Governments in Least Developed Countries need to adopt a “pragmatic, strategic and evolutionary” approach to strengthen their public sector capacity, bring about institutional reform and promote policy learning, says a new United Nations report. Entrepreneurs in LDCs are marred by limited finances, weak infrastructure, and, often, elevated political, economic and environmental risks, so they are “forced into” small-scale, low-value economic activities, stifling growth, says the latest Least Developed Countries Report 2018, ‘Entrepreneurship for Structural Transformation’, issued by UNCTAD.
The least developed countries represent most vulnerable segment of the international community; 47 nations that includes most of sub-Saharan Africa, some Asian countries, and several island States. They comprise more than 880 million people (about 12% of world population), but account for less than 2% of world gross domestic product (GDP) and about 1% of global trade in goods.
The report says that large numbers of people in LDCs are forced into small-scale, low-value entrepreneurship by necessity. Entrepreneurship is dominated by self-employment (which accounts for 70% of total employment), informal micro- and small enterprises with low chances of survival and growth and little propensity to innovate. Small companies account for 58% of all firms in these countries.
“Governments in [these countries] should focus on boosting entrepreneurs and established firms that seize opportunities to create innovative products and services, employ more people and grow dynamic businesses that have a transformative, ripple effect throughout the economy,” urged UNCTAD.
It explained that supporting enterprises that focus on bottom-up economic transformation must go beyond the, so called, “business-as-usual approach”, and must establish an enabling environment for business, correct market failures, and support small enterprises.
“[We call on the] least developed countries not to overlook the pivotal and complementary role played by large enterprises, alongside medium-sized and smaller enterprises,” said Mukhisa Kituyi, the Secretary-General of UNCTAD, the UN Conference on Trade and Development.
“By encouraging policymakers to value the benefits of entrepreneurship […] an invaluable contribution [can be made to] the least developed countries’ implementation of the 2030 Agenda for Sustainable Development,” he added.
Specific recommendations in the report call for a new “developmental state”, engaging in transformative and focused investments, and involves private sector with a clear vision and path for development. Greater attention needs to be given to the development of domestic supply chains, urges the report, noting also the importance of coherence and coordination between various policies, including those related to industries; science, technology and innovation; as well as rural development.