PRESS BRIEFING BY UNCTAD ON LEAST DEVELOPED COUNTRIES REPORT

Press Briefing

PRESS BRIEFING BY UNCTAD ON LEAST DEVELOPED COUNTRIES REPORT

At a Headquarters press briefing this morning, Makha Sarr, Director of the Office of the Special Coordinator for Africa and Least Developed Countries, introduced the 1997 Report on the Least Developed Countries, a publication of the United Nations Conference on Trade and Development (UNCTAD).

The report, which is divided into three parts, provides an overview of the economic growth of the least developed countries (LDCs) in 1996, he said. Part One deals with the economic performance of LDCs during 1996 and their prospects for 1997. It also reviews the crucial issues relating to official development assistance (ODA) and the LDCs' external debt. Part Two of the report focuses on the agricultural sector which, on average, accounted for about one third of the gross domestic product (GDP) for most LDCs. "Sustained growth in the food and agricultural sector was key to sustainable development in LDCs", he said.

Part Three of the report discusses what it calls "economies in regress", representing approximately one quarter of the 48 LDCs, Mr. Sarr said. Those countries underwent political crisis or civil strife and their overall economic and social indicators had deteriorated over the past decade. The section also looks at the various elements characterizing the economies in regress, as well as the action required by them and by the international community.

Mr. Sarr said the report would be the main background document for the Trade and Development Board's annual review of progress made in implementing the Programme of Action for the LDCs for the 1990s, as well as for the forthcoming ministerial conference of LDCs to be held on 30 September at United Nations Headquarters. Most importantly, the report would also be a major background document for the next meeting for the High-level Meeting on the Integrated Initiatives for Least Developed Countries' Trade Development, to be held at Geneva on 27 and 28 October. The convening of that meeting was agreed upon last year at the Ministerial Conference of the World Trade Organization in Singapore to look at the possibilities for the LDCs and to take advantage of the opportunities offered by the signing of the Uruguay Round Agreement on Agriculture.

The economic performance of LDCs continued to be good, Mr. Sarr said. Their GDP growth rate as a group remained healthy, although it fell to 4.7 per cent in 1996, compared to 5.2 per cent in 1995. Many LDCs also recorded a substantial increase in per capita income, which had not been the case for many of them during the 1980s. The performance of LDCs in Africa had been particularly remarkable. Nineteen African LDCs recorded growth rates in excess of 4 per cent, and 10 of those had GDP growth rates higher than 5 per cent.

Mr. Sarr said it was important to note that economic improvement had taken place despite the decrease in ODA flows, which fell from 0.09 per cent of gross national product (GNP) in 1992 to 0.06 per cent in 1995. The economic reform packages devised and implemented by LDCs had paid off. If there was a reversal in the reduction of ODA and if the issue of external debt was decisively addressed by the international community, those sound economic reforms would enable LDCs to sustain economic growth in the coming years.

Turning to agricultural issues, Mr. Sarr said that if due attention was given to the agricultural sector, which accounted for about one third of the GDP of LDCs, they could record even higher growth rates. Policies regarding pricing, research in agricultural technology, extension services and marketing should be looked at by LDCs to ensure the health of their agricultural sector and to provide faster economic growth.

The immediate impact of the Uruguay Round Agreement on Agriculture was rather negative for most LDCs, Mr. Sarr said. For example, the potential for vertical diversification into processed agricultural products was still constrained in LDCs by the fact that many of the products important to developing and least developed countries, such as cocoa and coffee, were still subject to tariff escalation. The report calls for increased attention to the issue in order to enable LDCs to take advantage of the Uruguay Round Agreement to increase their supply capacity and improve access to the markets of developed countries.

In countries where there were economies in regress, there had been a marked deterioration in economic and social conditions over an extended period of time, Mr. Sarr said. That was accompanied by an inability of the State to provide normal administrative services, as well as other basic public and social services, including the maintenance of law and order. In some countries, regress was often associated with or the result of internal conflict and civil war, which resulted in displacement of segments of the population. It was difficult to measure regress because such statistics as GDP per capita, daily calorie supply, infant mortality rates, primary school enrolment and conflict-related mortality, did not exist in those countries. Therefore, it was difficult to identify a list of "economies in regress". However, it was important to highlight the particular circumstances of those countries, primarily that institutions and infrastructures had collapsed. "The international community needed to pay special attention to LDCs with economies in regress."

Asked if there were any underlying trends that united the economies in regress, Mr. Sarr said the economies concerned were a relatively small number of countries; the majority of LDCs were performing very well. In most of the cases, internal conflict was the origin of the regress. The political system did not allow enough freedom for growth in other sectors of the country. Therefore, the international community needed to make efforts to address the internal conflict. Such work was being done by the United Nations in many countries.

UNCTAD Briefing - 3 - 24 September 1997

How should the international community fix the political systems of the countries with economies in regress? the correspondent asked. Mr. Sarr said the international community should help the system that created the situation by resolving the political dispute. Institution-building was necessary before such economies could begin to function.

Asked what were the four or five least developed countries in the world, Mr. Sarr said there was no specific criteria used to define the least developed countries. The statistics required must be based on quantitative elements which were not available for the economies in regress. There was no definitive list of economies in regress, but there were characteristics that those countries shared.

Was there any correlation between the level of ODA and the improvement in the economic performance of LDCs? a correspondent asked. Mr. Sarr said there was certainly no distinct correlation between the decrease in ODA and the deterioration of a country's economic performance, but the level of ODA did affect such performance. The LDCs had made tremendous efforts in reforming their economies, and most of those countries had recorded high growth rates in 1994, 1995 and 1996. Nonetheless, ODA was crucial for most LDCs to meet their requirements in the areas of health, education and social infrastructure, particularly in rural areas. If ODA had been at an adequate level, as agreed upon in international forums, economic growth prospects would have been much better for those LDCs which had already undertaken great efforts to meet investment requirements in building their capacities.

The report shows a decrease in Niger's GDP from 1980 to 1995, a correspondent said. Did that figure take into account the earnings from Niger's uranium mine, which was operated by France? Mr. Sarr said Niger's economic performance should be viewed in a wide context. During that period, Niger experienced political instability which had not been totally resolved. Also, the price of uranium had declined tremendously during that period, which also contributed to the decrease in Niger's GDP.

A correspondent asked if the international community had ever been successful in aiding countries with economies in regress. Mr. Sarr said that although the situation there was currently unstable, Cambodia could be seen as an example of a country in which there had been a political settlement and economic rehabilitation. The United Nations had helped to build the capacity of the Government, and Cambodia had since recorded a high growth rate. Assistance from the Organization of African Unity (OAU) and the international community had enabled the Government of Mali to concentrate on development issues. Mali had achieved a successful transition to democracy and had recorded a healthy economic growth rate.

Did private investment and ODA have different effects on the economic development of a country? a correspondent asked. Mr. Sarr said the two had different purposes. The main purpose of private investment was profit, while ODA went to a government to complement its own resources, in areas where the private sector could not contribute.

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