March 14, 2012— With a new global economic landscape, how can World Bank research help set priorities for growth in the poorest countries? Is there a roadmap least-developed countries can use to generate sustained economic growth and poverty reduction?
Those questions were explored at a roundtable discussion last week at Columbia University in New York, which was organized by the Trade and International Integration team of the World Bank’s Development Research Group. Chief Economist Justin Yifu Lin gave the keynote address before United Nations officials, private sector leaders and academics.
“I am convinced that, by following their comparative advantage, low-income countries facing high unemployment can seize the bonanza of the 85 million manufacturing jobs China will shed in the coming years because of fast rising wages for unskilled workers,” Lin said. “This type of new dynamic, which is embedded in my theory of New Structural Economics that I outlined today, is highly relevant to the UN's agenda.”
Rather than replicating the industrial infrastructure of high-income countries, Lin suggested that least-developed countries identify industries with growth potential in line with their economy’s comparative advantage. He said governments can facilitate this process by providing information and coordination, which will reduce the risks for firms to invest in new technologies.
The rest of the event explored how least-developed countries could overcome economic vulnerabilities and better manage risks to achieve sustained, equitable and inclusive economic growth. Opening remarks were given by Cheick Sidi Diarra, under-secretary general and UN high representative for least developed countries, landlocked developing countries and small island developing states, and permanent representatives from Nepal and Turkey.
A group of panelists, moderated by John S. Wilson, lead economist in the Development Research Group of the World Bank, discussed the key constraints for growth and development facing least-developed countries. Frannie Léautier, executive secretary of the African Capacity Building Foundation, said the biggest challenge facing African countries is how to translate economic growth into development outcomes and jobs, and adapt to new vulnerabilities amid commodity-price shocks and continued distress in global financial markets. Léonce Ndikumana, Andrew Glyn professor of economics at the University of Massachusetts at Amherst, echoed these concerns, saying rising inequality threatens to destabilize economic gains made in Africa in recent years.
Aaditya Mattoo, research manager of the Trade and International Integration team of the World Bank’s Development Research Group, outlined trade policy priorities for least-developed countries as the WTO Doha round of trade negotiations stalled and the global financial crisis continued to present challenges. World Bank research, he said, shows trade policies can bring significant gains, if they address non-tariff barriers, such as standards harmonization, improvements to the business regulatory environment, and removing barriers in the services sector.
There was agreement that increasing employment is critical to ensuring sustained growth in least-developed countries. Panelists agree that, in order to carry out the UN Istanbul Programme of Action over the next decade, it requires focused action in key areas. Governments should find new ways to promote growth, expand trade opportunities and facilitate job creation. Overall, the event was an opportunity to bring leading researchers and policy experts to discuss the crucial challenges facing least-developed countries and offer innovative approaches to charting effective development strategies.
The event was organized in partnership with the UN’s Office of the High Representative for the Least Developed Countries and Small Island Developing States and Columbia University’s APEC Study Center.