The Least Developed Countries Report 2002

Escaping the Poverty Trap

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The Least Developed Countries Report 2002 is in two parts. The first part reviews recent economic trends and assesses the progress in the 1990s towards fulfillment of development targets contained in the Programme of Action adopted by the Third United Nations Conference on the Least Developed Countries. The second part, on escaping the poverty trap, is the first analysis of poverty in all the LDCs. It is based on a new set of poverty estimates for LDCs that suggest that extreme poverty may have been under-estimated in the poorest countries, particularly in Africa, and over-estimated in other countries. The Report examines the reasons why extreme poverty is pervasive and persistent in most LDCs, and the implications for the design of poverty reduction strategies and international policy. An important discovery of the Report is the close link between primary commodity dependence and extreme poverty.

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Patterns of trade integration and poverty

The previous chapter identified various cause-and-effect relationships that work within many LDCs to cause generalized poverty to persist and even intensify. International economic relationships were not included in the discussion. But these relationships affect any country that is not completely isolated from the world economy, and with the globalization of production systems and finance, and liberalization of economic activities, they are becoming even more closely implicated in national processes of accumulation, productivity growth, and trends in inequality and poverty. This chapter and the next one focus on the relationship between international trade and poverty in the LDCs, examining whether the current pattern of trade is reinforcing the poverty trap or helping countries to break out of it.

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