Refining financing for least developed countries

The Special high-level meeting of ECOSOC with the Bretton Woods institutions, the World Trade Organization and the United Nations Conference on Trade and Development commenced at the United Nations Headquarters on 10 March. The two day meeting focused on the overall theme of “Coherence, coordination and cooperation on Financing for Development”.

At the opening, Mr. Lazarous Kapambwe, President of the Economic and Social Council (ECOSOC) urged the international community to “maintain its financial support for development efforts of Least Developed Countries (LDCs), including in the areas of development finance, aid for trade and debt relief.”

Most LDCs are not on track to meet most of the MDG goals. LDCs have a higher level of vulnerability which constrains their capacity to mobilize domestic resources and absorb external shocks. Their limited access to private capital makes ODA the most vital source of development finance to achieve the MDGs and other development goals. It is important to note that LDCs are represented by 48 countries, comprising 11 per cent of the world population, but only 1% of the global trade.

Mr. Luis Manuel Piantini Munnigh, President of the Trade and Development Board (UNCTAD), pointed out that “the global financial and economic crisis, the food crisis, the fuel crisis, and now the recent wave of the revolt that has swept across some parts of North Africa and the Middle East, all underscore the inescapable reality that fundamental change in upon us.”

The ways in which business has been conducted in the past needs to be changed to eliminate the flaws. Munnigh continued, stating, “greater trade openness and deeper integration into the global economy have been associated with increased commodity dependence and export concentration.” He also emphasized the need for an “inclusive” approach to development that would be “looking beyond economic growth and focusing more on employment generation and improvements in the overall quality of life”.

Mr. Charles Gore, Head, Research and Policy Analysis on Africa and LDCs (UNCTAD), suggested implementing a New International Development Architecture for LDCs (NIDA) that will focus on potential, rather than needs. This will allow for promotion of domestic resource mobilization, innovative uses of aid, building development of state capabilities, while fighting high aid dependency and weak country ownership.

He also stressed that despite the fact technology transfer is one of the priorities of development, only 22% of reported programs actually promote technology transfer targeted specifically at LDCs.

Gore provided insight towards the future, stating “The Haitian earthquake illustrates the extreme vulnerability of LDCs. The global financial and economic crisis can be considered a catastrophic event analogous to an earthquake, which not only wreaks devastation but also offers a reconstruction and a new beginning.”

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