Presentation on theme: "Addressing Key Structural Vulnerabilities for [Africas] LDCs UN-OHRLLS Brainstorming Meeting on Substantive Preparation for UNLDC-IV New York, NY 14-16."— Presentation transcript:
Addressing Key Structural Vulnerabilities for [Africas] LDCs UN-OHRLLS Brainstorming Meeting on Substantive Preparation for UNLDC-IV New York, NY 14-16 July 2010
Brief Outline Context: Africas macroeconomic fundamentals in recent past Key structural vulnerabilities specific to [African] LDCs and actions required: to increase resilience to shocks; and for structural transformation Concluding thoughts
Underlying risks, but great potential Speed and the magnitude of the global recovery; Amount and timeliness of foreign aid; EU turmoil may increase risk of recovery; may induce W-shaped recovery; Delayed recovery could derail economic fundamentals due to lack of finances; Setback on institutional reforms could delay technology adoption Nonetheless, the 53 countries offer a variety of business environments: with different investment grade ratings
Africas Strong Performance in 2001-08 At about 6% annual growth, Africa among the fastest growing regions in 2001-08; rel. low inflation Broad-based growth – 40% of countries grew at 5% or above; Continent becoming more integrated into the global economy: Trade openness increased for all countries – from 62% of GDP in 2001 to 79% in 2008; Drivers: Policy and structural reforms Stable macroeconomic conditions; Favorable external environment; commodity boom; Increased FDI flows; remittances; debt relief; non-traditional partners; ….. but Africas growth more subdued in terms of GDP/cap.
Many African Economies Still Rather Fragile Continent remains highly vulnerable to external shocks (dependence on commodities; little value addition; undiversified trade partners, etc); Africa can increase resilience through: i.implementing structural reforms to diversify their economies, including development of the manufacturing sector; ii.increasing flexibility of macroeconomic frameworks while maintaining macroeconomic stability; iii.building social safety nets to raise social and political stability; and iv.deepening regional integration. These measures are also key for making African economies more attractive to foreign investors. VULNERABILITY 1
Generally non-Competitive Economies VULNERABILITY 2
Underdeveloped Manufacturing/Industrial Sector VULNERABILITY 3 Share of Manufacturing in Output, 1998 - 2008
Africas under-developed human resources VULNERABILITY 5
Generally underdeveloped infrastructure Infrastructure critical to growth, but continent held back by limited stocks and high costs. VULNERABILITY 6 Images from Google
General absence of regional integration In general, efforts at regional integration on the continent have not gone far enough to remove barriers to free trade in the region; increasing the free movement of people, labor, goods, and capital across national borders, reduce the possibility of regional armed conflict, and adopt cohesive regional stances on policy issues, such as the environment, climate change and migration, trade, FDI, relationship with donor community, etc. VULNERABILITY 7
Key Policy actions required for Africas LDCs: 1.Continue macroeconomic policies aimed at improving general resilience in the economies; 2.Prioritize improvements in general competitiveness of the economies; 3.Develop the productive capacities, particularly in the manufacturing sector, based on latest thinking on the subject; 4.Redouble efforts to boost saving rates; 5.Scale up investments infrastructure; 6.Support efforts at greater regional integration.
Concluding thoughts In general, Diversification and structural reforms (private sector development, financial sectors, labor markets) as well as deepening regional integration remain key development priorities for Africas LDCs. Pay-off to domestic policy reform in Africa would be even greater if supplemented by measures taken by developed countries (including adequate and timely development assistance; successful completion of Doha Round). The African voice is still not adequately heard in the debate on global financial governance framework something that ought to change. As a major partner of choice for Africas development financing; the AfDB is an important voice in the debate on the continents development challenges.
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