03 Nov 2014 We must recognise the special needs of landlocked developing countries
Delegates at a UN conference on Monday need to find solutions to the unique disadvantages facing landlocked poor countries
Landlocked developing countries (LLDCs) face particular challenges that limit their potential gains from trade, and restrict their resources for investing in development. Although the world’s 32 LLDCs have recorded good economic gains recently – with the value of exports increasing almost fivefold between 2003 and 2013 (pdf) – their share of global trade hovers at about 1%.
Such gains have not been enough to boost the prospects of these countries, many of which are still on the bottom rung of the development ladder. The human development report 2014 paints a stark picture. Notwithstanding a sharp drop in the number of children dying from preventable diseases and a small rise in the number of young girls in school, nine of the 15 countries with the lowest Human Development Index scores are landlocked. Life expectancy, in most cases, continues to lag behind neighbouring coastal countries.
The lack of access to the sea means it is far more expensive to import essential items and export goods. It is estimated that the basic trade costs of LLDCs are nearly twice those of neighbouring countries with coastlines.
A recent World Bank study (pdf) shows that, on average, it costs $3,040 (£1,900) to export a standard container of cargo from a landlocked developing country, whereas a coastal neighbour spends about $1,268. Likewise, a country such as Burundi pays $3,643 to import a similar container of merchandise compared with $1,567 for its coastal neighbours in east Africa.
When the global recession bottomed out in 2009, it left the gross domestic product growth rate for this group of countries at 3.6%, substantially below the decade-long average of 6.1%. Five years later, growth continues to slow, reflecting the effects of the sovereign debt crisis in the eurozone, the double recession in major economies and the anaemic global demand for commodities.
However, distance alone cannot explain why LLDCs are at a disadvantage compared with equally remote, inland regions of large countries. Border crossings, cumbersome transit procedures, inefficient logistics systems and poor infrastructure substantially increase the cost of doing business.
It is our hope that the second UN conference onLLDCs, in Vienna from 3-5 November, will offer concrete ways in which the cooperation and collaboration between landlocked developing countries and transit countries can be strengthened with the support of the international community.
In order to address successfully many of the attendant challenges in LLDCs, there needs to be an action plan for sustainable and inclusive growth, structural transformation and economic diversification. The focus should also be on strengthening LLDCs’ production capacity in agriculture, manufacturing and the service sector.
Data analysis shows a steady decline in added value with the agriculture and manufacturing sectors in LLDCs. It has become urgent to reverse this trend, and to promote LLDCs’ participation in regional and global value chains.
The private sector in general, and small and medium enterprises (SMEs) in particular, have an important role to play, especially in employment creation, poverty alleviation and structural transformation. A competitive private sector generates efficiency, higher productivity, foreign exchange earnings and incomes.
But SMEs remain regrettably weak in most LLDCs. They have poor access to markets, lack adequate finance and are also found wanting in other areas including technology, a skilled labour force, and critical infrastructure and utilities.
Since LLDCs typically suffer from a general lack of resources and underfunded social sectors due to structural barriers, official development assistance (ODA) strategies should recognise the large infrastructure needs of low-income landlocked countries and the need for an increase in direct assistance to support large-scale investments in roads and railways.
ODA must be complemented by investment in and development of trade capacity, which also contributes to promoting the domestic resource base. A significant part of the Vienna conference will be dedicated to this.
As the world continues to discuss the development agenda after the millennium development goals expire in 2015, we should recognise the special needs of landlocked developing countries. Sustainable development of our global community cannot be achieved without taking into account the concerns and aspirations of vulnerable economies.
• Sebastian Kurz is the foreign minister of Austria.
• Gyan Chandra Acharya is the UN under secretary general for least developed countries, landlocked developing countries and small island developing states
Source: The Guardian