Promoting Productive Capacity Development in the LDCs

Transcription

1 Promoting Productive Capacity Development in the LDCs Asia-Pacific Regional Workshop on Graduation Strategies from the Least Developed Country Category as part of the Implementation of the Istanbul Programme of Action for the LDCs 4 December 2013, Siem Reap, Cambodia Clovis Freire Economic and Social Commission for Asia and the Pacific (ESCAP)

2 Before IPoA Change of paradigm Focus on exchange (static view) Given what we produce today, how to improve welfare through trade? After IPoA Focus on production and employment (dynamic view) How to foster new economic activities and create productive jobs given the existing production base and market incentives?

3 Take home message LDCs need to build productive capacities to benefit from globalization, increase resilience, sustain growth as well as poverty eradication, achieve structural transformation, and generates full and productive employment and decent work for all

4 The underlying structure of an economy is a network of non-tradable productive capacities Productive capacities Infrastructure Methods Processes Entrepreneurial capabilities Production linkages Economic activities: jobs Goods Services

5 Higher GDP is associated with diversification 100,000 10,000 Diversification (number of products exported) LKA SGP KOR IND HKGTHA TUR MYS IDN RUS VNM PHL PAK JPN CHN FJI MAC GEO KHM AZE ARM AFG UZB BGD KAZ 1, TUV MHL KIR PLW WSM SLB VUT TLS FSM TON MDV BTN KGZ MNG LAO TJK PNG TKM y = x R 2 = ,000 10, ,000 1,000,000 10,000, ,000,000 GDP (Milliion US$) Source: Author based on data from the United Nations Commodity Trade Statistics Database (COMTRADE) and from the World Bank s World Development Indicators. (2009 data)

6 How common are the products exported (Number of countries exporting similar products) More diversified countries face lower competition Non-diversified countries producing common products TUV MNP KIR WSM TLS BTN MDV VUT SLB LAO MMR KHM AFG BGD NPL Non-diversified countries producing uncommon products Diversified countries producing common products LKA IRN Mean=1,868 PAK Diversified countries producing uncommon products VNM PHL IDN MYS NZL RUSTUR THAHKG SGP KORIND AUS CHN JPN Mean=91.4 USA ,000 4,000 6,000 8,000 10,000 Diversification (Number of products) Source: ESCAP (2011), Economic and Social Survey 2011.

7 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 International environment has not facilitated 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 Source: Freire (2011). Productive Capacities in Asia and the Pacific. MPDD Working Papers, WP/11/17. 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)

8 Productive capacity (distance to the mean) Bangladesh Nepal Cambodia Myanmar Lao PDR Bhutan, Samoa, Vanuatu,Solomon Isl., Timor-Leste, Kiribati, Tuvalu Maldives Source: Author based on Freire (2011). Productive Capacities in Asia and the Pacific. MPDD Working Papers, WP/11/17.

9 Productive capacity (distance to the mean) Few countries increased their productive capacities when starting from LDCs levels Lithuania Viet Nam Estonia 0.1 Latvia LDCs in Asia-Pacific Source: ESCAP (2011), Economic and Social Survey 2011.

10 4,500 4,000 Increasing diversification and reducing competition 107 Competition faced, index ( average global competition=100, no competition = 0) (RHS) ,500 3, , ,000 1, ,000 Diversification, Number of products exported (LHS) Source: Author based on data from the United Nations Commodity Trade Statistics Database (COMTRADE).

11 Take home message LDCs build productive capacities facilitating the emergence of new economic activities that produce new and more productive goods and services

12 CHALLENGE: SHIFT IN PRICES OF COMMODITIES AND MANUFACTURES

13 Breaking historical trend, commodities are booming since Annual prices indices, real 2005 US dollar terms (1960=100) Annual price Metals & Minerals Beverages Food Raw Materials Energy (right axis) Source: Author based on data from the World Bank.

14 Shifting prices of commodities and manufactures 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 Sri Lanka Samoa 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 Source: ESCAP Economic and Social Survey of Asia and the Pacific 2012.

15 Commodity boom is not unprecedented 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% Source: Author based on data from Maddison, 2009.

16 25,000 The great income divergence GDP per capita in 1990 international dollars 20,000 Core 15,000 10,000 5,000 Periphery China Asia Source: Author based on data from Maddison, 2009.

17 Effect of shift in prices 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% specialize in fewer products produce more of the same diversify Source: Author based on data from the United Nations Commodity Trade Statistics Database (COMTRADE).

18 OPPORTUNITIES FOR BUILDING PRODUCTIVE CAPACITIES

19 Opportunities for diversification Bangladesh Nepal Cambodia Afghanistan Myanmar Lao PDR Samoa Solomon Islands Vanuatu Bhutan Timor-Leste Tuvalu Kiribati Existing products Potential new products with higher productivity Source: Author based on data from the United Nations Commodity Trade Statistics Database (COMTRADE).

20 Export opportunities Afghanistan Bangladesh Bhutan Cambodia Lao PDR Myanmar Nepal Electrical, electronic equipment Machinery & mech appliance etc Organic chemicals Sum of others with smaller shares Iron and steel Optical, photo, technical, medical, etc apparatus Plastics and articles thereof Source: Author based on data from the United Nations Commodity Trade Statistics Database (COMTRADE).

21 Export opportunities in agro-industries Kiribati Samoa Solomon Islands Timor-Leste Tuvalu Vanuatu Animal,vegetable fats and oils, cleavage products, etc Cocoa and cocoa preparations Edible vegetables and certain roots and tubers Meat, fish and seafood food preparations nes Vegetable, fruit, nut, etc food preparations Cereal, flour, starch, milk preparations and products Dairy products, eggs, honey, edible animal product nes Meat and edible meat offal Sugars and sugar confectionery Sum of others with smaller shares Source: Author based on data from the United Nations Commodity Trade Statistics Database (COMTRADE).

22 Export opportunity Cambodia Rubber and articles thereof Miscellaneous chemical products Paper & paperboard, articles of pulp, paper and board Iron and steel Machinery & mech appliance etc Sum of others with smaller shares Articles of iron or steel Organic chemicals Electrical, electronic equipment Optical, photo, technical, medical, etc apparatus Plastics and articles thereof Source: Author based on data from the United Nations Commodity Trade Statistics Database (COMTRADE).

23 Sample of list of potential new products for diversification with high export opportunities - Cambodia (HS code 6-digit) Description, price range Export opportun ity (U$ Million) (390319) Polystyrene other than expansible, in primary forms, $ (390320) Styrene-acrylonitrile (SAN) copolymers, in primary forms, $ (390330) Acrylonitrile-butadiene-styrene (ABS) copolymers, in primary forms, $ (390330) Acrylonitrile-butadiene-styrene (ABS) copolymers, in primary forms, $ (390390) Polymers of styrene, in primary forms (excl. of ), $ (390390) Polymers of styrene, in primary forms (excl. of ), $ (390410) Poly(vinyl chloride), not mixed with any oth. subs., in primary forms, $ (390421) Poly(vinyl chloride), non-plasticised, in primary forms (excl. of ), $ (390421) Poly(vinyl chloride), non-plasticised, in primary forms (excl. of ), $ (390422) Poly(vinyl chloride), plasticised, in primary forms (excl. of ), $ (390422) Poly(vinyl chloride), plasticised, in primary forms (excl. of ), $ (390599) Polymers of vinyl acetate/of oth. vinyl esters, in primary forms, n.e.s. in..., $ (390610) Poly(methyl methacrylate), in primary forms, $ (390690) Acrylic polymers other than poly(methyl methacrylate), in primary forms, $ Source: Author based on data from the United Nations Commodity Trade Statistics Database (COMTRADE). Top markets (U$ Million) top1 top2 top3 top4 top5 top6 top7 top8 top9 CN UA BY KR VN EG PT DO IL CN EG ES RU PL SG 8.6 HK.8 KR IN CN 4.2 IT 4 IE 2 DE 5.7 GB 3.4 BR 3.8 CA 2.5 DE 6.1 CN 5 BR 14.6 IN 14.9 UA 2.3 DE 2.6 MX 2.5 BR 3.1 CN 5.9 NL 6.5 UA 9.4 FR 3.6 SA 1.2 SK 3.4 TR 1.8 MX 3.3 FR 2.4 CL.9 US 2.8 IN 3.7 NG 1.6 TH 3.2 AR.7 JP 2.2 UA 2 RU 3.6 MA 1.4 MX 2.6 CZ.4 AT.4 IN 1.1 BE.9 PL 1.2 IN 1 UA.8 UA 1.6 CN 3.1 EG 2.3 KR 3.4 HK 1.4 BE 1.4 CA 1.2 IN.9 PL KR EG 2.4 IN 1.2 RU.8 BR.7 RU 1.2 GB.8 BE.4 IN 1.2 IN 2.8 UA.6 TH 1.8 BY 1.4 DZ.3 BR.7 VN.5 EG.8 TR.6 RU.3 CN 1.1 IR 1 AT 1.1 MY 2.5 CN.6 SE 1.4 BH.9 DK.9 PL 2.4 RU.5 VN 1.2 NG.9 CO.3 IT.2 BY.5 SG.5 SG.8 AR.3 top1 0 HU.7 NL.2 BE.8 IR.8 JP 1.9 KR.4 RU 1.6 AU.4 PT.9 IN.9 RO.7 US.2 SE.3 DZ.4 FI.3 CZ.8 NL AT.5.3 AU.2 IL.2 TR.8 TH.2 BR.6 MX.3 BR.1 CA.2 GR.7 EG.1 EG.2 TH.2 CL.5 BE.1 US.1 PL.2

24 Import replacement opportunity Cambodia Electrical, electronic equipment Optical, photo, technical, medical, etc apparatus Plastics and articles thereof Machinery & mech appliance etc Aluminium and articles thereof Manmade staple fibres Raw hides and skins (other than furskins) and leather Special woven or tufted fabric, lace, tapestry etc Impregnated, coated or laminated textile fabric Articles of iron or steel Sum of others with smaller shares Source: Author based on data from the United Nations Commodity Trade Statistics Database (COMTRADE).

25 Sample of list of potential new products for diversification with high import replacement opportunities - Cambodia Import replacementt opportunity (U$ (HS code 6-digit) Description, price range Million) (551599) Woven fabrics of synth. staple fibres, n.e.s., $ (760612) Plates, sheets & strip, rect. (incl. square), of a thkns. >0.2mm, of alumin..., $ (551529) Woven fabrics of acrylic/modacrylic staple fibres, other than that mixed ma..., $ (730120) Welded angles, shapes & sections of iron/steel, $ (590320) Textile fabrics impregnated/coated/covered/laminated with polyurethane othe..., $ (411510) Composition leather with a basis of leather/leather fibre, in slabs/sheets/..., $ (844859) Parts & accessories of the machines of 84.47/of their auxiliary mach. (excl..., $ (900110) Optical fibres, optical fibre bundles & cables (excl. of 85.44), $ (580429) Mechanically made lace in the piece/in strips/in motifs, other than fabrics..., $ (310590) Mineral/chem. fertilisers cont. 2/3 of the fertilising elements nitrogen, p..., $ (700529) Float glass & surface ground/polished glass, non-wired (excl. of ),..., $ (854790) Insulating fittings for electrical machines/appls./equip.(excl. of 85.46, 8..., $ (520419) Cotton sewing thread, not put up for retail sale (excl. of ), $ (580631) Narrow woven fabrics (excl. of & ), other than gds. of , $ (390421) Poly(vinyl chloride), non-plasticised, in primary forms (excl. of ), $ (721070) Flat-rolled prods. of iron/non-alloy steel, of a width of 600mm/more, paint..., $ (281511) Sodium hydroxide (caustic soda), solid, $ (691090) Ceramic sinks, wash basins, wash basin pedestals, baths, bidets, water clos..., $ (843710) Machines for cleaning/sorting/grading seed/grain/dried leguminous vegetable..., $ (560129) Wadding; oth. arts. of wadding other than of cotton/man-made fibres, $ (730820) Towers & lattice masts of iron/steel, $ (853530) Isolating switches & make-&-break switches, for a voltage >1000V, $ (740710) Bars, rods & profiles, of ref. copper, $ (845150) Machines for reeling/unreeling/folding/cutting/pinking textile fabrics, $ (210112) Preparations with a basis of extracts/essences/concs. of coffee/with a basi..., $ (480255) Paper & paperboard, not cont. fibres obt. by a mech./chemi-mech. process......, $ (731823) Rivets of iron/steel, $ (560122) Wadding; oth. arts. of wadding, of man-made fibres, $ Source: Author based on data from the United Nations Commodity Trade Statistics Database (COMTRADE).

26 0 Role of Government Laissez-faire: import substitution Strategic: exports BDI BTN PYF Strategic GBR CRI SVK PAK ROU SLV BLR UKRVEN EST AUS PER LUX SEN HKG BGR ECU EGY MAR HRV PHL ARG AFG CHE AZE BHR LBNTHA DZA JOR CHL LKA TUN BIH CMR CAN NGA SRB LTU OMN COL KOR ZMB UGA QAT KHM GHA GTM IRL BOL CIV CYP KEN CZE SVN TTO ZWE NZL DOM ALB AUT TGO MUS PAN MOZ CHN JAM SGP ARM FIN NCL MDA NOR GEO BHS ISL ISR BWA BRB MLT NIC RUS DNK CPV MWI NERMNE SWE JPN KGZ PRY NPL ABWMAC MLI BFA BMUMDV GUY TZA BLZ WSM TON VCT MDG SUR DMA ETH NLD MRT IRN PRT TUR BRA HUN GRC LVA MEXSAU Share of export oportunities with above average complexity (%) MYS POL ZAF IND BEL ITA DEU ESP FRA Strategic: import substitution Laissez-faire: exports USA Laissez-faire Source: Author based on data from the United Nations Commodity Trade Statistics Database (COMTRADE).

27 Need to balance the short-term gains from exploiting their current comparative advantages in low-skill industries with the long-term need to foster new economic activities Reduce their reliance on a few labour-intensive manufactures and diversify 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 to strategically identify a diversification path

28 Thank you Clovis Freire