1. The Least Developed Countries Report 2013
Growth with employment
for inclusive and
sustainable development
Presented by:
Sebastian C. Kopulande
Chief Executive Officer
•Lusaka, 26th November, 2013

3. The Least Developed Countries Report 2013
Key messages of the Report
• LDCs’ fast growing and young population needs quality jobs
to escape poverty and earn decent livelihood
• Despite fast economic growth since 2000, LDC economies’
employment generation has been disappointing
• Quality jobs can only be the consequence of developing
productive capacities
• Macroeconomic, industrial, rural and infrastructure policies
should be geared to employment generation and
development of productive capacities
Put job creation front and centre!

4. The Least Developed Countries Report 2013
This presentation
• Economic trends and outlook for LDCs
• Growth with employment for inclusive and
sustainable development
 Demographic trends
 Employment trends
 Policy agenda

5. Economic trends
and outlook

6. The Least Developed Countries Report 2013
Recent trends
GDP growth of LDCs in 2008–2013 was 5.2%, over 2 percentage
points lower than during the boom period:
2002-2008: 7.5% annual growth: fastest growth in decades

7. The Least Developed Countries Report 2013
Outlook
Mid-term outlook: 6% annual growth
• Lower than target of Istanbul Programme of Action (IPoA) of
May 2011 : 7%
• This has been caused by (recession) factors such as:




Lower growth in developed and developing (“emerging”) economies
Subdued international trade
Falling commodity prices
More expensive international finance
This has impacted LDCs’ capacity to generate jobs
required by population growth

8. Growth with employment for
inclusive and sustainable
development
Demographic
trends

9. The Least Developed Countries Report 2013
Rapid demographic growth
LDCs are the group of countries
with the fastest population growth
rate @ 2.2%, ODCs @ 1.2%, DCs
@0.4%
By 2050, total LDC
population is projected to
double to 1.7 billion

10. The Least Developed Countries Report 2013
Population:
very young…
Youth to soar from 168
million in 2010 to 300
million in 2050
… and increasingly urban

11. Growth with employment for
inclusive and sustainable
development
Employment
trends

12. The Least Developed Countries Report 2013
Fast growing labour force
Especially young: 16 million youths will reach working age
annually between 2010 and 2050
• Since 2000: more labour market entrants outside
agriculture
• They will expect to find quality jobs to escape poverty and
earn a reasonable livelihood
Major challenge for LDC economies:
Generate quality jobs for all these people

14. The Least Developed Countries Report 2013
Despite fast economic growth, job generation has lagged
behind
… in quantity
Employment growth: 3%
well below
economic growth: 7%
(annual rates, 2000–2012)

15. The Least Developed Countries Report 2013
Despite economic growth, job generation has lagged behind
… in quality
•Labour productivity gap falling slowly,
but still very wide
•Most jobs are in informal sector:
insecure, low wages, low skills
• Vulnerable employment (own account +
family workers): 80% total employment
• Working poor: ¾ total employment
Only slow overall poverty reduction

16. LDC LABOUR PRODUCTIVITY
LDC output per worker in 2012:
22% of the level in other
developing countries;
10% of the level in the
European Union
7% of the level in North
America
BUT
High labour force participation rate – 75%
compared to 68% in ODCs.
WORK IS THE ONLY MEANS TO SURVIVEregardless of type and quality!

17. Growth with employment for
inclusive and sustainable
development
Policy agenda

18. THE AWAKENING
• Economic Liberalization Policies on the early 1990s
have not produced inclusive development;
• Economic Growth by itself neither guarantees job
creation nor promotes inclusive development;
• It could lead to Social inequalities, rising
unemployment, and increased poverty;
• Growth must come from labour rather than capital
intensive activities

19. The Least Developed Countries Report 2013
Reversing the negative picture is urgent
• Economic growth without enough decent jobs is unsustainable
• Employment creation is best way out of poverty
• If employment performance does not improve, major risks arise:
 Growing poverty
 Social instability
 Mass international emigration
LDCs need to change policy focus and adopt
employment-rich growth as major objective

20. The Least Developed Countries Report 2013
Employment and productive capacities
(productive resources, entrepreneurial capabilities and production
linkages which together determine a country’s capacity to produce
goods and services and enable it to grow and develop).
• Sustainable economic growth can only result from development
of productive capacities
This occurs through three (3)
key economic processes:
Investment-growthemployment nexus:
virtuous circle
• Entry point: investment
• Critical role for
• public investment,
especially in
infrastructure
• social services

21. The Least Developed Countries Report 2013
Policy priorities
•
Develop productive capacities AND generate employment
•
Diversify economy (new sectors) AND upgrade traditional sectors
•
 instead of present type of structural change: Labour moving from
subsistence agriculture to informal survivalist urban activities
Policy interventions have to be designed to encourage investment in activities
with strongest employment effects;
•
Target the non-tradables sector where international competition is limited.
•
Increase labour productivity to make labour-intensive investments profitable
•
Aim at productivity growth in all sectors by improving technology

22. The Least Developed Countries Report 2013
Macroeconomic policies
•
Objective: Output and employment expansion
•
Fiscal policy: Central role to finance public investment and social
services
 Need to improve mobilization of domestic resources
•
Credit policy: Improve access to financing of firms, esp. farmers, micro
and small enterprises
 Multiple actors: development banks (national and regional), rural banks,
commercial banks, credit cooperatives, informal institutions…
•
Monetary policy: Focus on price and volume of credit
 Go beyond exclusive focus on price stability

23. The Least Developed Countries Report 2013
Public sector job creation Role
•
This has a Crucial role in short to medium term by increasing demand
and enlarging the capital base of the economy.
• It must be designed to encourage private investment, not to crow it out!
It should focus on:
1. Investment in infrastructure – Potential benefits:




Lifts major constraint on enterprise development
Can crowd in private investment
Can initiate virtuous circle
Choice of labour-intensive techniques – Advantages:
o Greater employment creation
o Local market creation
o Enterprise development
o Lower cost
o Foreign exchange savings
2. Investment in Social services
 Mostly labour-intensive
 e.g. education, health, sanitation, transport, public administration

24. The Least Developed Countries Report 2013
Enterprise development policies
•
Industrial policy
 Build / Upgrade activities around existing comparative advantage
o esp. natural resources
 Favour investment in labour-intensive manufaturing
 Support citizen/local investment
•
Types of policies for firms (to fill ‘missing middle’):




•
Financing
Formalizing
Strengthening organization and technology
Networking / Clustering
LDC Report 2013 proposes international support measure
 Donors and LDC governments match funds to provide finance and
training to young entrepreneurs, esp. firms creating jobs for youth

25. The Least Developed Countries Report 2013
Rural development policies
•
Invest heavily in rural infrastructure
 Esp. irrigation, energy, transport, storage, communications
•
Rural extension services
•
Raise funding of national / regional research centres
•
Build regional value chains
•
Seasonal and long-term finance to farmers and non-farm economic
agents

27. Thank you