Ministerial Meeting of Asia-Pacific LDCs on Graduation and Post-2015 Development Agenda December 2014, Kathmandu, Nepal

Transcription

1 Ministerial Meeting of Asia-Pacific LDCs on Graduation and Post-2015 Development Agenda December 2014, Kathmandu, Nepal Context: UNIDO Productive Capacities in LDCs: Edme Koffi, UNIDO Honorable Ministers, Excellences, distinguished colleagues, ladies and gentlemen Before I begin my presentation, I would like to express my gratitude to the Government of Nepal and to UN OHRLLS for organizing this retreat and giving UNIDO the opportunity for this contribution. Let me start by sharing with you that within the framework of the Istanbul Programme of Action for (IPoA) the United Nations Industrial Development Organization (UNIDO) continuously increased its technical assistance towards the Least Developed Countries (LDCs). In this regard, since 2007, UNIDO has been organizing LDCs Ministerial Conferences every two years to consolidate, review the achievements and determine the best way towards enhancing LDCs productive capacities and foster graduation. In addition, following the Istanbul Declaration, by the Fourth UN Conference on the Least Developed Countries, held in Istanbul, May 2011, UNIDO has developed a LDCs targeted strategy. Similar to most developing countries, to achieve sustainable economic growth, LDCs will need to focus on the structural transformation of their economies by promoting competitive industries and export structures that produce higher value-added products. This will require a strong focus on industrialization, and the development of responsible value addition to encourage job creation and income generation, while respecting the planetary boundaries and ensuring the efficient use of resources. The Strategy builds on ongoing activities developed by UNIDO in LDCs, and proposes a comprehensive, integrated and focused approach to deliver UNIDO s technical assistance to LDCs in order to develop their productive capacities and initiate a process of structural change involving product diversification and upgrading.

2 Let me first assert that by productive capacity, we mean "the productive resources, entrepreneurial capabilities and production linkages which together determine the capacity of a country to produce goods and services." I would like know to highlight some of UNIDO s activities to foster the productive resources, entrepreneurial capabilities and production linkages in LDCs. First, Industrial Policies: The structural transformation of an economy requires a strategic approach that has to be based on a thorough understanding of global and local trends and of the countries potential and limitations. Given the specific limitations that LDCs face, especially their limited access to world markets and high transaction costs, strategic choices regarding the transformation of their economies are crucial for LDCs. Governments in consultation with the private sector and main stakeholders need to develop a clear industrial vision that outlines clear commitments towards the strengthening of economic drivers and a competitive regional and international positioning. Strategic decisions that have to be taken include: expanding existing manufacturing capacities and engaging in new industries, creating new linkages including enhanced linkages with transit countries for stronger regional integration; furthermore improving productivity and participating in more dynamic world market segments. The main role of the State in this process is to facilitate the coherent implementation of this vision and help overcome the coordination problems among the stakeholders and institutions involved. Although there is no one-size-fit-all, a necessary element of the industrial strategies of LDCs countries should focus on: specialization within a regional context; specializing in niche products for domestic consumption and export; participating in non-tradable goods for local and regional markets; and developing production and trade systems that are less dependent on transport or producing goods that are efficient to transport in the sense of having high value relative to weight. For resource-rich LDCs a necessary part of their strategy should be to increase domestic value-added content of their natural resource exports as well as leveraging their natural resources to achieve economic transformation. Very importantly too, a key part of the strategy will be to increase productive capacity geared to transforming agriculture through science and technology into a launching pad for Industrialization, in addition to guaranteeing food security.

3 Second, Private Sector Development and the importance of public-private partnership: Besides attracting foreign businesses, developing a vibrant private sector at home is critical for economic growth, entrepreneurship development, technological dynamism and associated productivity growth. Therefore, LDCs will have to focus on the development of a strong private sector by improving the general business environment for private sector development. Supported by a conducive business environment the private sector can play a vital role in driving innovation. Private companies often stand at the frontier of new sectors and bring innovation to the economy. In this regard, I would also like to stress the importance of public-private partnerships. In the area of science and technology, strong inter-linkages between the public and private sector can be of profit for both sides. In this context, I would like to mention three activities of UNIDO: 1) UNIDO facilitates market access for SMEs in the agribusiness sector through the development of export consortia. Export consortia are voluntary alliances of firms with the objectives of promoting export of goods and services of its members through joint actions. 2) UNIDO s industrial upgrading programmes for developing countries offer a wide range of competitiveness improving tools provided to enterprises and their networks. These programmes aim at improving competitiveness of individual producers and their networks through strengthening their productive and trade capacities. Specially, industrial upgrading assumes undertaking actions that intend to improve the financial situation of companies, their productive performance and energy efficiency, ability to produce according to international standards and to facilitate their integration into the world market. Upgrading projects lead not only to providing direct assistance to the consolidation of economic data and its dissemination. Such an approach allows SMEs and their networks to build interlinked capacities necessary to reliably produce larger volumes of manufacturing goods in compliance with technical requirements of open markets and to contribute to the diversification of the economy, away from minerals processing and to the creation of stable manufacturing jobs. Indeed, UNIDO s upgrading programmes are expected to support specific actions aimed at improving the institutional and technical support institutions (public and private) involving in a range of specialized intermediaries for the selected priority products/value chains (As regards the enterprise level, an overall diagnosis of the market position of manufacturing enterprise, of its financial performance, of management,

4 organizational and process quality aspects, as well as of technical capacities pertaining to production operations, technical performance and environmental aspects, is at the basis of a supply-side development plan developed with and for business owners. 3) Enhancing trade capacity building by supporting the development of quality infrastructure and compliance services. Food safety is an increasingly important aspect of quality infrastructure development, both towards the imported and the locally produced products in local markets, and for products to be exported to international markets (UNIDO provides technical assistance for the development of national food safety laws, SPS legal and regulatory frameworks, and support to the strengthening of a local modern risk-based management of food safety): Traceability scheme for sea food products in Bangladesh and scheme for food hygiene in Sri Lanka. UNIDO has made a critical contribution of assisting the National Specifications Laboratory (NSL) of the Cambodian Rubber Research Institute (CRRI) to gain accreditation to ISQ/IEC standard. UNIDO supported Cambodia and Nepal in upgrading their testing laboratories. The strengthening of legal metrology services (mass, length, volume) help to prevent unsafe products on local markets and also help to improve the purchasing power of low-income groups. Third, Access to investment and technology: The development of productive capacities in LDCs furthermore largely depends on access to investment. Foreign direct investment (FDI) plays a crucial role in accelerating private sector development and can be an important driver of industrial development, as it promotes productivity growth by providing capital, technologies and knowledge. Therefore, to expand their productive assets, LDCs need to mobilize investment - both domestic and foreign. In this context it is crucial that LDCs promote an enabling environment to attract foreign direct investment and private sector. To secure quality FDI, LDCs must have access to a wide variety of data on domestic companies and foreign investors so that they can devise effective investment promotion strategies: target investors and customize services; evaluate the effectiveness of their interventions on investor decisions and actions; influence government policies that support high impact investment; rationalize the use of the scare resources that are available for investment

5 promotion; and, very importantly, achieve consensus among national stakeholders around a common investment promotion strategy. The network of Investment and Technology Promotions Office (IITPO) is an exclusive feature of UNIDO investment and technology promotion programmes to foster industrial partnerships with LDCs. UNIDO operates a global network of 13 ITPOs (Bahrain, China (Beijing and shanghai), France (Paris and Marseille), Greece, Italy, Japan, Korea, Russia, Mexico, United Kingdom and Belgium (Walloon region). ITPOs promote investment opportunities in developing countries to the business community of their respective host countries. The ITPOs network provide combination of value-added services to client institutions and entrepreneurs from developing countries, who want to forge new alliances in international industrial investment and technology transfer, by: - Identifying and promoting specific investment opportunities; - Providing expert advice at all stages of the business cycle; - Facilitating business contacts between project sponsors and potential foreign investors. UNIDO has also established more than 60 Subcontracting Partnership Exchange Centres (SPXs) in more than 30 countries worldwide, creating a network that aims to help local enterprises successfully meet the challenge of globalization by becoming suppliers or subcontractors to transnational corporations. The SPX serves three fundamental objectives: matchmaking between suppliers and buyers, benchmarking of local suppliers and upgrading of supplier capabilities. Fourth, Development of human capacities: Effective transfer of technology requires enhanced capabilities to acquire, assimilate, adopt, adapt, learn and invent. A problem that many LDCs face is the shortage in human capital at the different skills levels. Increasing investment in human capital is particularly essential in LDCs to increase productivity, innovation and competitiveness. Low levels of productivity and limited economic diversification often lead to emigration of skilled workers in search of job opportunities. In view of this brain drain, ensuring a match between labour demand and supply is a big challenge for LDCs. In close cooperation with the private sector and vocational training institutions, LDC governments should therefore establish and revise vocational training curricula, and build capacities of vocational training institutions. This will contribute to match the skills of job-seekers to labour market needs and demands of the private sector.

6 The UNIDO action-oriented Entrepreneurship Curriculum Programme (ECP) in secondary, technical school and universities prepares youth to enter their economic career. Fifth, Infrastructure Here we limit our contribution to energy for productive uses. A major constraint confronting LDCs is inadequate access to reliable, affordable, energy services. The high cost of energy is one of the reasons for the high cost of production and doing business. Industry needs reliable and affordable energy to become productive and competitive. UNIDO s energy strategy aims at helping developing countries to achieve the following objectives: - Enhance access of the poor to the modern energy services based on renewable; - Increase the competitiveness of their industries by reducing industrial energy intensity; - Increase the reliability of their enterprises, particularly in rural areas, by augmenting the availability of renewable energy for productive uses. To enhance productive activities and increase competitiveness of small and medium enterprises (SMEs) in rural on/off-grid areas, UNIDO s strategy promotes the following forms of renewable energy: bio-energy (biomass), small hydropower, solar energy and wind energy. In the area of small scale hydropower (SHP), UNIDO is developing projects in Sri Lanka and Cambodia. There is therefore a need to invest in energy infrastructure, while at the same time enhancing energy efficiency as this can reap environmental, social and economic dividends. Finally, South-South cooperation: LDCs are particularly well placed to positively benefit from South-South cooperation because; different from traditional North-South cooperation, such cooperation usually takes place in a regional context and can thus promote regional integration. South-South cooperation is also crucial for LDCs because, in as much as it facilitates exchange of knowledge, experience, technology, and investment, the technological gap between countries of the South is usually less pronounced and thus facilitates adoption in LDCs. It is also because of these distinct advantages that The Almaty Declaration emphasizes the importance of South-South cooperation and encourages the further strengthening of South- South cooperation and triangular cooperation. Concluding remarks and the way forwards

7 Concluding my intervention I would like indicate that, through its Inclusive and Sustainable Industrial Development (ISID) mandate, UNIDO is striving to be in the forefront to assist LDCs within the post 2015 development agenda and aims to support inclusive growth, sustainable industrial development and, ultimately, structural transformation of LDCs economies. In this regards, UNIDO organized two Forums focusing on Strategies and Instruments for ISID and on Partnership to scale up investment for ISID to promote ISID and innovative partnerships development as critical tools towards poverty alleviation particularly through developing productive capacities. Let me finish by saying that increasing productive capacity is at the core of both the IPoA and the UNIDO Operational Strategy for LDCs. In order to scale up projects and programmes formulation focusing on productive capacity development and foster graduation, we suggest the creation of a dedicated LDC Trust Fund. The potential sources of funding for this Trust Fund could be the identified development partners from the South & BRICs, traditional donors; various development banks and financial institutions, and the private sector. It is essential that LDCs also contribute to the funding effort. Likewise, the effective implementation of the IPoA and hence UNIDO s operational strategy requires its mainstreaming into LDCs national policies, strategies and sectoral development frameworks for the countries to maintain ownership and leadership of their own development. The active engagement of civil society, private sector and governments in the implementation and followup process is also instrumental. Finally, it is also essential to deepen UNIDO s South-South and Triangular Cooperation s role in supporting and fostering LDCs industrial development through investment promotion, technology transfer, knowledge absorption and productive capacities development by increasing innovative public private partnerships (PPPs) and BRICs involvement as emerging donors.