Least Developed Countries Report

2225-1723 (online)
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UNCTAD´s Least Developed Countries Report provides a comprehensive and authoritative source of socio-economic analysis and data on the world´s most impoverished countries. The Report is intended for a broad readership of governments, policy makers, researchers and all those involved with LDCs´ development policies. Each Report contains a statistical annex, which provides basic data on the LDCs.
Also available in Spanish, French
The Least Developed Countries Report 2012

The Least Developed Countries Report 2012

Harnessing Remittances and Diaspora Knowledge for Productive Capacities You do not have access to this content

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31 Dec 2012
9789210559195 (PDF)

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This Report reviews the LDCs' recent economic performance and examines how to enhance developmental impact of remittances and tap into the knowledge pool of its citizens abroad. Given the increasing magnitude of remittances in LDCs, the Report explores both the beneficial as well as possible adverse impacts of this type of private external flow. While remittances are the most visible effect of migration, there are other forms of Diaspora engagement within the home country such as Diaspora knowledge networks that can facilitate technological catch-up in LDCs and therefore enhance development of productive capacities. Through innovative forms of network-based industrial policy, LDCs could offset some of the adverse impacts of brain drain on their economies. The Report concludes with a policy review section containing lessons from international experiences in this area of interest to LDCs.
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  • What are the least developed countries?
    Forty-eight countries are currently designated by the United Nations as “least developed countries” (LDCs). These are: Afghanistan, Angola, Bangladesh, Benin, Bhutan, Burkina Faso, Burundi, Cambodia, Central African Republic, Chad, Comoros, Democratic Republic of the Congo, Djibouti, Equatorial Guinea, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, Lao People’s Democratic Republic, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Nepal, Niger, Rwanda, Samoa, Sao Tome and Principe, Senegal, Sierra Leone, Solomon Islands, Somalia, Sudan, Timor-Leste, Togo, Tuvalu, Uganda, United Republic of Tanzania, Vanuatu, Yemen and Zambia.
  • Acknowledgements
    The Least Developed Countries Report 2012 was prepared by a team consisting of Željka Kožul-Wright (team leader), Maria Bovey, Agnès Collardeau-Angleys, Junior Davis, Pierre Encontre, Igor Paunovic, Madasamyraja Rajalingam, Rolf Traeger, Giovanni Valensisi and Stefanie West (the LDC Report team). Jayati Ghosh (consultant) also made specific inputs to the Report. Bethany Paris and Xenia Wassihun provided research assistance. The work was carried out under the overall guidance and supervision of Taffere Tesfachew, Director, Division for Africa, Least Developed Countries and Special Programmes, who also made significant inputs to the structure and content of the Report.
  • Abbreviations
  • Classifications used in this Report
    Unless otherwise specified, in this Report the least developed countries (LDCs) are classified according to a combination of geographical and structural criteria. Therefore, the small island LDCs which geographically are in Africa or Asia are grouped together with the Pacific islands, due to their structural similarities. Haiti and Madagascar, which are regarded as large island States, are grouped together with the African LDCs. The resulting groups are as follows
  • Overview
    The uncertain global economic recovery and the worsening Eurozone crisis continue to undermine those factors that enabled the least developed countries (LDCs) as a group to attain higher growth rates between 2002 and 2008. Despite seeing real gross domestic product (GDP) grow slightly faster in 2010, the group as a whole performed less favourably in 2011, signalling challenges ahead. Indeed, with the world’s attention focused on Europe, there is a danger that the international community may lose sight of the fact that in recent years, LDCs have been most affected by financial crises caused by other countries. With less diversified economies, LDCs have neither the reserves nor the resources needed to cushion their economies and adjust easily to negative shocks. Furthermore, if another global downturn hurts the growth prospects of emerging economies, LDCs, as major commodity exporters, will be directly affected. Therefore, LDCs require increased external assistance to better protect their economies against external shocks and help them manage volatility.
  • Recent trends and outlook for the LDCs
    This chapter analyses recent macroeconomic trends in LDCs and their performance in terms of economic growth, international trade and external finance. It shows that their economic performance has been substantially worse in the last three years than in the previous boom period and that some indicators have not yet reached pre-crisis levels. In addition, the current world economic situation and its implications for LDCs are analysed briefly. The main conclusion is that the growth of LDCs in the medium term will be constrained by the fragile recovery in the global economy and its negative impact on the growth of developing economies, which have been the main drivers of LDC growth in recent years. Finally, there is a small statistical annex at the end of the chapter which served as a basis for the analysis provided and which presents more detailed data at the level of national economies or different groupings of LDCs.
  • Harnessing remittances and diaspora knowledge for productive capacities in LDCs
    Remittances have attracted increasing attention in the international discourse, partly owing to their remarkable growth over the last decade (Ratha, 2003; Solimano, 2005; UNECA, 2007; UNDESA, 2012b; UNDP, 2009). A growing consensus is emerging that remittances constitute a significant source of external financing, whose availability, if managed through appropriate policies, could prove particularly valuable for capital-scarce developing countries (especially those with larger diasporas). The jury is still out on whether or not they are the most stable and predictable source of development finance. While some unresolved questions remain as to their macroeconomic impact, a large body of evidence suggests that remittances contribute to poverty reduction and improved health care and education.
  • Remittances and the LDCs: Magnitude, impacts and costs
    In recent years, remittances as a potential source of development finance have received greater attention from international policymakers. There is also a growing body of economic and social research highlighting the determinants, impact and significance of remittances in developing countries. In addressing these issues in an LDC context, the present chapter starts from the perspective that remittances may have multifaceted and significant impacts on recipient households, as well as at a regional and macroeconomic level. Remittances should therefore be regarded as an additional facet of LDCs’ multi-pronged efforts to mobilize adequate sources of development finance.
  • Mobilizing the diaspora: From brain drain to brain gain
    The present chapter analyses two aspects of international migration in the LDCs not yet discussed in this Report. First, it studies the flows of knowledge and technology stemming from the international movement of labour — particularly from the migration of so-called high-skilled persons — , their impact on the human capital endowment and technological accumulation of LDCs, and the emergence of diaspora knowledge networks. Second, the chapter examines the impact of international migration on the business activities of these countries through two mechanisms: international trade and investment flows between home and host countries; and returnee entrepreneurship.
  • Towards a policy agenda for the LDCs: An integrated approach to migration, remittances and mobilization of diaspora knowledge
    This Report examines the impact on LDCs of past and current migration that has created diasporas in different parts of the world, and the potential for utilizing these diasporas for development of the home country. It is evident that migration and its varied consequences have become increasingly significant for developing countries in general and LDCs in particular, and these trends are likely to continue in the medium term.
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