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Least developed countries being badly hit by world downturn

The world financial and economic crisis has reversed recent growth trends in the world’s poorest nations, according to a report just issued this morning by the United Nations Conference on Trade and Development (UNCTAD).

Many of the least developed countries are being hit hard by the global crisis

The Fourth United Nations LDC Conference, held last year in Istanbul, resulted in a Programme of Action that sets a target of having at least half of the 48 least developed countries (LDCs) on track to move out of this category by 2020.

Sadly, this is just not going to happen given the present world situation, In fact, in the 40 years in which the LDC category has existed, only three countries have moved out of the LDC category – Botswana, Cape Verde, and the Maldives.

According to UNCTAD’s report entitled: “Enabling the Graduation of LDCs: Enhancing the Role of Commodities and Improving Agricultural Productivity”, case studies on Zambia, Benin, and Cambodia show that “the recent economic and financial crisis severely weakened the abilities of many LDCs to maintain steady income and spending.”

In Zambia, “it was estimated that the loss in mining production and reduced exports – which meant low royalty payments as well as temporary closure of some production activities – led the country to lose up to 22% of its government revenue between 2009 and 2010.” The largest copper mining company in Zambia reported a 40% reduction in all supplier contracts. Between June 2008 and June 2009, the total job loss in Zambia’s mining sector amounted to 30.4% of the total labour force engaged in mining.

In Cambodia, the case study found that “the share of households that did not have sufficient income for food and other essential expenses increased from 62% to 69% between June 2007 and June 2008. It was also estimated that 63,000 jobs were lost in the country’s garment sector during the same period, and that employment in the country’s construction sector sank by 30%.”

In Benin, the case study had shown that the proportion of people living in absolute poverty increased from 33.4 to 34.4% between 2007 and 2009.

It is salutary to remember that while we may be experiencing some hardship in the advanced economies, LDCs are suffering far more serious conditions, through no fault of their own. The decline in demand for some primary commodities is having a huge effect.

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Posted in Development, Low-income countries, UNCTAD

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