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Emerging Challenges for Emerging Challenges for LDCs LDCs UN-OHRLLS Brainstorming meeting UN-OHRLLS Brainstorming meeting in preparation for UNLDC IV in preparation for UNLDC IV New York, 14 – 16 July 2010 New York, 14 – 16 July 2010 Presentation by Presentation by Dr. Frannie A. LEAUTIER Dr. Frannie A. LEAUTIER Executive Secretary, ACBF Executive Secretary, ACBF
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Emerging Challenges for LDCs UN-OHRLLS Brainstorming meeting in preparation for UNLDC IV New York, 14 – 16 July 2010 Presentation by Dr. Frannie A. LEAUTIER.

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Page 1: Emerging Challenges for LDCs UN-OHRLLS Brainstorming meeting in preparation for UNLDC IV New York, 14 – 16 July 2010 Presentation by Dr. Frannie A. LEAUTIER.

Emerging Challenges for Emerging Challenges for LDCsLDCs

UN-OHRLLS Brainstorming meeting UN-OHRLLS Brainstorming meeting in preparation for UNLDC IVin preparation for UNLDC IVNew York, 14 – 16 July 2010New York, 14 – 16 July 2010

Presentation by Presentation by Dr. Frannie A. LEAUTIERDr. Frannie A. LEAUTIER

Executive Secretary, ACBFExecutive Secretary, ACBF

Page 2: Emerging Challenges for LDCs UN-OHRLLS Brainstorming meeting in preparation for UNLDC IV New York, 14 – 16 July 2010 Presentation by Dr. Frannie A. LEAUTIER.

Distribution of LDCs: Mainly an African Problem Today

Majority of LDCs are on the African continent, particularly Sub-Saharan Africa:

Income levels remain low, despite impressive economic growthProgress in meeting the MDGs, but remaining weaknesses in nutrition, health, education and adult literacyEconomic vulnerabilities still present:

agricultural production, pattern of exports, size of economiesshare of population impacted by shocks (natural disasters, food prices, fuel shocks, financial crises)

New vulnerabilities emerging:Global: climate change; contagion in economic and financial systems; technological transformation; communicable diseasesRegional: demographic; arable land; water and energy shortages; challenges of economic integration; logistics and infrastructure issuesCountry: implementation for service delivery; governance challenges; ethnic, religious, political violence

2

Page 3: Emerging Challenges for LDCs UN-OHRLLS Brainstorming meeting in preparation for UNLDC IV New York, 14 – 16 July 2010 Presentation by Dr. Frannie A. LEAUTIER.

Impressive Economic Transformation Before Crisis:

Real GDP Growth (%)

3

2005 2006 2007 2008 2009(estimated)

2010(projections)

Africa 5.9 5.9 6.0 4.9 1.3 4.3

Central Africa 5.0 2.6 5.6 4.5 0.9 3.8

East Africa 7.4 6.8 7.5 6.4 3.9 5.3

North Africa 6.0 5.9 5.3 4.7 3.5 4.1

Southern Africa 6.0 6.6 6.7 4.6 -1.6 4.1

West Africa 5.1 5.3 5.9 5.3 2.4 4.7

Oil-exporters 6.8 6.0 6.9 5.6 2.5 4.9

Oil-importers 4.9 5.9 5.1 4.2 0.5 3.6

Source: UNECA (2010). Economic Report on Africa. Addis Ababa: UNECA.

Capacities to project short-term economic growth, manage indebtedness in the face of financial crises, obtain market access under changing consumer behavior, secure external financing in times of sharp retrenchment

Page 4: Emerging Challenges for LDCs UN-OHRLLS Brainstorming meeting in preparation for UNLDC IV New York, 14 – 16 July 2010 Presentation by Dr. Frannie A. LEAUTIER.

Emerging Challenges for LDCs• Post-financial crisis economic models

• Demographic shifts and their implications• Balancing effects of more open borders (trade,

remittances)• New challenges of urbanization and global

connectivity• Emerging and re-emerging disease patterns in

humans and animals• Scarcity of water, energy, and land• Climate change and pressure on natural resources• Geographical and temporal patterns of economic

growth• Transforming agriculture and food security issues• Technological and business model shocks• Challenges of integration (labour and capital markets,

logistics and infrastructure) 4

Page 5: Emerging Challenges for LDCs UN-OHRLLS Brainstorming meeting in preparation for UNLDC IV New York, 14 – 16 July 2010 Presentation by Dr. Frannie A. LEAUTIER.

Pre and Post Crisis Economic Growth Recovery in Africa

2008-2010

Source: Calculated using data from UNECA, 2010.

Capacities: to decide on R&D, industrial and competition policies in light of the financial crisis and growing competition from BRICs; maintain good fiscal governance and accountability for and get consensus on policy adopted; protect consumers in light of growing complexity of financial and business decisions; tap into the potential of nascent SMEs; regulate financial and commercial markets; effectively choose among integration options and their governance implications; shape investment policy to ensure allocative efficiency; strengthen macroeconomic management and redefine the role of the central banks

Page 6: Emerging Challenges for LDCs UN-OHRLLS Brainstorming meeting in preparation for UNLDC IV New York, 14 – 16 July 2010 Presentation by Dr. Frannie A. LEAUTIER.

Source: United Nations

Demographics: What do the patterns of growth imply?

Capacities: to manage demographic transitions (employment creation, pension management); tap into creative potential of agglomerations and manage twin challenges of access to services and food security

Page 7: Emerging Challenges for LDCs UN-OHRLLS Brainstorming meeting in preparation for UNLDC IV New York, 14 – 16 July 2010 Presentation by Dr. Frannie A. LEAUTIER.

Can LDCs in Africa balance the effects of trade and migration to their

advantage (2005-2008)?Angola MoroccoBenin NigerBurundi NigeriaCongo, R RwandaDjibouti NigeriaEthiopia Sao Tome & PrinciGambia Sierra LeoneGhana South AfricaGuinea Bissau SwazilandKenya TanzaniaLesotho TogoLiberia UgandaMali Zambia

CameroonCape VerdeCote d’IvoireGabonGuineaMozambiqueSenegalSudan

ChadEquatorial GuineaEritreaMauritaniaMauritiusSomalia

Burkina FasoCentral African RepublicComorosCongo, DRCMadagascarMalawiNamibiaZimbabwe

Growing exports (%growth)

Growing remittances (current US$)

Declining exports

Declining remittancesSource: Ranked using data for 2000 and 2005 from the World Development Indicators

Page 8: Emerging Challenges for LDCs UN-OHRLLS Brainstorming meeting in preparation for UNLDC IV New York, 14 – 16 July 2010 Presentation by Dr. Frannie A. LEAUTIER.

                                                                                                  

           

Global connectivity of the leading 123 world cities measured in terms of networks of accountancy, advertising, banking/finance, insurance, law, and management consultancy firms. Only six of the global cities are African.

Source: Taylor (2003)

Capacities: to manage global integration during economic slowdown; to deal with urbanization stresses on land use, access to services, food prices and riots, youth unemployment, urban-rural linkages; for effective connectivity of leading and lagging areas through labor migration policies and infrastructure investments; for containing contagion in crime, violence, security issues; to manage effects of increased frequency/severity of disasters

Page 9: Emerging Challenges for LDCs UN-OHRLLS Brainstorming meeting in preparation for UNLDC IV New York, 14 – 16 July 2010 Presentation by Dr. Frannie A. LEAUTIER.

Successfully tackling current communicable diseases can build readiness for handling

emerging diseases in the future

Capacities: set up “smart surveillance” measures in the hotspots indentified; generate dynamic responses to communicable diseases that are based on effective collection and monitoring of outcomes with replication of solutions worked out from in-country trials

Page 10: Emerging Challenges for LDCs UN-OHRLLS Brainstorming meeting in preparation for UNLDC IV New York, 14 – 16 July 2010 Presentation by Dr. Frannie A. LEAUTIER.

Dynamics of change impacting LDCs: Water is at the nexus of many risks

Pandemic

Infectious diseases

Extreme weatherevents

BiodiversityUrbanization

&migration

Infrastructureprovision

AgriculturalProductivity

& food prices

Science & technology

Chronicdiseases

Water

Source: Adapted from World Economic Forum 2009

Build secondary networks

Identify & remove critical path

Hedge against shocks

Control for natural or induced risks

Balance between local & global actions

Capacities: to develop regional strategy and policies for water basin management and managing the suite of risks related to water shortages

Page 11: Emerging Challenges for LDCs UN-OHRLLS Brainstorming meeting in preparation for UNLDC IV New York, 14 – 16 July 2010 Presentation by Dr. Frannie A. LEAUTIER.

Africa: Electrification Rate in 2005 (%)

0.00%

5.00%10.00%

15.00%20.00%

25.00%30.00%

35.00%40.00%

45.00%50.00%

Oil ExportingCountries

Middle IncomeCountries

Low IncomeCountries

Fragile States

• Energy trade: Limited at present, no regional markets, no interconnectivity

• Inefficiency: In operations and maintenance of existing systems

• Innovation: Little innovation on alternatives with negative pressure on forest and desertificationSource: Calculated using data from UNDP 2007/2008 and OECD classification

Capacities: to develop and support regional energy markets, put in place and maintain interconnected transmission grids, and improve the level of efficiency of current network operations; investment in innovative alternatives for energy generation and sales; enhancing capabilities for cross-country conflict prevention, resolution and management to ensure existing resources reach the demand centres across the continent

Page 12: Emerging Challenges for LDCs UN-OHRLLS Brainstorming meeting in preparation for UNLDC IV New York, 14 – 16 July 2010 Presentation by Dr. Frannie A. LEAUTIER.

Dynamics of change impacting LDCs: Agricultural dependency and arable land. Top

10 Countries over 5 YearsCountry Ag. Value

in 2003 (%GDP)

Rank in 2003

Country Ag. Value in 2008 (%GDP)

Rank in 2008

Liberia 68 1 Liberia 61 1

Guinea Bissau 62 2 Guinea Bissau 56 2

Central African Republic

56 3 Central African Republic

53 3

Congo, DR 51 4 Congo, DR 46 5

Lao PDR 49 5 Lao PDR 34 10

Sierra Leone 47 6 Sierra Leone 50 4

Tanzania 45 7 Tanzania 45 6

Ethiopia 44 8 Ethiopia 45 7

Rwanda 41 9 Rwanda 37 9

Togo 41 10 Togo 44 8

Availability:

Arable land makes up 11% of total global land area (1.4 billion hectares globally)Europe and Central Asia has the highest arable land per capita (0.57 ha per person)Arable land per capita has declined by 19% in low income countries over the past two decades

Technology:

Fertilizer use per hectare is highest in East Asia and Pacific and lowest Sub-Saharan Africa (by a factor of 17)During the past 30 years, Africa has experienced at least one major drought each decade

Capacities: agricultural productivity, innovation in drought resistant technologies, managing food security, regional food markets and agricultural supply chains

Source: World Development Indicators, World Atlas

Page 13: Emerging Challenges for LDCs UN-OHRLLS Brainstorming meeting in preparation for UNLDC IV New York, 14 – 16 July 2010 Presentation by Dr. Frannie A. LEAUTIER.

Dynamics of change impacting LDCs dependent on Agriculture: The Case of Ethiopia and rainfall patterns

-80

-60

-40

-20

0

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

year

%

-30

-25

-20

-15

-10

-5

0

5

10

15

20

25

rainfall variability

GDP growth

Ag GDP growth

Ethiopia – a relatively water rich country, but

with GDP still tied to yearly

rainfall variations

Source: A Country Water Resources Assistance Strategy for Ethiopia (Sadoff)Capacities: for multi-Sectoral policies that recognize the complex interconnection between climate change, environment and development

Page 14: Emerging Challenges for LDCs UN-OHRLLS Brainstorming meeting in preparation for UNLDC IV New York, 14 – 16 July 2010 Presentation by Dr. Frannie A. LEAUTIER.

LDCs can leverage a Portfolio of Assets: natural, produced, human and

social capital

0

50

100

150

200

250

300

350

400

450

OECD LowIncome

SSA

Per Capita Wealth

(US$1000)

0

20

40

60

80

OECD LowIncome

SSA (nooil)

Natural Capital

Produced Capital

Human&Social Capital

Share of Wealth by Category

(%)

Source: World Bank (2006) Where is the Wealth of Nations

Capacities to balance development of human, social and produced assets while consuming and preserving natural assets

Page 15: Emerging Challenges for LDCs UN-OHRLLS Brainstorming meeting in preparation for UNLDC IV New York, 14 – 16 July 2010 Presentation by Dr. Frannie A. LEAUTIER.

• 5 Fastest growth:• Mongolia 12.8%• China 9.5%• India 8.1%• Mozambique 7.8%• Ethiopia 7.7%• Slowest growth:• Germany 1.2%• Italy 1.3%• Spain 1.7%• Japan 1.7%• Congo, R 1.9%

Dynamics of change impacting LDCs: Geographical pattern of projected real GDP growth rates for the year 2010

Capacities to sustain significant growth patterns over time and speed growth in other sub-regions, while ensuring the polity owns the growth agenda

Page 16: Emerging Challenges for LDCs UN-OHRLLS Brainstorming meeting in preparation for UNLDC IV New York, 14 – 16 July 2010 Presentation by Dr. Frannie A. LEAUTIER.

Transforming Agriculture: Top 20 Producing Countries of Cotton Lint in 2007 by Value in $

1000

Rank Country Value ($1000) Rank Country Value ($1000)

1 China

11,317,680 11 Australia

406,747

2 India

6,531,712 12 Egypt

335,492

3 USA

6,207,813 13 Nigeria

228,609

4 Pakistan

2,942,239 14 Burkina Faso

218,367

5 Brazil

2,013,801 15 Argentina

215,249

6 Uzbekistan

1,677,462 16 Mexico 215,249

7 Turkey

1,425,101 17 Tajikistan

206,342

8 Syria

541,835 18 Kazakhstan

163,992

9 Turkmenistan

460,188 19 Benin

161,748

10 Greece

445,344 20 Mozambique

139,884

Source: FAOSTAT, 2010.

Page 17: Emerging Challenges for LDCs UN-OHRLLS Brainstorming meeting in preparation for UNLDC IV New York, 14 – 16 July 2010 Presentation by Dr. Frannie A. LEAUTIER.

1994 2004 1994 2004 1994 2004Australia Australia Australia New Zealand France GermanyNew Zealand New Zealand New Zealand Australia Germany ItalyArgentina South Africa United Kingdom United Kingdom Australia FranceSouth Africa Germany Argentina China Uruguay AustraliaKazakhstan Argentina France Germany United Kingdom Czech RepublicRussian Federation United Kingdom Russian Federation Turkey South Africa ArgentinaUruguay France South Africa South Africa Argentina ChinaFrance United States of America Germany Belgium Thailand South AfricaUnited Kingdom Italy Uruguay France Malaysia ThailandIreland Uruguay Malaysia Argentina United States of America SpainKyrgyzstan Ireland Spain Spain Italy United KingdomItaly Hungary Ireland Uruguay Brazil BulgariaMongolia Romania Kazakhstan Italy China IndiaGermany Belgium Pakistan Mongolia Spain United States of AmericaSpain Spain Italy Saudi Arabia Czech Republic ChileChile Norway Azerbaijan Russian Federation Netherlands BrazilBrazil Brazil Netherlands Portugal Portugal HungaryLesotho Chile Romania United States of America Republic of Korea AustriaChina Peru United States of America Romania Iran (Islamic Republic of) MalaysiaNetherlands Czech Republic Greece Syrian Arab Republic Bulgaria Republic of Korea

Wool Greasy Wool Scoured Wool Tops

Technological and Business Model Shocks: Global Brands-- Top 20 Wool Exporters 1994 to 2004 by Value in 2004 (US$ 000)

Source: FAO, Key Statistics of Food and Agricultural Trade, 2007

Capacities to transform primary products, manage complex supply chains, and negotiate appropriate trade agreements

Page 18: Emerging Challenges for LDCs UN-OHRLLS Brainstorming meeting in preparation for UNLDC IV New York, 14 – 16 July 2010 Presentation by Dr. Frannie A. LEAUTIER.

Challenges of Economic Integration• Improve trade within borders (rural-urban) and

outside borders by:– Mitigating for geographic characteristics:

country size; proximity to other countries; common borders and land-lockedness

– Rethinking trade policies in place: domestic (connectivity through transport and communication investments; competition and reliance on markets) and international (trading agreements, barriers and tariffs)

– Adjusting for income levels: richer countries to interact more with other countries (regional trade)

• Other factors for consideration:– Import and export policy reforms– Functioning of the labour markets

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Page 19: Emerging Challenges for LDCs UN-OHRLLS Brainstorming meeting in preparation for UNLDC IV New York, 14 – 16 July 2010 Presentation by Dr. Frannie A. LEAUTIER.

Key elements of the logistics revolution: access, inventory, supply

chain logistics, risk management

ACCESSINVENTORY

SUPPLY CHAIN LOGISTICS RISK MANAGEMENT

Source: Images from Google Images

Opportunity for LDC economies:•Many LDCs are still tackling first generation infrastructure, transport and trade facilitation constraints•Few firms in LDCs have internalized the issue of supply chain management•There is room for LDCs to learn from countries in Asia (Malaysia) and Africa (South Africa)

Page 20: Emerging Challenges for LDCs UN-OHRLLS Brainstorming meeting in preparation for UNLDC IV New York, 14 – 16 July 2010 Presentation by Dr. Frannie A. LEAUTIER.

Conflict and Security Challenges

Poverty & access to services:

• Speed and scope of addressing chronic poverty and broadening access to basic needs

• Horizontal inequalities (ethnic, religious, group, clan, race, geographical, gender distinctions)

Threat from climate change:

• Droughts, desertification, land degradation, depletion of forests and fisheries

• Threat to coastal populations, increase in forced migration

Challenge from weak states:

• Growing insurgency• Networks of crime,

drugs, illicit trade, human trafficking

Economic/Political Competition:

• Low ability to generate jobs, poor distribution of natural resources

• Weak inclusion and poor representation

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Page 21: Emerging Challenges for LDCs UN-OHRLLS Brainstorming meeting in preparation for UNLDC IV New York, 14 – 16 July 2010 Presentation by Dr. Frannie A. LEAUTIER.

Three Potential Scenarios for Africa and LDCs in other Regions

Page 22: Emerging Challenges for LDCs UN-OHRLLS Brainstorming meeting in preparation for UNLDC IV New York, 14 – 16 July 2010 Presentation by Dr. Frannie A. LEAUTIER.

LDCs Leadersh

ip & Ideas

International

Parity

Domestic Results

•Polity owns the growth

agenda

•LDC countries lead

innovation

•Homegrown

democracies flourish

•Leadership &

representation in

international

institutions and debates

•LDC standards of

governance

internationally

accepted

•LDC countries

contribute to

international

architecture (trade,

finance, environment,

migration, debt)

•LDCs resolve

conflicts and

prevent violence

and crime

•Service solutions

(health, gender,

water, education)

are effective

Scenario 1: Continental Leadership and Ownership (Optimistic: high on inspiration, aspiration, and coordinated action )

Page 23: Emerging Challenges for LDCs UN-OHRLLS Brainstorming meeting in preparation for UNLDC IV New York, 14 – 16 July 2010 Presentation by Dr. Frannie A. LEAUTIER.

Sub-Regional Prominen

ce

Differentiated

Performance

Visible but

uneven Outcome

s•Models of success

in some RECs but

limited continental

learning

•Variable quality of

democratic and

economic

governance

•Some RECs with

respectable

performance, but

others not

•Ad hoc cooperation

driven by bilateral

strategies

•Few prominent

countries driving the

external agenda

•Isolated success in

service provision

(heath, education,

gender, water)

•External aid driven

by external security

needs and donor-

based evaluations of

capacity and need

Scenario 2: Sub-Regional Mosaic(Realistic: focused on performance and results, managing interdependency, mastering strategic planning)

Page 24: Emerging Challenges for LDCs UN-OHRLLS Brainstorming meeting in preparation for UNLDC IV New York, 14 – 16 July 2010 Presentation by Dr. Frannie A. LEAUTIER.

Reacting to

external threats

Weak capacity

to manage

Country Conditio

nality

•New technologies

and business models

threaten domestic

production

•Governance

standards externally

set

•Under-

representation in

international fora

and debates

•Weak capacity to handle

ethnic, religious, and

political violence

•Weak country institutions

lack capacity to react to

international imperatives

•Access to globalization

determined by bilateral

and multi-lateral

organizations

•Service provision

variable with

heavy dependence

on international

civil society

•Selective aid

provision with

specific conditions

Scenario 3: Externally Driven Nation States(Gloomy, with attention to adaptability and resilience, managing uncertainty from conflict, climate, global events)

Page 25: Emerging Challenges for LDCs UN-OHRLLS Brainstorming meeting in preparation for UNLDC IV New York, 14 – 16 July 2010 Presentation by Dr. Frannie A. LEAUTIER.

Scenarios for Africa and LDCs in other Regions and Capacity Implications

•Capacity to manage across sectors, geographies & generations•Capacity to engage civil society, private sector, and international community

•Capacity to decide on investment priorities•Capacity to observe, collect and analyze facts and data

•Capacity to negotiate and manage conflict•Capacity to transform agriculture

Page 26: Emerging Challenges for LDCs UN-OHRLLS Brainstorming meeting in preparation for UNLDC IV New York, 14 – 16 July 2010 Presentation by Dr. Frannie A. LEAUTIER.

Three key aspects of critical capacities regardless of scenario• Abilities to formulate, implement, analyze,

evaluate and revise the appropriate policies• Skills to observe, collect, analyze and evaluate

outcomes, trends, and patterns in a variety of macroeconomic, sectoral and cross-sectoral issues, including the requisite leadership skills to move perspectives, transform societies, unite diverse perspectives, or oversee implementation

• Tools to know where you are, track where you are going, tap into opportunities, and handle the challenges at hand

Page 27: Emerging Challenges for LDCs UN-OHRLLS Brainstorming meeting in preparation for UNLDC IV New York, 14 – 16 July 2010 Presentation by Dr. Frannie A. LEAUTIER.

Source: MDG Report 2010 - UN

Financing Capacity Development and the Patterns of ODA

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Page 28: Emerging Challenges for LDCs UN-OHRLLS Brainstorming meeting in preparation for UNLDC IV New York, 14 – 16 July 2010 Presentation by Dr. Frannie A. LEAUTIER.

Implications for ACBF• Philosophy: develop a philosophy and approach that is suitable to the

contexts and realities of different countries on the continent, drawing on local knowledge and practical skills, and embedding work programs in country priorities

• Entry Points: select areas for strategic long-term support to particular countries, sub-regions, or group of institutions in partnership with critical institutions to build sustainable capacity—for example supreme audit institutions, procurement agencies, policy units, data collection and analysis agencies, leadership development, and entrepreneurship skills building

• Partnerships: give priority to finding partnerships in tackling policy issues that can help evolve from one scenario to the next—policies on agriculture, climate change, investment and trade---and give priority to partnerships with institutions that can stretch geographies—(WB, IMF, IMF) (AfDB, AU, ECA, NEPAD) (bilateral donors) (private sector)

• Piloting: put in place a more experimental “test and learn” approach to capacity building, drawing out lessons from experience horizontally across sectors and themes and vertically across levels of engagement

• Scaling-up: speed up success by supporting regional learning institutions, policy institutes, regional NGOs, private sector associations

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