New York: 18 September 2006: Despite strong rates of growth since 2001, poverty rates are falling slightly or not at all in the world’s 50 most vulnerable economies, UN Secretary-General Kofi Annan warns in a report prepared for today’s General Assembly focus the least developed countries. The Secretary-General is urging more inputs in the educational and health sector and attracting investment from overseas that will diversify production and better spread the benefits of economic growth.
The General Assembly High-Level Dialogue is tracking progress of these countries in the five years since world leaders met in Brussels to forge an LDC Programme of Action. Rich nations agreed to boost support through increased aid, trade and debt relief, while governments of the poorest countries pledged governance and economic reforms.
But while the Least Developed Countries, as a group, are growing at better than six per cent a year since 2001, the report notes that poverty rates in these countries have not improved substantially and in some cases have worsened.
In particular, the Secretary-General said that improved results will depend on the availability of additional resources, and on the sustained provision of education and health services.
Booming global commodity prices spurred LDC exports, but growth was also aided by reforms in many least developed countries, particularly in fiscal and economic management, had led to reduced fiscal deficits, lower inflation rates and reduced external deficits.
Five oil-exporting least developed countries have benefited from the surge in oil prices, but the report found that for the other countries, the higher oil prices are now eroding some of the gains made due to higher manufacturing prices and higher prices for non-oil minerals.
Furthermore, continued dependence on the primary commodity sector is hampering progress toward stable, long term development and broad-based job creation, the report says, citing lack of infrastructure and productive capacity required to increase and diversify the production of exports.
Progress on poverty target in jeopardy
Because of slow progress on poverty, these countries are among the least likely to achieve the Millennium Development Goal target of halving the poverty rate by 2015. Least developed country governments nevertheless are credited with paying more attention to health and education, and infant and child mortality rates are declining. There has also been substantial progress toward universal primary education.
Almost all of the least developed countries now hold elections and voter participation has been high. At the same time, the number of conflicts afflicting least developed countries has decreased although these countries still account for half of all the UN’s 16 peacekeeping missions.
Least developed countries have benefited from increased international cooperation, according to the report with official development assistance rising by about 75 per cent between 2001-2004. Still, although seven countries have met the donor goal for aid of 0.20 per cent of gross national income, the overall level has hovered at around 0.08 per cent. although there have been indications of several new significant commitments.
Foreign direct investment to the least developed countries has doubled since 2000, the report found, and remittances sent home to LDCs by migrants overseas have risen as well. But efforts to improve the trade environment for the least developed countries have been mixed. Developed countries have promised to eliminate most duties and quotas on imports from least developed countries, but for textiles, most of these countries are still finding it difficult to compete because of heavy subsidies, such as on cotton, by the richer countries for domestic production.
According to the Secretary-General, measures taken to reduce the external debt burden of the least developed countries have had an impact and the ratio of debt service to exports of goods and services for these countries has fallen by about half between 1990 and 2004, and efforts to extend debt relief are continuing.