DEVELOPMENT: Possible for Poorest to Escape ‘Poverty Trap’ – UN

By Gustavo Capdevila Reprint | | Print |

Gustavo Capdevila

GENEVIA, Jun 18 2002 (IPS) - A United Nations specialised agency criticisea the existing strategies for alleviating poverty in what are known as the least developed countries (LDCs) and issues a call for changes in national and international policies in a new report.

The United Nations Conference on Trade and Development (UNCTAD) urges implementation of national policies aimed at doubling the income of all households in the 49 countries the UN has categorised as LDCs.

This goal can be achieved by increasing production capacity and wages, UNCTAD secretary-general Rubens Ricupero said in Geneva Tuesday.

The UN agency’s latest annual report on LDCs is centred on ways that would allow these nations to escape “the international poverty trap.”

The UN’s identification of the 49 LDCs is based on their low national income, with per capita gross domestic product of less than 900 dollars annually, and their lack of human capital, an index that takes health, nutrition and education into account.

Another element identifying the LDCs is their economic vulnerability, defined by factors of instability in the production and export of farm commodities, the lack of diversification and their status as small countries.

The Committee for Development Policy, based at the UN headquarters in New York, also requires that the countries in this category have a population of less than 75 million.

The UNCTAD report reflects a poverty study that encompassed more than 90 percent of the population of the 49 countries, which reaches 637.4 million.

Ricupero said the report’s conclusions are “extremely worrying” because they indicate that “the number of people living on less than one dollar a day in those countries has doubled in the last 30 years to 301 million people.”

This is a matter of particular concern because, at this rate, the figure would reach 420 million people by the year 2015, he said.

But in contrast to this gloomy outlook, “the report shows very clearly that there is a way to dramatically reduce the level of extreme poverty,” stated the UNCTAD chief.

The solution lies in giving priority to economic growth with the objective of doubling the average household income, Ricupero said in his presentation of the report.

He added that there has been a wrongheaded trend recently to minimise or underestimate the correlation between economic growth and poverty reduction. “Unfortunately we see that current policies don’t give adequate importance” to this relation.

The “old permissiveness of severe poverty” and its upward trend in most LDCs persists, said Ricupero, “particularly in African LDCs and those which depend on primary commodity exports for their economic survival and development.”

The lesson learned from the process is that poverty is increasing in the LDCs that are commodity-dependent “because they are failing to share in global economic growth.”

The failure to insert themselves into world markets is a consequence of being “caught in an international poverty trap from which is difficult to escape under the current conditions,” said Ricupero.

In this context, UNCTAD has diagnosed the problem as one in which the existing form of economic globalisation is “reinforcing this poverty trap instead of reducing it.”

The report concludes on an optimistic note that “the poverty problem is not intractable,” but warns that national and international policies must be modified to enable LDCs to escape the poverty trap.

In this regard, UNCTAD underscores the need for national policies that seek to double every household’s incomes through increased productive capacities and the creation of better-paid employment.

In a broader context, the UN agency encourages international policies that alleviate foreign debt, which is unsustainable in all but four of the LDCs, largely as a result of plummeting commodity prices.

As an example of this price deterioration, UNCTAD cites a recent report by the World Trade Organisation, which states that the volume of trade shrank one percent in 2001, while the value of international transactions fell by four percent.

The gravest situations among the LDCs are found in the countries that are most dependent on primary commodities, particularly minerals, whose revenues have fallen dramatically in the last 20 years largely as a result of lower prices.