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    Aid — for — Trade and Infrastructure Development for Agriculture. Client: Gates Foundation. Other version s : Aid — for — Infrastructure and Agriculture. TVET, skills training and youth employment. Co-authored with Jakob Engel. ODI mimeo. Substantial poverty reduction in the LDCs will thus require not simply increased agricultural productivity, but also the development of competitive businesses in manufacturing and services, as well as increased dynamic inter-sectoral linkages. The Report calls for a paradigm shift from a consumption- and exchange-oriented approach to poverty reduction towards a production- and employment-oriented approach.

    It analyzes three basic constraints on the development of productive capacities in the LDCs -- poor physical infrastructure; weaknesses of the domestic private sector and supporting financial systems and knowledge systems; and insufficient demand and thus underutilization of domestic resources and capabilities as well as weak incentives to invest and innovate -- and it identifies some key policy priorities to overcome these constraints, including the mobilization of underutilized domestic potentials and a re-balancing of the sectoral allocation of aid.

    If past trends persist, LDCs are likely to become the main locus of extreme poverty in the world economy by A more effective link between international trade and poverty reduction could help to prevent this from happening. Action is required now on three fronts: mainstreaming of trade and development concerns within national poverty reduction strategies; increasing international financial and technical assistance to enhance domestic production and trade capacities; and promoting a more favourable international trade regime.

    The latter includes: -- phasing out by OECD countries of agricultural support measures that adversely affect LDCs, -- new international policies to reduce vulnerability to negative commodity price shocks and to address the special challenges facing mineral economies, more effective market access preferences for LDCs, complemented by supply-side preferences, and -- enhanced South-South cooperation in the field of trade and investment. With improved national and international policies, LDCs can escape the poverty trap. Indeed a central message of the Report is that there is a major, but currently underestimated, opportunity for rapid reduction in extreme poverty in the LDCs through sustained economic growth.

    However, the new Poverty Reduction Strategy Papers PRSPs , which are currently the focus of national and international efforts to reduce poverty in poor countries, are not grasping that opportunity. The Report proposes an alternative approach to improve the design of poverty reduction strategies. It also shows that effective poverty reduction in the LDCs needs a more supportive international environment.

    The least developed countries report, 2006: Developing productive capacities

    This should include increased and more effective aid and debt relief, a review and recasting of international commodity policy, and policies which recognize the interdependence between the socio-economic marginalization of the poorest countries and the increasing polarization of the global economy. From the analysis, two key features of the development financing patterns of LDCs emerge. First, the central accumulation and budgetary processes of the LDCs are dominated by external rather than domestically generated resources.

    Second, almost all the external finance for most LDCs comes from official sources.