The Least Developed Countries Report 2020

LDCs have so far been spared by the worst effects of the health emergency, yet the fallout from COVID-19 has taken its toll on their economies, threatening to roll back progress towards sustainable development, worsening entrenched inequalities, and possibly leading to long-term damage. The ongoing crisis has brought back to the fore the pivotal role of productive capacities for resilience to shocks, as well as for a sustainable and inclusive recovery and sustainable development. The broadening and full utilization of LDC productive capacities remains central to upgrade LDC economic structure, bridge their development gaps vis-a-vis other countries (not only developed but also developing countries) and avert further divergence. Only a handful of LDCs displayed a sustained progress in recent years, thanks to their successfully spurring productive capacities acquisition and shift significant resources towards higher-productivity activities. The majority of LDCs, by contrast, have either advanced at an increasingly sluggish pace, or even fell behind. In the LDCs, the uptake of advanced technologies is still incipient and hindered by a range of factors, from longstanding infrastructural gaps, to skill shortages and political considerations. Bold concerted policies to strengthen LDC productive capacities are as imperative as ever and they should constitute a key pillar of any sustainable recovery and development strategy. Beyond countercyclical policies to cushion the impact of the crisis, this calls for: (i) an investment push to redress long-standing infrastructural gaps and support broader employment creation; (ii) forward-looking science technology and innovation policy frameworks to upgrade the skill basis in line with market needs; (iii) brave industrial and sectoral policies to promote domestic value addition and deepen productive linkages. The international community should play its part, assisting LDC efforts with adequate financial resources, suitable policy space and more effective international support measures, notably in the area of technology transfer.