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Economic diversification in Asian LLDCs

Prospects and challenges

image of Economic diversification in Asian LLDCs
This report on Economic Diversification of Asian LLDCs: Challenges and Prospects will address economic diversification and its impact on structural transformation, building productive capacities, job creation and enhancing competitiveness of LLDCs in Asia. The primary objective of the report is to discuss the prospects and challenges for economic diversification in Asian LLDCs. The panel will discuss examples of concrete opportunities for economic diversification in these countries that would contribute to structural transformation, building productive capacities and job creation. The panel will also discuss the challenges posed by high and volatile commodity prices, which create incentives away from diversification. The 12 Asian landlocked developing countries (LLDCs) share the common challenge of remoteness and isolation from international markets, without direct access to trade by sea, which increases substantially their trade costs. Higher costs reduce the competitiveness of the Asian LLDCs and hinder their ability to harness trade to promote their economic growth and structural transformation. They also create incentives to these countries to specialize in high bulk primary commodities with relative inelastic demand to the trade costs.

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Sectors and markets with high potential for economic diversification

As discussed in the previous section, the opportunities for LLDCs in the Asia-Pacific region to diversify their economies are in products that are more complex (i.e. those that are more sophisticated and differentiated) and that are nearby in the product space to the existing product mix (i.e. those that require a set of capabilities that is similar to that required in the current product niches).

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