Poor nations 'being pushed back'

Agriculture is providing fewer jobs in poor countries

The world's poorest nations are at a "critical moment of transition" which threatens to push them even further behind, the United Nations has warned.

The 50 least developed countries, most of which are in Africa, lack the means to compete in a rapidly globalising world, says the UN's Unctad agency.

Unctad's latest report says aid should be used to make poorer economies more productive and boost wealth creation.

"We need to go back to the basics," said co-author Zeljka Kozul-Wright.

"If countries do not invest in infrastructure, they are not going to sow the seeds for growth and development in future," she told the BBC News website.

Poor and poorer

According to Unctad's annual Least Developed Countries (LDCs) report, the poorest nations achieved an overall 2004 growth rate of 5.9% - their best performance for 20 years.

But that average masks big disparities among the LDCs in terms of growth performance. At the top of the table, Chad achieved a 31% increase in GDP, while for the worst performer, Haiti, GDP shrank by 3.8%.

WORST GROWTH RECORD Angola Burundi Central African Republic Comoros DR Congo Djibouti Gambia Guinea-Bissau Haiti Liberia Madagascar Niger Rwanda Sao Tome & Principe Sierra Leone Togo Zambia All experienced negative GDP growth per head from 1980 to 2003 (Source: Unctad)

The picture is even bleaker for the LDCs over the long term.

Since 1980, GDP per head in most poor countries has diverged from that of rich countries, with only Bangladesh, Bhutan, Burkina Faso, Cape Verde, Laos, Lesotho and Nepal experiencing steady growth.

As urbanisation accelerates and more people seek work outside agriculture, most poor countries are facing a deepening employment crisis, with their economies unable to absorb the growing labour force, Unctad says.

"Very few LDCs have restrictive trade regimes at the present time and most have undertaken rapid and extensive trade liberalisation," the report says.

"But their existing production and trade structures offer very limited opportunities in a rapidly globalising world driven by new knowledge-intensive products," it adds.

"The relentless logic of cumulative causation threatens to push LDCs even further behind."

'Invest to grow'

Unctad's solution is to call for a "paradigm shift" on the part of the international community, so that aid can be directed towards economic investment.

"Aid used to go towards infrastructure and productive sectors of the economy but, over the past 10 years, there has been a historical shift towards social sectors such as health and education," said Mrs Kozul-Wright.

"That was very successful in addressing the basic needs of the population. However, we believe the aid needs to go into productive investment and be reoriented back towards the sectors that actually make the wealth."

Unctad - the UN Conference on Trade and Development - wants to see LDCs focus on capital accumulation, structural economic change and technological development, so that they can become more competitive internationally.

Wealthy nations can help by honouring pledges made at last year's G8 Gleneagles summit for a $50bn (£28.8bn) aid boost, as long as it is not swallowed up by debt forgiveness and emergency assistance, Mrs Kozul-Wright says.

"There are 600 million people in these countries. They have to develop and we have to help them. It's a moral, ethical, economic and political issue," she said.

"Poverty reduction needs wealth creation. Good words and solidarity are not enough."