The Least Developed Countries Report 2000

Aid, Private Capital Flows and External Debt - The Challenge of Financing Development in the LDCs

image of The Least Developed Countries Report 2000

What the world's poorest countries need most is not simply debt relief, but a 'New Deal' in international development cooperation, contends UNCTAD in its Least Developed Countries 2000 Report. Almost two thirds of the 48 least developed countries (LDCs) have an external debt burden, which is unsustainable according to international criteria. The report also states that past efforts to substantially decrease their debt service payments have failed, and recent attempts to finally resolve the debt problem through the Heavily Indebt Poor Countries (HIPC) Initiative are not very promising. The LDCs also looks at economic growth and social trends in the LDCs in the 1990s, financing development, and ways in which new approaches to partnerships can increase the effectiveness of aid.



Domestic resource mobilization, external finance and vulnerability

The issue of development finance in the LDCs involves the analysis of three interrelated themes namely, resource requirements for economic growth, poverty reduction and sustained development; the effort made to mobilize domestic resources; and the need for, and availability and effects of, external sources of finance. This chapter examines resource requirements in the LDCs in the context of their specific structural characteristics, and it assesses the effort made in domestic resource mobilization and the degree of reliance on external sources of finance.


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