The Least Developed Countries Report: Developing Productive Capacities

The least developed countries (LDCs) are a group of 50 countries identified by the UN as being 'least developed' in terms of low gross national income (GNI) per capita, high levels of extreme poverty (based on indicators for nutrition, child mortality rates, school enrolment and adult literacy levels), and a high degree of economic vulnerability. The Least Developed Countries Report 2006 , reviews recent economic trends in LDCs and progress made towards the development targets agreed at the 3rd UN Conference on LDCs (UNLDC III) held in Brussels in 2001. It then goes on to focus on the issue of developing the productive capacities of LDCs, which are defined as productive resources, entrepreneurial capabilities and production linkages which together determine the capacity of a country to produce goods and services and enable its economy to grow. The report considers how productive capacities develop through three interrelated processes of capital of accumulation, technological progress and structural change, and a number of constraints including weak infrastructure and institutions, and lack of demand. Findings include that, in almost all the LDCs there is an imbalance between the rate of growth of the labour force, and the rate of capital accumulation and technological progress, resulting in widespread underemployment and poverty. The report concludes that the development of productive capacities is the key to achieving substantial and sustained poverty reduction in LDCs, and this objective needs to be placed at the centre of national and international development policies.