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Thematic Debate on Investment in and Financing of Productive Capacities in LDCs

11 March 2011, New York

Background

Prior to the global economic and financial crisis the Least Developed Countries (LDCs) as a group experienced high growth, surpassing the 7 per cent target growth rate of the Brussels Programme of Action (BPOA). This growth rate however has been uneven between and within countries, reflecting the heterogeneous nature of LDCs. 

Growth in LDCs has mainly been driven by the extractive and commodities sectors which have very few linkages with the rest of the economy and which only have a limited employment creation effect. Growth has also provided limited improvements in productive capacities, savings and capital formation, and investment.

The objective in the coming decade for the LDCs will be to better diversify their economy and increase investment that will allow for a more sustained, inclusive, and equitable economic growth. Only then will they be able to have substantially higher and more sustained growth and to catch up with middle income countries and to effectively reduce poverty.

To achieve a higher rate of economic growth in an open global economy, it is also important for LDCs to increase their competitive advantage in their own market as well as in the global market. 

In achieving these objectives, the LDCs need to adopt economic growth strategies that contribute to the development of national productive capacities. The development of productive capacities will allow the increase of productive resources, creation of productive jobs, acquisition of technological capabilities and creation of production linkages which permit LDCs to produce a diverse array of goods and services and enable a beneficial integration into the global economy on the basis of an internal momentum of growth development.

In this context, creating an enabling national and international environment for the mobilization of resources for investment in national productive capacities is central for the next decade of LDCs development. At the international level, better access to international markets, enhanced predictability in the flow of ODA and flexibility in the use of ODA, better technology transfer, and strengthened regional and South-South cooperation are important factors that contribute to the mobilization of investments and financing in productive capacities in LDCs.

At national level, attracting investment whether that is domestic or foreign investment requires infrastructural pre-conditions such as adequate development of physical, institutional, financial, and telecommunication infrastructure. Apart from pursuingappropriate policy and regulatory frameworks, and strengthening good public and corporate governance, creating an enabling environment therefore also require the development of a national development strategy that focuses on public investment policy aimed at enhancing these preset conditions. In short there is a need for LDCs to be “investing in investment”.

As a contribution to the preparation to the fourth conference on LDCs to be held on 9-13 May 2011, the General Assembly will have a thematic debate on Investment in and financing of Productive Capacities in LDCs.

Objectives

Webcast

Least Developed Countries – General Assembly Thematic Debate (Part 1)

Least Developed Countries- General Assembly Thematic Debate (Part 2)

Statements

Programme

The thematic debate will take place on Friday, 11 March 2011, Conference Room 2 (NLB) at UN Headquarters in New York. The debate, which will consist of two moderated panel discussions with high-level experts, will focus on national development strategies to enhance productive capacities and reorienting international support mechanism towards enhancing LDCs competitive advantage. The floor will be opened to delegates and other participants for questions to the panelists as well as to share their experience and other perspectives.

Panel I
National Development Strategies to Enhance Productive Capacities

The objective of this session will be to examine the challenges and identify effective national development strategies for fostering domestic and foreign investment to enhance value addition and labour productivity within LDCs. The creation of a conducive business climate is central to attracting domestic as well as foreign investment, and strengthens national capital formation. But also important is to identify the role of governments through the mobilization of public investment, consistent with medium and long term fiscal sustainability, so as to have a proactive role and encourage a virtuous cycle of investment.

Member states and other participants may wish to address the following questions:

Panel II
“Reorienting International Support Mechanism towards enhancing LDCs competitive advantage”

A successful national development strategy in LDCs will be shaped by the nature and quality of the supporting international environment. As Official Development Assistance (ODA) still represent the largest sources of international source of finance in many LDCs, removing uncertainty concerning ODA flows and enhancing national flexibility in the use of ODA for stimulating investment in productive capacities is therefore important. But there are also a number of other complementary international measures that can influence the effectiveness of national policies to encourage greater investment which should be explored. The main objective of this session is to review the main aspects of the international support system in light of the objective of stimulating enhanced investment in productive capacities in LDCs.

Member states and other participants may wish to address the following questions:

10.00

Opening
-   Opening remarks by:
H.E. Mr. Joseph Deiss, President of the General Assembly
H.E. Mr. Ban Ki-moon, United Nations Secretary-General

-   Keynote speaker:
     H.E. Mr. Hailemariam Desalegn
Deputy Prime Minister and Minister of Foreign Affairs of Ethiopia

-   Remarks by:
    H.E. Mr. Gyan Chandra Acharya, Permanent Representative of Nepal (Chair of the LDCs Group)
     H.E. Mr. Ertuğrul Apakan, Permanent Representative of Turkey
     H.E. Mr. Jarmo Viinanen, Permanent representative of Finland

 

10.50-1.00 p.m.

Panel I
“National Development Strategies to Enhance Productive Capacities”

Moderator: H.E. Mr. Joseph Deiss, President of the General Assembly

Speakers:

  • H.E. Dr. Bounthavy Sisouphanthong, Vice Minister of Planning and Investment, Lao People’s Democratic Republic
  • H.E. Mr. Gyan Chandra Acharya, Permanent Representative of Nepal (Chair of the LDCs Group)
  • Mr. Jyrki Koskelo, Vice President, International Finance Corporation (IFC), Washington D.C.
  • Prof. Erik S. Reinert,  Chairman, The Other Canon Foundation, Norway

1.00 – 3.00 p.m.

Lunch

3.00 – 4.45 p.m.

Panel II
“Reorienting International Support Mechanisms towards enhancing LDCs’ competitive advantage”

Moderator: Mr. Hugo Beteta, Director of the Economic Commission for Latin America and the Caribbean's Sub-regional Headquarters, Mexico City

Speakers:

  • Mr. James Zhan, Director, Investment and Enterprise Division, UNCTAD, Geneva
  • Prof. Calestous Juma, John F. Kennedy School of Government, Harvard University, Boston
  • Mr. Axel van Trotsenburg, Vice-President, World Bank, Washington D.C.
  • Prof. Mehmet Arda,  Galatasaray University, Istanbul, and Turkey’s substantive coordinator for LDC IV

4.45 – 5.00 p.m.

Closing
Closing remarks by:
-   Mr. Cheick Sidi Diarra,Under Secretary-General, High Representative for the Least Developed Countries
-   H.E. Mr. Joseph Deiss, President of the General Assembly

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