At face value, the United Nations Conference on Trade and Development’s (UNCTAD) latest report on Least Developed Countries looks good. Its main focus is on how to harness Remittances and Diaspora to build productive capacities.
Launched by the UN System in The Gambia on Wednesday, November 28, “The 2012 LDC Report: Harnessing Remittances and Diaspora knowledge to Build Productive Capacities”, has its theme beautifully inscribed on a colourful cover.
The report indicated that remittance flows to LDCs is growing because the number of people who emigrated from LDCs increased from 19 million in 2000 to 27 million in 2010. Remittances to LDCs grew from $3.5 billion in 1990 to $27 billion in 2011, amounting to 4.4 percent (%) of Gross Domestic Product (GDP) and 15% of exports, compared with 1.6% and 4.5% for other developing countries.
The UNCTAD Report also analyses issues related to diaspora knowledge and notes that the so-called “brain drain” (migration abroad of very highly skilled professionals) is very high in the case of LDCs. Some 2 million people from LDCs with university education live abroad and their number is rapidly growing: now 54% higher than in 2000.
For instance, a small country like The Gambia with a population of less than 2 million has close to 60, 000 professional who live and work abroad.
It suggests that LDCs put in place policy actions to turn over time, the brain drain into positive impact by engaging the diaspora.
Nonetheless, the authors of the report still sound the alarm on economic trends of LDCs. They point out that Least Develop Countries around the world has recorded a downward trend of an average real rate of gross domestic product of 4.2% in 2011, down from 5.6% in 2010.
The 48 least developed countries (33 from Africa) including The Gambia saw their GDP growth rate fall way below the 7.9% in 2002 to 2008. The Gambia’s real GDP grew by 6.7% in 2009, declining to 5.5% in 2010 and further decreased to 3.3% in 2011 – authorities blame the “free fall” on the total crop failure that gripped the country in 2011.
It says the economic trends in LDCs are not encouraging. It highlighted a 23% increase in trade in 2011 that surpass the pre-crisis level, but in contrast, it noted that private financial flows declined for three consecutive years, only offset by an increase in official flows.
“After peaking at almost $19 billion in 2008, Foreign Direct Investment (FDI) has been declining for three years , and amounted to only $15 billion in 2011,” the report said, LDC economies continue to be extremely vulnerable to external shocks as many countries face large fiscal and current account deficits.
The Report further painted a gloomy picture of the outlook for LDCs which it said is basically a continuation of the recent trends with significant risks to the downside. It argues that “given the fragility of the global economy, the outlook for LDCs is subject to a high degree of uncertainty.”
“Unless the global downturn (which is also affecting large dynamic developing economies like China) reverses, LDCs have to prepare for a possibility of a lengthy period of stagnation and deflation,” the experts said, “Of particular concern are external shocks from reversals of commodity prices and drying up of financing options.”
Written by Modou S. Joof