Expanding Productive Capacity

Lessons Learned from Graduating Least Developed Countries

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Over the past decades, least developed countries (LDCs) have made only limited progress in dynamically transforming and diversifying their economies. Their structural challenges and weak economic and social performance are rooted in the limited development of their productive capacity. Building productive capacities helps move LDC towards graduation from the category and provides development momentum necessary to manage graduation and beyond. Graduation is not only a policy objective for many countries and the international community but, more importantly, it is a reflection that a country has been able to overcome or mitigate the most severe structural impediments to sustainable development. This is part of the Committee for Development Policy (CDP) Policy Note series. The CDP analyses how intergovernmental cooperation could be strengthened to better manage the increasing interdependence among countries, reduce inequalities among and within countries and contribute to the post-2015 sustainable development agenda.




The lack of productive capacity is generally seen as a major constraint for least developed countries (LDCs), and developing countries in general, to overcome their development challenges. The issue is the first priority area in the Istanbul Programme of Action for the Least Developed Countries 2011-2020 and is the subject of various reports by international organizations working on LDCs. Expanding productive capacity is also reflected in the United Nations 2030 Agenda for Sustainable Development and the Sustainable Development Goals (SDGs). SDG-8 (Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all) and SDG-9 (Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation) are cases in point. In addition, meeting other SDGs and targets (such as those on education, health and nutrition, institutions and energy) also contributes to building productive capacity. At the same time, building up productive capacity will also have an impact on a series of SDGs and targets (such as those on gender equality, employment, income growth and natural resources). In particular, building productive capacity is closely linked to SDG-1 on eradicating poverty.


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