Growth surge in economies of poorest countries not providing jobs – UN report

Though the economies of the world’s 50 least developed countries (LDCs) grew in 2004 at the impressive rate of 5.9 per cent due to high demand for natural resources and a growth in aid, that surge has not translated into an increase of employment for the reduction of poverty, according to a new United Nations report.

“What we see is a problem of productive labour absorption,” Charles Gore, author of The Least Developed Countries Report 2006, told correspondents at UN Headquarters this morning at the launch of the report, which is produced annually by the UN Conference on Trade and Development (UNCTAD).

“The labour force is growing very rapidly in the least developed countries, but it is very difficult for them to generate the productive jobs and livelihoods to employ people productively and remuneratively,” he said.

In the past, Mr. Gore explained, excess labour was absorbed by opening up more and more land for agriculture, but there is no longer room for such expansion. As a result, more people were seeking work outside agriculture, leading to increasing urbanization.

Productive jobs had to be generated in manufacturing and in services and for the LDCs that was an enormous challenge, since they were operating in an open economy with global competition.

The key to reducing poverty in the LDCs, the report argues, is for governments and international aid programmes to focus on enabling poor countries to efficiently produce goods and services that can be sold both at home and abroad, kicking off a “virtuous circle” of increased employment and stable growth.

“A country that succeeds at this process will reduce poverty for itself, will ultimately no longer need periodic doses of humanitarian aid, will keep its best-educated citizens at home (instead of losing them to jobs overseas), and will reduce the floods of desperate migrants who now seek to enter Western Europe and North America,” according to UNCTAD.