LDCs Graduation in Asia-Pacific: Achievements and Challenges Ministerial Meeting of Asia-Pacific Least Developed Countries on Graduation and Post 2015 Development Agenda Kathmandu, Nepal 16-18 December 2014 Thangavel Palanivel, UNDP, New York 1
Message - 1 Asia-Pacific LDCs and recently graduated LDCs have made significant progress on socio-economic indicators in the last decade. However, still significant gaps remain. 2
1999 Many A-P LDCs and recently graduated LDCs have made significant progress in reducing extreme poverty 2009 2003 2012 1994 2009 1998 2004 2003 2010 1996 2010 1998 2008 1997 2008 2002 2008 2002 2011 1994 2010 2000 2010 2000 2009 Poverty reduction has been relatively faster in Bhutan, Cambodia, Nepal, Lao PDR and Maldives (until recently a LDC). 60 Extreme Poverty ($1.25 a day) (%) 50 40 30 20 10 0 CHI BHU CAM MALD NEP SRL VIE LAO PAK INDO INDI BGD PHI Source: World Bank Povcal database 3
Nepal Bhutan Cambodia Sri Lanka Philippines Malaysia Thailand Bangladesh China Pakistan India Mongolia Laos Indonesia Many LDCs also managed to reduce income inequality Though income inequality increased across all LDCs in the 1990s, recently LDCs such as Bangladesh, Bhutan, Cambodia, and Nepal managed to contain rising inequality or started to reducing it. This is encouraging sign. 60 50 40 30 20 10 0 Gini Index 1990-93 2000-03 2008-12 Source: World Bank WDI online database 4
Many Asia-Pacific LDCs and recently graduated LDCs are also making solid progress in human development indices Afghan Solomon Islands Yemen Myanmar Nepal Bangladesh Laos Cambodia Bhutan Kiribati Vanuatu Timor Leste Cape Verde Botswana Samoa Maldives Solomon Islands Vanuatu Samoa Cambodia Myanmar Bhutan Kiribati Afghanistan Cape Verde Maldives Yemen Bangladesh Botswana Lao People's Nepal Timor-Leste HDI values increased across all LDCs in Asia-Pacific. But in terms of HDI world ranking, some LDCs such as Timor Leste, Nepal, Laos and Bangladesh managed to gain ranking and some others such as Solomon Islands, Vanuatu and Cambodia lost a few places. 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 HDI values 6 4-2 02-4 -10-8 -6-12 Change in HDI rank during 2008-13 2000 2013 Source: UNDP 2014 HDR 5
Message - 2 Asia-Pacific LDCs and recently graduated LDCs remained resilient after the 2006-08 global food, fuel and financial crises. However, as their economies are strongly linked with the performance of Asian emerging economies such as China and India, the slowdown of emerging economies is expected to affect adversely A-P LDCs growth in the coming years. In fact, LDCs economic growth rates in the post crisis period were substantially lower than that of pre-crisis levels. 6
Most of Asia-Pacific LDCs trade are within the region Since Intra-regional exports account for large share of total exports of A-P LDCs and recently graduated LDCs, their future performance to some extent depends on the performance of Asian emerging economies such as China and India. 100.0 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 Intraregional merchandise exports % of total merchandise exports Cambodia Kiribati Maldives Samoa Nepal Afghanistan Solomon Islands 1999-01 2010-12 Vanuatu Myanmar Bhutan Source: ESCAP database 7
Economic growth has slowed down sharply in Asian emerging economies in recent years which seems to have already affected LDCs growth adversely 15 14 13 12 11 10 9 8 7 6 5 GDP Growth (IMF data) China Asia 8 7 6 5 4 3 2 1 0 Real GDP Growth Total LDCs African LDCs and Haiti Asian LDCs 2002 08 2009-13 Island LDCs Source: UNCTAD LDC Report 2014 8
The slowdown worsening unemployment and underemployment problems in Asia and the Pacific- particularly for youth and women 12 11.5 11 10.5 10 9.5 9 8.5 8 7.5 7 ILO -Youth unemployment 2007 16 25.0 20.0 15.0 10.0 5.0 0.0 Youth Unemployment East Asia South Asia 2002-08 2009-13 Source: UN ESCAP Statistical Yearbook for Asia and the Pacific 2014 9
The growth slowdown also worsening fiscal situations in many A-P LDCs and recently graduated LDCs After the global financial crisis, fiscal deficits have been widening in Cambodia, Myanmar, Timor Leste, Maldives, Nepal, Samoa and Vanuatu. Fiscal situations seem to have improved only in a few LDCs such as Bangladesh, Bhutan, Laos and Solomon Islands. 4.0 2.0 0.0-2.0-4.0-6.0-8.0-10.0-12.0-14.0 Fiscal Deficit as % of GDP 2002-08 2009-13 Source: UN ESCAP Statistical Yearbook for Asia and the Pacific 2014 10
The slowdown also affects commodity prices; in fact commodity prices has declined by more than 40 % in the last six months Declining commodity prices expected to affect adversely resource rich LDCs such as Afghanistan, Cambodia, Lao PDR, Myanmar, and Timor Leste; however, this might act as stimulus for net importing LDCs such as Bhutan and Nepal. 230 220 210 200 190 180 170 160 150 140 130 IMF Commodity Price Indices All Food Oil 11
Message - 3 Since the poor and vulnerable people lack both human and financial capital, public policies that help poor to build their human capital (through quality secondary and tertiary education), better manage their risks, and improve the access to credit are key for making growth more inclusive and sustainable. But unfortunately public policies in many Asia- Pacific LDCs seems to be not sufficiently inclusive. 12
Myanmar Lao PDR Bangladesh Vanuatu Bhutan Timor-Leste Cambodia Nepal Samoa Solomon Islands Maldives Afghanistan Kiribati Tuvalu LDC A-P World Public Spending on education and health is low in many Asian LDCs 12.00 10.00 8.00 6.00 4.00 2.00 0.00 Public expenditure on education as % of GDP: 2008-12 18 16 14 12 10 8 6 4 2 0 Total health expenditure as % of GDP Source: UNESCAP online database Source: UNESCAP online database 13
International migration and remittances have been contributing to broader development efforts in some Asia-Pacific LDCs Countries such as Bangladesh, Cambodia, Nepal and Samoa managed to use international migration as a development tool successfully. However, LDC such as Myanmar have not been using the same in a effective manner. 30 25 20 15 10 5 0 Remittances as % of GNI 14
Lessons from Asian Tiger economies Ensuring rapid & sustained growth with equitable income distribution. Strong exports push through selective interventions such as export credit and duty-free capital goods import for exports. which resulted in high exports growth. Fostering dynamic agriculture and rural development (initial period) which supported industrialization process later. Strong emphasis on education by establishing policies and institutions to encourage (or even force) skills, technology and knowledge. Strong emphasis on structural economic transformation. Strong emphasis on productivity growth. Implementing complex & flexible labour market policies. Leveraged successfully demographic transition resulting huge demographic dividends.