麻豆传媒

Twelve LDCs are set to graduate over the next few years. This study argues that despite their success in meeting the specific graduation criteria, they are still afflicted by embedded structural weaknesses, a lack of export and market diversity, supply-side constraints, weak competitive strength, fiscal-budgetary deficits and aid dependence. The cost of graduating out of the LDC group will also be high. These costs result from significant erosion of preferential market access, the loss of flexibilities enjoyed under various special and differential provisions and increased obligations and commitments as developing countries under international agreements. Middle-income graduation of many of these LDCs will have adverse implications for the terms, amount and conditions of concessional private and institutional flows. This study warns that the negative impacts of the ongoing COVID-19 pandemic will add to these challenges. Against this backdrop, this report undertakes an in-depth examination of the potential role of South-South Cooperation (SSC) in supporting sustainable LDC graduation. Two avenues of SSC are considered: trade-related cooperation and extended support through concessional financial flows. It stresses that both avenues are mutually reinforcing. Analysis reveals that LDCs are increasingly integrated with the Global South through trade in goods and services, investment, Southern Regional Trading Arrangements (RTA) and financial flows from both public and private Southern providers. Southern financial institutions such as the New Development Bank (NDB) and the Asian Infrastructure Investment Bank (AIIB) have added new dimensions to these financial flows. This study argues that opportunities to leverage these connections have emerged that could help LDCs in their quest for sustainable graduation. This study therefore puts forward a number of concrete initiatives. It provides evidence that Southern markets are key export destinations for many graduating LDCs. Under LDC schemes Southern country preferential market access plays an important role in enhancing competitive strengths. Many graduating LDCs are also members of Southern RTAs. This study suggests Southern providers continue to provide preferential market access to graduating LDCs for a specific period beyond graduation, preferably for five years. It recommends that regional RTA provisions (similar to those provided to LDCs) be calibrated to extend favourable treatment to graduated LDCs on a predictable basis. And that the special and differential treatment provided to LDCs under various WTO agreements and provisions are also extended to graduating LDCs for an additional period. Southern countries need to demonstrate solidarity with graduating LDCs. This paper argues that trade-related aid and concessional credit will help these countries build the supply-side capacities they need, raise export competitiveness, and build production network and value chains at a time when preferential margins will decline. Concessional financial flows are crucial to help graduating LDCs address structural impediments and build trade and other supply capacities. This paper demonstrates that LDCs and graduating LDCs continue to suffer from a savings-investment gap, fiscal deficit and current account and balance of payments difficulties. However, Southern providers have emerged as important players in financial flows. This report argues that, while Southern governments, private sectors and financial institutions play an increasing role in this regard, there are opportunities to further enhance their contribution. It therefore recommends that Southern partners be encouraged to voluntarily adopt a target indicator to ensure a certain percentage of their financial flows are earmarked for LDCs and graduating LDCs. Southern financial institutions should create a special window financing the structural transformation of LDCs and low income countries to ensure graduation is irreversible. Such support should also be targeted at upgrading these countries’ social sectors. Southern partners also need to provide LDCs with greater FDI and remittances; as these play a critically important role in their development and sustainable graduation. Southern partners should play their part in helping LDCs and graduating LDCs survive the pandemic, which has led to the erosion of many past gains and comfort zones enjoyed as they move towards graduation. This paper argues that such support will be very well aligned with the spirit of the SDGs, particularly Goal 17 concerning global partnerships. This report proposes establishing a dedicated task force under the auspices of the UNOSSC to monitor how SSC will be affected by graduation, and to recommend initiatives for more effective SSC in terms of sustainable LDC graduation. It emphasises that in view of several important upcoming global fora, including the WTO MC 12 and the UN LDC V, Southern providers should volunteer to enhance their support for LDCs and graduating LDCs, in areas relating to trade and through greater concessional financial flows. They should also demonstrate solidarity with these countries so that these fora agree to a package of ISMs to support sustainable LDC graduation.