Productive capacity development in the Asia-Pacific LDCs

Transcription

1 Productive capacity development in the Asia-Pacific LDCs ESCAP/OHRLLS Asia-Pacific Regional Meeting on Implementing the Istanbul Programme of Action (IPoA) December 2011, Bangkok, Thailand Clovis Freire Economic Affairs Officer Macroeconomic Policy and Development Division (MPDD) Economic and Social Commission for Asia and the Pacific (ESCAP)

2 Key Messages Asia-Pacific LDCs need to build productive capacities to benefit from region s dynamism, by producing new and more sophisticated goods Need of strategic diversification through the combined efforts of the State and the private sector with a supportive role played by development partners

3 Share of Asia-Pacific LDCs remain marginal in global GDP, manufacturing value added, exports, manufactured exports and is non-existent in hightechnology exports Hardly any increase over the past 40 years Reflects poor development of productive capacity Need to build productive capacities to benefit from region s dynamism

4 Productive Capacities Combination of productive resources, entrepreneurial capabilities and production linkages which together determine the capacity of a country to produce a progressively wider range of goods and services and enable it to grow and develop (UNCTAD, 2006)

5 Development is associated with diversification 100,000 Diversification (Number of products exported) 10,000 1, TUV FSM WSM SLB VUT TON KIR TLS MHL PLW MDV BTN LKA GEONPL MAC FJI KHM UZB KGZ LAO MNG ARM AZE BRN TJKPNG TKM HKG SGP THA NZLMYS VNM PHL PAK IRN BGD KAZ AUS TUR KOR IND IDN RUS JPN CHN ,000 10, ,000 1,000,000 10,000, ,000,000 GDP (MiIlion US$)

6 Higher priced products require different set of productive capacities thus they are different products over 34.5 Thailand Japan Korea, Rep. of China India Bangladesh Viet Nam Thailand Unit value (US$) Nepal Myanmar Japan Korea, Rep. of China India Viet Nam Bangladesh up to 13.7 Thailand Korea, Rep. of Cambodia Nepal Myanmar Lao PDR 10, ,000 1,000,000 10,000, ,000,000 1,000,000,000 10,000,000,000 Value of exports (US$)

7 More diversified countries face lower competition

8 Increasing diversification and competition:..it takes all the running you can do, to keep in the same place

9 What a country produces today affects what it will be able to produce tomorrow

10 Bangladesh

11 ESCAP Index of productive capacity Most LDCs are at the tail-end of the index of productive capacities; below the global average LDCs remain specialized in few and less sophisticated products Current international environment does not facilitate diversification and increase in productive capacities of LDCs ESCAP Iran, Islamic Rep. Sri Lanka LAC Korea, Dem. Rep. Bangladesh Nepal Macao SAR, China Afghanistan Georgia Kazakhstan Sub-Saharan Africa Cambodia Fiji Uzbekistan Myanmar Armenia Azerbaijan Lao PDR Kyrgyzstan Mongolia Brunei Darussalam Papua New Guinea New Caledonia Tajikistan American Samoa French Polynesia Maldives Guam Turkmenistan Nauru Niue Bhutan Solomon Islands Samoa Cook Islands Vanuatu Tonga Timor-Leste Micronesia, Fed. Sts. Northern Mariana Islands Marshall Islands Kiribati Tuvalu Palau Australia China Eu15 India Korea, Rep. Singapore Hong Kong SAR, China Thailand Turkey Russian Federation Malaysia New Zealand Indonesia Philippines Viet Nam Pakistan Japan United States Productive Capacity (Distance to the mean)

12 Asia-Pacific LDCs: Top and bottom of the Global LDC List Zambia Sierra Leone Senegal Cambodia Mozambique Myanmar Ethiopia Congo, Democratic Rep. Lao PDR Yemen Angola Mali Niger Sudan Togo Haiti Malawi Guinea Mauritania Liberia Burundi Burkina Faso Benin Rwanda Central African Republic Chad Eritrea Djibouti Somalia Vanuatu Sao Tome and Principe Solomon Islands Gambia, The Bhutan Samoa Equatorial Guinea Comoros Lesotho Timor-Leste Guinea-Bissau Kiribati Tuvalu Madagascar Nepal Bangladesh TanzaniaUganda Global median = Productive capacity (index USA=100)

13 Landlocked LDCs have made the highest progress, SIDs LDCs Productive capacity (index, USA=100) LDCs Asia-Pacific LDCs African LDCs SIDS LDCs Landlocked LDCs

14 LDCs have lagged behind Productive capacity index USA Cambodia, Myanmar, Lao PDR, Maldives, Solomon Islands, Samoa, Bhutan, Vanuatu, Timor-Leste, Kiribati, Tuvalu Australia EU15 Japan China India Republic of Korea Thailand Malaysia Indonesia Philippines Viet Nam world's average Bangladesh Nepal

15 7.0 Convergence in the middle, divergence in the rest y=x Productive capacity in 2009 (Distance to the mean) ZAF THA TUR MYS NZL IDN PHL IND KOR CHN BRA FIN SGP HKG NOR IRL AUT CAN ESP AUS DNK BEL SWE NLD ITA CHE FRA DEU GBR JPN USA Productive capacity in 1984 (Distance to the mean)

16 Almost all LDCs have lagged further behind in the past 25 years Bangladesh Madagascar Nepal Afghanistan Cambodia Senegal Zambia Sierra Leone Lao PDR Mozambique Ethiopia Myanmar Congo, Democratic Republic of Yemen Angola Niger Mali Malawi Sudan Togo Mauritania Guinea Burundi Burkina Faso Benin Chad Rwanda Central African Republic Haiti Vanuatu Sao Tome and Principe Somalia Bhutan Solomon Islands Equatorial Guinea Djibouti Samoa Gambia, The Comoros Guinea-Bissau Timor-Leste Liberia Kiribati Tuvalu Tanzania Uganda Difference between the distance to the global average of the productive capacity in 2009 and in 1984

17 Few countries transformed themselves when stating from LDCs levels of productive capacity 0.3 Lithuania Viet Nam Productive capacity (distance to the mean) Estonia Latvia LDCs in Asia-Pacific

18 Viet Nam

19 Complexity of Viet Nam s product mix,

20 Product complexity function of the diversification of countries that produce the product and the ubiquity of their productmix Rich countries export products of a large range of complexity Percent Percent Japan How common is the product-mix (Number of countries that export the product) Bangladesh How common is the product-mix (Number of countries that export the product)

21 Percent Food and live animals How common is the product-mix (Number of countries that export the product) Product complexity by industry Percent Beverages and tobacco How common is the product-mix (Number of countries that export the product) Percent Crude materials, inedible, except fuels How common is the product-mix (Number of countries that export the product) Percent Mineral fuels, lubricants and related materials How common is the product-mix (Number of countries that export the product) Percent Animal and vegetable oils, fats and waxes How common is the product-mix (Number of countries that export the product) Percent Chemicals and related products How common is the product-mix (Number of countries that export the product) Percent Manufactured goods classified chiefly by materials How common is the product-mix (Number of countries that export the product) Percent Machinery and transport equipment How common is the product-mix (Number of countries that export the product) Percent Miscellaneous manufactured articles How common is the product-mix (Number of countries that export the product)

22 Breaking historical trend, commodities are booming since 2000 Annual price indices, constant 2000 US dollars (2000=100) Energy Beverages Raw Materials Metals & Minerals Food

23 Boom is not unprecedented and is driven by the rise of Asia 70% Share of World's GDP in 1990 international dollars 60% Core 50% 40% Periphery excluding Asia 30% 20% 10% interpolation Asia including China China 0%

24 Resource rich countries increased their terms of trade while resource scarce saw it diminishing Annual growth of net barter terms of trade (per cent) Top 3 exports Commodities Manufactures Palau Hong Kong SAR, China Vietnam Thailand Turkey Solomon Islands Fiji Maldives Micronesia, Fed. Sts. Tajikistan Singapore Macao SAR, China Guam Vanuatu French Polynesia Kiribati Nepal Northern Mariana Islands Korea, Dem. Rep. Cambodia China Samoa Sri Lanka Philippines Tonga Korea, Rep. Japan Pakistan Bangladesh imports > exports Georgia Indonesia New Zealand Myanmar India Armenia Lao PDR Marshall Islands Malaysia Kyrgyzstan Afghanistan Turkmenistan Brunei Darussalam Russian Federation Kazakhstan Azerbaijan Iran, Islamic Rep. Mongolia Australia Papua New Guinea Bhutan Uzbekistan American Samoa exports > imports

25 The evolution of productive capacity of countries that have graduated ( ) Productive capacity (distance to the mean) Cape Verde Botswana LDCs in Asia-Pacific Less populated LDCs in Asia- Pacific

26 Diversification required to graduate from least developed country status, 2009

27 Strategy for Increasing Productive Capacities in the Least Developed Countries Build productive capacities by diversifying economic structure beyond existing range of products in favour of complex and high-value adding products Combined efforts of a development State and the private sector with a supportive role played by development partners

28 1) Strategic diversification

29 Trade-off? Growth & Lower carbon emissions 100 CO2 emissions (metric tons per capita) BRN AUS KAZ PLW RUS SGP KOR TKM JPN IRN MYS NZL HKG CHN UZB MNG THAAZE TUR MDV MAC MHL TON IDN ARM FJI VNM IND GEO TJK KGZ PAK BTN WSM PHL y = x LKA PNG FSM R 2 = VUT SLB BGD KHM KIR LAO TLS NPL AFG ,000 10, ,000 1,000,000 GDP per capita (US$)

30 Moving towards the good low carbon opportunities (1) Low complexity and high carbon foot print (2) High complexity and high carbon foot print 8 Carbon footprint index (3) Low complexity and low carbon foot print Complexity index (4) High complexity and low carbon foot print

31 Requires developmental states Government gives top priority to economic development in government policy and seeks to design policies and institutions that promote this goal Need a broader policy space Industrial and trade policies, international private capital flows, technology transfer, macroeconomic policies and regulations

32 Policy Agenda NATIONAL POLICY FRAMEWORK Stable investment-friendly macroeconomic policy framework Industrial policy and infrastructure development Domestic resource mobilization Technological upgrading SUPPORTIVE GLOBAL PARTNERSHIP Financing for development: FDI and ODA Market access and aid for trade South-South, triangular and regional cooperation

33 Thank you Clovis Freire