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The Least Developed Countries Report 2010

image of The Least Developed Countries Report 2010

This report calls for the creation of a new international development architecture (NIDA) for the LDCs aimed at: a) reversing their marginalization in the global economy and helping them in their catch-up efforts; b) supporting a pattern of accelerated economic growth and diversification to improve the well-being of all their people; and c) helping them graduate from LCD status. The NIDA for LDCs would be constituted through reforms of the global economic regimes which directly affect development and poverty reduction in LDCs, and through the design of a new generation of special international support mechanisms for the LDCs aimed at addressing their specific structural constraints and vulnerabilities. Increasing South-South cooperation could play an important role in a NIDA for LCDs. The Report proposes five major pillars of the NIDA: finance, trade, commodities, technology, and climate change mitigation and adaptation and identifies a forward-looking action.

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Overview

Over the past three decades, the LDCs have been following a development strategy designed to release the creative potential of market forces by reducing the role of the State in the development process. For the first two of those decades, there was little indication that this strategy was working. But after the turn of the millennium, with the emergence of new Asian growth drivers and favourable movements in the terms of trade, economic growth began to accelerate. Some observers attributed this to the market-oriented policy reforms undertaken by a number of LDCs, though others raised doubts about their pattern of growth. Surging commodity prices, in some cases driven by speculative investment, debt forgiveness, increased aid flows, remittances and foreign direct investment (FDI) seemed vulnerable to a global economic downturn. There were also concerns that growth was not translating into substantial improvement in human well-being. When commodity prices suddenly fell at the end of 2008, heralding a bust in the global economic cycle, many LDCs experienced a sharp slowdown, with major adverse social consequences. It was clear from this that markets are not only creative but also can be destructive.

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