100 35 54 62 9 12 16 95.7 98.6 61.2 0.0 0.1 0.1 -35.3 3 6 2
United Rep. of Tanzania 11.5 36,800 54 57 85 20 26 24 65.0 65.0 60.5 0.1 0.1 0.2 -18.5 3 7 0
Vanuatu .. .. 145 191 186 71 63 56 0.0 0.0 0.0 0.8 0.4 0.7 0.0 3 0 0
Yemen 38.2 14,200 110 130 209 50 51 55 0.0 0.0 0.0 0.9 0.8 1.1 0.0 0 1 2
Zambia 18.8 9,900 770 594 600 216 163 132 98.2 99.1 99.5 0.3 0.2 0.2 -6.0 1 3 2
LDCs 23.9b 540,900b 64 78 123 33 30 34 60.6 56.7 51.5 0.2 0.2 0.3 -6.7 38 118 98
African LDCs and Haiti .. .. 73 77 102 37 31 30 77.2 73.8 67.2 0.1 0.2 0.2 -5.4 22 88 78
Asian LDCs .. .. 49 78 157 27 29 41 28.2 29.4 32.8 0.2 0.2 0.3 -15.3 11 30 20
Island LDCs .. .. 102 168 163 47 60 45 13.0 17.1 12.3 0.5 0.6 0.8 -7.3 5 0 0
All developing countries 72.0 1,453,000 538 825 1,340 538 825 1,340 31.5 46.8 75.0 1.6 1.9 3.2 -5.6 170 381 327
Source: OECD/IEA, World Energy Outlook, 2010; EIA, International Energy Annual 2010,May 2011; EM-DAT, OFDA/CRED International Disaster database,


Université catholique de Louvain accessed July 2011; and FAO, FAOSTAT, June 2011.
a Household electrification rate, 2008 or latest year available; b Includes 25 LDCs;
c Natural disaster include: Drought, earthquake, epidemic, extreme temperature, flood, mass movement wet, storm, wildfire.




The Least Developed Countries Report 2011144


16. Status of women in LDCs


Country


Adult
Literacy


rate


School enrolment ratio
Health, fertility and


mortality
Economic activity,


employment
Political


Participation


Gender
Inequality


Indexc
Primary


(net)
secondary


(net)
Tertiary
(gross)


Fertility
rate
(biths
per


woman)


Maternal
Mortality
(maternal


deaths per
100’000


live births)


Labour
Force


Female
labour force:
Agriculture/
Total labour


force


Women in
parliaments


Female-male gapsa (%) (%) (% of total)


2009b 2009 2008 2010 2010
end-June


2011
2008


Afghanistan .. 38.2 23.9 6.5 1400 23.4 82.0 27.7 0.797
Angola 72.7 .. .. .. 5.6 610 47.3 80.6 38.6 ..
Bangladesh 82.7 108.4 105.3 56.1 2.3 340 40.3 57.4 18.6 0.734
Benin 53.4 89.1 .. .. 5.4 410 40.8 43.0 8.4 0.759
Bhutan 51.4 102.5 106.7 58.6 2.6 200 33.1 97.2 8.5 ..
Burkina Faso 61.0 88.6 77.6 48.7 5.8 560 47.1 93.3 15.3 ..
Burundi 89.6 101.4 80.6 43.3 4.5 970 51.4 97.3 32.1 0.627
Cambodia 91.0 96.0 87.5 53.6 2.9 290 48.3 69.8 21.1 0.672
Central African Republic 64.3 74.7 59.8 43.0 4.7 850 44.9 70.3 13.0 0.768
Chad 53.4 .. .. 17.2 6.1 1200 49.0 76.2 12.8 ..
Comoros 86.7 92.4 .. 77.0 3.9 340 43.7 82.8 3.0 ..
Dem. Rep. of the Congo 75.7 .. .. 35.3 5.9 670 38.5 72.6 10.4 0.814
Djibouti .. 90.0 71.7 69.4 3.8 300 43.3 79.4 13.8 ..
Equatorial Guinea 95.7 99.0 .. .. 5.3 280 32.5 87.4 10.0 ..
Eritrea 77.1 87.0 73.1 32.9 4.5 280 40.9 78.5 22.0 ..
Ethiopia 44.1 94.1 .. 31.1 5.2 470 47.9 73.5 27.8 ..
Gambia 64.6 103.2 .. .. 5 400 46.8 86.5 7.5 0.742
Guinea 54.9 87.1 61.3 33.5 5.3 680 47.1 84.3 .. ..
Guinea-Bissau 58.9 .. .. .. 5.7 1000 38.2 94.4 10.0 ..
Haiti 88.8 .. .. .. 3.4 300 33.1 44.0 11.1 0.739
Kiribati .. .. 109.9 .. .. .. 43.8 14.3 4.3 ..
Lao People's Dem. Rep. 79.6 95.9 86.8 77.6 3.4 580 50.3 77.8 25.0 0.650
Lesotho 139.3 105.4 162.9 118.7 3.3 530 52.3 50.6 24.2 0.685
Liberia 88.5 .. .. .. 5 990 40.3 68.6 12.5 0.766
Madagascar 93.2 100.8 104.7 90.3 4.6 440 49.1 76.4 12.5 ..
Malawi 86.4 105.3 95.1 .. 5.5 510 49.8 94.0 20.8 0.758
Maldives 98.1 97.8 .. .. 2 37 42.0 14.3 6.5 0.533
Mali 55.5 84.7 67.3 40.8 5.4 830 38.4 73.6 10.2 0.799
Mauritania 77.3 106.5 88.0 41.4 4.4 550 43.2 62.6 22.1 0.738
Mozambique 65.6 94.4 89.7 49.4 5 550 55.8 94.0 39.2 0.718
Myanmar 101.0 .. 101.7 137.1 2.3 240 46.3 70.0 4.3 ..
Nepal 68.5 .. .. 40.3 2.8 380 45.7 97.8 33.2 0.716
Niger 36.6 81.1 61.2 36.1 7.1 820 31.3 97.0 13.1 0.807
Rwanda 98.1 102.5 .. 75.0 5.3 540 53.1 96.1 56.3 0.638
Samoa 91.0 99.8 113.0 .. 3.9 .. 33.8 27.3 4.1 ..
Sao Tome and Principe 93.9 102.7 113.6 97.7 3.7 .. 40.4 69.6 18.2 ..
Senegal 65.4 103.8 76.3 58.5 4.9 410 43.2 77.2 22.7 0.727
Sierra Leone 62.2 .. .. .. 5.2 970 51.1 72.6 13.2 0.756
Solomon Islands .. 98.5 90.2 .. 3.8 100 38.7 80.2 0.0 ..
Somalia .. .. .. .. 6.4 1200 39.2 76.7 6.8 ..
Sudan 76.4 .. .. .. 4.1 750 31.3 65.1 25.6 0.708
Timor-Leste 70.6 96.7 .. 70.9 6.4 370 40.6 88.2 29.2 ..
Togo 65.5 90.8 .. .. 4.2 350 38.1 57.8 11.1 0.731
Tuvalu .. .. .. .. .. .. 50.0 0.0 0.0 ..
Uganda 77.2 103.0 94.1 80.0 6.3 430 47.8 77.5 34.9 0.715
United Rep. of Tanzania 86.7 101.2 .. 48.0 5.5 790 49.7 84.0 36.0 ..
Vanuatu 93.3 98.0 86.7 59.4 3.9 .. 46.5 30.0 3.8 ..
Yemen 55.3 82.7 .. 42.1 5.1 210 25.1 61.9 0.3 0.853
Zambia 77.5 102.5 .. .. 5.7 470 43.3 68.0 14.0 0.752
LDCs 78.0 98.6 92.9 56.4 4.3 590 43.4 73.8 19.8 0.746
All Developing countries 84.2 96.8 99.0 98.1 2.7 290 39.1 54.1 18.2 ..
Source: UNESCO Institute for Statistics, UIS, online data, July 2011; UNICEF, The State of World Children 2011; Maternal Mortality Estimates developed by


WHO, UNICEF and UNFPA and the World Bank, Maternal Mortality, September, 2010; FAO, FAOSTAT database, August 2011; IPU database, August
2011; UNDP, Human Development Report, November, 2010.


a Females as percentage of males; b 2009 or latest year available; c Gender Inequality Index: higher values indicate high inequality for women. See
explanatory notes for HDR composite indices at http://hdrstats.undp.org/images/explanations/PSE.pdf




145ANNEX. Statistical Tables on the Least Developed Countries


17. Leading merchandise exports of all LDCs in 2008-2010


SITC
Rev.3


Item


LDCs main merchandise exportsa Share in LDCs total exports


2008 2009 2010b
2008-
2010


2008 2009 2010b
2008-
2010


($ million) (%)
Total all products 178,042 130,010 159,854 155,968 100.0 100.0 100.0 100.0


333 Petroleum oils, crude and crude oils from
bitumin. materials


102,549 61,900 73,584 79,344 57.6 47.6 46.0 50.9


845 Articles of apparel, of textile fabrics 8,155 7,589 9,321 8,355 4.6 5.8 5.8 5.4
682 Copper 4,532 4,050 7,677 5,420 2.5 3.1 4.8 3.5
841 Men's clothing of textile fabrics, not knitted 5,064 4,884 5,931 5,293 2.8 3.8 3.7 3.4
334 Petroleum products, refined 3,364 2,317 4,003 3,228 1.9 1.8 2.5 2.1
343 Natural gas, whether or not liquefied 5,415 4,474 3,842 4,577 3.0 3.4 2.4 2.9
971 Gold, non-monetary (excluding gold ores


and concentrates)
2,362 2,994 3,757 3,038 1.3 2.3 2.4 1.9


842 Women's clothing, of textile fabrics, not
knitted


2,700 2,409 3,024 2,711 1.5 1.9 1.9 1.7


844 Women's clothing, of textile, knitted or
crocheted


1,854 1,622 2,358 1,944 1.0 1.2 1.5 1.2


263 Cotton 1,884 1,753 2,015 1,884 1.1 1.3 1.3 1.2
054 Vegetables 1,336 1,474 1,877 1,562 0.8 1.1 1.2 1.0
247 Wood in the rough or roughly squared 1,597 1,294 1,859 1,583 0.9 1.0 1.2 1.0
843 Men's or boy's clothing, of textile, knitted,


crocheted
1,538 1,344 1,851 1,577 0.9 1.0 1.2 1.0


287 Ores and concentrates of base metals 1,385 1,046 1,804 1,412 0.8 0.8 1.1 0.9
071 Coffee and coffee substitutes 1,460 1,289 1,754 1,501 0.8 1.0 1.1 1.0
036 Crustaceans, mollusks and aquatic


invertebrates
1,422 1,250 1,613 1,428 0.8 1.0 1.0 0.9


034 Fish, fresh (live or dead), chilled or frozen 1,376 1,259 1,557 1,397 0.8 1.0 1.0 0.9
283 Copper ores and concentrates 1,603 1,147 1,509 1,420 0.9 0.9 0.9 0.9
121 Tobacco, unmanufactured 1,153 1,359 1,187 1,233 0.6 1.0 0.7 0.8
684 Aluminium 1,486 582 1,154 1,074 0.8 0.4 0.7 0.7


SITC
Rev.3


Item


Share of LDCs
in developing countries’ exports


Share of LDCs
in world exports


2008 2009 2010b
2008-
2010


2008 2009 2010b
2008-
2010


(%)
Total all products 2.8 2.6 2.5 2.6 1.1 1.0 1.0 1.1


333 Petroleum oils, crude and crude oils from
bitumin. Materials


9.1 9.2 8.4 8.9 6.5 6.6 6.0 6.4


845 Articles of apparel, of textile fabrics 9.2 9.9 10.3 9.8 6.3 6.7 7.3 6.8
682 Copper 7.7 9.0 10.8 9.3 3.7 4.6 5.8 4.7
841 Men's clothing of textile fabrics, not knitted 12.0 13.2 13.7 13.0 7.7 8.7 9.5 8.6
334 Petroleum products, refined 1.0 1.0 1.4 1.1 0.4 0.5 0.6 0.5
343 Natural gas, whether or not liquefied 5.3 5.6 4.0 4.9 1.8 2.2 1.7 1.9
971 Gold, non-monetary (excluding gold ores


and concentrates)
4.3 4.0 4.7 4.3 2.1 2.4 2.5 2.4


842 Women's clothing, of textile fabrics, not
knitted


5.4 5.5 5.8 5.6 3.4 3.5 3.9 3.6


844 Women's clothing, of textile, knitted or
crocheted


6.0 5.7 6.4 6.1 4.5 4.3 5.0 4.6


263 Cotton 33.7 36.2 23.9 30.0 14.5 16.5 10.6 13.3
054 Vegetables 7.9 8.2 8.4 8.2 2.7 3.0 3.2 3.0
247 Wood in the rough or roughly squared 39.1 38.0 42.5 40.0 11.2 12.6 14.3 12.7
843 Men's or boy's clothing, of textile, knitted,


crocheted
7.7 7.8 8.7 8.1 6.3 6.4 7.3 6.7


287 Ores and concentrates of base metals 7.0 8.8 8.9 8.2 4.3 5.4 5.6 5.0
071 Coffee and coffee substitutes 8.6 8.5 8.8 8.6 5.3 5.1 5.5 5.4
036 Crustaceans, mollusks and aquatic


invertebrates
10.0 8.9 9.3 9.4 6.1 5.6 6.0 5.9


034 Fish, fresh (live or dead), chilled or frozen 7.2 6.7 6.3 6.7 3.1 2.8 2.7 2.9
283 Copper ores and concentrates 6.0 4.6 4.0 4.8 4.6 3.6 3.2 3.7
121 Tobacco, unmanufactured 17.5 17.1 15.5 16.7 11.1 11.5 10.5 11.0
684 Aluminium 4.4 2.5 3.1 3.4 1.2 0.7 1.0 1.0
Source: UNCTAD, UNCTADstat database, August 2011.
a Sorted in descending order of LDCs 2008–2010 export values; b 2010 preliminary data.




The Least Developed Countries Report 2011146


18. Total merchandise exports: Levels and annual average growth rates


Country
Total merchandise exports ($ million) Annual average growth rates (%)


1995 2000 2007 2008 2009 2010a
1995–
2000


2000–
2009


2007 2008 2009 2010a


Afghanistan 166 137 497 540 403 400 -0.2 20.2 21.8 8.7 -25.3 -0.9
Angola 3,723 7,887 44,396 72,179 40,985 46,437 10.3 27.4 39.3 62.6 -43.2 13.3
Bangladesh 3,501 6,389 12,453 15,380 15,073 19,239 11.6 13.0 5.5 23.5 -2.0 27.6
Benin 420 392 1,047 1,282 1,225 1,188 -2.9 14.7 42.3 22.5 -4.5 -3.0
Bhutan 103 103 674 519 496 540 1.0 23.4 62.6 -22.9 -4.5 8.9
Burkina Faso 276 206 623 693 900 1,050 -2.5 18.2 5.9 11.3 29.9 16.6
Burundi b 106 50 62 54 62 100 -8.5 7.9 6.9 -13.3 14.6 62.0
Cambodia 855 1,389 4,088 4,708 4,302 5,500 12.8 15.0 10.7 15.2 -8.6 27.9
Central African Republic 171 161 178 150 124 161 -1.1 0.4 12.8 -15.7 -17.6 30.3
Chad 243 183 3,668 4,328 2,633 3,071 -3.5 41.5 9.4 18.0 -39.2 16.6
Comoros 11 14 14 7 12 13 6.3 -5.9 32.5 -52.8 83.2 8.0
Dem. Rep. of the Congo 1,649 824 2,600 3,950 3,200 4,937 -14.4 19.2 12.1 51.9 -19.0 54.3
Djibouti 14 32 58 69 77 85 12.0 11.3 3.7 18.5 12.4 10.1
Equatorial Guinea 90 1,097 10,210 14,930 8,822 10,400 60.6 27.6 24.4 46.2 -40.9 17.9
Eritrea 86 19 13 11 11 12 -31.0 -6.7 7.7 -15.3 -2.7 10.1
Ethiopia 423 486 1,277 1,602 1,618 2,580 2.9 19.2 22.5 25.4 1.0 59.4
Gambia 16 15 13 14 15 15 -5.0 2.9 13.4 7.1 7.7 0.0
Guinea 702 666 1,203 1,342 1,050 1,105 -1.6 7.1 16.5 11.5 -21.8 5.3
Guinea-Bissau 24 62 107 128 119 123 18.6 9.1 44.4 19.8 -6.8 2.9
Haiti 110 318 522 480 576 560 31.7 8.0 5.6 -8.1 20.1 -2.9
Kiribati 7 4 10 15 15 15 -4.9 19.7 55.3 53.4 0.0 0.0
Lao People's Dem. Republic 311 330 923 1,092 1,005 1,550 0.6 19.0 4.6 18.3 -7.9 54.2
Lesotho 160 221 804 882 716 849 3.9 13.8 14.9 9.8 -18.9 18.6
Liberia 820 329 187 234 155 200 -14.5 0.5 22.0 25.1 -33.6 28.9
Madagascar 507 862 1,343 1,667 1,096 1,275 9.3 5.6 33.2 24.1 -34.3 16.4
Malawi 405 379 869 879 1,188 1,066 -2.1 12.2 30.4 1.2 35.1 -10.2
Maldives 85 109 228 331 169 200 4.9 8.1 1.2 45.2 -49.0 18.3
Mali 442 545 1,556 2,097 1,782 1,954 5.5 13.7 0.4 34.8 -15.0 9.7
Mauritania 488 355 1,402 1,788 1,370 2,040 -7.3 23.6 2.5 27.5 -23.4 48.9
Mozambique 169 364 2,412 2,653 2,147 2,243 14.0 19.1 1.3 10.0 -19.1 4.5
Myanmar 860 1,646 6,317 6,950 6,731 8,590 14.3 17.2 37.8 10.0 -3.2 27.6
Nepal 345 804 868 939 823 950 17.8 3.1 3.6 8.1 -12.4 15.5
Niger 288 283 650 912 861 926 -0.7 15.1 24.8 40.3 -5.7 7.6
Rwanda 52 53 177 256 192 238 -0.7 17.0 19.9 45.1 -25.2 23.9
Samoa 9 14 97 72 46 60 13.6 5.5 49.6 -26.1 -36.1 29.4
Sao Tome and Principe 5 3 7 11 8 6 -15.1 11.0 -12.6 58.0 -23.7 -21.4
Senegal 993 920 1,652 2,206 2,017 2,161 -0.6 9.3 6.2 33.5 -8.6 7.1
Sierra Leone 42 13 245 216 208 340 -30.7 32.7 5.8 -11.8 -3.6 63.7
Solomon Islands 168 69 166 210 163 227 -14.5 16.3 38.0 27.2 -22.4 38.6
Somalia 170 193 346 415 422 450 2.3 7.7 21.4 19.9 1.7 6.6
Sudan 556 1,807 8,879 11,671 7,834 10,500 20.7 23.5 57.0 31.4 -32.9 34.0
Timor-Lestec _ _ 7 13 8 11 _ 4.5 -22.2 85.7 -34.7 29.6
Togo 378 364 690 853 818 923 -1.6 9.8 12.7 23.6 -4.0 12.8
Tuvalu 0 0 0 0 0 0 -23.5 28.9 78.5 64.5 100.0 0.0
Uganda 461 450 1,776 2,208 2,327 2,164 -1.7 21.7 49.6 24.3 5.4 -7.0
United Republic of Tanzania 682 734 2,219 3,040 2,982 4,051 -2.8 18.2 15.5 37.0 -1.9 35.8
Vanuatu 28 26 50 56 57 49 -2.7 11.4 2.1 13.6 0.7 -14.4
Yemen 1,945 4,079 6,299 7,584 6,259 8,500 8.7 9.7 -5.3 20.4 -17.5 35.8
Zambia 1,032 892 4,617 5,099 4,312 7,200 -1.5 25.9 22.5 10.4 -15.4 67.0
LDCs 24,098 36,276 128,499 176,715 127,416 156,253 6.4 19.2 24.2 37.5 -27.9 22.6
African LDCs and Haiti 15,697 21,160 95,801 138,288 91,845 110,404 3.9 22.4 30.0 44.3 -33.6 20.2
Asian LDCs 8,086 14,878 32,120 37,711 35,092 45,269 10.9 13.0 9.7 17.4 -6.9 29.0
Island LDCs 314 238 578 715 479 580 -4.7 9.8 17.4 23.7 -33.0 21.1
Other developing countries 1,410,857 2,019,745 5,147,977 6,111,364 4,822,583 6,239,372 5.7 14.2 16.0 18.7 -21.1 29.4
All developing countries 1,434,955 2,056,021 5,276,476 6,288,079 4,949,999 6,395,625 5.7 14.3 16.2 19.2 -21.3 29.2
Source: UNCTAD, UNCTADstat database, August 2011.
a 2010 preliminary data; b Burundi: excluding gold exports.




147ANNEX. Statistical Tables on the Least Developed Countries


19. Total merchandise imports: Levels and annual average growth rates


Country
Total merchandise imports ($ million) Annual average growth rates (%)


1995 2000 2007 2008 2009 2010a
1995–
2000


2000–
2009


2007 2008 2009 2010a


Afghanistan 387.0 1,175.9 2,819.0 3,019.9 3,336.4 4,200.0 20.6 10.0 9.2 7.1 10.5 25.9
Angola 1,467.7 3,040.0 13,662.0 20,982.0 22,659.9 16,574.0 14.3 24.1 55.6 53.6 8.0 -26.9
Bangladesh 6,694.0 8,883.0 18,595.0 23,840.0 21,851.1 27,793.7 5.7 13.3 16.0 28.2 -8.3 27.2
Benin 745.7 613.0 2,037.1 2,289.4 2,064.2 2,189.8 -1.4 16.2 65.8 12.4 -9.8 6.1
Bhutan 112.3 175.2 525.9 540.1 529.9 760.0 9.8 15.6 25.3 2.7 -1.9 43.4
Burkina Faso 454.8 611.0 1,678.1 2,041.2 1,870.3 2,177.3 5.4 14.6 11.7 21.6 -8.4 16.4
Burundi 234.2 147.9 319.1 402.3 402.2 509.2 -6.2 15.8 -25.9 26.1 0.0 26.6
Cambodia 1,186.8 1,935.7 5,438.9 6,508.4 5,875.8 7,300.0 11.2 15.2 14.0 19.7 -9.7 24.2
Central African Republic 174.1 117.0 248.9 300.4 270.9 315.7 -6.0 12.7 22.6 20.7 -9.8 16.6
Chad 488.2 317.0 1,797.1 1,906.0 2,266.1 2,623.0 -5.3 17.6 33.2 6.1 18.9 15.8
Comoros 62.5 43.2 138.3 175.9 169.6 185.0 -5.4 17.2 20.0 27.2 -3.6 9.1
Dem. Rep. of the Congo 1,046.0 697.1 2,950.0 4,100.0 3,300.0 3,907.9 -9.8 19.7 7.7 39.0 -19.5 18.4
Djibouti 176.7 207.0 473.2 574.1 450.7 414.0 3.7 11.2 41.0 21.3 -21.5 -8.1
Equatorial Guinea 120.6 503.7 2,759.6 3,745.8 5,195.0 5,700.0 26.2 29.5 36.6 35.7 38.7 9.7
Eritrea 453.5 471.4 510.0 601.5 587.4 690.0 -0.2 3.6 3.0 17.9 -2.3 17.5
Ethiopia 1,145.2 1,261.8 5,808.6 8,680.3 7,973.9 9,692.2 3.1 24.0 11.5 49.4 -8.1 21.5
Gambia 182.4 187.0 305.0 329.4 303.9 300.0 -2.7 8.8 17.6 8.0 -7.7 -1.3
Guinea 818.5 612.0 1,190.0 1,600.0 1,400.0 1,363.0 -5.7 11.0 32.2 34.5 -12.5 -2.6
Guinea-Bissau 132.9 59.6 191.4 226.6 235.3 241.3 -15.7 17.8 32.2 18.4 3.8 2.6
Haiti 653.0 1,036.2 1,681.5 2,376.8 2,129.3 3,229.2 11.5 11.4 -2.4 41.3 -10.4 51.7
Kiribati 34.0 39.6 70.2 73.7 68.1 100.0 2.3 8.1 10.8 5.1 -7.6 46.9
Lao People's Dem. Rep. 588.8 535.3 1,066.9 1,403.2 1,413.5 1,750.0 -4.3 15.1 0.7 31.5 0.7 23.8
Lesotho 1,106.9 809.2 1,731.3 2,030.0 1,900.0 2,196.3 -7.0 11.9 18.1 17.3 -6.4 15.6
Liberia 510.0 668.0 529.6 849.0 563.0 650.0 2.6 10.4 13.5 60.3 -33.7 15.5
Madagascar 628.1 997.0 2,445.5 3,850.6 3,159.3 2,752.0 8.3 15.6 38.9 57.5 -18.0 -12.9
Malawi 474.7 532.3 1,380.0 2,203.7 2,021.7 2,173.0 1.1 16.6 14.1 59.7 -8.3 7.5
Maldives 267.9 388.6 1,096.3 1,387.5 967.3 1,095.1 8.1 14.2 18.3 26.6 -30.3 13.2
Mali 772.1 806.4 2,184.8 3,338.9 2,430.8 2,968.0 1.3 15.0 20.1 52.8 -27.2 22.1
Mauritania 431.3 454.2 1,595.5 1,941.2 1,429.8 1,972.1 -0.8 18.6 36.7 21.7 -26.3 37.9
Mozambique 704.0 1,162.3 3,049.7 4,007.8 3,764.2 3,564.2 11.4 14.6 6.3 31.4 -6.1 -5.3
Myanmar 1,347.9 2,401.5 3,280.1 4,299.1 4,392.6 4,650.0 14.5 7.4 27.9 31.1 2.2 5.9
Nepal 1,333.0 1,573.0 3,121.5 3,590.1 4,384.4 5,500.0 1.6 14.4 25.3 15.0 22.1 25.4
Niger 373.6 395.2 1,148.7 1,574.5 2,364.2 2,857.9 0.7 22.1 21.0 37.1 50.2 20.9
Rwanda 237.7 213.2 737.3 1,177.7 1,203.9 1,394.4 -1.8 22.8 34.5 59.7 2.2 15.8
Samoa 95.0 90.1 265.6 287.9 230.5 309.8 0.4 11.6 -3.5 8.4 -19.9 34.4
Sao Tome and Principe 29.3 29.8 79.1 114.0 103.3 112.2 5.0 17.3 11.6 44.2 -9.4 8.6
Senegal 1,412.2 1,552.8 4,871.4 6,527.6 4,712.9 4,782.2 2.6 14.4 32.7 34.0 -27.8 1.5
Sierra Leone 133.5 149.4 446.5 533.4 521.1 773.3 -6.3 15.3 14.7 19.5 -2.3 48.4
Solomon Islands 154.0 92.0 287.2 320.0 261.9 394.0 -10.1 18.9 32.4 11.4 -18.2 50.4
Somalia 268.0 343.0 887.0 1,131.0 931.0 955.0 4.5 11.6 11.9 27.5 -17.7 2.6
Sudan 1,218.8 1,552.7 8,775.5 9,351.5 9,690.9 9,960.0 3.3 22.1 8.7 6.6 3.6 2.8
Timor-Lesteb _ _ 176.0 268.6 295.1 440.0 _ 20.0 74.3 52.6 9.9 49.1
Togo 593.5 562.2 1,450.0 1,540.0 1,508.5 1,636.3 -1.9 13.4 9.0 6.2 -2.0 8.5
Tuvalu 5.7 5.2 15.3 26.5 14.0 16.0 2.6 14.9 21.0 72.9 -47.1 14.3
Uganda 1,056.1 1,538.1 3,493.4 4,525.9 4,247.4 4,782.4 6.8 15.8 36.6 29.6 -6.2 12.6
United Republic of Tanzania 1,674.5 1,523.5 5,337.1 7,081.1 6,296.3 7,706.3 -0.1 19.9 25.7 32.7 -11.1 22.4
Vanuatu 95.1 86.8 228.5 312.5 291.2 283.9 -1.3 16.1 5.3 36.7 -6.8 -2.5
Yemen 1,581.6 2,323.5 8,514.0 10,452.3 9,184.8 9,700.0 5.7 18.1 40.2 22.8 -12.1 5.6
Zambia 691.6 888.0 4,007.0 5,060.5 3,792.6 5,320.8 4.3 20.8 30.3 26.3 -25.1 40.3
LDCs 34,554.9 43,807.5 125,399.8 163,499.9 155,016.3 170,960.6 4.6 16.6 23.3 30.4 -5.2 10.3
African LDCs and Haiti 20,579.9 24,029.1 79,682.0 106,880.2 101,646.8 106,370.9 2.9 18.6 25.1 34.1 -4.9 4.6
Asian LDCs 13,231.4 19,003.1 43,361.3 53,653.0 50,968.5 61,653.7 7.1 13.5 20.5 23.7 -5.0 21.0
Island LDCs 743.6 775.3 2,356.5 2,966.6 2,401.0 2,936.0 1.5 16.2 17.9 25.9 -19.1 22.3
Other developing countries 1,465,328.3 1,872,962.2 4,571,340.0 5,551,760.3 4,461,684.9 5,760,319.0 3.2 13.9 17.5 21.4 -19.6 29.1
All developing countries 1,499,883.2 1,916,769.7 4,696,739.8 5,715,260.2 4,616,701.2 5,931,279.6 3.2 13.9 17.7 21.7 -19.2 28.5
Source: UNCTAD, UNCTADstat database, August 2011.
a 2010, preliminary data; b Timor-Leste: data since 2003.




The Least Developed Countries Report 2011148


20. Main markets for exports of LDCs: Percentage share in 2010


Country


Developed economies


Econo-
mies in


transition


Developing countries


Un-
allo-


catedTotal EU Japan
USA
and
Canada


Other
developed
countries


Total China India
Major


petroleum
exporters


Newly
industria-


lized
economies:


1st tier


Newly
industria-


lized
economies:


2nd tier


Other
Developing
economies


Afghanistan 21.9 9.9 0.1 11.8 0.2 12.2 65.9 0.6 21.0 14.8 0.2 0.0 29.2 0.0
Angola 40.5 8.5 0.2 31.8 0.0 0.0 59.5 52.3 0.0 0.7 0.0 0.2 6.3 0.0
Bangladesh 84.1 51.2 1.8 28.9 2.2 1.0 14.9 1.4 1.8 1.6 1.8 0.9 7.3 0.0
Benin 14.5 14.2 0.0 0.1 0.2 0.0 85.5 22.5 14.5 7.5 0.9 4.8 35.4 0.0
Bhutan 3.0 0.8 1.9 0.3 0.0 0.0 97.0 0.0 88.5 0.0 0.3 0.2 8.0 0.0
Burkina Faso 46.6 15.6 2.7 2.6 25.7 0.0 53.4 11.1 0.6 2.6 8.0 10.2 20.9 0.0
Burundi 54.6 37.9 0.1 2.0 14.6 0.8 44.6 2.0 0.4 8.8 5.7 0.1 27.6 0.0
Cambodia 76.5 21.8 3.3 50.0 1.4 0.7 22.9 1.4 0.1 0.2 12.1 3.8 5.2 0.0
Central African Republic 55.0 49.2 1.0 3.2 1.6 0.1 44.9 11.5 0.8 2.6 0.4 8.1 21.4 0.0
Chad 80.8 10.3 0.0 70.5 0.0 0.0 19.1 16.6 0.3 1.2 0.1 0.3 0.7 0.0
Comoros 39.8 36.4 0.7 2.7 0.1 0.2 60.1 0.0 9.1 10.4 7.8 0.0 32.8 0.0
Dem. Rep. of the Congo 23.6 12.5 0.0 10.8 0.2 0.1 76.4 49.0 0.0 1.3 0.0 0.0 26.0 0.0
Djibouti 11.9 7.1 2.9 1.8 0.1 0.1 88.0 0.4 1.6 12.3 0.2 0.2 73.4 0.0
Equatorial Guinea 80.8 26.5 5.9 48.3 0.1 0.0 19.2 9.8 0.0 0.0 0.0 0.0 9.4 0.0
Eritrea 40.4 37.2 0.0 2.8 0.4 0.0 59.6 8.0 1.3 7.8 0.1 0.8 41.6 0.0
Ethiopia 45.4 30.5 1.7 4.8 8.5 0.3 54.3 10.4 1.3 11.3 1.1 0.5 29.7 0.0
Gambia 27.0 24.1 0.2 2.4 0.3 0.0 73.0 8.6 35.2 0.4 2.7 1.7 24.4 0.0
Guinea 54.5 40.1 0.0 11.2 3.1 17.4 28.1 2.0 18.6 0.4 2.4 0.5 4.2 0.0
Guinea-Bissau 8.0 1.7 0.2 6.1 0.0 0.0 92.0 0.0 88.0 0.0 2.3 0.0 1.7 0.0
Haiti 82.2 6.0 0.2 75.1 0.8 0.0 17.8 1.0 0.2 1.2 1.9 2.4 11.1 0.0
Kiribati 21.4 0.5 15.7 3.7 1.6 0.0 78.5 0.0 0.0 0.0 18.9 34.2 25.4 0.0
Lao People's Dem. Rep. 19.5 12.7 2.3 4.2 0.2 0.1 80.4 34.4 0.0 0.0 0.0 45.8 0.2 0.0
Lesotho 93.4 11.7 0.1 81.7 0.0 0.0 6.6 0.0 0.0 0.0 0.1 0.0 6.5 0.0
Liberia 72.1 20.3 0.1 45.7 6.0 2.5 25.4 4.7 0.0 12.1 0.0 4.1 4.6 0.0
Madagascar 75.1 56.4 1.3 16.3 1.1 0.2 24.7 10.2 2.0 2.1 2.5 0.5 7.4 0.0
Malawi 55.6 36.7 0.2 17.0 1.7 2.0 42.2 3.1 1.2 0.5 1.6 2.1 33.7 0.2
Maldives 44.7 38.6 4.0 2.0 0.1 0.0 55.3 0.5 2.0 2.2 1.9 36.4 12.3 0.0
Mali 13.0 8.5 0.2 1.4 2.9 0.0 87.0 8.5 1.1 0.6 0.9 6.0 69.9 0.0
Mauritania 43.8 35.2 5.9 2.1 0.6 2.3 53.9 39.9 0.1 2.3 0.4 0.2 11.1 0.0
Mozambique 65.9 63.1 0.3 2.0 0.5 1.1 32.9 6.1 2.1 0.6 0.9 1.6 21.5 0.0
Myanmar 24.9 17.5 5.9 0.8 0.6 0.3 72.8 7.0 14.4 0.1 5.4 42.3 3.6 2.0
Nepal 18.4 9.8 0.8 6.7 1.2 0.1 69.2 1.5 57.5 0.5 1.1 0.2 8.4 12.2
Niger 61.3 39.3 3.9 14.3 3.8 0.8 37.9 0.5 0.2 22.9 0.5 0.9 12.9 0.0
Rwanda 21.5 15.1 0.2 5.8 0.4 0.5 78.1 9.6 0.3 1.1 4.4 3.0 59.7 0.0
Samoa 91.7 0.3 0.3 3.1 88.0 0.0 8.3 0.0 0.0 0.0 2.3 0.2 5.8 0.0
Sao Tome and Principe 50.1 46.4 0.2 2.6 0.9 0.4 49.5 0.1 0.0 2.0 0.0 3.3 44.2 0.0
Senegal 20.3 18.1 0.5 0.3 1.4 0.1 70.0 2.3 11.2 3.2 0.7 0.5 52.0 9.6
Sierra Leone 80.5 65.7 1.3 11.3 2.1 1.0 18.5 2.6 1.5 3.0 0.7 1.2 9.5 0.0
Solomon Islands 14.3 9.1 2.9 0.4 1.9 0.0 85.7 65.0 0.5 0.0 5.5 10.2 4.5 0.0
Somalia 0.9 0.8 0.0 0.0 0.1 0.0 99.1 0.5 0.0 94.8 0.0 0.1 3.6 0.0
Sudan 19.6 1.5 16.1 2.0 0.0 0.0 80.3 60.8 3.3 6.2 0.9 6.2 2.9 0.0
Timor-Leste 36.0 16.0 13.7 2.4 3.8 0.0 64.0 0.2 0.5 0.0 61.9 0.8 0.6 0.0
Togo 19.7 17.7 0.0 0.9 1.1 0.1 80.0 3.3 8.5 14.6 1.5 3.1 49.1 0.2
Tuvalu 56.8 9.5 33.6 0.3 13.4 0.6 42.6 0.0 1.5 0.2 0.0 28.2 12.7 0.0
Uganda 38.4 32.0 0.5 2.4 3.6 1.1 60.5 1.2 1.0 7.9 1.9 0.6 47.9 0.0
United Republic of Tanzania 32.9 17.3 6.1 1.8 7.7 1.5 65.7 16.7 8.4 8.9 1.6 2.5 27.6 0.0
Vanuatu 28.6 3.9 22.1 1.2 1.5 0.0 71.4 0.3 0.9 0.2 2.0 63.1 5.0 0.0
Yemen 9.1 2.1 4.3 1.0 1.8 0.0 90.5 27.1 15.8 11.2 7.6 21.3 7.5 0.4
Zambia 55.6 4.4 0.1 0.1 51.1 0.1 44.3 20.2 0.3 3.0 0.4 0.1 20.3 0.0
LDCs 46.6 18.7 3.0 21.3 3.6 0.5 52.6 27.5 3.7 3.0 1.7 5.3 11.5 0.3
African LDCs and Haiti 44.0 14.3 2.9 22.5 4.4 0.4 55.4 35.4 1.6 3.0 0.5 1.3 13.6 0.2
Asian LDCs 52.9 29.2 3.2 18.8 1.6 0.7 45.7 8.3 8.9 2.9 4.6 14.6 6.4 0.7
Island LDCs 35.9 19.0 5.1 1.5 10.2 0.0 64.1 24.9 1.2 1.0 5.0 23.0 9.0 0.0
Other developing countries 44.6 16.4 7.4 18.0 2.8 1.7 53.6 12.0 3.7 4.9 13.6 6.1 13.3 0.2
All developing countries 44.7 16.5 7.3 18.1 2.8 1.6 53.5 12.3 3.7 4.9 13.3 6.1 13.3 0.2
Source: UNCTAD, UNCTADstat database, August 2011.




149ANNEX. Statistical Tables on the Least Developed Countries


21. Main sources of imports of LDCs: Percentage share in 2010


Country


Developed economies


Econo-
mies in


transition


Developing countries


Un-
allo-


catedTotal EU Japan
USA
and


Canada


Other
developed
economies


Total China India
Major


petroleum
exporters


Newly
industria-


lized
economies:


1st tier


Newly
industria-


lized
economies:


2nd tier


Other
Developing
economies


Afghanistan 38.6 11.6 3.3 23.5 0.2 11.2 50.2 4.3 6.6 9.8 1.8 2.7 25.0 0.0
Angola 60.1 43.2 1.0 11.8 4.1 0.2 39.7 16.0 0.0 4.9 0.0 3.1 15.8 0.0


Bangladesh 20.7 8.3 4.4 4.5 3.5 4.4 74.8 22.8 13.0 6.9 13.9 11.4 6.7 0.0
Benin 46.8 37.9 2.6 1.7 4.7 0.0 53.2 8.5 2.0 5.3 2.5 7.0 27.9 0.0
Bhutan 25.9 7.9 8.4 2.5 7.1 0.0 74.1 0.7 60.8 0.1 3.9 3.9 4.7 0.0
Burkina Faso 41.6 34.1 1.4 5.3 0.8 1.6 56.8 5.0 2.6 2.0 2.6 1.4 43.2 0.0
Burundi 34.9 25.7 5.6 3.0 0.6 0.4 64.7 9.8 4.9 11.4 0.6 1.0 37.0 0.0
Cambodia 6.5 2.3 1.9 1.9 0.4 0.2 93.3 14.7 0.6 0.1 36.5 28.7 12.8 0.0
Central African Republic 54.9 41.9 1.2 11.0 0.8 0.1 44.9 5.2 0.8 1.7 8.7 1.7 26.9 0.0
Chad 63.8 48.7 0.3 14.1 0.7 2.4 33.9 11.3 0.9 2.9 0.5 0.2 18.0 0.0
Comoros 30.9 29.8 0.6 0.5 0.1 0.0 69.0 4.8 6.3 20.6 4.0 3.8 29.6 0.0
Dem. Rep. of the Congo 33.0 27.4 1.0 3.4 1.1 2.6 64.4 15.2 0.0 4.5 0.0 0.4 44.2 0.0
Djibouti 20.5 11.1 2.4 6.6 0.5 1.7 77.8 20.9 15.5 7.2 3.3 13.4 17.6 0.0
Equatorial Guinea 37.7 25.8 1.0 10.6 0.3 0.5 61.8 17.5 0.0 37.5 0.0 0.5 6.3 0.0
Eritrea 24.2 21.1 0.1 1.4 1.6 2.2 73.6 10.9 9.2 18.4 3.8 1.1 30.2 0.0
Ethiopia 27.9 15.5 5.5 5.8 1.0 2.2 70.0 24.0 7.2 19.0 2.0 5.2 12.6 0.0
Gambia 46.4 36.8 1.8 6.3 1.5 0.2 53.5 11.2 2.8 4.1 3.4 5.8 26.2 0.0
Guinea 54.5 44.8 1.4 5.5 2.8 1.6 43.9 13.3 4.5 2.4 2.3 3.2 18.3 0.0
Guinea-Bissau 42.9 40.2 0.3 1.7 0.7 0.1 57.0 4.0 1.2 0.0 0.7 4.1 47.0 0.0
Haiti 75.6 8.3 3.2 63.2 0.9 0.1 23.8 2.2 0.9 0.7 1.9 3.6 14.4 0.6
Kiribati 60.2 3.0 29.0 8.5 19.7 0.0 39.8 10.2 0.3 0.0 0.6 3.6 25.0 0.0
Lao People's Dem. Rep. 8.0 4.5 2.2 0.5 0.8 0.3 91.7 16.8 0.0 0.0 0.0 74.9 0.1 0.0
Lesotho 25.3 11.9 0.8 12.1 0.5 0.1 74.6 62.9 0.0 0.5 0.0 2.3 9.0 0.0
Liberia 36.6 7.0 26.5 2.8 0.3 0.7 62.7 59.5 0.0 0.3 0.0 1.1 1.7 0.0
Madagascar 32.9 22.7 0.6 9.0 0.6 0.1 67.1 17.9 5.5 7.2 9.6 5.9 21.0 0.0
Malawi 19.3 12.5 2.0 3.1 1.8 0.4 80.4 6.8 7.2 4.1 3.3 1.7 57.3 0.0
Maldives 15.1 7.7 0.6 3.2 3.5 0.0 84.9 6.5 7.8 18.0 26.8 15.7 10.1 0.0
Mali 36.8 25.9 2.6 6.5 1.8 2.8 60.3 9.2 2.3 1.5 0.9 1.5 44.9 0.0
Mauritania 55.5 47.9 1.7 4.7 1.1 2.9 41.7 12.5 1.7 1.9 0.7 6.0 18.9 0.0
Mozambique 29.1 14.7 2.0 4.9 7.5 0.3 70.6 10.2 7.6 3.1 2.5 4.0 43.3 0.0
Myanmar 7.3 2.1 3.8 0.4 0.9 2.1 90.3 31.7 3.5 0.2 29.5 24.7 0.8 0.3
Nepal 9.8 4.1 1.7 1.6 2.4 0.8 89.4 10.5 57.0 9.7 4.4 5.3 2.5 0.0
Niger 45.4 35.9 1.6 5.0 2.9 0.4 54.1 17.7 2.4 13.9 0.7 2.0 17.5 0.0
Rwanda 24.9 19.4 0.7 3.4 1.4 0.4 74.7 5.3 3.2 12.0 3.6 0.4 50.1 0.0
Samoa 75.3 1.3 8.4 11.5 54.1 0.0 24.7 6.1 0.1 0.0 8.0 3.8 6.7 0.0
Sao Tome and Principe 69.3 66.8 2.3 0.2 0.0 0.0 29.8 2.2 0.3 17.1 1.5 0.6 8.2 0.8
Senegal 50.9 43.6 2.4 3.2 1.6 3.2 45.6 8.3 2.5 12.0 1.3 3.9 17.6 0.3
Sierra Leone 33.3 16.4 4.3 11.8 0.8 0.5 65.0 3.4 3.9 3.8 1.9 2.9 49.1 1.2
Solomon Islands 46.2 3.0 6.4 2.1 34.8 0.0 53.8 3.7 2.9 0.0 29.8 8.2 9.2 0.0
Somalia 3.3 2.8 0.0 0.4 0.1 0.0 96.7 8.2 0.0 40.0 0.0 2.1 46.4 0.0
Sudan 27.6 17.2 3.2 3.1 4.1 3.2 69.2 19.4 5.5 19.3 3.0 2.5 19.4 0.0
Timor-Leste 6.0 0.3 0.6 1.0 4.2 0.0 94.0 8.9 0.4 0.0 0.3 39.7 44.7 0.0
Togo 43.5 36.7 0.8 5.4 0.6 1.5 54.2 27.7 5.1 2.0 2.0 5.6 11.8 0.7
Tuvalu 60.9 0.1 55.6 0.7 4.4 0.0 39.1 10.2 0.3 0.0 0.1 4.2 24.4 0.0
Uganda 31.5 20.6 5.8 3.9 1.2 1.9 66.6 8.6 9.4 14.2 3.0 2.4 29.0 0.0
United Republic of Tanzania 33.4 14.4 7.1 2.4 9.5 2.1 64.5 10.9 11.2 12.1 7.8 3.8 18.8 0.0
Vanuatu 56.8 1.8 8.0 6.9 40.0 0.0 43.0 8.0 0.8 0.0 15.7 4.3 14.1 0.3
Yemen 25.4 14.1 3.2 4.4 3.7 2.3 72.3 13.2 7.8 26.3 1.7 6.2 17.1 0.0
Zambia 13.7 9.1 1.6 1.8 1.2 0.0 86.3 5.4 2.7 11.9 1.7 0.4 64.2 0.0
LDCs 31.9 19.2 3.1 6.7 2.9 2.1 66.0 16.0 7.3 10.2 6.5 7.2 18.9 0.0
African LDCs and Haiti 39.2 25.8 2.8 7.9 2.8 1.4 59.3 15.0 3.9 11.0 2.2 2.9 24.3 0.1
Asian LDCs 18.7 7.8 3.6 4.8 2.6 3.4 77.9 18.2 13.4 8.8 13.7 14.4 9.4 0.0
Island LDCs 33.5 8.3 4.3 3.9 17.0 0.0 66.4 6.4 3.9 8.8 16.9 13.8 16.6 0.1
Other developing countries 41.2 14.8 9.5 12.5 4.5 2.4 56.2 14.9 2.2 9.3 11.7 7.7 10.3 0.1
All developing countries 41.0 14.9 9.3 12.3 4.4 2.4 56.5 15.0 2.3 9.4 11.6 7.7 10.6 0.1
Source: UNCTAD, UNCTADstat database, August 2011.




The Least Developed Countries Report 2011150


22. Merchandise trade indices


Country
Number of products


exporteda (units)
Export


Concentration Indexb
Export


Diversification Indexc
Terms of traded


(2000=100)


1995 2000 2009 1995 2000 2009 1995 2000 2009 1995 2009
Afghanistan 187 51 231 0.359 0.366 0.180 0.800 0.817 0.608 .. 107.6
Angola 31 41 72 0.898 0.885 0.955 0.860 0.818 0.820 80.8 170.8
Bangladesh 123 98 193 0.352 0.412 0.371 0.669 0.792 0.798 111.8 64.5
Benin 165 70 135 0.674 0.577 0.354 0.768 0.803 0.753 106.6 83.1
Bhutan 39 28 37 0.326 0.416 0.437 0.629 0.619 0.643 .. 152.0
Burkina Faso 40 63 86 0.573 0.561 0.338 0.767 0.736 0.720 131.0 78.6
Burundi 26 12 66 0.597 0.703 0.585 0.757 0.737 0.802 163.6 137.9
Cambodia 173 61 115 0.384 0.376 0.415 0.785 0.774 0.807 .. 85.0
Central African Republic 28 16 24 0.450 0.641 0.397 0.684 0.717 0.702 193.0 78.5
Chad 19 23 173 0.722 0.744 0.871 0.707 0.774 0.772 92.6 136.0
Comoros 70 99 5 0.641 0.770 0.514 0.667 0.753 0.751 86.2 65.7
Dem. Rep. of the Congo 67 184 216 0.532 0.605 0.353 0.811 0.811 0.824 79.8 112.0
Djibouti 185 181 171 0.130 0.129 0.327 0.537 0.532 0.648 .. 77.0
Equatorial Guinea 56 16 96 0.558 0.810 0.730 0.610 0.674 0.739 36.8 150.8
Eritrea 99 20 24 0.373 0.311 0.218 0.600 0.602 0.632 101.7 73.3
Ethiopia 25 27 104 0.647 0.535 0.339 0.548 0.570 0.797 151.0 121.1
Gambia 99 102 38 0.314 0.461 0.262 0.582 0.709 0.628 100.0 85.5
Guinea 51 46 92 0.627 0.574 0.494 0.851 0.845 0.794 89.6 143.3
Guinea-Bissau 8 70 14 0.525 0.615 0.926 0.690 0.684 0.804 102.7 66.0
Haiti 123 137 63 0.232 0.472 0.513 0.632 0.724 0.748 113.2 70.6
Kiribati 12 10 18 0.637 0.644 0.326 0.487 0.479 0.563 .. 60.9
Lao People's Dem. Rep. 124 141 90 0.326 0.313 0.321 0.708 0.745 0.778 .. 103.9
Lesotho 38 27 34 0.323 0.479 0.501 0.764 0.570 0.860 100.0 78.3
Liberia 21 30 23 0.807 0.574 0.598 0.771 0.834 0.775 .. 111.4
Madagascar 186 218 227 0.234 0.260 0.220 0.733 0.760 0.728 79.6 75.5
Malawi 70 70 111 0.663 0.585 0.625 0.821 0.805 0.809 105.7 94.2
Maldives 9 10 7 0.410 0.350 0.804 0.483 0.483 0.540 .. 127.9
Mali 42 162 112 0.586 0.649 0.749 0.759 0.815 0.871 109.6 165.4
Mauritania 31 138 79 0.500 0.498 0.496 0.702 0.808 0.818 102.2 150.9
Mozambique 192 214 236 0.360 0.307 0.322 0.751 0.788 0.734 151.1 98.2
Myanmar 89 202 173 0.307 0.270 0.335 0.817 0.792 0.822 214.3 117.1
Nepal 53 89 113 0.440 0.307 0.150 0.485 0.559 0.658 .. 80.7
Niger 32 50 71 0.552 0.395 0.509 0.748 0.833 0.792 121.4 185.2
Rwanda 116 121 212 0.599 0.457 0.404 0.717 0.726 0.821 110.1 155.3
Samoa 72 9 139 0.712 0.640 0.680 0.605 0.743 0.736 .. 80.4
Sao Tome and Principe 79 36 53 0.519 0.902 0.699 0.549 0.573 0.564 100.0 165.4
Senegal 104 116 164 0.288 0.264 0.235 0.758 0.751 0.686 156.3 99.2
Sierra Leone 19 9 97 0.554 0.514 0.270 0.791 0.641 0.617 - 64.6
Solomon Islands 19 17 21 0.600 0.593 0.741 0.699 0.788 0.822 .. 87.3
Somalia 119 32 36 0.716 0.666 0.467 0.794 0.801 0.783 .. 101.3
Sudan 19 63 47 0.351 0.612 0.765 0.569 0.783 0.743 100.0 152.5
Timor-Leste _ _ 10 _ _ 0.544 _ _ 0.806 _ ..
Togo 98 216 157 0.364 0.291 0.249 0.748 0.752 0.712 99.1 28.6
Tuvalu 8 45 .. 0.382 0.227 0.481 0.544 0.454 0.523 .. -
Uganda 81 77 186 0.650 0.329 0.234 0.864 0.802 0.732 197.2 120.4
United Republic of Tanzania 179 85 247 0.275 0.258 0.294 0.750 0.734 0.768 98.0 121.1
Vanuatu 55 13 28 0.301 0.504 0.368 0.588 0.757 0.760 .. 95.4
Yemen 70 83 145 0.891 0.896 0.796 0.763 0.790 0.784 .. 126.6
Zambia 86 98 249 0.829 0.517 0.655 0.857 0.839 0.859 189.7 155.9
LDCs 260 259 260 0.230 0.328 0.450 0.731 0.721 0.696 .. 124.1


African LDCs and Haiti 241 258 260 0.255 0.384 0.586 0.765 0.749 0.724 .. 136.7
Asian LDCs 244 244 247 0.277 0.313 0.230 0.758 0.759 0.711 .. 95.0
Island LDCs 168 195 221 0.368 0.238 0.383 0.772 0.808 0.845 .. 101.4
Other developing countries 261 261 260 0.091 0.127 0.115 0.276 0.260 0.224 .. 100.6
All Developing economies 261 261 260 0.092 0.129 0.120 0.278 0.262 0.228 .. 101.0


Source: UNCTAD, UNCTADstat database, November 2010.
a The Number of products is based on SITC, Revision 3 commodity classification at 3-digit group level.
This figure includes only those products that are greater than 100,000 dollars or more than 0.3 per cent of the country’s or country group’s total exports.


The maximum number of products is 261.
b The Concentration index, also named Herfindahl-Hirschmann index, is a measure of the degree of market concentration. It has been normalized to


obtain values ranking from 0 to 1. An index value close to 1 indicates a very concentrated market (maximum concentration), values closer to 0 reflect
a more equal distribution of market shares among products.


c The Diversification index reveals the extent of the differences between the structure of trade of the country or country group and the world average
exports. The index ranges from 0 to 1: a value closer to 1 indicates a bigger difference from the world average exports , values closer to 0 indicates
closer similarity between the country or country group exports and world average exports. The Diversification index is computed by measuring absolute
deviation of the country share from world structure.


d The "net barter" terms of trade is defined as the ratio of the export unit value index to the import unit value index.




151ANNEX. Statistical Tables on the Least Developed Countries


23 . Total services exports: Levels and annual average growth rates


Country
Total services exports


($ million)
Annual average growth rates


(%)


1995 2000 2007 2008 2009 2010
1995–
2000a


2000–
2010a


2008 2009 2010


Afghanistan .. .. .. .. .. .. .. .. .. .. ..
Angola 113 267 311 329 623 787 7.4 11.2 6.0 89.1 26.3
Bangladesh 698 815 1,617 1,996 1,976 2,414 4.6 12.5 23.4 -1.0 22.2
Benin 194 136 302 348 325 351 -1.6 11.0 15.4 -6.6 8.1
Bhutan 15 20 60 55 58 .. 9.5 14.3 -9.2 5.9 ..
Burkina Faso 65 31 88 120 77 98 -8.3 12.4 35.8 -35.7 27.2
Burundi 16 4 31 83 50 55 -24.5 35.1 170.6 -40.1 11.0
Cambodia 114 428 1,548 1,645 1,625 1,826 27.5 17.1 6.3 -1.2 12.4
Central African Republic 62 31 .. .. 66 .. -14.5 15.3 .. .. ..
Chad 74 51 176 184 156 166 -3.0 14.6 4.5 -15.2 6.4
Comoros 35 38 55 67 68 69 -2.8 10.6 22.6 1.3 0.9
Dem. Rep. of the Congo .. 71 392 522 651 628 .. 27.9 33.0 24.7 -3.5
Djibouti 163 162 248 297 322 .. 0.7 8.4 19.5 8.5 ..
Equatorial Guinea 4 18 .. .. .. .. 35.1 12.6 .. .. ..
Eritrea 49 61 .. .. .. .. -5.3 4.4 .. .. ..
Ethiopia 345 506 1,368 1,959 1,895 2,353 7.7 17.5 43.2 -3.3 24.2
Gambia 54 134 132 123 104 133 17.4 4.3 -7.0 -15.4 28.0
Guinea 117 68 49 168 72 80 -8.2 -1.0 244.7 -57.0 10.7
Guinea-Bissau 6 6 33 44 .. .. -3.9 30.1 31.1 .. ..
Haiti 104 172 257 343 382 382 12.7 11.7 33.3 11.4 0.0
Kiribati 4 6 9 .. .. .. 4.6 7.1 .. .. ..
Lao People's Dem. Rep. 97 176 278 402 391 470 12.0 12.1 44.4 -2.5 20.0
Lesotho 39 43 76 67 73 92 0.1 8.4 -11.7 8.4 26.4
Liberia .. .. 346 510 274 315 .. 7.8 b 47.2 -46.2 15.0
Madagascar 242 364 759 854 576 640 7.2 8.7 12.5 -32.6 11.1
Malawi 24 34 73 75 78 84 7.2 9.0 2.1 4.0 7.9
Maldives 233 348 649 705 660 0 14.1 8.6 -6.4 ..
Mali 88 99 377 454 401 392 3.4 14.6 20.6 -11.8 -2.2
Mauritania 28 47 81 93 136 160 9.2 12.4 14.0 47.4 17.3
Mozambique 242 325 459 555 612 697 5.8 9.6 21.0 10.2 13.9
Myanmar 365 478 284 268 218 225 6.0 -6.4 -5.8 -18.4 2.8
Nepal 679 506 511 724 652 .. -6.4 6.2 41.5 -9.8 ..
Niger 33 38 85 131 113 118 -0.6 11.4 54.6 -13.6 4.4
Rwanda 18 59 179 408 341 374 27.5 24.1 127.9 -16.5 9.7
Samoa 56 .. 139 134 149 .. 1.5 c 7.9 d -3.3 11.2 ..
Sao Tome and Principe 6 14 7 10 11 13 17.4 0.7 44.4 17.4 11.0
Senegal 512 387 1,202 1,294 1,132 1,111 -2.8 13.8 7.7 -12.5 -1.9
Sierra Leone 87 42 45 61 53 59 -18.6 1.9 35.5 -14.1 11.9
Solomon Islands 42 52 59 59 72 91 3.0 9.8 0.1 22.8 25.9
Somalia .. .. .. .. .. .. .. .. .. .. ..
Sudan 125 27 384 493 392 514 -17.8 41.5 28.2 -20.5 31.2
Timor-Leste _ _ .. .. .. .. _ .. .. .. ..
Togo 87 62 236 283 297 312 -9.4 19.2 19.9 5.0 5.0
Tuvalu .. .. .. .. .. .. .. .. .. .. ..
Uganda 104 213 593 799 967 1,310 13.9 20.9 34.7 21.0 35.5
United Republic of Tanzania 583 627 1,876 2,169 1,855 2,354 1.3 13.2 15.6 -14.5 26.9
Vanuatu 82 130 186 .. .. .. 9.6 10.2 .. .. ..
Yemen 179 211 724 1,205 1,237 1,250 1.7 25.4 66.5 2.6 1.0
Zambia 121 115 273 300 241 334 -2.0 10.8 9.6 -19.6 38.7
LDCse 6,453 7,477 17,019 21,233 20,320 23,462 2.8 13.6 24.8 -4.3 15.5
African LDCs and Haitie 3,849 4,201 10,679 13,330 12,515 14,655 1.8 14.4 24.8 -6.1 17.1
Asian LDCse 2,147 2,634 5,174 6,622 6,501 7,348 4.0 13.0 28.0 -1.8 13.0
Island LDCse 457 641 1,166 1,281 1,304 1,459 6.1 9.9 9.9 1.8 11.9
Other developing countriese 271,635 340,925 870,115 1,013,964 916,547 1,086,202 3.5 14.1 16.5 -9.6 18.5
All developing countriese 278,087 348,401 887,134 1,035,196 936,866 1,109,664 3.5 14.1 16.7 -9.5 18.4
Source: UNCTAD, UNCTADstat database, July 2011; and UNCTAD secretariat estimates.
a UNCTAD secretariat estimates; b 2004–2010; c 1995–1999; d 2001–2010; e Totals include estimates for missing countries.




The Least Developed Countries Report 2011152


24 . Total services imports: Levels and annual average growth rates


Country


Total services imports
($ million)


Annual average growth rates
(%)


1995 2000 2007 2008 2009 2010
1995–
2000a


2000–
2010a


2007 2008 2009 2010


Afghanistan .. .. .. .. .. .. .. .. .. .. .. ..
Angola 2051.4 2699.5 13030.3 22139.3 19169.4 21750.0 4.6 26.8 73.5 69.9 -13.4 13.5
Bangladesh 1531.2 1620.2 2884.8 3664.4 3405.4 4352.5 2.3 11.8 23.3 27.0 -7.1 27.8
Benin 272.2 191.7 500.5 510.0 457.0 471.0 -3.5 11.7 42.1 1.9 -10.4 3.1
Bhutan 27.3 46.2 57.1 93.4 74.0 .. 19.9 4.3 -6.3 63.5 -20.7 ..
Burkina Faso 168.4 139.9 404.8 580.4 504.7 622.7 -1.8 17.7 3.1 43.4 -13.0 23.4


Burundi 83.3 42.6 178.9 258.8 176.6 203.0 -12.0 23.2 -11.6 44.7 -31.7 14.9
Cambodia 187.9 327.5 915.4 1035.8 1022.4 1176.0 11.6 15.3 13.9 13.1 -1.3 15.0
Central African Republic 149.8 114.7 .. .. 157.6 .. -3.9 6.6 .. .. .. ..
Chad 211.8 241.0 2126.9 2224.0 2286.0 2369.0 2.2 25.5 11.3 4.6 2.8 3.6
Comoros 49.9 23.0 64.3 80.1 81.9 93.3 -14.0 16.6 19.9 24.5 2.3 13.9
Dem. Rep. of the Congo .. 239.1 1617.7 2145.9 1863.0 2273.1 .. 28.9 90.2 32.7 -13.2 22.0
Djibouti 74.9 71.2 107.7 129.5 127.6 .. -2.0 8.9 20.7 20.2 -1.5 ..
Equatorial Guinea 75.5 566.7 .. .. .. .. 44.4 13.9 .. .. .. ..
Eritrea 44.7 28.4 .. .. .. .. 1.0 4.9 .. .. .. ..
Ethiopia 352.8 489.6 1752.1 2410.3 2226.9 2720.0 7.9 20.6 49.7 37.6 -7.6 22.1
Gambia 69.2 100.0 88.6 88.1 82.6 79.5 8.8 4.2 -5.9 -0.6 -6.2 -3.7
Guinea 389.3 284.9 296.1 920.4 330.7 390.0 -5.1 4.5 -1.3 210.8 -64.1 17.9
Guinea-Bissau 29.9 40.1 68.2 85.2 .. .. 5.2 13.3 72.4 24.9 .. ..
Haiti 284.5 282.0 680.2 746.0 780.6 889.9 -2.9 15.0 14.6 9.7 4.6 14.0
Kiribati 16.4 23.1 47.3 .. .. .. 4.1 11.7 46.0 .. .. ..
Lao People's Dem. Rep. 121.6 43.1 76.0 85.3 120.1 126.1 -20.4 15.1 22.2 12.2 40.8 5.0
Lesotho 61.1 42.5 110.2 111.1 124.3 143.9 -6.6 11.9 15.8 0.8 11.9 15.8
Liberia .. .. 1248.8 1411.1 1145.2 1260.0 .. 7.9 b -2.0 13.0 -18.8 10.0
Madagascar 358.8 522.1 1174.5 1579.4 1400.1 .. 7.7 12.0 59.6 34.5 -11.4 ..
Malawi 151.4 167.1 295.0 357.0 403.5 437.1 0.5 10.3 11.4 21.0 13.0 8.3
Maldives 76.7 109.7 269.3 348.3 284.6 .. 7.3 14.1 16.5 29.3 -18.3 ..
Mali 434.5 334.9 776.6 1024.3 937.5 985.9 -3.9 12.2 15.1 31.9 -8.5 5.2
Mauritania 217.0 168.4 585.5 768.8 616.1 771.6 -7.5 18.5 44.1 31.3 -19.9 25.2
Mozambique 350.0 445.8 855.6 965.3 1062.0 1220.0 6.2 9.4 12.9 12.8 10.0 14.9
Myanmar 246.2 328.1 591.0 615.0 636.2 665.0 3.2 8.3 5.0 4.1 3.4 4.5
Nepal 313.3 199.9 722.6 851.7 784.7 .. -7.6 19.4 46.6 17.9 -7.9 ..
Niger 151.8 131.9 369.4 600.9 840.0 1053.0 -3.2 23.3 12.4 62.7 39.8 25.4
Rwanda 154.7 200.1 272.0 521.5 518.8 632.0 5.9 12.8 12.1 91.7 -0.5 21.8
Samoa 35.2 .. 71.1 73.1 78.2 78.0 -8.5 c 12.1 d 25.2 2.8 6.9 -0.2
Sao Tome and Principe 11.9 12.5 18.7 21.4 20.7 21.8 -0.3 6.9 5.1 14.8 -3.6 5.6
Senegal 578.2 405.0 1238.4 1414.5 1162.0 1142.0 -3.9 13.8 47.1 14.2 -17.9 -1.7
Sierra Leone 91.8 112.8 98.0 125.4 115.9 119.2 1.8 1.6 14.1 28.0 -7.6 2.8
Solomon Islands 76.9 72.6 96.7 115.9 98.9 184.2 -2.5 9.0 42.3 19.8 -14.7 86.2
Somalia .. .. .. .. .. .. .. .. .. .. .. ..
Sudan 172.3 647.6 2938.8 2619.5 2684.0 3112.0 24.7 20.4 5.0 -10.9 2.5 15.9
Timor-Leste _ _ .. .. .. .. - 14.2 f .. .. .. ..
Togo 164.3 117.5 305.5 359.2 382.3 390.1 -8.5 13.4 15.6 17.6 6.4 2.0
Tuvalu .. .. .. .. .. .. .. .. .. .. .. ..
Uganda 562.7 458.8 977.0 1256.8 1440.9 1835.1 -6.5 15.8 26.8 28.6 14.6 27.4
United Rep. of Tanzania 799.4 682.4 1415.4 1648.9 1709.1 1817.0 -3.2 12.8 13.3 16.5 3.6 6.3
Vanuatu 35.3 70.2 75.7 .. .. .. 18.5 7.0 6.2 .. .. ..
Yemen 639.3 809.4 1867.1 2347.6 2132.8 2463.0 5.8 13.4 0.6 25.7 -9.1 15.5
Zambia 315.0 334.6 914.8 911.1 705.4 810.6 2.2 11.1 55.5 -0.4 -22.6 14.9
LDCse 12,768.4 14,014.6 44,745.6 60,678.4 55,584.9 63,567.0 1.8 18.6 32.4 35.6 -8.4 14.4
African LDCs and Haitie 9,399.2 10,302.9 36,056.6 50,047.2 45,402.4 51,509.4 1.7 19.9 37.6 38.8 -9.3 13.5
Asian LDCse 3,066.8 3,374.4 7,720.8 9,335.1 8,908.6 10,706.4 2.4 13.5 13.1 20.9 -4.6 20.2
Island LDCse 302.3 337.3 968.3 1,296.0 1,273.9 1,351.2 1.9 17.3 26.7 33.8 -1.7 6.1
Other developing countriese 334,328.1 407,014.0 951,740.9 1,126,280.71,038,824.4 1,207,149.2 2.9 13.4 20.6 18.3 -7.8 16.2
All developing countriese 347,096.5 421,028.6 996,486.6 1,186,959.11,094,409.3 1,270,716.2 2.8 13.6 21.1 19.1 -7.8 16.1
Source: UNCTAD, UNCTADstat database, July 2011; and UNCTAD secretariat estimates.
a UNCTAD secretariat estimates; b 2004–2010; c 1995–1999; d 2001–2010; e Totals include estimates for missing countries.




153ANNEX. Statistical Tables on the Least Developed Countries


25 . Indicators on tourism in LDCs


Country


Tourism
in total
exports
(G & S)


Tourism
in


service
exports


Gross tourism receiptsa


Annual
average
growth


rate


Tourist arrivalsb
Annual
average
growth


rate


Tourism
employ-
mentc


(%) (%) ($ million) (%) (‘000) (%) (‘000)


2009 2009 1995 2000 2009
2000-
2009


1995 2000 2009
2000-
2009


2010


Afghanistan .. .. .. .. .. .. .. .. .. .. ..
Angola 1.3 88.9 27 34 554 34.6 9 51 366 21.7 61.9
Bangladesh 0.4 3.8 25 50 76 5.7 156 199 267 5.7 1,470.3
Benin 15.8f 67.9f 85 77 236f 13.5i 138 96 190 10.4 40.9
Bhutan 9.2 88.1 5 10 51 27.3 5 8 23 20.0 ..
Burkina Faso 13.4f 68.3f 18 23 82 15.7i 124 126 269 10.8 53.0
Burundi 0.8 3.4 2 1 2 5.3 34 29 201d 39.0d 33.5
Central African Republic 3.5 9.1 4 5 6 10.7 26 11 52 22.5 11.5
Cambodia 24.1 80.7 71 345 1,312 18.4 220 466 2,162 20.1 547.5
Chad .. .. 43 14 .. .. 19 43 31 -6.8 17.2
Comoros 41.0 48.0 21 30 33 1.9 23 24 15e -0.2e 2.8
Dem. Rep. of the Congo .. .. .. .. .. .. 35 103 53 -1.3 116.4
Djibouti 4.0 5.0 5 8 16 3.2 21 20 53f 12.5 ..
Equatorial Guinea .. .. 1 5 .. .. .. .. .. .. ..
Eritrea 16.6 18.3 58 36 26 -4.7 315 70 79 -2.1 ..
Ethiopia 31.9 59.1 177 205 1,119 23.4 103 136 330f 12.9 884.1
Gambia 37.6 61.4 28 48 64 6.7 45 79 142 10.2 33.6
Guinea 0.5 6.8 1 8 5 .. .. 33 30e 0.5e 54.0
Guinea-Bissau 22.6f 87.2f .. .. .. .. .. .. 30e .. ..
Haiti 32.7 82.5 90 128 315 11.9 145 140 423 12.8 54.7
Kiribati 23.2e 43.2e 2 3 4e 1.7h 4 5 4 -2.0 1.1
Lao People's Dem. Rep. 19.1 69.2 52 114 271 12.6 60 191 1,239 30.7 103.2
Lesotho 4.2 54.9 29 24 40 5.1 209 302 344 1.0 14.3
Liberia .. .. .. .. .. .. .. .. .. .. ..
Madagascar 31.0 89.9 106 152 518 21.7 75 160 163 10.8 173.0
Malawi 5.1e 65.3e 22 29 48e ..h 192 228 755 14.6 92.4
Maldives 84.2 92.2 211 321 608 8.5 315 467 656 4.5 35.1
Mali 12.1f 63.0f 26 47 .. 20.3 42 86 160 9.4 81.9
Mauritania .. .. 11 .. .. .. .. 30 .. .. ..
Mozambique 7.9 35.5 .. 74 217 16.0 .. .. 2,224 .. 239.5
Myanmar 1.1d 21.1d 169 195 59d ..g 117 208 243 1.4 ..
Nepal 25.8 60.8 232 219 397 6.8 363 464 510 4.2 287.3
Niger 6.9e 65.7f 7 23 86f 14.7i 35 50 66 3.8 10.6
Rwanda 39.4 63.9 4 27 218 24.6 .. 104 699 .. 51.8
Samoa 59.6 77.9 36 41 116 14.7 68 88 129 5.0 ..
Sao Tome and Principe 42.6 73.1 .. 10 8 -1.2 6 7 15 8.3 2.0
Senegal 18.4e 49.2f 168 152 637f 19.4h 280 389 875e 14.9e 126.0
Sierra Leone 9.7 47.4 57 10 25 5.6 38 16 37 6.6 31.9
Solomon Islands 22.9 72.3 17 4 52 46.5 12 5 16f .. 3.3
Somalia .. .. .. .. .. .. .. .. .. .. ..
Sudan 3.2 76.3 8 5 299 64.8 29 38 420 39.1 80.2
Timor-Leste .. .. _ _ .. .. .. .. .. .. ..
Togo 4.0f 15.5f 13 11 44f 16.8i 53 60 150 8.4 15.7
Tuvalu .. .. .. .. .. .. 1 1 2 2.9 ..
Uganda 25.4 70.6 78 165 683 17.0 160 193 817 19.3 171.3
United Rep. of Tanzania 24.6 64.3 502 381 1192 12.8 285 459 714 5.2 372.6
Vanuatu 61.0e 76.4e 45 69 142e 11.9h 44 58 101 7.7 10.9
Yemen 6.6 40.1 50 73 496 33.5 61 73 434 25.4 147.7
Zambia 2.2 40.7 .. 67 98 7.7 163 457 710 7.5 21.6
LDCs 5.9 43.4 2,507 3,243 8,817 14.1 4,030 5,773 14,649 12.7 5,480.5
All developing countries 5.5 34.6 115,135 143,368 323,542 11.8 160,534 217,204 352,303 6.7 179,964.3
Source: UNdata based on UNWTO (World Tourism Organisation) database, May 2011; UNCTAD, UNCTADstat database, June 2011; World Travel and Tourism


Council (WTTC), June 2011.
a Gross Tourism Receipts means Tourism expenditure in the country = Travel and passenger transport or travel only, according to data availability.
b Tourist Arrivals: overnight visitors;
c Tourism employment: Travel and tourism Total Direct contribution to Employment;
d 2006; e 2007; f 2008; g 2000–2006; h 2000–2007; i 2000–2008.




The Least Developed Countries Report 2011154


26. Financial flows to LDCs in current and constant dollars
(Net disbursements)


Millions of dollars, current Millions of dollars, 2009e


1985 1990 2000 2007 2008 2009 1985 1990 2000 2007 2008 2009
Concessional loans and grantsa 9,335 16,517 12,432 32,973 38,661 40,149 24,649 25,522 18,915 33,714 37,493 40,149


DAC countries 8,689 15,942 12,259 32,547 37,976 39,601 23,024 24,647 18,665 33,283 36,849 39,601


of which: Bilateral 5,444 9,812 7,899 19,683 23,407 24,332 14,353 15,136 11,991 20,029 22,670 24,332
Multilateral 3,246 6,130 4,360 12,864 14,569 15,269 8,671 9,511 6,674 13,254 14,180 15,269


Non-DAC countries 646 575 173 427 685 548 1,625 875 250 431 644 548


ODA grants total 6,699 12,130 10,407 30,339 35,266 36,851 17,925 18,776 16,090 31,118 34,319 36,851


ODA loans total, net 2,636 4,387 2,025 2,634 3,395 3,298 6,724 6,746 2,825 2,596 3,174 3,298


Technical cooperation 2,124 3,232 2,653 3,611 4,115 4,419 5,686 4,993 3,927 3,724 3,978 4,419


Otherb 7,212 13,285 9,779 29,362 34,546 35,730 18,963 20,529 14,988 29,990 33,515 35,730


Non-concessional flows 429 741 1,047 1,223 7,223 6,986 1,279 1,145 1,741 1,236 7,027 6,986


Total other official flows, net 773 724 342 -629 1,703 1,722 2,185 1,120 671 -650 1,681 1,722


DAC countries 744 727 342 -636 1,669 1,697 2,113 1,124 671 -657 1,650 1,697


of which: Bilateral 497 692 345 -342 1,322 948 1,474 1,072 658 -358 1,312 948
Multilateral 247 36 -3 -295 347 749 640 52 13 -299 338 749


Non-DAC Countries 28 -3 .. 7 35 25 71 -4 .. 7 31 25


Total private flows, net -344 17 705 1,853 5,520 5,264 -906 26 1,070 1,885 5,346 5,264


of which: Export credits, netc -64 250 8 1,366 861 2,486 -169 385 12 1,390 834 2,486
Direct investment -329 -527 52 753 1,223 1,011 -868 -813 79 767 1,185 1,011


Otherd 50 294 645 -266 3,435 1,767 131 454 979 -271 3,327 1,767


Total Financial flows 9,764 17,258 13,479 34,197 45,884 47,135 25,927 26,668 20,656 34,950 44,520 47,135


Source: UNCTAD secretariat calculations based on OECD/DAC, International Development Statistics, online data, 21 July 2011.
a Total net ODA;
b Grants (excluding technical assistance grants) and loans;
c Bank and non-bank net export credits;
d Portfolio investment corresponds to bonds and equities;
e Data for total net private flows in constant 2009 dollars has been calculated by applying an ad-hoc deflator, DAC countries in 2009=100.




155ANNEX. Statistical Tables on the Least Developed Countries


27. Distribution of financial flows to LDCs and to all developing countries
(Percentage)


Country To least developed countries To developing countries


1985 1990 2000 2007 2008 2009 1985 1990 2000 2007 2008 2009
Concessional loans and grantsa 95.6 95.7 92.2 96.4 84.3 85.2 71.4 70.6 36.0 25.4 46.9 34.2
DAC countries 89.0 92.4 90.9 95.2 82.8 84.0 64.7 63.3 35.5 24.5 44.2 32.7
of which: Bilateral 55.7 56.9 58.6 57.6 51.0 51.6 47.3 47.6 26.7 17.5 32.5 22.6
Multilateral 33.2 35.5 32.3 37.6 31.8 32.4 17.4 15.7 8.8 7.0 11.8 10.2
Non DAC countries 6.6 3.3 1.3 1.2 1.5 1.2 6.7 7.3 0.5 0.9 2.7 1.5
ODA grants total 68.6 70.3 77.2 88.7 76.9 78.2 53.0 55.0 29.3 25.1 44.3 30.7
ODA loans total, net 27.0 25.4 15.0 7.7 7.4 7.0 18.4 15.6 6.7 0.3 2.6 3.5
Technical cooperation 21.7 18.7 19.7 10.6 9.0 9.4 17.4 17.0 10.3 3.8 7.1 5.1
Otherb 73.9 77.0 72.5 85.9 75.3 75.8 54.0 53.6 25.6 21.5 39.9 29.1
Non-concessional flows 4.4 4.3 7.8 3.6 15.7 14.8 28.6 29.4 64.0 74.6 53.1 65.8
Total other official flows, net 7.9 4.2 2.5 -1.8 3.7 3.7 23.4 22.6 2.8 1.6 5.9 10.3
DAC countries 7.6 4.2 2.5 -1.9 3.6 3.6 23.9 22.6 2.8 1.6 5.9 10.3
of which: Bilateral 5.1 4.0 2.6 -1.0 2.9 2.0 7.6 10.0 -3.9 -1.5 -0.4 2.3
Multilateral 2.5 0.2 0.0 -0.9 0.8 1.6 16.3 12.6 6.7 3.0 6.3 8.0
Non-DAC Countries 0.3 0.0 .. 0.0 0.1 0.1 -0.6 -0.03 .. 0.0 0.0 ..
Total private flows, net -3.5 0.1 5.2 5.4 12.0 11.2 5.2 6.8 61.2 73.1 47.2 55.5
of which: Export credits, netc -3.4 -3.1 0.4 2.2 2.7 2.1 3.2 -1.0 4.2 3.1 3.0 0.8
Direct investment -0.7 1.4 0.1 4.0 1.9 5.3 13.7 31.4 55.6 42.0 66.7 42.0
Otherd 0.5 1.7 4.8 -0.8 7.5 3.7 -11.7 -23.6 1.4 28.0 -22.5 12.7
Total Financial flows 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
For source and notes, see table 26.




The Least Developed Countries Report 2011156


28. Share of LDCs in financial flows to all developing countries, by type of flow
(Percentage)


1985 1990 2000 2007 2008 2009


Concessional loans and grantsa 29.5 29.1 26.9 31.9 31.5 32.6
DAC countries 30.2 31.3 26.9 32.6 32.8 33.6
of which: Bilateral 25.9 25.6 23.1 27.5 27.6 29.9
Multilateral 42.1 48.7 38.5 45.3 47.3 41.7
Non DAC countries 21.8 9.8 28.0 12.1 9.8 10.2
ODA grants total 28.5 27.5 27.7 29.7 30.4 33.3
ODA loans total, net 32.3 35.0 23.7 241.4 50.0 26.5
Technical cooperation 27.6 23.6 20.0 23.1 22.3 23.9
Otherb 30.1 30.9 29.7 33.5 33.2 34.1
Non-concessional flows 3.4 3.1 1.3 0.4 5.2 2.9
Total other official flows, net 7.5 4.0 9.6 11.0 4.6
DAC countries 7.0 4.0 9.6 10.8 4.6
of which: Bilateral 14.8 8.6 -6.9 5.8 11.6
Multilateral 3.4 0.4 0.0 2.1 2.6
Non-DAC Countries .. 12.7 .. .. .. ..
Total private flows, netc .. 0.3 0.9 0.6 4.5 2.6
of which: export credits, netd .. 66.2 1.0 6.0 15.7 36.5
Direct investment .. 1.0 0.0 0.8 0.5 1.6
Othere .. .. 35.3 .. .. 3.9
Total Financial flows 22.0 21.5 10.5 8.4 17.6 13.1
Note: No percentage is shown when either the net flow to all LDCs or the net flow to all developing countries in a particular year is negative.
For other notes and sources, see table 26.




157ANNEX. Statistical Tables on the Least Developed Countries


29. Net ODAa from individual DAC member countries to LDCs


Donor Countryb
Percentage of GNI Millions of dollars


%
change


1985 1990 2000 2007 2008 2009 1985 1990 2000 2007 2008 2009
2009/
2000


Luxembourg 0.00 0.08 0.22 0.35 0.38 0.41 0 10 39 146 164 153 292.2
Denmark 0.32 0.35 0.36 0.34 0.32 0.34 190 461 563 1,078 1,109 1,098 95.1
Sweden 0.28 0.32 0.22 0.29 0.31 0.34 298 765 541 1,373 1,555 1,398 158.4
Norway 0.38 0.46 0.27 0.35 0.33 0.33 242 530 443 1,347 1,478 1,258 183.9
Ireland 0.07 0.05 0.14 0.27 0.30 0.28 14 21 121 607 680 512 324.3
Netherlands 0.28 0.28 0.21 0.23 0.24 0.21 371 823 828 1,819 2,054 1,627 96.5
Belgium 0.27 0.18 0.11 0.17 0.19 0.20 227 363 253 776 954 957 278.0
Finland 0.17 0.23 0.10 0.15 0.15 0.19 92 317 117 365 410 451 284.6
United Kingdom 0.10 0.08 0.10 0.14 0.16 0.18 455 832 1,539 4,064 4,295 3,922 154.8
Switzerland 0.11 0.13 0.10 0.11 0.11 0.14 120 322 279 492 500 699 150.0
France 0.17 0.18 0.09 0.11 0.11 0.12 945 2,277 1,267 2,973 3,164 3,273 158.3
Spain 0.00 0.04 0.03 0.08 0.10 0.12 0 188 185 1,128 1,546 1,704 823.4
Canada 0.17 0.13 0.05 0.11 0.13 0.11 593 737 356 1,571 1,862 1,482 316.6
Germany 0.12 0.10 0.07 0.09 0.10 0.10 877 1,760 1,354 3,041 3,747 3,390 150.4
DAC Countries, Total 0.09 0.09 0.06 0.08 0.09 0.10 8,021 15,096 13,793 32,294 37,839 37,443 171.5
New Zealand 0.04 0.04 0.07 0.07 0.08 0.10 10 18 33 84 101 104 216.3
Portugal 0.00 0.11 0.13 0.09 0.10 0.09 0 85 153 206 232 211 37.5
Austria 0.06 0.06 0.06 0.07 0.07 0.09 42 102 115 255 292 348 202.9
Australia 0.08 0.05 0.07 0.07 0.08 0.08 148 171 294 690 765 728 147.6
United States 0.04 0.04 0.02 0.04 0.06 0.07 1,779 2,190 2,009 6,141 8,273 9,404 368.1
Japan 0.08 0.06 0.06 0.06 0.05 0.06 1,134 1,750 2,699 2,515 2,608 3,218 19.2
Italy 0.11 0.12 0.05 0.06 0.07 0.05 485 1,374 515 1,298 1,662 1,139 121.4
Greece 0.00 0.00 0.02 0.04 0.05 0.04 0 0 29 110 154 117 296.9
Korea 0.00 0.00 0.01 0.02 0.03 0.03 0 0 61 213 236 251 313.2
Source: UNCTAD secretariat calculations based on OECD/DAC, International Development Statistics, online data, 22 July 2011; UN DESA, UNdata, UN National


Account database for GNI current dollars.
a Net disbursements including imputed flows through multilateral channels.
b Ranked in descending order of the ODA/GNI ratio in 2009.




The Least Developed Countries Report 2011158


30. Bilateral ODA from DAC, non-DAC member countries and multilateral agencies to LDCs
(Millions of dollars)


Country
Net disbursements Commitments


1985 1990 2000 2007 2008 2009 1985 1990 2000 2007 2008 2009
Bilateral Donors: DAC
Australia 58.2 104.5 205.8 526.3 646.7 587.7 59.1 97.0 217.3 521.0 852.4 400.5
Austria 10.6 57.5 60.7 50.2 106.7 98.0 10.7 127.6 56.1 49.4 114.7 97.3
Belgium 177.6 269.9 153.5 493.0 540.8 613.7 82.8 269.9 158.6 697.3 642.6 854.4
Canada 329.2 391.1 194.9 1,172.1 1,219.1 1,155.6 351.7 353.6 264.8 1,298.1 1,454.3 1,536.3
Denmark 126.0 294.9 373.4 716.3 745.6 796.0 148.6 260.6 598.4 580.5 645.5 769.3
Finland 60.5 194.6 65.6 208.0 232.6 268.0 125.4 129.8 44.6 285.9 330.8 452.3
France 717.8 1,850.6 841.7 1,409.8 1,307.8 1,104.7 894.8 1,475.7 888.0 1,643.9 1,695.4 1,183.3
Germany 578.6 1,154.5 662.9 1,267.5 1,758.4 1,641.8 834.9 1,317.4 496.0 1,416.6 2,076.5 1,707.2
Greece .. .. 1.8 27.3 26.0 29.0 .. .. 1.8 27.3 26.0 29.0
Ireland 10.4 13.9 98.3 465.0 526.9 412.4 10.4 13.9 98.3 465.0 526.9 412.4
Italy 412.5 962.5 239.4 305.3 465.2 375.7 522.2 840.5 268.8 319.8 613.6 344.1
Japan 561.8 1,066.3 1,308.5 1,872.9 1,418.2 1,895.8 632.1 1,142.0 1262.1 2,828.7 2,349.3 2,779.0
Korea .. 0.2 21.2 121.0 144.2 161.2 .. 0.3 38.3 311.5 479.2 434.9
Luxembourg .. 7.4 32.2 105.1 117.6 108.8 .. .. 31.6 105.1 117.6 108.8
Netherlands 252.2 583.0 553.9 1,185.7 1,361.0 1,094.6 250.7 671.3 609.4 1,235.3 1,696.4 1,357.6
New Zealand 7.0 13.3 24.7 62.0 81.3 82.8 12.2 9.7 24.7 88.3 112.1 116.7
Norway 156.4 355.8 310.7 966.1 1,072.8 901.9 151.1 187.0 249.2 961.3 1,306.1 945.9
Portugal .. 84.1 124.9 130.8 134.5 136.4 .. .. 270.2 125.8 135.0 165.6
Spain .. 91.0 65.6 436.1 707.9 991.1 .. .. 90.3 478.8 883.5 910.7
Sweden 194.2 521.3 337.3 748.5 902.7 807.7 204.4 321.0 295.9 540.4 652.6 1,171.2
Switzerland 86.0 230.0 163.1 295.3 290.6 471.0 136.3 212.7 202.6 357.5 365.2 411.9
United Kingdom 281.5 472.9 1,015.3 2,318.1 2,572.8 2,564.6 232.2 479.9 1,026.7 2,319.9 2,595.3 4,174.2
United States 1,423.0 1,093.0 1,043.5 4,800.7 7,027.3 8,033.4 1,358.2 1,145.9 1,218.1 6,687.3 1,1015.9 9,883.1
Total 5,443.6 9,812.3 7,898.7 19,682.9 23,406.8 24,331.7 6,017.9 9,055.5 8,411.5 23,344.7 30,686.8 30,245.6
Bilateral Donors: non-DAC
Czech Republic .. .. 0.4 17.6 52.4 39.2 .. .. 0.4 .. .. ..
Hungary .. .. .. 25.5 4.5 10.7 .. .. .. 19.6 .. ..
Iceland .. .. 2.2 15.1 15.9 12.1
Israel .. .. 19.8 29.7 34.4 25.4 .. .. 19.8 .. .. ..
Poland .. .. 0.8 5.8 13.2 15.7 .. .. .. .. .. ..
Slovak Republic .. .. .. 19.3 25.8 0.7 .. .. .. .. .. ..
Thailand .. .. .. 49.2 161.2 29.8
Turkey .. .. 0.4 100.8 195.1 136.7 .. .. .. 100.8 .. ..
United Arab Emirates 56.0 -4.9 -0.3 45.0 0.2 201.2 23.4 7.9 .. 7.0 316.0 1,164.3
Arab Countries 590.2 575.7 149.8 92.4 169.7 68.9 806.7 533.1 199.6 .. .. ..
Other Bilateral Donors 0.0 3.9 0.0 26.4 12.7 8.1 0.0 0.0 0.0 0.0 4.9 0.0
Total 646.1 574.7 173.0 426.8 685.0 548.5 830.1 541.0 219.8 127.5 320.9 1,164.3
Multilateral Donors
AfDB + AfDF (African Dev. Bank &
Fund)


169.6 557.7 199.8 1,117.1 1,190.9 1,604.1 344.4 831.3 391.1 1,064.7 1,624.2 1,565.9


Arab Agencies 76.9 9.6 5.6 234.7 214.4 317.0 191.5 216.6 239.0 348.2 341.4 618.0
AsDF (Asian Dev. Fund) 229.6 448.2 388.4 490.1 636.8 579.9 383.7 536.4 589.5 605.3 1,092.0 1,513.7
CarDB (Carribean Dev. Bank) .. .. .. .. 11.1 14.2 .. .. .. 10.0 11.1 10.0
EU Institutions 551.8 1,158.5 1,012.3 3827.6 4511.3 3,929.3 578.9 787.5 2,027.9 3,521.9 6,351.7 4,444.3
GEF .. .. .. 73.5 64.6 92.5 .. .. .. 73.5 64.6 92.5
GAVI .. .. .. 298.7 367.4 230.4 .. .. .. 298.7 367.4 230.4
Global Fund .. .. .. 821.2 1,237.7 979.1 .. .. .. 1,229.8 1,593.3 1,763.9
IAEA .. .. .. 9.9 10.2 9.8
IBRD 0.6 .. .. .. .. .. .. .. .. .. .. ..
IDA 1,177.6 2,136.0 1,658.1 4,477.0 4,124.0 4,569.3 1,580.4 2,986.0 3,232.6 6,459.3 5,563.9 6,119.1
IDB Spec. Fund 10.7 11.7 26.4 94.3 102.7 138.9 24.7 56.0 1.8 2.7 7.2 134.0
IFAD 107.8 120.6 78.1 200.6 200.5 130.8 83.2 66.1 152.1 256.5 220.2 347.4
Trust fund +SAF+ESAF+PRGF(IMF) -108.8 297.9 57.7 47.6 599.1 1,357.7
Nordic Dev. Fund .. .. 25.0 37.5 58.4 40.2 .. .. 30.2 0.5 2.4 15.2
UNAIDS .. .. .. 29.6 18.1 20.4 .. .. .. .. 18.1 20.4
UNDP 272.3 365.1 186.6 252.3 300.6 318.4 .. .. .. .. 307.4 328.6
UNFPA 26.3 45.4 52.4 102.1 139.3 135.1 .. .. .. .. 140.2 136.1
UNHCR 201.8 197.6 172.1 38.0 44.2 66.0
UNICEF 126.5 231.7 170.7 443.3 472.0 465.3 .. .. .. 443.9 473.4 474.6
UNTA 61.5 58.1 111.6 112.8 32.0 32.0
WFP 341.5 491.7 215.9 155.9 199.7 198.1
Total 3,245.7 6,129.8 4,360.4 12,863.8 14,569.0 15,268.9 4,295.2 6,995.1 6,664.1 14,314.9 18,212.6 17,855.4
Grand Total 9,335.4 16,516.8 12,432.1 32,973.4 38,660.8 40,149.1 11,143.2 16,591.7 15,295.4 37,787.1 49,220.3 49,265.2
Source: UNCTAD secretariat calculations based on OECD DAC, International Development Statistics, online, 22 July 2011.




159ANNEX. Statistical Tables on the Least Developed Countries


31. Net ODA to LDCs from DAC member countries and multilateral agencies: Distribution by donor
and shares allocated to LDCs in total ODA to all developing countries


(Percentage)


Country
Distribution by donor


Share of LDCs in ODA flows
to all developing countries


1985 1990 2000 2007 2008 2009 1985 1990 2000 2007 2008 2009
Bilateral Donors: DAC


Australia 0.6 0.6 1.7 1.6 1.7 1.5 10.9 13.9 27.4 23.2 24.4 25.4
Austria 0.1 0.3 0.5 0.2 0.3 0.2 6.2 96.4 29.9 4.4 9.8 25.7
Belgium 1.9 1.6 1.2 1.5 1.4 1.5 64.5 49.3 32.9 40.0 39.6 38.8
Canada 3.5 2.4 1.6 3.6 3.2 2.9 33.0 23.1 17.5 38.2 36.9 37.4
Denmark 1.3 1.8 3.0 2.2 1.9 2.0 55.1 42.4 37.7 44.1 41.6 42.5
Finland 0.6 1.2 0.5 0.6 0.6 0.7 47.4 39.3 33.6 36.8 35.4 35.4
France 7.7 11.2 6.8 4.3 3.4 2.8 30.1 33.1 30.5 23.1 20.2 15.8
Germany 6.2 7.0 5.3 3.8 4.5 4.1 29.7 26.1 28.3 17.1 21.1 26.0
Greece .. .. 0.0 0.1 0.1 0.1 .. .. 11.4 18.5 14.5 16.8
Ireland 0.1 0.1 0.8 1.4 1.4 1.0 60.6 60.8 68.0 56.9 57.2 59.9
Italy 4.4 5.8 1.9 0.9 1.2 0.9 53.4 46.8 87.1 25.3 26.5 46.1
Japan 6.0 6.5 10.5 5.7 3.7 4.7 22.0 15.7 13.9 34.0 21.5 32.4
Korea .. 0.0 0.2 0.4 0.4 0.4 .. 2.0 19.4 25.7 27.5 29.5
Luxembourg .. 0.0 0.3 0.3 0.3 0.3 .. 49.6 36.6 44.1 44.9 43.7
Netherlands 2.7 3.5 4.5 3.6 3.5 2.7 33.4 31.8 26.9 26.0 27.0 23.3
New Zealand 0.1 0.1 0.2 0.2 0.2 0.2 16.3 16.4 29.2 25.1 29.3 36.6
Norway 1.7 2.2 2.5 2.9 2.8 2.2 47.7 46.9 39.6 35.1 36.6 29.7
Portugal .. 0.5 1.0 0.4 0.3 0.3 .. 81.4 71.4 55.7 39.6 52.7
Spain .. 0.6 0.5 1.3 1.8 2.5 .. 14.4 10.0 13.4 15.1 22.6
Sweden 2.1 3.2 2.7 2.3 2.3 2.0 33.5 37.8 29.0 27.4 30.8 28.9
Switzerland 0.9 1.4 1.3 0.9 0.8 1.2 37.8 41.8 31.1 26.4 21.3 30.1
United Kingdom 3.0 2.9 8.2 7.0 6.7 6.4 33.9 32.1 39.9 42.1 35.6 35.1
United States 15.2 6.6 8.4 14.6 18.2 20.0 17.6 13.1 15.9 26.5 31.1 33.5


Total 58.3 59.4 63.5 59.7 60.5 60.6 25.9 25.6 23.6 28.0 28.1 30.4
Bilateral Donors: non-DAC


Czech Republic .. .. 0.0 0.1 0.1 0.1 .. .. 7.2 30.3 57.7 61.0
Hungary .. .. .. 0.1 0.0 0.0 .. .. 92.9 76.1 47.1
Iceland .. .. 0.0 0.0 0.0 0.0 .. .. 58.0 41.0 45.5 48.6
Israel .. .. 0.2 0.1 0.1 0.1 .. .. 17.6 36.2 37.0 32.7
Poland .. .. 0.0 0.0 0.0 0.0 .. .. 10.6 5.5 32.2 28.8
Slovak Republic .. .. .. 0.1 0.1 0.0 .. .. 83.0 74.9 4.5
Thailand .. .. .. 0.1 0.4 0.1 .. .. 81.3 97.0 85.8
Turkey .. .. 0.0 0.3 0.5 0.3 .. .. 3.7 36.9 43.6 37.9
United Arab Emirates 0.6 0.0 0.0 0.1 0.0 0.5 48.7 -0.5 -0.2 10.4 0.3 24.9
Arab Countries 6.3 3.5 1.2 0.3 0.4 0.2 20.7 11.7 56.2 5.7 3.2 2.2
Other Bilateral Donors 0.0 0.0 0.0 0.1 0.0 0.0 15.8 4.6 2.5 1.6


Total 6.9 3.5 1.4 1.3 1.8 1.4 21.8 9.8 31.8 12.9 10.2 10.8
Multilateral Donors


AfDB + AfDF (African Dev. Bank & Fund) 1.8 3.4 1.6 3.4 3.1 4.0 80.7 92.5 66.5 80.6 66.1 58.3
Arab Agencies 0.8 0.1 0.0 0.7 0.6 0.8 60.5 12.9 17.9 56.4 51.3 50.2
AsDF (Asian Dev. Fund) 2.5 2.7 3.1 1.5 1.6 1.4 58.4 40.7 43.8 42.5 43.4 37.8
CarDB (Carribean Dev. Bank) .. .. .. .. 0.0 0.0 17.3 20.9
EU Institutions 5.9 7.0 8.1 11.6 11.7 9.8 42.0 45.3 30.4 37.2 40.0 35.1
GEF .. .. .. 0.2 0.2 0.2 .. .. .. 7.1 8.3 13.8
GAVI .. .. .. 0.9 1.0 0.6 .. .. .. 31.8 50.5 47.2
Global Fund .. .. .. 2.5 3.2 2.4 .. .. .. 53.8 60.4 43.8
IAEA .. .. .. 0.0 0.0 0.0 .. .. .. 17.7 17.5 19.2
IBRD 0.0 .. .. .. .. .. 1.9 .. .. .. .. ..
IDA 12.6 12.9 13.3 13.6 10.7 11.4 45.3 54.6 46.5 64.1 65.7 54.1
IDB Spec. Fund 0.1 0.1 0.2 0.3 0.3 0.3 3.0 7.6 17.2 36.7 33.2 36.6
IFAD 1.2 0.7 0.6 0.6 0.5 0.3 39.9 49.2 59.6 66.0 66.8 61.9
Trust fund +SAF+ESAF+PRGF(IMF) -1.2 1.8 0.5 0.1 1.5 3.4 36.5 92.7 -59.7 -222.8 160.6 71.9
Nordic Dev. Fund .. .. 0.2 0.1 0.2 0.1 .. .. 65.8 55.4 64.4 63.1
UNAIDS .. .. .. 0.1 0.0 0.1 .. .. 15.7 8.8 8.5
UNDP 2.9 2.2 1.5 0.8 0.8 0.8 43.2 40.2 50.0 62.0 65.5 53.7
UNFPA 0.3 0.3 0.4 0.3 0.4 0.3 20.7 25.5 40.7 48.9 52.8 40.5
UNHCR 2.2 1.2 1.4 0.1 0.1 0.2 49.4 44.0 47.8 16.8 17.9 23.7
UNICEF 1.4 1.4 1.4 1.3 1.2 1.2 45.4 39.7 30.2 46.1 48.9 43.7
UNTA 0.7 0.4 0.9 0.3 0.1 0.1 21.8 25.5 26.3 26.6 5.5 5.5
WFP 3.7 3.0 1.7 0.5 0.5 0.5 43.9 52.7 63.3 69.4 65.4 69.2


Total 34.8 37.1 35.1 39.0 37.7 38.0 42.1 48.7 40.0 46.2 48.7 43.3
Grand Total 100.0 100.0 100.0 100.0 100.0 100.0 29.5 29.1 27.7 32.5 32.2 33.4
Source: UNCTAD secretariat calculations based on OECD DAC, International Development Statistics, online, 22 July 2011.




The Least Developed Countries Report 2011160


32. Total financial flows and ODA from all sources to individual LDCs
(Net disbursements in millions of dollars)


Country
Total financial flows of which: ODA


1985 1990 2000 2007 2008 2009 1985 1990 2000 2007 2008 2009
Afghanistan -6 120 157 3,972 4,926 6,308 16 122 136 3,965 4,865 6,235
Angola 257 88 118 -287 3,550 1,898 90 266 302 248 369 239
Bangladesh 1,104 2,164 1,234 1,726 2,829 1,893 1,128 2,093 1,172 1,515 2,061 1,227
Benin 96 242 232 496 652 649 94 267 243 474 641 683
Bhutan 23 49 44 89 91 188 23 46 53 90 87 125
Burkina Faso 183 342 187 900 1,038 1,080 188 327 180 951 1,001 1,084
Burundi 152 253 79 481 488 536 137 263 93 475 526 563
Cambodia 12 41 404 1,358 1,217 954 12 41 396 675 743 722
Central African Rep. 111 256 50 188 234 247 104 249 75 177 257 242
Chad 178 312 -226 413 438 577 179 311 130 358 419 561
Comoros 50 44 -2 -41 39 44 47 45 19 44 37 51
Congo, Dem. Rep. 461 1,409 192 1,162 1,618 2,152 305 896 177 1,356 1,769 2,354
Djibouti 103 191 91 133 155 328 81 194 71 112 121 162
Equatorial Guinea 28 62 22 -207 -984 428 17 60 21 31 32 32
Eritrea 0 0 183 160 138 149 176 158 144 145
Ethiopia 777 982 680 2,491 3,177 4,049 708 1,009 686 2,578 3,328 3,820
Gambia 47 106 45 89 95 148 48 97 50 73 94 128
Guinea 105 283 329 236 228 190 113 292 153 228 328 215
Guinea-Bissau 62 133 85 102 118 135 56 126 81 122 134 147
Haiti 141 153 176 642 936 1,092 149 167 208 702 912 1,120
Kiribati 12 20 18 19 28 29 12 20 18 27 27 27
Laos 64 148 286 620 638 534 37 148 281 396 496 420
Lesotho 117 145 11 110 135 118 92 139 37 129 144 123
Liberia -294 519 632 1,884 1,638 1,671 90 114 67 701 1,251 513
Madagascar 209 429 317 1,185 2,238 1,393 185 397 320 894 843 445
Malawi 117 515 431 724 933 799 112 500 446 744 924 772
Maldives 10 38 11 123 72 64 9 21 19 37 54 33
Mali 375 471 313 927 939 971 374 479 288 1,020 964 985
Mauritania 222 218 220 316 314 326 205 236 221 346 320 287
Mozambique 326 1,046 1,176 1,808 1,889 2,036 296 997 906 1,778 1,996 2,013
Myanmar 309 115 56 123 534 358 344 161 106 198 534 357
Nepal 241 426 405 601 690 839 231 423 386 605 697 856
Niger 279 373 183 327 575 473 298 388 208 542 607 470
Rwanda 181 283 318 735 952 1,026 177 288 321 722 933 934
Samoa 20 54 28 66 81 90 19 48 27 37 40 77
Sao Tome & Principe 12 53 36 13 42 33 12 54 35 36 47 31
Senegal 302 753 480 980 1,357 1,397 285 812 429 872 1,064 1,018
Sierra Leone 55 63 185 372 388 461 64 59 181 545 379 450
Solomon Islands 22 58 55 256 263 215 21 46 68 246 224 206
Somalia 377 486 100 391 766 668 351 491 101 384 758 662
Sudan 1,113 730 315 2,148 2,404 2,333 1,125 813 220 2,112 2,384 2,289
Timor-Leste -5 -5 649 279 281 220 0 231 278 278 217
Togo 90 256 60 194 313 554 111 258 70 121 330 499
Tuvalu 3 5 0 11 17 18 3 5 4 12 16 18
Uganda 220 660 828 1,833 1,875 1,953 179 663 853 1,737 1,641 1,786
United Rep. of Tanzania 549 1,118 1,228 2,379 2,515 3,136 477 1,163 1,063 2,820 2,331 2,934
Vanuatu 38 148 71 47 156 173 22 50 46 57 92 103
Yemen 393 326 287 323 1,271 1,052 388 400 263 236 305 500
Zambia 520 578 701 1,300 1,598 1,151 319 475 795 1,008 1,116 1,269
LDCs 9,764 17,258 13,479 34,197 45,883.9 47,135 9,335 16,517 12,432 32,973 38,661 40,149
All Developing countries 44380 80,351 125,229 396,726 252,992.1 355,634 31,686 56,722 44,870 101,526 120,021 120,291
Source: UNCTAD secretariat calculations based on OECD/DAC, International Development Statistics, online, July 2011.




161ANNEX. Statistical Tables on the Least Developed Countries


33. Bilateral and multilateral net ODA disbursements to individuals LDCs


Country


Per
capita


Net
disburse-


ments


of which:
technical
coopera-


tion


Bilateral
ODAa


of
which:
Grants


Multi-
lateral
ODA


of
which:
Grants


Per
capita


Net
disburse-


ments


of which:
technical
coopera-


tion


Bilateral
ODAa


of
which:
Grants


Multi-
lateral
ODA


of
which:
Grants


Dollars $ million As percentage of total net ODA dollars $ million As percentage of total net ODA


1998-1999 2008-2009
Afghanistanb 7.5 148.3 17.5 64.9 64.4 35.1 35.0 200.5 5,550.2 15.0 85.1 85.1 14.9 12.7
Angola 26.3 361.4 15.2 64.5 55.9 35.5 25.3 16.7 304.2 21.2 59.1 60.0 40.9 36.3
Bangladesh 8.7 1,190.7 15.7 52.9 59.8 47.1 11.8 10.2 1,644.2 12.7 47.6 75.0 52.4 18.7
Beninb 32.7 208.0 31.5 62.6 63.4 37.4 20.4 75.3 662.1 13.3 48.2 49.1 51.8 32.4
Bhutan 114.0 61.3 34.4 75.0 69.5 25.0 18.9 153.1 106.0 14.1 49.9 49.5 50.1 26.3
Burkina Fasob 35.7 399.1 21.3 59.4 59.1 40.6 17.3 67.3 1,042.4 10.0 44.9 44.8 55.1 32.0
Burundib 11.2 71.3 23.6 67.2 77.3 32.8 24.0 66.5 544.3 11.5 47.7 62.0 52.3 125.0
Cambodia 24.8 307.3 35.0 64.8 65.5 35.2 17.1 49.9 732.6 20.9 64.5 58.9 35.5 22.3
Central African Rep.b 32.8 119.0 27.1 48.6 57.6 51.4 45.9 57.0 249.7 7.7 45.6 48.0 54.4 153.0
Chad 22.3 177.6 23.7 42.4 42.8 57.6 21.6 44.3 490.0 7.8 64.6 66.4 35.4 41.5
Comoros 52.9 28.3 36.8 56.6 64.1 43.6 42.6 65.8 44.0 26.3 58.1 61.2 41.9 43.4
Dem. Rep.of the Congob 2.6 128.9 38.3 65.7 71.7 34.3 40.4 31.6 2,061.0 8.2 50.8 50.5 49.2 46.8
Djibouti 111.8 78.0 37.3 77.2 76.9 22.8 18.3 165.2 141.5 10.1 65.1 55.2 34.9 20.2
Equatorial Guinea 41.7 21.1 55.2 78.7 86.4 21.6 26.6 47.6 31.8 48.5 68.6 73.8 31.4 38.5
Eritrea 45.5 158.0 16.5 72.2 50.0 27.8 10.2 28.8 144.2 6.2 40.8 40.7 59.2 48.0
Ethiopiab 10.4 651.6 17.4 55.1 54.1 44.9 23.6 43.7 3,573.9 4.5 51.9 50.6 48.1 32.3
Gambiab 29.8 36.8 32.1 38.6 44.6 61.4 39.1 65.9 110.9 7.6 24.9 27.1 75.1 141.1
Guinea 36.7 298.5 17.2 50.5 47.1 49.5 25.6 27.3 271.6 16.7 69.5 76.1 30.5 34.8
Guinea-Bissaub 58.8 74.1 29.8 65.4 65.0 34.6 25.2 88.1 140.3 15.9 37.4 37.4 62.6 71.0
Haitib 39.8 334.9 29.5 60.9 49.0 39.1 16.8 102.1 1,016.3 14.6 62.1 62.2 37.9 63.2
Kiribati 233.3 19.1 44.3 93.7 93.7 6.3 6.6 279.0 27.2 36.9 78.9 78.9 21.3 22.2
Lao People's Dem. Rep. 54.4 284.9 25.1 66.2 63.2 33.8 7.7 73.1 457.8 17.8 68.8 49.6 31.2 27.1
Lesotho 25.0 46.1 32.6 60.5 63.3 39.5 29.7 64.8 133.4 8.8 52.9 53.3 47.1 41.9
Liberiab 32.6 83.0 22.6 45.8 53.4 54.2 55.0 227.7 882.0 3.1 67.3 85.0 32.7 16.5
Madagascarb 28.7 419.3 22.3 62.8 67.4 37.2 18.7 33.3 644.1 12.4 40.5 41.3 59.5 26.9
Malawib 39.1 440.6 18.2 49.6 50.9 50.4 20.4 56.3 848.0 9.7 51.9 52.7 48.1 36.0
Maldives 104.8 27.8 27.5 71.9 71.4 28.1 11.1 142.4 43.8 11.9 76.7 49.5 23.3 11.9
Malib 34.3 350.4 30.8 66.8 69.1 33.2 17.4 75.8 974.6 13.5 56.8 59.3 43.2 20.5
Mauritaniab 76.7 191.5 18.8 39.3 49.1 60.7 47.2 93.2 303.2 16.8 50.5 46.7 49.5 21.9
Mozambiqueb 52.9 929.2 16.5 70.1 76.2 29.9 47.8 88.6 2,004.7 9.1 65.7 64.9 34.3 14.8
Myanmar 1.7 76.6 48.1 61.0 72.5 39.0 38.7 8.9 445.2 8.3 75.9 77.1 24.1 24.0
Nepal 15.9 374.6 32.5 57.5 56.2 42.5 11.4 26.7 776.1 14.2 60.7 69.4 39.3 39.8
Nigerb 22.8 239.3 26.7 55.7 63.4 44.3 21.8 35.9 538.4 13.4 49.0 50.8 51.0 40.8
Rwandab 50.8 361.6 16.7 53.9 56.7 46.1 19.1 94.7 933.8 9.6 52.3 52.3 47.7 39.8
Samoa 168.8 29.5 65.5 88.2 88.8 11.8 6.7 329.1 58.9 31.9 62.2 61.0 37.8 26.5
Sao Tome & Principeb 203.7 27.8 49.3 67.0 68.1 33.0 17.7 241.7 39.0 39.5 59.2 78.0 40.8 30.5
Senegalb 54.4 518.0 25.0 68.6 70.7 31.4 14.9 84.1 1,040.9 20.1 53.4 53.4 46.6 18.2
Sierra Leoneb 22.0 90.0 13.8 64.5 63.3 35.5 25.5 73.6 414.4 12.6 44.7 45.3 55.3 39.3
Solomon Islands 103.0 41.1 43.5 56.6 58.0 43.4 13.7 416.2 215.2 51.9 97.7 98.0 2.3 4.2
Somalia 13.8 97.5 20.6 60.5 63.3 39.5 39.9 78.6 710.0 1.7 76.3 76.3 23.7 23.7
Sudan 6.7 226.2 13.0 74.2 75.8 25.8 26.6 55.9 2,336.2 5.8 83.4 81.4 16.6 15.4
Timor-Leste .. 77.2 26.4 96.4 96.4 7.2 7.2 221.5 247.2 34.9 83.6 83.6 16.4 16.4
Togob 20.0 99.9 27.0 58.8 67.8 41.2 12.6 63.4 414.3 8.0 65.0 62.3 35.0 42.1
Tuvalu 633.3 6.0 53.4 70.5 70.5 29.5 6.3 1,696.5 16.8 19.8 89.5 89.5 10.5 8.9
Ugandab 27.0 630.1 18.6 58.9 61.3 41.1 31.6 53.2 1,713.6 5.9 59.1 58.6 40.9 20.4
United Rep. of Tanzaniab 30.3 994.7 17.0 69.7 70.0 30.3 8.4 61.1 2,632.4 5.8 52.8 51.8 47.2 15.1
Vanuatu 211.5 38.9 59.3 70.7 72.0 29.3 6.2 412.9 97.8 29.1 95.8 96.5 4.3 6.1
Yemen 23.7 412.8 12.7 41.9 40.1 58.1 6.8 17.3 402.6 14.9 71.8 75.8 28.2 21.9
Zambiab 48.2 485.5 19.3 61.4 68.6 38.6 13.0 93.3 1,192.5 7.0 59.0 60.0 41.0 23.3
LDCs 19.1 12,473.2 21.5 60.6 62.2 39.4 21.1 47.7 39,404.9 10.8 62.1 63.6 37.9 27.9
All developing countries 10.1 47,502.1 28.5 72.7 65.9 27.3 14.5 22.0 120,155.7 15.0 72.9 72.2 27.1 20.4
Source: UNCTAD secretariat calculations based on OECD DAC, International Development Statistics, online, July 2011; UNCTADSTAT, July 2011.
Note: Countries have been ranked in descending order of total net ODA disbursements received in 2008-2009.
a Includes ODA from DAC and non-DAC donors;
b LDCs that have reached the HIPC completion point ( World Bank, Spring 2011).




The Least Developed Countries Report 2011162


34. Total official flowsa and private grants, gross disbursement, by sector


LDCs, total
Gross disbursement


(Millions of dollars, current)
Annual average growth rate


(% in constant 2009 dollar)


Sectors 2002 2003 2004 2005 2006 2007 2008 2009
2002-
2009


2006 2007 2008 2009


All Sectors 16,346.6 22,922.7 25,342.8 28,165.9 58,810.3 34,011.3 40,629.0 43,164.0 8.3 102.0 -46.3 13.3 9.2


Social infrastructure & services 4,742.0 6,739.0 8,651.5 10,781.2 11,768.7 14,730.4 16,704.5 17,897.3 13.7 5.9 14.7 8.4 10.6


Economic infrastructure and
services


1,929.5 2,374.9 3,090.4 3,213.6 3,148.2 4,143.6 5,029.8 5,636.1 9.5 -4.9 22.3 14.7 14.6


Production sectors 1,152.9 1,244.4 1,443.7 1,647.2 1,686.3 2,208.7 3,094.0 3,625.0 11.6 -1.4 21.4 32.0 21.7


Multisector / cross-cutting 662.4 943.0 1,012.1 1,109.7 1,528.9 1,709.1 1,833.0 1,897.2 10.1 32.8 2.7 1.0 7.0


Commodity aid / general prog. Ass. 2,364.5 2,015.6 2,666.3 2,618.9 3,027.1 3,295.5 4,716.7 5,474.9 7.9 11.7 -0.1 38.0 20.8


Action relating to debt 2,969.5 6,685.5 5,222.0 3,575.1 33,695.0 3,682.8 3,023.6 3,380.8 -7.5 808.3 -89.2 -24.1 10.3


Humanitarian aid 1,359.6 2,080.6 2,430.9 3,987.3 3,454.6 3,593.7 5,909.1 4,955.5 14.8 -17.1 -2.6 58.2 -14.1


Administrative costs of donors 11.6 22.4 45.3 54.7 62.9 69.4 85.4 108.9 24.1 9.2 0.6 14.5 31.0


Support to ngo's 110.3 199.8 315.7 270.2 111.5 97.4 104.2 69.6 -17.2 -58.9 -16.0 -3.9 -34.3


Refugees in donor countries 110.9 77.3 146.8 509.5 46.6 20.9 16.1 0.8 -49.3 -91.4 -58.7 -28.2 -95.1


Unallocated/unspecified 933.4 540.1 318.1 398.4 280.4 459.7 112.7 117.9 -26.3 -31.1 47.9 -76.6 4.0


Other developing countries
(excluding LDCs)


Gross disbursement
(Millions of dollars, current)


Annual average growth rate
(% in constant 2009 dollar )


Sectors 2002 2003 2004 2005 2006 2007 2008 2009
2002-
2009


2006 2007 2008 2009


All Sectors 44,075.1 52,759.0 58,730.0 89,380.2 100,481.6 90,730.0 97,868.0 124,172.7 9.6 9.9 -16.2 2.1 29.3


Social infrastructure & services 13,390.7 19,725.7 20,496.0 25,952.2 29,880.6 33,121.2 37,969.5 51,002.6 12.6 12.5 2.6 9.5 37.3


Economic infrastructure and
services


8,166.6 8,109.6 10,591.6 11,641.0 13,087.9 15,552.1 17,850.2 30,552.8 13.2 10.2 11.4 9.1 72.3


Production sectors 3,741.0 3,975.4 5,216.9 4,897.6 6,116.9 8,274.8 8,741.7 10,280.2 10.5 18.5 26.9 1.4 20.6


Multisector / cross-cutting 2,266.5 2,579.0 3,744.5 3,661.4 4,069.6 5,052.5 6,290.7 9,034.9 13.7 8.8 14.0 17.9 45.8


Commodity aid / general prog. Ass. 2,315.8 2,993.7 1,898.4 2,138.7 2,335.7 2,312.8 2,997.6 4,196.1 1.8 7.1 -5.0 20.4 42.6


Action relating to debt 2,237.1 4,566.9 4,533.6 24,858.9 28,625.9 8,527.1 7,732.4 2,574.8 1.0 13.1 -71.8 -16.7 -65.7


Humanitarian aid 1,068.0 1,812.1 2,568.9 3,931.1 3,804.7 3,914.0 4,154.5 4,937.3 15.1 -6.5 -5.9 1.7 22.1


Administrative costs of donors 1,370.9 1,731.3 2,301.1 3,142.8 3,754.9 5,505.5 6,289.2 6,272.6 20.8 15.5 35.6 8.9 1.5


Support to ngo's 453.9 750.3 1,116.2 787.3 1,269.0 1,287.9 1,468.8 653.1 1.9 57.5 -8.6 6.0 -54.2


Refugees in donor countries 269.3 434.6 1,033.0 1,447.0 1,327.0 1,322.5 2,121.1 2,766.2 27.7 -11.5 -8.9 50.2 35.7


Unallocated/unspecified 8,795.2 6,080.3 5,229.9 6,922.4 6,209.4 5,859.7 2,252.4 1,902.2 -19.7 -10.4 -13.2 -64.2 -16.1


Source: OECD, Creditor Reporting System, database, 3 August 2011.
a Include Official Development Assistance and Other Official Flows.




163ANNEX. Statistical Tables on the Least Developed Countries


35 . Foreign direct investment: inflow to and outflow from LDCs
(Millions of dollars)


Country
FDI inflow FDI outflow


1985 1990 2000 2008 2009 2010 1985 1990 2000 2008 2009 2010
Afghanistan .. .. 0.2 300.0 185.0 75.7 .. .. .. .. .. ..


Angola 278.0 -334.8 878.6 16,581.0 13,100.6 9,941.6 .. 0.9 -21.4 2,569.6 8.3 1,163.3


Bangladesh -6.7 3.2 578.7 1,086.3 716.0 913.3 .. 0.5 2.0 9.3 15.2 15.4


Benin -0.1 62.4 59.7 173.8 92.5 110.9 .. 0.3 3.6 -2.7 -3.5 7.1


Bhutan .. 1.6 0.0 29.7 36.4 11.7 .. .. .. .. .. ..


Burkina Faso -1.4 0.5 23.1 137.1 171.4 37.1 0.0 -0.6 0.2 0.3 0.5 0.4


Burundi 1.6 1.3 11.7 13.6 9.9 14.1 -1.1 0.0 0.0 .. .. ..


Cambodia .. .. 148.5 815.2 532.5 782.6 .. .. 16.3 24.2 -1.4 17.0


Central African Republic 3.0 0.7 0.8 117.1 42.3 72.0 0.6 3.8 .. .. .. ..


Chad 53.7 9.4 115.2 233.6 461.8 781.4 0.3 0.1 .. .. .. ..


Comoros .. 0.4 0.1 7.5 9.1 9.4 .. 1.1 .. .. .. ..


Dem. Rep. of the Congo 69.2 -14.5 72.0 1,726.8 951.4 2,939.3 .. .. -1.8 54.1 30.3 7.2


Djibouti 0.2 0.1 3.3 234.0 100.0 26.8 .. .. .. .. .. ..


Equatorial Guinea 2.4 11.1 154.5 -793.9 1,636.2 695.0 .. 0.1 -3.6 .. .. ..


Eritrea _ _ 27.9 -0.2 0.0 55.6 _ _ .. .. .. ..


Ethiopia _ _ 134.6 108.5 93.6 184.0 .. .. .. .. .. ..


Gambia -0.5 14.1 43.5 70.1 47.4 37.4 .. .. .. .. .. ..


Guinea 1.1 17.9 9.9 381.9 140.9 302.9 0.0 0.1 .. 126.1 .. ..


Guinea-Bissau 1.4 2.0 0.7 6.0 14.0 8.8 .. .. .. 0.3 0.2 0.1


Haiti 4.9 8.0 13.3 29.8 38.0 150.0 .. -8.0 .. .. .. ..


Kiribati 0.2 0.3 17.6 1.9 2.2 3.7 .. .. .. .. .. 0.3


Lao People's Dem. Rep. -1.6 6.0 34.0 227.7 156.7 350.0 -0.2 0.2 4.1 .. .. 5.7


Lesotho 4.8 16.1 31.5 55.6 48.0 54.7 .. .. .. .. .. ..


Liberia -16.2 225.2 20.8 200.0 378.0 248.0 245.0 -3.1 779.9 381.9 363.6 30.3


Madagascar -0.2 22.4 83.0 1,179.8 542.6 860.4 .. 1.3 .. .. .. ..


Malawi 0.5 23.3 39.6 170.0 60.4 140.0 .. .. -0.6 1.3 1.3 1.3


Maldives 1.2 5.6 13.0 12.0 9.6 163.8 .. .. .. .. .. ..


Mali 2.9 5.7 82.4 179.7 109.1 147.6 .. 0.2 4.0 2.5 3.7 4.5


Mauritania 7.0 6.7 40.1 338.4 -38.3 13.6 .. .. .. 4.1 .. 4.1


Mozambique 0.3 9.2 139.2 591.6 881.2 788.9 .. .. 0.2 0.0 2.8 0.8


Myanmar .. 225.1 208.0 283.5 323.0 756.3 .. .. .. .. .. ..


Nepal 0.7 5.9 -0.5 1.0 38.6 39.0 .. .. .. .. .. ..


Niger -9.4 40.8 8.4 565.9 738.9 946.9 1.9 0.0 -0.6 24.4 10.5 14.3


Rwanda 14.6 7.7 8.1 103.4 118.7 42.3 .. .. .. 13.6 13.6 ..


Samoa 0.4 6.6 -1.5 13.0 1.4 2.2 .. .. .. 0.0 1.5 ..


Sao Tome and Principe .. .. 3.8 32.5 35.8 3.0 .. .. .. 6.9 4.4 4.8


Senegal -18.9 56.9 62.9 272.4 207.5 237.2 3.1 -9.5 0.6 9.0 14.5 154.1


Sierra Leone -31.0 32.4 38.9 53.0 33.4 35.8 .. 0.1 .. .. .. 5.0


Solomon Islands 0.7 10.4 1.4 75.5 173.0 237.8 .. .. 0.1 11.9 13.9 2.3


Somalia -0.7 5.6 0.3 87.0 108.0 112.0 .. .. .. .. .. ..


Sudan -3.0 -31.1 392.2 2,600.5 3,034.1 1,600.0 .. .. .. 98.2 45.0 51.3


Timor-Leste _ _ _ 37.8 18.3 279.6 _ _ _ .. .. ..


Togo 16.3 22.7 41.5 23.9 50.1 41.1 .. .. 0.4 -15.9 -10.3 -30.7


Tuvalu .. .. -0.9 1.7 2.2 1.5 .. .. .. .. .. ..


Uganda -4.0 -5.9 180.8 787.4 798.8 847.6 .. .. .. .. .. ..


United Rep. of Tanzania 14.5 0.0 282.0 679.3 645.0 700.0 .. .. .. .. .. ..


Vanuatu 4.6 13.1 20.3 32.9 27.2 38.9 .. .. .. -0.5 0.1 1.1


Yemen 3.2 -130.9 6.4 1,554.6 129.2 -329.0 0.5 .. -8.8 66.0 66.4 70.3


Zambia 51.5 202.8 121.7 938.6 959.4 1,041.4 .. .. .. .. .. 288.7


LDCs 445.6 578.1 4,151.3 32,358.4 27,971.0 26,390.1 250.1 -12.5 774.6 3,384.6 580.6 1,818.5


LDCs: Africa and Haiti 442.8 430.7 3,122.3 27,845.6 25,574.9 23,214.5 249.9 -14.3 761.0 3,266.9 480.5 1,701.7


LDCs: Asia -4.4 111.0 975.3 4,297.9 2,117.3 2,599.5 0.3 0.7 13.6 99.5 80.2 108.4


LDCs: Islands 7.2 36.4 53.6 214.9 278.8 576.1 .. 1.1 0.1 18.3 19.9 8.5
Other developing countries 13,708.2 34,517.5 252,314.0 597,654.1 450,378.0 547,178.0 3,661.411,920.9 134,191.6 292,901.0 228,578.1 325,745.7


All Developing economies 14,153.7 35,095.6 256,465.2 630,012.5 478,349.0 573,568.1 3,911.611,908.4 134,966.2 296,285.6 229,158.6 327,564.2


Source: UNCTAD, UNCTADstat, FDI/TNC database, August 2011.




The Least Developed Countries Report 2011164


36. External debt and debt service by source of lending
(Millions of dollars)


External debt (at year end)a Debt serviceb


1985 1990 2000 2007 2008 2009
% of total


1985 1990 2000 2007 2008 2009
% of total


1985 2008 1985 2008


I. Long term 58,766.2 105,606.7 119,189.3 119,906.9 128,319.8 136,338.8 80.2 84.3 2,189.1 3,034.4 4,386.1 8,677.1 5,603.6 7,822.8 66.2 94.3


Public and publicly guaranteed 58,299.7 104,766.0 116,799.5 116,089.5 123,946.1 131,312.8 79.6 81.2 2,136 2,954 4,324 8,392 5,318 7,416 64.6 89.4


Official Creditors 50,531.3 90,045.3 107,009.0 105,086.9 110,368.8 116,478.8 69.0 72.0 1,501.3 2,204.6 2,820.7 4,440.7 4,002.1 4,167.2 45.4 50.2


A. Concessional 38,159.2 68,860.8 90,211.5 93,317.0 99,233.0 104,343.4 52.1 64.5 679.0 1,225.5 2,205.4 2,697.9 3,007.4 3,150.3 20.5 38.0


of which:


Bilateral concessional 25,291.6 39,044.4 36,522.2 34,519.6 36,594.0 38,790.2 34.5 24.0 453.9 740.9 1,129.4 1,190.5 1,094.3 1,330.0 13.7 16.0


Multilateral concessional 12,867.6 29,816.4 53,689.3 58,797.5 62,639.0 65,553.2 17.6 40.5 225.1 484.6 1,076.0 1,507.3 1,913.1 1,820.3 6.8 21.9


B. Non-concessional 12,372.1 21,184.4 16,797.5 11,769.9 11,135.8 12,135.4 16.9 7.5 822.3 979.1 615.2 1,742.9 994.8 1,016.9 24.9 12.3


Private creditors 7,768.4 14,720.7 9,790.5 11,002.6 13,577.4 14,833.9 10.6 9.2 635.1 749.0 1,503.1 3,951.1 1,316.1 3,249.2 19.2 39.2


Bonds 6.8 10.0 7.1 0.0 0.0 200.0 0.0 0.1 1.4 0.6 0.0 0.0 0.0 0.0 0.0 0.0


Commercial banks 2,491.5 3,159.1 5,024.6 8,138.8 10,759.9 10,790.9 3.4 6.7 227.1 174.1 1,273.5 3,653.9 1,027.8 2,955.6 6.9 35.6


Other private 5,270.2 11,551.6 4,758.8 2,863.8 2,817.5 3,843.0 7.2 2.4 406.6 574.3 229.7 297.2 288.3 293.6 12.3 3.5


Private non-guaranteed 466.5 840.8 2,389.7 3,817.4 4,373.6 5,026.0 0.6 3.1 52.7 80.9 62.3 285.3 285.4 406.4 1.6 4.9


II. Short term 9,351.2 13,200.9 17,245.9 20,732.2 21,525.7 19,416.8 12.8 12.0 .. .. .. .. .. .. .. ..


III.IMF credit 3,505.5 3,920.6 4,510.4 1,611.1 2,260.7 3,165.5 4.8 2.0 889 902 468 344 1,190 337 26.9 4.1


Total 73,285.7 124,198.4 142,268.7 144,071.9 154,100.3 161,704.5 100.0 100.0 3,307.3 4,243.7 5,109.7 9,353.0 7,025.9 8,295.9 100.0 100.0


Source: UNCTAD secretariat calculations, based on World Bank, Global Development Finance database, online, July 2011.
a Refers to debt stocks.
b Refers to debt service on external debt.




165ANNEX. Statistical Tables on the Least Developed Countries


37. Total external debt and debt service payments of individual LDCs
(Millions of dollars)


Country
External debt (at year end)a Debt serviceb


1985 1990 2000 2007 2008 2009 1985 1990 2000 2007 2008 2009
Afghanistan .. .. .. 1,974 2,089 2,328 .. .. .. 5 8 11
Angola .. 8,592 9,408 11,518 15,132 16,715 .. 326 1,705 4,434 1,643 3,508
Bangladesh 6,530 12,285 15,535 21,296 22,886 23,820 330 735 766 990 888 957
Benin 905 1,122 1,390 766 918 1,073 49 37 74 30 58 37
Bhutan 9 84 204 775 692 762 0 5 7 31 81 75
Burkina Faso 513 832 1,422 1,450 1,682 1,835 29 34 47 42 45 42
Burundi 455 907 1,108 1,456 1,443 518 26 42 22 19 19 19
Cambodia 7 1,845 2,628 3,761 4,215 4,364 30 32 30 42 49
Central African Republic 344 699 860 964 955 396 26 29 14 89 26 32
Chad 216 514 1,090 1,797 1,749 1,743 17 12 24 68 138 78
Comoros 134 188 237 292 282 279 2 1 3 26 12 12
Dem. Rep. of the Congo 6,183 10,259 11,692 12,359 12,196 12,183 498 348 25 502 599 700
Djibouti 96 155 258 657 685 752 4 11 13 23 25 29
Equatorial Guinea .. .. .. .. .. .. .. .. .. .. .. ..
Eritrea _ _ 300 860 961 1,019 _ _ 3 6 16 22
Ethiopiac 5,212 8,645 5,495 2,620 2,879 5,025 159 236 138 133 111 103
Gambia 245 369 483 727 449 520 9 38 22 36 22 26
Guinea 1,465 2,478 3,066 3,143 3,094 2,926 72 168 157 157 141 129
Guinea-Bissau 319 695 947 1,073 1,084 1,111 9 8 5 10 10 10
Haiti 757 917 1,173 1,580 1,946 1,244 48 36 44 82 58 45
Kiribati .. .. .. .. .. .. .. .. .. .. .. ..
Lao People's Dem. Rep. 619 1,766 2,501 4,388 4,955 5,539 7 9 40 190 204 242
Lesotho 175 396 672 678 689 705 19 23 62 98 37 38
Liberia 1,250 2,056 2,809 3,745 3,128 1,660 40 3 1 642 934 64
Madagascar 2,520 3,689 4,691 1,707 2,086 2,213 150 223 117 22 26 45
Malawi 1,021 1,557 2,705 836 959 1,093 110 133 63 33 32 36
Maldives 83 78 206 630 716 780 10 9 20 55 66 69
Mali 1,456 2,468 2,960 1,992 2,125 2,667 53 68 93 67 69 81
Mauritania 1,454 2,113 2,378 1,705 1,987 2,029 102 146 83 121 63 78
Mozambique 2,871 4,650 7,255 2,966 3,450 4,168 63 79 96 28 37 43
Myanmar 3,098 4,695 5,975 8,237 8,002 8,186 223 60 36 54 33 29
Nepal 590 1,627 2,867 3,602 3,685 3,683 23 68 102 147 162 177
Niger 1,223 1,758 1,708 925 928 991 107 99 26 26 26 45
Rwanda 363 708 1,270 562 652 747 18 20 36 23 25 26
Samoa 75 92 138 186 206 235 8 5 5 7 8 8
Sao Tome and Principe 63 150 310 173 177 186 3 3 4 8 4 3
Senegal 2,559 3,754 3,622 2,553 2,826 3,503 189 324 224 188 181 200
Sierra Leone 708 1,176 1,190 312 399 444 24 21 47 10 6 7
Solomon Islands 66 120 155 177 166 156 4 12 9 14 15 10
Somalia 1,639 2,370 2,562 2,944 2,949 2,973 20 11 0 2 ..
Sudan 8,955 14,762 16,009 19,161 19,463 20,139 149 50 245 367 364 483
Timor-Leste _ _ _ .. .. .. _ _ _ .. .. ..
Togo 935 1,281 1,430 1,967 1,638 1,640 111 86 30 15 196 55
Tuvalu .. .. .. .. .. .. .. .. .. .. .. ..
Uganda 1,239 2,606 3,497 1,607 2,246 2,490 155 145 74 65 74 71
United Rep. of Tanzania 9,090 6,446 7,142 5,008 5,964 7,325 170 179 167 64 65 164
Vanuatu 16 38 74 98 126 130 1 2 2 4 5 6
Yemen 3,341 6,354 5,125 6,089 6,258 6,356 131 169 243 270 283 262
Zambia 4,487 6,905 5,722 2,758 2,984 3,049 136 201 185 121 166 171
LDCsd 73,286 124,198 142,269 144,072 154,100 161,705 3,307 4,244 5,110 9,353 7,026 8,296
African LDCs and Haitid 58,656 94,876 106,314 92,393 99,646 104,899 2,565 3,135 3,840 7,522 5,215 6,386
Asian LDCsd 14,193 28,656 34,835 50,122 52,781 55,039 714 1,077 1,226 1,717 1,702 1,801
Island LDCsd 436 666 1,120 1,556 1,673 1,767 28 32 44 114 109 109
Source: UNCTAD secretariat calculations, based on World Bank, Global Development Finance database online (July 2011).
a External debt cover both long-term and short term debt as well as the use of IMF credit.
b Debt service on total external debt.
c Ethiopia include Eritrae up to 1992.
d LDC aggregates exclude missing data Equatorial Guinea, Kiribati, Sao tome, Myanmar, Timor Leste, Tuvalu; Afghanistan from 1985 to 2005 and Angola


in 1985.




The Least Developed Countries Report 2011166


38. Indicators of debt sustainability
(Percentage)


Country
External Debta/GDP Debt serviceb/exportsc


1985 1990 2000 2007 2008 2009 1985 1990 2000 2007 2008 2009
Afghanistan .. .. .. 19.5 19.4 18.1 .. .. .. 0.3 0.4 0.5
Angola .. 83.7 103.1 19.1 18.0 22.1 .. 8.2 20.8 9.9 2.6 8.9
Bangladesh 30.2 40.8 33.0 31.1 28.8 26.7 27.5 39.9 11.6 7.3 5.5 5.5
Benin 86.5 60.8 61.6 13.8 13.7 16.2 19.9 14.1 21.7 3.3 5.7 4.0
Bhutan 5.3 29.7 47.6 64.8 55.1 60.3 0.1 6.5 5.1 5.3 11.5 10.2
Burkina Faso 33.0 26.8 54.5 21.4 20.9 22.5 19.1 10.1 18.5 5.9 6.0 4.5
Burundi 39.6 80.1 156.3 148.6 123.5 38.9 30.1 61.5 39.7 22.6 26.7 33.7
Cambodia 0.8 131.4 71.7 43.5 37.5 40.4 .. 87.7 1.7 0.5 0.7 0.9
Central African Republic 39.7 47.0 89.6 56.8 48.2 20.0 14.8 13.3 7.4 35.0 12.1 11.0
Chad 21.0 29.6 78.7 25.6 20.9 25.5 14.2 5.0 10.4 1.8 3.1 2.7
Comoros 117.2 75.1 117.2 62.8 53.2 52.2 11.2 3.1 9.5 38.2 16.7 15.1
Dem. Rep. of the Congo 85.9 109.7 271.6 123.9 104.5 108.7 25.2 12.6 2.6 18.5 22.2 68.8
Djibouti 28.1 34.3 46.8 77.5 69.7 71.7 2.2 3.0 5.4 6.6 7.2 6.2
Equatorial Guinea .. .. .. .. .. .. .. .. .. .. .. ..
Eritrea .. .. 47.3 65.2 69.7 54.9 .. .. 3.1 6.7 25.5 25.6
Ethiopiad 55.4 71.6 67.2 13.4 10.8 15.7 28.9 35.2 14.0 5.4 3.8 3.4
Gambia 108.6 116.5 114.8 111.6 54.6 70.9 9.1 19.9 10.7 16.9 8.8 11.5
Guinea 0.0 84.9 96.1 74.7 81.4 61.8 13.7 21.5 27.3 13.5 11.3 8.7
Guinea-Bissau 222.0 284.7 439.7 155.3 128.0 133.1 23.9 11.9 4.4 8.8 7.3 7.5
Haiti 37.7 35.1 33.4 27.6 31.7 19.8 8.8 7.6 9.1 10.0 6.8 4.6
Kiribati .. .. .. .. .. .. .. .. .. .. .. ..
Lao People’s Dem. Rep. 26.1 204.0 144.2 103.0 90.2 90.9 28.5 9.1 8.1 12.6 11.8 16.8
Lesotho 60.5 73.2 90.1 42.9 43.0 41.0 46.8 23.8 24.1 11.2 4.0 4.7
Liberia 133.7 534.8 500.8 509.5 371.3 188.7 10.3 1.9 0.5 347.3 362.1 25.5
Madagascar 88.2 119.7 121.0 23.3 22.2 26.1 42.8 43.5 9.8 1.0 1.0 1.9
Malawi 90.2 82.8 155.1 24.2 23.5 23.1 40.2 29.6 14.1 3.5 2.7 2.5
Maldives 65.3 36.2 33.0 59.7 56.8 59.2 11.3 4.8 3.5 6.3 6.2 7.0
Mali 110.8 101.9 122.2 27.9 24.3 29.8 24.8 15.6 15.3 3.2 3.5 4.0
Mauritania 212.8 207.3 219.9 60.1 55.4 67.0 24.9 31.3 16.6 7.8 3.2 5.2
Mozambique 64.4 188.8 170.7 36.9 34.9 42.6 49.7 39.0 13.7 1.0 1.2 1.8
Myanmar 46.4 90.8 82.1 51.6 44.6 43.1 72.9 60.1 100.3 231.2 168.2 147.7
Nepal 22.5 44.8 52.2 35.0 29.3 28.6 7.6 17.7 8.0 11.0 10.6 9.0
Niger 84.9 70.9 95.0 21.6 17.3 18.8 35.6 18.6 8.1 3.5 2.5 4.3
Rwanda 21.2 27.4 73.2 15.0 13.8 14.2 9.5 13.6 23.6 5.6 3.7 4.2
Samoa 88.2 81.9 56.1 37.7 35.5 47.4 24.0 17.3 7.8 4.2 4.8 5.2
Sao Tome and Principe 75.2 124.9 404.3 109.9 94.1 87.7 19.6 16.3 16.0 18.1 7.4 6.5
Senegal 86.4 65.7 77.2 22.5 21.4 27.4 23.0 22.3 17.1 6.6 5.2 6.5
Sierra Leone 82.6 181.1 187.1 18.8 20.4 23.9 18.5 14.5 40.6 2.9 1.8 2.4
Solomon Islands 28.2 39.8 35.7 30.2 25.7 25.9 4.9 12.7 8.7 6.5 6.3 4.5
Somalia 203.2 238.4 124.8 118.6 113.4 147.8 59.4 126.6 0.4 .. 20.7 ..
Sudan 71.9 119.0 129.5 41.2 33.5 36.9 20.8 10.0 12.9 3.9 2.8 5.9
Timor-Leste .. .. .. .. .. .. .. .. .. .. .. ..
Togo 122.7 78.6 107.6 78.0 51.8 52.0 31.2 16.7 7.0 1.6 17.3 5.2
Tuvalu .. .. .. .. .. .. .. .. .. .. .. ..
Uganda 35.2 60.5 56.5 13.5 15.6 15.8 32.1 46.4 11.2 3.3 2.1 1.9
United Rep. of Tanzania 99.7 117.6 68.5 28.9 28.0 31.8 38.7 31.9 12.0 1.5 1.2 2.9
Vanuatu 12.7 24.1 26.5 18.0 20.3 21.1 1.8 2.8 1.7 1.4 1.5 1.8
Yemen 83.0 135.9 51.0 25.7 21.8 23.6 62.5 27.4 6.1 3.5 2.9 3.9
Zambia 199.2 210.0 176.7 23.9 20.4 23.8 16.6 17.0 21.1 2.5 3.2 3.8
LDCse 64.4 85.0 81.4 34.7 30.1 31.3 25.1 19.5 13.1 7.3 4.3 6.5
African LDCs and Haitie 78.6 96.0 109.4 34.2 29.3 31.5 23.7 17.3 16.1 7.9 4.2 7.0
Asian LDCse 37.0 62.1 46.0 35.2 31.5 30.7 34.6 34.1 8.5 5.4 4.5 5.0
Island LDCse 57.0 57.5 60.1 47.1 43.8 46.7 9.1 7.2 4.9 7.0 5.8 6.0
Source: UNCTAD secretariat calculations, based on World Bank, World Development Indicators, online (July 2011); and UNCTADstat database, July 2011.
a External debt cover both long-term and short -term debt as well as use of IMF credit.
b Debt service total.
c Exports of good and services (including non-factor services).
d Ethiopia include Eritrea upto 1992.
e LDC aggregates exclude missing data Equatorial Guinea, Kiribati, Sao tome, Myanmar, Timor Leste, Tuvalu; Afghanistan from 1985 to 2005 and Angola


in 1985.




Printed at United Nations, Geneva
GE.11-00000–October 2011–5,143


UNCTAD/LDC/2011


United Nations publication
Sales No E.11.II.D.19
ISBN 978-92-1-112839-0
ISSN 0257-7550


The least developed countries (LDCs) are a group of countries that have been classified by the
United Nations as least developed in terms of their low gross domestic product (GDP) per capita,
weak human assets and high degree of economic vulnerability. This Report argues that the LDCs
need to go beyond business as usual in order to promote inclusive and sustainable development
and it suggests how South–South cooperation supports such a transformational agenda.


The Report shows that despite strong GDP growth during the last decade, the benefits of growth
were neither inclusive nor sustainable, mainly because growth was not complemented by structural
transformation and employment creation. Growth and trade has not-recovered to pre-crisis levels
after the global recession of 2009. Most LDCs continue to deepen their specialization in exports of
primary commodities and low-value, labour-intensive manufacturing, rather than diversifying into
more sophisticated products. Growth projections also indicate that the poorest countries of the
world could face a more volatile and less expansive global economic environment in the coming
decade.


Further, the Report examines how South–South cooperation could support development LDCs
against this background. It shows that there are intensifying economic relationships between the
LDCs and other developing countries and that these helped to buffer LDCs from the downturn in
advanced economies. A major new trend in the pattern of integration over the last decade or so
has been the deepening and intensification of economic and political ties with more dynamic, large
developing countries, acting as growth poles for the LDCs. While intensifying South–South relations
presents major new opportunities for LDCs in terms of markets, foreign direct investment, remittances
and official financing, they also bring many challenges, ranging from extreme competition to
de-industrialization. Therefore, the long-term impact of South–South economic relations on the
LDCs still remains a puzzle.


The Report explores how the potential of South–South cooperation can be turned into a reality
that promotes the development of productive capacities, structural transformation and decent
employment in the LDCs. It argues that the benefits of South–South cooperation will be greatest
in the LDCs when a dynamic two-way relationship is established in which policies carried out by
catalytic developmental States in the LDCs and South–South cooperation reinforce each other
in a continual process of change and development. In such a dynamic relationship, the catalytic
developmental State in the LDCs enhances and shapes the benefits of South–South cooperation,
and South–South cooperation supports both the building of the catalytic developmental State in the
LDCs and the successful achievement of its objectives.


New modalities and structures are required to strengthen the interdependence between the two
phenomena in the post-crisis environment. In this regard, the Report claims that developmental
regionalism is particularly important. Given that financing productive capacities still remains a
major challenge for most LDCs, the Report revisits the role of regional development banks and
proposes new modalities through which a small part of the reserves that have accumulated in
developing countries and that are managed by sovereign wealth funds could support the financing
of development in the LDCs. South–South cooperation should be a complement to North–South
cooperation.


FRONT COVER
The front cover indicates three major regions of the South – i.e. developing countries in
Latin America and the Caribbean, Africa, and Asia and the Pacific – and identifies the
number of least developed countries in each region.




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