Secretary-General Calls for ‘Structural Transformation’ of Landlocked Countries in Round Table at Vienna Conference

Following are UN Secretary-General Ban Ki-moon’s remarks at the High-Level Thematic Round Table of the United Nations Conference on Landlocked Developing Countries (LLDCs), entitled “Achieving Structural Transformation of LLDC Economies”, in Vienna today:

It is a great pleasure to be part of this Round Table in support of landlocked developing countries.  Honourable [Wolfgang] Schüssel [Former Chancellor of Austria], it is a great pleasure to see you again.

If I just may take one minute — my relationship with him.  When I was Ambassador here in Vienna, he was Foreign Minister, and he rose to become Prime Minister.  Normally it is very difficult, rare, that a foreign minister recognizes all the ambassadors because there are three, four ambassadors [of many countries] in this town — multilateral, VIC [Vienna International Centre], international organizations, OSCE [Organization for Security and Co-operation in Europe] and bilateral ambassadors.  At least three, four Ambassadors are in this town.  We did not expect that the Foreign Minister would engage with all the ambassadors.  I was lucky enough to be recognized by him, and each time when he recognized me it can be sense of strong encouragement.  I was very happy.  Now I am very happy to see you still continuing to contribute to international development and politics, and I wish you alles Gute.

It has been 11 years since the Almaty Plan of Action was adopted, and I hope with this meeting in Vienna, Member States will be very positively forward looking and ambitious to have a Vienna Plan of Action for these LLDC countries.  That’s why we are here.

There is economic growth overall.  The value of merchandise exports is up.  The share of global exports has more than doubled.  Landlocked developing countries have collectively seen an increase in foreign direct investment.

But not all LLDCs are benefiting from these overall trends.  Many landlocked developing countries have highly concentrated export markets and products.  All LLDCs face a structural disadvantage in terms of the high import and transport costs.  Even more worrying, the positive trends in growth rates have not brought faster poverty reduction or greater progress in people’s lives.  Industries in LLDCs tend to be low-tech and with low productivity.  Many businesses in these countries are extremely small, and many operate outside of formal markets.

This Forum should examine those problems holistically.  We have to do more than address landlocked developing countries in terms of transport and trade.  We have to tackle the fundamental problems blocking sustainable growth.  The goal is clear:  we must enable LLDCs to consistently achieve high economic growth while creating decent jobs and reducing poverty.

Economists would say we have to support them to move away from activities that are low value-added and low-productivity to activities that add more value and boost productivity.  Think of a coffee bean, just a simple coffee bean.  All LLDCs can sell just a coffee bean as it is.  But more developed creative countries — they grind this coffee bean and sell as manufactured product at a much higher price.

The same with unprocessed minerals.  Lots of developing countries, they sell minerals just as they are.  Many foreign companies come and bring all these minerals, and then they sell back with processed manufactures, [at a] much higher [price].  Then with their own mineral resources they have to buy, they have to pay lot of money.  This is the current situation in these LLDC countries.

Structural transformation makes the difference.  With structural transformation, LLDCs can export goods that are low bulk — so they take up less precious transport space or cost — with higher value.  That makes good sense all around.  It reduces transaction costs — and with the right approach, local production can also benefit the environment.  Structural transformation also moves goods and workers out of the informal economy and into the markets. It creates better jobs and spreads knowledge. It also promotes competitiveness.

LLDCs that want to achieve a structural transformation have to take actions.  They need to gear their economies to higher value products.  There are challenges to finding the right products and sectors.

The UN is here to help LLDCs.  We can provide technical assistance, and help design public policies and enable all countries to exchange ideas.  We are ready to work with LLDCs as well as donors, development finance institutions, businesses and other partners to achieve structural transformation.  The LLDCs can count on the United Nations to transform their geographical disadvantages into platforms for great innovation and progress.

If I may add some more out of my own experience as Secretary-General.  We have to deploy mediation and facilitation to resolve all these political disputes between landlocked countries and transit countries.  There are many such political disputes because of inflexibility, insufficient cooperation in transit countries or some historical legacies.  There are some undefined disputed boundaries between landlocked countries and transit countries facing oceans.  Sometimes they argue that, look, this area should be open because it used to be our territory.  Something like this.

A lot of cases are before the International Court of Justice or even maritime tribunals.  This will create economic disadvantages, economic difficulties, lot of political disputes, which may develop into real violent disputes.  That I am very much concerned [about].  That is why I am asking that all landlocked countries should be linked to landlinked countries.  That requires some compassionate leadership by the transit countries and neighbouring countries.

We need to live together.  That is the main purpose, the main goal of sustainable development by which nobody should be left behind.  That is the basic purpose and goal of sustainable development, post-2015 development agenda on which Member States are working very hard to shape it, and I really count on your strong leadership and compassionate leadership for those LLDC countries.