• Introduction

• National policy framework for accelerated growth and poverty reduction

• Good governance

• Strengthening human and institutional capacities

• Strengthening productive capacities

• The role of trade in development

• Reducing economic vulnerability and protecting the environment

• Mobilizing financial resources

The role of trade in development

Although trade universally remains the principal engine of growth, seizing new trading opportunities in the context of globalization is not an even game among countries with unequal economic capacities. Because of their structural handicaps, the LDCs are disadvantaged in their efforts to enhance the contribution of trade to the development process. Benefiting from globalization forces through external trade development, in these countries, requires a sound perception, by relevant economic actors, of the most desirable economic specialization in the light of the evolving international demand. It also implies that a minimal infrastructure and an appropriate range of human resources be available, and that there be enough efficient producer services to help entrepreneurs limit the transaction costs that are obstacles to economic efficiency. Finally, considering the multilateralization of international trade policies, being able to effectively participate in the multilateral trade system in order to derive benefits from new trading opportunities is important to any LDC that is desirous of avoiding the risk of irreversible marginalization. The lack of effective participation of many LDCs in negotiations in the World Trade Organization has been recognized, and can be remedied through intensified institutional capacity-building efforts.

Reducing economic vulnerability and protecting the environment

Vulnerability to natural and economic shocks beyond domestic control is a major symptom of the structural weaknesses of the LDCs. Alleviating vulnerability implies reducing the exposure of the economy to the relevant external shocks, which generally involves diversifying into economic activities that are less prone to the impact of these shocks. For example, in a context of frequent natural disasters, reducing the share of the economic sectors that are highly prone to the adverse impact of disasters is desirable. Reducing the economic dependence on primary commodities that are highly vulnerable to price fluctuations is an answer to the risk of market-related shocks. Environmental fragility is not an LDC-specific issue, but it can be exacerbated, in LDCs, by the context of poverty and lack of appropriate technology. Moreover, LDCs are practically unable to prevent the impact of adverse environmental phenomena originating from outside, in particular, the multiple consequences of global warming, from coral bleaching (a factor discouraging island tourism) to sea-level rise, which forces atoll countries such as Maldives or Tuvalu to envisage costly strategies for population relocation.

Mobilizing financial resources

In the absence of sufficient domestic resource mobilization capacities, LDCs are unable to meet their substantial financial needs, and consequently incur a high degree of external financial dependence. Breaking the syndrome of external dependence implies successful efforts to make the most effective use of aid and other financial inflows to improve the business environment and attract foreign investment. Ideally, an enabling environment induced through external support such as aid and debt cancellation (which are important conditions for developing an infrastructure) will enhance the supply capacities and contribute to inducing a level of prosperity in a relatively self-sufficient manner. Paving the road to enable this virtuous circle to take place implies a sound development strategy and an ability to convince development partners of the relevance of the country's vision.

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