Summary of discussions
1. This round table addressed the topic ‘Globalization and the Least Developed Countries: Issues in Trade and Investment’. The panel was chaired by H. E. Ms. Sahana Pradhan, Minister of Foreign Affairs of Nepal. Kamal Malhotra, Senior Adviser and Cluster Leader, Inclusive Globalization, Poverty Group, Bureau for Development Policy, UNDP, was the presenter of the issues paper ‘Globalization and the Least Developed Countries: Issues in trade and investment’. It was noted that the paper is a collaborative effort of UNCTAD and UNDP. The paper was pre- sented on behalf of the two agencies.
2. The key messages of the presentation highlighted that while globalization has been associated with rising world income, the benefits among countries have been unequal, and LDCs, despite significant trade liberalization and economic reforms, have often been marginalized. While there is little doubt that trade can be a positive force for economic growth, poverty reduction and human develop- ment, by increasing productivity and providing access to new markets and new technologies, nothing about this is either automatic or inevitable. To make this happen, there must be a shift from trade-led development policies to develop- ment-led trade policies.
3. The presentation also emphasized that, at the national level, while the focus on supply-side issues is desirable and welcome, there is a need to broaden that focus to include support for productive and economic growth capacities. At the international level, there is a need to strengthen export capacities of the LDCs and ensure effective market access and adequate policy space. It was concluded that both international development assistance as well as national poverty reduction strategies need to focus much more strongly on a production orient- ed approach to poverty reduction in the LDCs if commonly shared objectives are to be achieved.
4. Most participants agreed to the major recommendations stated in the issues paper. Participants emphasized the importance of integrating LDCs into the world economy. Trade and investment are important movers of globalization, and LDCs can benefit from both if properly addressed.
5. Many participants noted that there are impediments that affect meaningful trade participation by LDCs in the world economy. Difficulties facing the LDCs are many, including, but not limited to, insufficient levels of foreign and domes- tic investment, poor infrastructure, structural handicaps such as geography and
climate, commodity dependence and lack of value addition of export products, limited access to international markets, low levels of human, physical and tech- nological capital, migration of skilled workers, the dominance of the informal sector, weak institutions, post-conflict situations, and lack of ownership and effective power to enforce international aid commitments in the context of inter- national economic governance institutions.
6. Several interventions highlighted that the integration of LDCs into the world economy through better market access remains a major challenge. While prefer- ential market access is yet to deliver the expected benefits to the least developed countries, it was noted that a number of policy issues should be addressed, including the heavy dependence of LDCs on a narrow range of primary com- modities exports and the weaknesses of LDCs in supply-side capacities. In order to effectively increase their access to international markets, special attention should be given to enhanced S&DT and DFQF access for all LDC products in the markets of developed countries.
7. It was emphasized that regional integration is essential to maximizing the bene- fits of globalization for LDCs. Regional integration has the potential to attract investment flows, expand market size and develop regional infrastructure and connectivity, especially in the case of LLDCs.
8. Participants also reaffirmed the great potential of South-South cooperation based on bilateral, as well as regional and sub-regional integration schemes. They underlined that international development partnerships with emerging economies from the South offer unprecedented opportunities for LDCs, espe- cially in the areas of infrastructure development and technology transfer. 9. Many participants called for a fair and open trade framework, citing the need to
achieve a truly developmental Doha Round. To ensure a successful outcome, overall reduction of tariff and non-tariff barriers, such as the simplification and harmonization of restrictive rules of origin, is crucial.
10. There was a broad understanding that increased Aid for Trade, of which the EIF is a key element, must enable them to build capacities to compete effectively in international markets. Attention was drawn to impediments to improving Aid for Trade led initiatives, notably poor infrastructure, low levels of education and skills, poor technological base, weak export institutional frameworks, lack of effective market access and cumbersome customs procedures.
11. Participants felt that trade and investment are critical elements to promote sus- tainable growth. Both are mutually supportive and reinforcing. However, to make trade a powerful force for poverty reduction and effective sustainable growth, S&DT for the least developed countries under the multilateral trading system needs to be enhanced and effectively implemented. In all, an open, fair and non-discriminatory multilateral trading system is essential to help promote investment and enhance productive capacities of LDCs.
12. Participants concluded that both domestic and international enhanced institu- tional support measures are needed to build the productive capacities of LDCs needed to engage productively in the process of globalization.