Expanding and diversifying productive capacities will better position least developed countries (LDCs) to tap the financing and e-trade opportunities that will underpin their Covid-19 recovery. This was a recurrent theme in the United Nations Conference on Trade and Development (UNCTAD) Least Developed Countries Report 2020, which cautioned however that the international community must first rally with resources, policy space and better international support measures.
Covid-19 has exposed asymmetries in global trade and financing systems, with LDCs hit hardest. Falling demand and prices for LDC goods and services caused a slump in export earnings during 2020, placing targets to double LDCs’ share of global exports further beyond reach. Shrinking remittances depressed domestic consumption and threatened rural jobs. External debt-servicing costs grew while foreign direct investment projects (FDI) projects were cancelled and accessing private finance became harder. LDCs’ current account deficits have also widened at a time when official development assistance (ODA) volumes – the biggest source of capital inflows for many – appears under threat.
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