LDCs need to "own" policies to use aid more effectively

Growth, Poverty and the Terms of Development Partnership was the theme of the Least Developed Countries (LDCs) Report 2008 published  by the United Nations   Conference on Trade and Development (UNCTAD).

On behalf of the UNCTAD, CPD launched the  report on 17 July 2008. Mustafizur Rahman, Executive Director of CPD presented the highlights of the LDC

report 2008 at a press briefing  held at the CPD  office. The report addressed economic and social trends in the LDCs, including   developments in poverty reduction and progress towards the Millennium Development Goals (MDGs). Despite rapid economic growth, number

of poor was still rising in LDCs. the report warned and suggested that world's poorest countries should design and "own" policies in order to use development aid effectively. The report urged for a strong development partnership between donors and national governments for a sustained and inclusive development with the government in driver's seat and the donors aligning their aid disbursements with national priorities and policies, and harmonising them with national systems. The report identified key factors which weaken country ownership of national development strategies, and proposed for improving the situation which is in line with the assessment of the Paris Declaration on Aid Effectiveness. The report estimated that with her current 6.5 per cent real economic growth, Bangladesh would come out from the LDC to become a middle income country by the year 2025. CPD however, differed with the time line and said that Bangladesh would become a middle income country much earlier if the current positive economic trend continues. Compared to other LDCs, Bangladesh had done well in terms of GDP growth, export, import and external finance, but could not do well in poverty reduction, income inequalities, capital formation, foreign direct investment (FDi) and progress towards MDGs in 2006. Aid dependency was relatively less and at the same time Bangladesh was among the highest workers' remittance earner LDCs, the report said. The report ranked Bangladesh 15th (6.5 - 6.7 per cent) among 50 LDCs that had more than 6 per cent real GDP growth. However, her position with respect to gross capital formation, gross domestic savings and the subsequent resource gap (4.6 Per cent) was discouraging in comparison to other developing countries.
During 2005-2006, 75 per cent of LDCs' total exports in manufactured goods were from the Asian LDCs, where Bangladesh alone exported an average of USD 7.3 billion of manufactured goods per year. However, Bangladesh's share of percentage in terms of FDI inflows was only 9 per cent among the top five countries. Regarding poverty the report found income inequality was high in general in LDCs with estimation that 26.4 per cent of Bangladesh's population live on or below USD 1-a-day, while 74.8 per cent between USD 1 to USD 2-a-day.
The report affirmed that LDCs were generally off track to achieve the poverty and human development MDGs, particularly the Asian LDCs would perhaps miss the poverty target. In this regard Mustafizur Rahman informed that 30 per cent of the population of Bangladesh is estimated to be undernourished despite steady GDP growth since the early 1990s. Rahman added that extreme rise in food price, particularly of rice and wheat, had significant adverse impact on the overall poverty situation in Bangladesh. Uttam Kumar Deb, Fahmida Khatun, both Additional Director, Research, Khondaker Golam Moazzem, Senior Research Fellow, CPD also attended the launch meeting.