Emerging Challenges for LDCs UN-OHRLLS Brainstorming meeting in preparation for UNLDC IV New York,...
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Transcript of Emerging Challenges for LDCs UN-OHRLLS Brainstorming meeting in preparation for UNLDC IV New York,...
Emerging Challenges for Emerging Challenges for LDCsLDCs
UN-OHRLLS Brainstorming meeting UN-OHRLLS Brainstorming meeting in preparation for UNLDC IVin preparation for UNLDC IVNew York, 14 – 16 July 2010New York, 14 – 16 July 2010
Presentation by Presentation by Dr. Frannie A. LEAUTIERDr. Frannie A. LEAUTIER
Executive Secretary, ACBFExecutive Secretary, ACBF
Distribution of LDCs: Mainly an African Problem Today
Majority of LDCs are on the African continent, particularly Sub-Saharan Africa:
Income levels remain low, despite impressive economic growthProgress in meeting the MDGs, but remaining weaknesses in nutrition, health, education and adult literacyEconomic vulnerabilities still present:
agricultural production, pattern of exports, size of economiesshare of population impacted by shocks (natural disasters, food prices, fuel shocks, financial crises)
New vulnerabilities emerging:Global: climate change; contagion in economic and financial systems; technological transformation; communicable diseasesRegional: demographic; arable land; water and energy shortages; challenges of economic integration; logistics and infrastructure issuesCountry: implementation for service delivery; governance challenges; ethnic, religious, political violence
2
Impressive Economic Transformation Before Crisis:
Real GDP Growth (%)
3
2005 2006 2007 2008 2009(estimated)
2010(projections)
Africa 5.9 5.9 6.0 4.9 1.3 4.3
Central Africa 5.0 2.6 5.6 4.5 0.9 3.8
East Africa 7.4 6.8 7.5 6.4 3.9 5.3
North Africa 6.0 5.9 5.3 4.7 3.5 4.1
Southern Africa 6.0 6.6 6.7 4.6 -1.6 4.1
West Africa 5.1 5.3 5.9 5.3 2.4 4.7
Oil-exporters 6.8 6.0 6.9 5.6 2.5 4.9
Oil-importers 4.9 5.9 5.1 4.2 0.5 3.6
Source: UNECA (2010). Economic Report on Africa. Addis Ababa: UNECA.
Capacities to project short-term economic growth, manage indebtedness in the face of financial crises, obtain market access under changing consumer behavior, secure external financing in times of sharp retrenchment
Emerging Challenges for LDCs• Post-financial crisis economic models
• Demographic shifts and their implications• Balancing effects of more open borders (trade,
remittances)• New challenges of urbanization and global
connectivity• Emerging and re-emerging disease patterns in
humans and animals• Scarcity of water, energy, and land• Climate change and pressure on natural resources• Geographical and temporal patterns of economic
growth• Transforming agriculture and food security issues• Technological and business model shocks• Challenges of integration (labour and capital markets,
logistics and infrastructure) 4
Pre and Post Crisis Economic Growth Recovery in Africa
2008-2010
Source: Calculated using data from UNECA, 2010.
Capacities: to decide on R&D, industrial and competition policies in light of the financial crisis and growing competition from BRICs; maintain good fiscal governance and accountability for and get consensus on policy adopted; protect consumers in light of growing complexity of financial and business decisions; tap into the potential of nascent SMEs; regulate financial and commercial markets; effectively choose among integration options and their governance implications; shape investment policy to ensure allocative efficiency; strengthen macroeconomic management and redefine the role of the central banks
Source: United Nations
Demographics: What do the patterns of growth imply?
Capacities: to manage demographic transitions (employment creation, pension management); tap into creative potential of agglomerations and manage twin challenges of access to services and food security
Can LDCs in Africa balance the effects of trade and migration to their
advantage (2005-2008)?Angola MoroccoBenin NigerBurundi NigeriaCongo, R RwandaDjibouti NigeriaEthiopia Sao Tome & PrinciGambia Sierra LeoneGhana South AfricaGuinea Bissau SwazilandKenya TanzaniaLesotho TogoLiberia UgandaMali Zambia
CameroonCape VerdeCote d’IvoireGabonGuineaMozambiqueSenegalSudan
ChadEquatorial GuineaEritreaMauritaniaMauritiusSomalia
Burkina FasoCentral African RepublicComorosCongo, DRCMadagascarMalawiNamibiaZimbabwe
Growing exports (%growth)
Growing remittances (current US$)
Declining exports
Declining remittancesSource: Ranked using data for 2000 and 2005 from the World Development Indicators
Global connectivity of the leading 123 world cities measured in terms of networks of accountancy, advertising, banking/finance, insurance, law, and management consultancy firms. Only six of the global cities are African.
Source: Taylor (2003)
Capacities: to manage global integration during economic slowdown; to deal with urbanization stresses on land use, access to services, food prices and riots, youth unemployment, urban-rural linkages; for effective connectivity of leading and lagging areas through labor migration policies and infrastructure investments; for containing contagion in crime, violence, security issues; to manage effects of increased frequency/severity of disasters
Successfully tackling current communicable diseases can build readiness for handling
emerging diseases in the future
Capacities: set up “smart surveillance” measures in the hotspots indentified; generate dynamic responses to communicable diseases that are based on effective collection and monitoring of outcomes with replication of solutions worked out from in-country trials
Dynamics of change impacting LDCs: Water is at the nexus of many risks
Pandemic
Infectious diseases
Extreme weatherevents
BiodiversityUrbanization
&migration
Infrastructureprovision
AgriculturalProductivity
& food prices
Science & technology
Chronicdiseases
Water
Source: Adapted from World Economic Forum 2009
Build secondary networks
Identify & remove critical path
Hedge against shocks
Control for natural or induced risks
Balance between local & global actions
Capacities: to develop regional strategy and policies for water basin management and managing the suite of risks related to water shortages
Africa: Electrification Rate in 2005 (%)
0.00%
5.00%10.00%
15.00%20.00%
25.00%30.00%
35.00%40.00%
45.00%50.00%
Oil ExportingCountries
Middle IncomeCountries
Low IncomeCountries
Fragile States
• Energy trade: Limited at present, no regional markets, no interconnectivity
• Inefficiency: In operations and maintenance of existing systems
• Innovation: Little innovation on alternatives with negative pressure on forest and desertificationSource: Calculated using data from UNDP 2007/2008 and OECD classification
Capacities: to develop and support regional energy markets, put in place and maintain interconnected transmission grids, and improve the level of efficiency of current network operations; investment in innovative alternatives for energy generation and sales; enhancing capabilities for cross-country conflict prevention, resolution and management to ensure existing resources reach the demand centres across the continent
Dynamics of change impacting LDCs: Agricultural dependency and arable land. Top
10 Countries over 5 YearsCountry Ag. Value
in 2003 (%GDP)
Rank in 2003
Country Ag. Value in 2008 (%GDP)
Rank in 2008
Liberia 68 1 Liberia 61 1
Guinea Bissau 62 2 Guinea Bissau 56 2
Central African Republic
56 3 Central African Republic
53 3
Congo, DR 51 4 Congo, DR 46 5
Lao PDR 49 5 Lao PDR 34 10
Sierra Leone 47 6 Sierra Leone 50 4
Tanzania 45 7 Tanzania 45 6
Ethiopia 44 8 Ethiopia 45 7
Rwanda 41 9 Rwanda 37 9
Togo 41 10 Togo 44 8
Availability:
Arable land makes up 11% of total global land area (1.4 billion hectares globally)Europe and Central Asia has the highest arable land per capita (0.57 ha per person)Arable land per capita has declined by 19% in low income countries over the past two decades
Technology:
Fertilizer use per hectare is highest in East Asia and Pacific and lowest Sub-Saharan Africa (by a factor of 17)During the past 30 years, Africa has experienced at least one major drought each decade
Capacities: agricultural productivity, innovation in drought resistant technologies, managing food security, regional food markets and agricultural supply chains
Source: World Development Indicators, World Atlas
Dynamics of change impacting LDCs dependent on Agriculture: The Case of Ethiopia and rainfall patterns
-80
-60
-40
-20
0
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
year
%
-30
-25
-20
-15
-10
-5
0
5
10
15
20
25
rainfall variability
GDP growth
Ag GDP growth
Ethiopia – a relatively water rich country, but
with GDP still tied to yearly
rainfall variations
Source: A Country Water Resources Assistance Strategy for Ethiopia (Sadoff)Capacities: for multi-Sectoral policies that recognize the complex interconnection between climate change, environment and development
LDCs can leverage a Portfolio of Assets: natural, produced, human and
social capital
0
50
100
150
200
250
300
350
400
450
OECD LowIncome
SSA
Per Capita Wealth
(US$1000)
0
20
40
60
80
OECD LowIncome
SSA (nooil)
Natural Capital
Produced Capital
Human&Social Capital
Share of Wealth by Category
(%)
Source: World Bank (2006) Where is the Wealth of Nations
Capacities to balance development of human, social and produced assets while consuming and preserving natural assets
• 5 Fastest growth:• Mongolia 12.8%• China 9.5%• India 8.1%• Mozambique 7.8%• Ethiopia 7.7%• Slowest growth:• Germany 1.2%• Italy 1.3%• Spain 1.7%• Japan 1.7%• Congo, R 1.9%
Dynamics of change impacting LDCs: Geographical pattern of projected real GDP growth rates for the year 2010
Capacities to sustain significant growth patterns over time and speed growth in other sub-regions, while ensuring the polity owns the growth agenda
Transforming Agriculture: Top 20 Producing Countries of Cotton Lint in 2007 by Value in $
1000
Rank Country Value ($1000) Rank Country Value ($1000)
1 China
11,317,680 11 Australia
406,747
2 India
6,531,712 12 Egypt
335,492
3 USA
6,207,813 13 Nigeria
228,609
4 Pakistan
2,942,239 14 Burkina Faso
218,367
5 Brazil
2,013,801 15 Argentina
215,249
6 Uzbekistan
1,677,462 16 Mexico 215,249
7 Turkey
1,425,101 17 Tajikistan
206,342
8 Syria
541,835 18 Kazakhstan
163,992
9 Turkmenistan
460,188 19 Benin
161,748
10 Greece
445,344 20 Mozambique
139,884
Source: FAOSTAT, 2010.
1994 2004 1994 2004 1994 2004Australia Australia Australia New Zealand France GermanyNew Zealand New Zealand New Zealand Australia Germany ItalyArgentina South Africa United Kingdom United Kingdom Australia FranceSouth Africa Germany Argentina China Uruguay AustraliaKazakhstan Argentina France Germany United Kingdom Czech RepublicRussian Federation United Kingdom Russian Federation Turkey South Africa ArgentinaUruguay France South Africa South Africa Argentina ChinaFrance United States of America Germany Belgium Thailand South AfricaUnited Kingdom Italy Uruguay France Malaysia ThailandIreland Uruguay Malaysia Argentina United States of America SpainKyrgyzstan Ireland Spain Spain Italy United KingdomItaly Hungary Ireland Uruguay Brazil BulgariaMongolia Romania Kazakhstan Italy China IndiaGermany Belgium Pakistan Mongolia Spain United States of AmericaSpain Spain Italy Saudi Arabia Czech Republic ChileChile Norway Azerbaijan Russian Federation Netherlands BrazilBrazil Brazil Netherlands Portugal Portugal HungaryLesotho Chile Romania United States of America Republic of Korea AustriaChina Peru United States of America Romania Iran (Islamic Republic of) MalaysiaNetherlands Czech Republic Greece Syrian Arab Republic Bulgaria Republic of Korea
Wool Greasy Wool Scoured Wool Tops
Technological and Business Model Shocks: Global Brands-- Top 20 Wool Exporters 1994 to 2004 by Value in 2004 (US$ 000)
Source: FAO, Key Statistics of Food and Agricultural Trade, 2007
Capacities to transform primary products, manage complex supply chains, and negotiate appropriate trade agreements
Challenges of Economic Integration• Improve trade within borders (rural-urban) and
outside borders by:– Mitigating for geographic characteristics:
country size; proximity to other countries; common borders and land-lockedness
– Rethinking trade policies in place: domestic (connectivity through transport and communication investments; competition and reliance on markets) and international (trading agreements, barriers and tariffs)
– Adjusting for income levels: richer countries to interact more with other countries (regional trade)
• Other factors for consideration:– Import and export policy reforms– Functioning of the labour markets
18
Key elements of the logistics revolution: access, inventory, supply
chain logistics, risk management
ACCESSINVENTORY
SUPPLY CHAIN LOGISTICS RISK MANAGEMENT
Source: Images from Google Images
Opportunity for LDC economies:•Many LDCs are still tackling first generation infrastructure, transport and trade facilitation constraints•Few firms in LDCs have internalized the issue of supply chain management•There is room for LDCs to learn from countries in Asia (Malaysia) and Africa (South Africa)
Conflict and Security Challenges
Poverty & access to services:
• Speed and scope of addressing chronic poverty and broadening access to basic needs
• Horizontal inequalities (ethnic, religious, group, clan, race, geographical, gender distinctions)
Threat from climate change:
• Droughts, desertification, land degradation, depletion of forests and fisheries
• Threat to coastal populations, increase in forced migration
Challenge from weak states:
• Growing insurgency• Networks of crime,
drugs, illicit trade, human trafficking
Economic/Political Competition:
• Low ability to generate jobs, poor distribution of natural resources
• Weak inclusion and poor representation
20
Three Potential Scenarios for Africa and LDCs in other Regions
LDCs Leadersh
ip & Ideas
International
Parity
Domestic Results
•Polity owns the growth
agenda
•LDC countries lead
innovation
•Homegrown
democracies flourish
•Leadership &
representation in
international
institutions and debates
•LDC standards of
governance
internationally
accepted
•LDC countries
contribute to
international
architecture (trade,
finance, environment,
migration, debt)
•LDCs resolve
conflicts and
prevent violence
and crime
•Service solutions
(health, gender,
water, education)
are effective
Scenario 1: Continental Leadership and Ownership (Optimistic: high on inspiration, aspiration, and coordinated action )
Sub-Regional Prominen
ce
Differentiated
Performance
Visible but
uneven Outcome
s•Models of success
in some RECs but
limited continental
learning
•Variable quality of
democratic and
economic
governance
•Some RECs with
respectable
performance, but
others not
•Ad hoc cooperation
driven by bilateral
strategies
•Few prominent
countries driving the
external agenda
•Isolated success in
service provision
(heath, education,
gender, water)
•External aid driven
by external security
needs and donor-
based evaluations of
capacity and need
Scenario 2: Sub-Regional Mosaic(Realistic: focused on performance and results, managing interdependency, mastering strategic planning)
Reacting to
external threats
Weak capacity
to manage
Country Conditio
nality
•New technologies
and business models
threaten domestic
production
•Governance
standards externally
set
•Under-
representation in
international fora
and debates
•Weak capacity to handle
ethnic, religious, and
political violence
•Weak country institutions
lack capacity to react to
international imperatives
•Access to globalization
determined by bilateral
and multi-lateral
organizations
•Service provision
variable with
heavy dependence
on international
civil society
•Selective aid
provision with
specific conditions
Scenario 3: Externally Driven Nation States(Gloomy, with attention to adaptability and resilience, managing uncertainty from conflict, climate, global events)
Scenarios for Africa and LDCs in other Regions and Capacity Implications
•Capacity to manage across sectors, geographies & generations•Capacity to engage civil society, private sector, and international community
•Capacity to decide on investment priorities•Capacity to observe, collect and analyze facts and data
•Capacity to negotiate and manage conflict•Capacity to transform agriculture
Three key aspects of critical capacities regardless of scenario• Abilities to formulate, implement, analyze,
evaluate and revise the appropriate policies• Skills to observe, collect, analyze and evaluate
outcomes, trends, and patterns in a variety of macroeconomic, sectoral and cross-sectoral issues, including the requisite leadership skills to move perspectives, transform societies, unite diverse perspectives, or oversee implementation
• Tools to know where you are, track where you are going, tap into opportunities, and handle the challenges at hand
Source: MDG Report 2010 - UN
Financing Capacity Development and the Patterns of ODA
27
Implications for ACBF• Philosophy: develop a philosophy and approach that is suitable to the
contexts and realities of different countries on the continent, drawing on local knowledge and practical skills, and embedding work programs in country priorities
• Entry Points: select areas for strategic long-term support to particular countries, sub-regions, or group of institutions in partnership with critical institutions to build sustainable capacity—for example supreme audit institutions, procurement agencies, policy units, data collection and analysis agencies, leadership development, and entrepreneurship skills building
• Partnerships: give priority to finding partnerships in tackling policy issues that can help evolve from one scenario to the next—policies on agriculture, climate change, investment and trade---and give priority to partnerships with institutions that can stretch geographies—(WB, IMF, IMF) (AfDB, AU, ECA, NEPAD) (bilateral donors) (private sector)
• Piloting: put in place a more experimental “test and learn” approach to capacity building, drawing out lessons from experience horizontally across sectors and themes and vertically across levels of engagement
• Scaling-up: speed up success by supporting regional learning institutions, policy institutes, regional NGOs, private sector associations
28