New Approach to End Extreme Poverty in 49 Poor Countries

What fate is worse than death? Answer: Extreme Poverty.

According to Petko Draganov, UN Conference on Trade and Development (UNCTAD) Deputy Secretary-General, the number of people living in extreme poverty in the world’s least developed countries (LDCs) has been on the rise. This is despite higher national incomes in some of those States. senior United Nations official said today, calling for a review of the current development approaches.

“Even in the period between 2002 and 2007, during the so-called ‘boom of the LDCs,’ the pattern of growth followed in most countries has been neither inclusive nor sustainable,” he said, calling for a review of current development approaches.

He cited research contained in UNCTAD’s 2010 report on LDCs that was released last week. He recommends that poor countries must start to diversify their economies to reduce their dependence on basic agricultural and natural resource products and commodities in order to have sustainable growth.

The problem with relying on the export of primary commodities would continue to expose poor countries to the cyclical nature of commodities’ demand and prices, a trend that paves ways to boom-bust cycles. It will make poor countries even more vulnerable and would be unable to advance towards the Millennium Development Goals (MDGs). The MDG aims to cut the number of people living in extreme poverty in half by 2015.

The report Draganov cited calls for a “new international development architecture” that will support a transition to more broad-based economic growth with greater emphasis on adding value to commodities produced in poor countries.

In a meeting with UNCTAD’s Trade and Development Board in Geneva, Draganov said that next year’s global conference on the world’s 49 poorest countries should reconsider current approaches to helping these nations. He said the importance to come up with steps that can generate faster and long-lasting development.

The two-day Trade and Development Board (TDB) executive session is focusing on the situation and prospects for LDCs in advance of the LDC IV conference, which is scheduled for next May in Istanbul, Turkey.

“The recent triple economic crises have significantly undermined the development and growth prospects” of LDCs, said Jo Elizabeth Butler, UNCTAD’s Officer-in-Charge and Deputy Director of the Division for Africa, LDCs, and Special Programmes. “Poverty remains massive and widespread,” she added.

“According to UNCTAD assessments, some LDCs have considerable potential for increasing exports,” she said.

Butler pointed out a case study of Uganda that shows its sustained and higher economic growth for a relatively longer period of time than most LDCs. Butler said that one reason for Uganda’s growth is that emphasized on non-traditional exports such as fish and horticulture, which have shown tremendous increases.

Similarly, Ethiopia has a fast-growing floriculture industry that now employs more than 16,000 workers. Floriculture is expected to overtake coffee within five years as Ethiopia’s primary export.

Butler mentioned that among lessons learned from case studies of LDCs are that “activist, but less interventionist government policies” help encourage sustainable growth. This is coupled with effective incentives for investors and other steps to set up favorable environments for businesses and job growth.

“The international environment should aid, assist, and abet LDCs rather than hinder their development prospects,” UNCTAD economist and LDC specialist Zeljka Kozul-Wright, one of the authors of the report, said. “The international community has not honored its aid commitments to LDCs.”