Mobilizing adequate resources and putting them to productive use through investment and job creation is our best means of reducing the number of people living in poverty. Increasing investment in productive sectors of the economy by foreign but, particularly, by domestic firms is the key to accelerating growth. Unfortunately, the Least Developed Countries, where productive investment needs to be increased the most also face the greatest obstacles in doing so. They have limited capacity for domestic savings and structural impediments in their economies tend to deter foreign investment.
In recent years, the LDCs have made consistent efforts to create a favorable policy environment. In this regard, it should be underscored that the LDCs as a group have grown faster than other developing countries since 2000 and the forecasts of the Department of Economic and Social Affairs (DESA) of the United Nations is that this situation will continue in the immediate future. Encouragingly, this suggests that, despite some common constraints, higher investment and growth is possible in such countries.
Observations on the performance of the LDCs as a whole need to bear in mind, however, that there are wide variations among them. For example, the transformation of a few LDCs into oil-exporting countries has had a highly positive effect on their growth while, on the opposite side, the conflict-ridden LDCs have achieved little progress in long-term development.
Overall, a few LDCs, including several of the largest ones, have been able to achieve the 7 per cent target rate of growth called for in the Brussels Programme of Action. At the other end of the spectrum, several smaller LDCs have regressed. In both 2002 and 2003, the number of LDCs in which per capita GDP declined exceeded the number in which it rose by at least 3 per cent –a crude “poverty alleviation threshold” used by the United Nations.
Thus, moving all LDCs to this benchmark will require a decisive effort by all concerned. Indeed, despite their best efforts, the institutional capacity and infrastructures of LDCs remain weak and they cannot, by themselves, meet the formidable challenges they face in attracting investment and accelerating growth. It is important that their development partners and the private sector join and support their efforts to address these obstacles and generate a new momentum towards much higher levels of domestic as well as foreign investment in these countries.
The Investment Promotion Forum this afternoon is designed to bring together all the partners to discuss how best this objective can be realized. These are, of course, complex issues that need to be looked at from various angles and we shall do so this afternoon in the roundtable discussions, in which we will focus on the role of trade preferences, foreign investment and partnerships in mobilizing resources for LDCs, but also on domestic private investment, including in particular by small firms, as well as the efforts by their governments to increase investments in human development.
Through this discussion, we must not lose sight of the need to sustain and give substance to the partnership that was forged in the Brussels Program of Action for Poverty Eradication in LDCs. Governments, the business sector and civil society have shared responsibilities, in their respective capacities as partners of development. Concerted actions must follow dialogue among partners. The business sector’s command of capital, civil society’s strong advocacy role in favor of the poor, and stable and pro-poor investment policies of governments collectively represent the assets to be combined to create the package for growing prosperity in LDCs.
The business sector is crucial to giving the poor access to opportunities in the market. Indeed, there are some success stories where poor countries have been connected to the global economy through foreign direct investment, as there are very encouraging experiences in mobilizing inclusive finance for small firms in some LDCs. We must build on these experiences but we cannot afford to be complacent. We are fast approaching the halfway mark of the first decade of the millennium and the Brussels Plan of Action. If we are to meet the targets we have all set and agreed upon, we need to turn intentions into results. Without more international assistance, the Millennium Development Goals and the Brussels Programme of Action will remain unfulfilled and our common goal to eradicate extreme poverty will not be achieved. But, we have the opportunity to reverse present trends and set a new course towards better performance by all partners.