Next week, in Istanbul, world leaders have the chance to kill two birds with one stone: to breathe new life into solid, long-term economic recovery and to fulfil long-term commitments to reduce poverty, hunger and disease in the world's 48 Least Developed Countries.
This diverse group of nations – 33 in Africa, 14 in Asia and Oceania, and one (Haiti) in the Western hemisphere – has one common desire: increased engagement in the global economy. In the last decade, LDC exports have risen by a factor of five, and their share of world trade has doubled. But, with 12 per cent of the global population – some 900 million people – LDCs still collectively produce only 1 per cent of world exports, and receive less than 2 per cent of global investment.
Investing in LDCs offers a vast, and virtually untapped, opportunity to provide much-needed further stimulus to the global economic recovery without significantly burdening the balance sheets of the developed countries with more red ink. G-20 leaders recognized this last year at their meeting in Seoul.
In recent years, more than half the LDCs have shown consistent growth built on demand for commodities, diversification of their economic base or more productive regional partnerships. Nepal, which currently holds the presidency of the LDCs, is typical of many LDCs that are working to improve essential social services, encourage inclusive and transparent governance and provide efficient environments for doing business in the 21st century.
But LDCs will not escape their vulnerability easily. Climate change, in particular, poses a severe challenge. While LDCs produce the least greenhouse gas emissions compared with any other country grouping, their agriculture-oriented economies are the most threatened by the effects of a changing climate. Many are prone to desertification, or are at risk from sea-level rise and tropical storms. Others, like Nepal, depend on run-off from mountain glaciers that appear to be receding.
Rising food prices also present a clear test. Most LDCs are net food importers. Half their populations live in extreme poverty. One person out of three is malnourished. Agricultural capacity is low. On the other hand, the vast areas of under-utilized arable land in LDCs means they offer considerable potential to increase world harvests: improving nutrition security at home and mitigating food price inflation that – as we have already seen – poses a threat to social and political security worldwide.
Most measures under negotiation by governments going into the Fourth UN Conference on the LDCs in Istanbul are well within the capacities of the world's nations. Development assistance from the North has been generous, and has been rising over the last decade. We hope to see this trend continue. At only one quarter of total Official Development Assistance, aid to LDCs can easily increase – with considerable returns on investment to all parties. It can help to improve basic infrastructure, train the abundant human capital and ensure the transfer of adapted know-how. All these are important for attracting greater foreign direct investment. And indeed, productive capacity-building will be the main focus of the LDC conference in Istanbul.
We would also like to see more incentives for investors who want to get in on the ground floor of economies that are using a base of prized primary commodities as a foundation to diversify. This includes bringing down trade barriers to LDC exports and fulfilling commitments enshrined in the Monterrey Consensus and the Doha Declaration on Financing for Development. Studies have shown that 100 per cent duty-free quota-free access to markets would have only a negligible impact on domestic producers in host countries, but could bring profound benefits to LDCs. Equally, relieving LDCs of their debt burden would free up resources for improving infrastructure and productive capacity.
One development that gives us new hope is the growing role of the global South. Statistics from the UN Conference on Trade and Development show that companies from emerging economies raised their direct investment abroad to record levels in 2010. A good deal of that investment is going to LDCs. Combined with growing trade and assistance , nations like India, Brazil, China, South Africa and Turkey are serving as new models for LDCs under the South-South Cooperation.
For their part, the LDCs are working hard to overcome the various social, economic and environmental challenges they face so they can follow in the footsteps of the major emerging economies that have fared so well in the past two decades, including by enacting political and economic reform. Only by providing a fuller global economic role for these countries can we set in motion the necessary economic currents that will carry often unstable nations towards the security and stability the whole world needs.
Investing in LDCs is a classic win-win for all: traditional donors, emerging economies, the private sector and – most important – nearly one billion people who deserve to enjoy their rights to social progress and better standards of life. Opportunity knocks in Istanbul on 9 May. Let us seize it.
Abdullah Gül, President of the Republic of Turkey
Jhala Nath Khanal, Prime Minister of the Federal Democratic Republic of Nepal
Ban Ki-moon, United Nations Secretary-General
Disclaimer: "The views/contents expressed in this article are the sole responsibility of the author(s) and do not necessarily reflect those of Modern Ghana. Modern Ghana will not be responsible or liable for any inaccurate or incorrect statements contained in this article."