The worlds poorest countries are falling further behind developing and developed peers (ligemænd) in terms of technology, a problem that foreign direct investment (FDI) flows are failing to redress, a United Nations report said on Thursday.
In its The Least Developed Countries Report 2007 report, the UN Conference on Trade and Development (UNCTAD) said the worlds least developed countries (LDC) had seen a marked economic improvement but this remains fragile as it is largely driven by investment into the commodity sector.
The UN defines LDCs as those with per capita incomes below 750 US dollar a year, low levels of literacy and nutrition, plus a higher level of vulnerability to natural disasters and economic shocks. Technological progress is seen as key to improving productivity and ensuring sustained economic growth.
The report said foreign direct investment flows into LDCs had increased substantially since the early 1990s, with 2000-2005 levels three times the level of the past 10 years and surpassing wealthier developing nations. But it added: “There is little evidence of a significant contribution by FDI to technological capability accumulation in LDCs”.
The study noted “that foreign aid has been largely ineffective because it has failed to recognize the importance of knowledge and innovation in driving development. – The problem of brain drain highlights the bigger issue of knowledge, said Charles Gore, one of the reports authors.
– We need to adopt new policies which should be orientated to reducing the technology gap and diversifying the economy. It is no use just investing in human capital without policies which develop employment opportunities to encourage workers to stay, explained he.
The report showed that in 2004, 1 million educated people emigrated from LDCs out of a total skilled pool of 6,6 million – a loss of 15 percent. Haiti, Samoa, Gambia and Somalia are among the LDCs that have lost more than half of their university-educated professionals in recent years.
The health sector, in particular, has suffered. In Bangladesh, 65 percent of all newly graduated doctors seek jobs abroad.
Unlike predominantly government-to-government technology transfer schemes of the past, Gore emphasized the new approach was “bottom-up”.
– We are looking at it in terms of building up the technological capabilities of firms and farms, he said. For example, agricultural techniques to boost crop yields were vital in poor countries where increasing numbers of farm workers migrated to cities, according to the report.
Such wanted innovation occurred “when an entrepreneur in Mauritania started to export camel cheese to the European Union in the 1990s. It occurred when smallholder farmers in Malawi experimented with adopting high-yield maize varieties. These were entrepreneurial acts that involved risk but had potentially high pay-offs”, the report said.
UNCTAD Director General Supachai Panitchpakdi said, that “the 50 LDCs also needed to build the right environment for technological development, which would encourage investment in education and infrastructure and allow them ‘to break loose from their poverty trap”.
Only some of the Asian LDCs – Bangladesh, Cambodia and Laos – were showing signs of taking that path, he added.
Between 2003 and 2005, about 1,3 billion dollar in official development aid was devoted to governance or social issues in the poorest countries, while just 12 million was spent on agricultural technology that could strengthen crops and food production, according to UNCTAD.
Kilde: www.worldbank.org
