LDCs need aid, trade and local capacity

The Jakarta Post, Jakarta

If the world does not want to see 80 million people in 14 least developed countries in the Asia Pacific in poverty, special points on commitment, aid and trade must be addressed by the global community.

A working group discussing the progress of least developed, landlocked and small island developing countries in the current ministerial meeting on the Millennium Development Goals (MDGs) here on Wednesday emphasized the need for tripling official development aid as well as strengthening the countries' commitment in enhancing the human capacity to achieve the goals.

Currently, the official development aid for these countries amounted for US$4 billion, and they hope to have reached $12 billion by 2006.

The working group recommended that the development aid should be directed toward the financing of basic investments in physical infrastructure for least developed countries, as well as special needs in transportation and communications-related infrastructure to provide better access to the landlocked developing countries such as Bhutan and Nepal.

Meanwhile, for small islands developing countries like the Maldives and Timor Leste, development aid should be directed toward investments to reduce environmental vulnerability due to natural hazards and to preserve biodiversity.

These least developed countries or countries with special needs generally face problems of isolation from major international markets, prohibitive transit and transport costs, as well as heavy dependence on transit services.

In addition, they also have a problem of a small domestic market due to small populations and find themselves relying on a few key export commodities, which are subject to international market fluctuations, as well as vulnerability to natural disasters.

All the above increase the transaction costs of doing business in these countries, making it difficult for them to compete in the free trade environment, which leads to lower capacity to finance their own development.

Director for the Millennium Project Jeffrey Sachs said that it was not trade that was the barrier for poor countries in eradicating poverty. "Their problem is the supply limitation, no resources and insufficient infrastructure," he said.

UN Assistant Secretary-General Hafiz Pasha concurred and said, "These countries also need to reiterate commitments to institutional change and progress, and signal to the international community that they are serious about the task, particularly of delivery of basic services." (003)

Recommendations to help least developed countries (LDCs)

Recommendations of facilitating trade and market access for countries with special needs to achieve the MDGs * At the national level 1. Mainstreaming trade into overall development plans 2. Undertaking social impact assessments of various trade liberalization options * At the international level 1. Granting duty and quota-free access for the countries' exports 2. Establishing preferential schemes for market access 3. Making more commercially meaningful commitments in terms of temporary movement of natural persons as well as cross-border supply of services such as outsourcing 4. Intensifying technical assistance for human resources 5. Increasing funds allocated to trade and supply-side responses 6. Strengthening global development partnerships by addressing volatilities in the financial and monetary systems 7. building regional economic cooperation in the development of economic infrastructure and trade liberalization and facilitation

Recommendations on aid and debt relief * At the national level 1. Ensuring good governance 2. Creating harmonization and coordination in making aid effective 3. Strengthening domestic capacities for planning and project implementation, improve monitoring and evaluation, achieve greater decentralization of project implementation * At the international level 1. Meeting the targets made in previous commitments for least developed, landlocked and small islands developing countries (Brussels and Almaty Actions, as well as Mauritius strategy) 2. Taking steps for better coherence among donors in areas of policy conditionalities, official development assistance (ODA) practices, trade regimes and technology transfers from donor countries 3. Continuing dialogs with recipient countries on grant components, tied purchases and financing of recurring costs to improve these areas 4. Introducing economies of scale by implementing regional solutions for smaller countries on issues that would be too costly to implement at the country level 5. Ensuring that the given assistance continue to address the changing needs of the recipient countries

Source: Voices of the Least Developed Countries of Asia and the Pacific MDG report (UNESCAP and UNDP)