Building productive capacity for LDC graduation in Bhutan

Building productive capacity is generally seen as a major challenge for least developed countries (LDCs). The issue is the first priority area in the Istanbul Programme of Action for the Least Developed Countries 2011-2020, features strongly in the Sustainable Development Goals, and is the subject of various reports by international organizations dedicated to LDCs. There is also international consensus around the view that LDC graduation should be seen not as an end in itself but as a waypoint in sustainable development. Productive capacity is thus a critical component of LDC graduation and successful and sustainable development. Work on LDC graduation has already begun in Bhutan under the national UN Delivering As One programme including an inter-agency LDC graduation workshop in November 2015, the outcome of which included a report on processes and implications of graduation for Bhutan. This short briefing builds on this work by outlining the importance of productive capacity for LDC graduation, summarizing Bhutan’s performance in this regard and identifying possible priorities in building sustainable productive capacity to ensure successful development after graduation. The intention is not to provide a summary of economic activity or to outline all future areas of potential, but to focus on one or two binding constraints, to rule out some possibilities and to identify promising areas of future economic activity. The briefing draws on research conducted during on productive capacity and LDC graduation conducted during 2016 for the Committee for Development Policy (CDP) of the UN Department of Economic and Social Affairs (UNDESA), and a growth identification and facilitation framework (GIFF) study commissioned by the CDP on Bhutan.