LAUNCH OF THE UNCTAD LDC REPORT 2013

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  • Labour force dynamics in LDC: 1990-2020
  • LAUNCH OF THE UNCTAD LDC REPORT 2013

    1. 1. The Least Developed Countries Report 2013 Growth with employment for inclusive and sustainable development Presented by: Sebastian C. Kopulande Chief Executive Officer •Lusaka, 26th November, 2013
    2. 2. The Least Developed Countries Report 2013 Key messages of the Report • LDCs’ fast growing and young population needs quality jobs to escape poverty and earn decent livelihood • Despite fast economic growth since 2000, LDC economies’ employment generation has been disappointing • Quality jobs can only be the consequence of developing productive capacities • Macroeconomic, industrial, rural and infrastructure policies should be geared to employment generation and development of productive capacities Put job creation front and centre!
    3. 3. The Least Developed Countries Report 2013 This presentation • Economic trends and outlook for LDCs • Growth with employment for inclusive and sustainable development  Demographic trends  Employment trends  Policy agenda
    4. 4. Economic trends and outlook
    5. 5. The Least Developed Countries Report 2013 Recent trends GDP growth of LDCs in 2008–2013 was 5.2%, over 2 percentage points lower than during the boom period: 2002-2008: 7.5% annual growth: fastest growth in decades
    6. 6. The Least Developed Countries Report 2013 Outlook Mid-term outlook: 6% annual growth • Lower than target of Istanbul Programme of Action (IPoA) of May 2011 : 7% • This has been caused by (recession) factors such as:     Lower growth in developed and developing (“emerging”) economies Subdued international trade Falling commodity prices More expensive international finance This has impacted LDCs’ capacity to generate jobs required by population growth
    7. 7. Growth with employment for inclusive and sustainable development Demographic trends
    8. 8. The Least Developed Countries Report 2013 Rapid demographic growth LDCs are the group of countries with the fastest population growth rate @ 2.2%, ODCs @ 1.2%, DCs @0.4% By 2050, total LDC population is projected to double to 1.7 billion
    9. 9. The Least Developed Countries Report 2013 Population: very young… Youth to soar from 168 million in 2010 to 300 million in 2050 … and increasingly urban
    10. 10. Growth with employment for inclusive and sustainable development Employment trends
    11. 11. The Least Developed Countries Report 2013 Fast growing labour force Especially young: 16 million youths will reach working age annually between 2010 and 2050 • Since 2000: more labour market entrants outside agriculture • They will expect to find quality jobs to escape poverty and earn a reasonable livelihood Major challenge for LDC economies: Generate quality jobs for all these people
    12. 12. The Least Developed Countries Report 2013 Despite fast economic growth, job generation has lagged behind … in quantity Employment growth: 3% well below economic growth: 7% (annual rates, 2000–2012)
    13. 13. The Least Developed Countries Report 2013 Despite economic growth, job generation has lagged behind … in quality •Labour productivity gap falling slowly, but still very wide •Most jobs are in informal sector: insecure, low wages, low skills • Vulnerable employment (own account + family workers): 80% total employment • Working poor: ¾ total employment Only slow overall poverty reduction
    14. 14. LDC LABOUR PRODUCTIVITY LDC output per worker in 2012: 22% of the level in other developing countries; 10% of the level in the European Union 7% of the level in North America BUT High labour force participation rate – 75% compared to 68% in ODCs. WORK IS THE ONLY MEANS TO SURVIVEregardless of type and quality!
    15. 15. Growth with employment for inclusive and sustainable development Policy agenda
    16. 16. THE AWAKENING • Economic Liberalization Policies on the early 1990s have not produced inclusive development; • Economic Growth by itself neither guarantees job creation nor promotes inclusive development; • It could lead to Social inequalities, rising unemployment, and increased poverty; • Growth must come from labour rather than capital intensive activities
    17. 17. The Least Developed Countries Report 2013 Reversing the negative picture is urgent • Economic growth without enough decent jobs is unsustainable • Employment creation is best way out of poverty • If employment performance does not improve, major risks arise:  Growing poverty  Social instability  Mass international emigration LDCs need to change policy focus and adopt employment-rich growth as major objective
    18. 18. The Least Developed Countries Report 2013 Employment and productive capacities (productive resources, entrepreneurial capabilities and production linkages which together determine a country’s capacity to produce goods and services and enable it to grow and develop). • Sustainable economic growth can only result from development of productive capacities This occurs through three (3) key economic processes: Investment-growthemployment nexus: virtuous circle • Entry point: investment • Critical role for • public investment, especially in infrastructure • social services
    19. 19. The Least Developed Countries Report 2013 Policy priorities • Develop productive capacities AND generate employment • Diversify economy (new sectors) AND upgrade traditional sectors •  instead of present type of structural change: Labour moving from subsistence agriculture to informal survivalist urban activities Policy interventions have to be designed to encourage investment in activities with strongest employment effects; • Target the non-tradables sector where international competition is limited. • Increase labour productivity to make labour-intensive investments profitable • Aim at productivity growth in all sectors by improving technology
    20. 20. The Least Developed Countries Report 2013 Macroeconomic policies • Objective: Output and employment expansion • Fiscal policy: Central role to finance public investment and social services  Need to improve mobilization of domestic resources • Credit policy: Improve access to financing of firms, esp. farmers, micro and small enterprises  Multiple actors: development banks (national and regional), rural banks, commercial banks, credit cooperatives, informal institutions… • Monetary policy: Focus on price and volume of credit  Go beyond exclusive focus on price stability
    21. 21. The Least Developed Countries Report 2013 Public sector job creation Role • This has a Crucial role in short to medium term by increasing demand and enlarging the capital base of the economy. • It must be designed to encourage private investment, not to crow it out! It should focus on: 1. Investment in infrastructure – Potential benefits:     Lifts major constraint on enterprise development Can crowd in private investment Can initiate virtuous circle Choice of labour-intensive techniques – Advantages: o Greater employment creation o Local market creation o Enterprise development o Lower cost o Foreign exchange savings 2. Investment in Social services  Mostly labour-intensive  e.g. education, health, sanitation, transport, public administration
    22. 22. The Least Developed Countries Report 2013 Enterprise development policies • Industrial policy  Build / Upgrade activities around existing comparative advantage o esp. natural resources  Favour investment in labour-intensive manufaturing  Support citizen/local investment • Types of policies for firms (to fill ‘missing middle’):     • Financing Formalizing Strengthening organization and technology Networking / Clustering LDC Report 2013 proposes international support measure  Donors and LDC governments match funds to provide finance and training to young entrepreneurs, esp. firms creating jobs for youth
    23. 23. The Least Developed Countries Report 2013 Rural development policies • Invest heavily in rural infrastructure  Esp. irrigation, energy, transport, storage, communications • Rural extension services • Raise funding of national / regional research centres • Build regional value chains • Seasonal and long-term finance to farmers and non-farm economic agents
    24. 24. Thank you

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