Least developed countries (LDCs) have so far been spared from the worst effects of the health emergency, yet the fallout from the COVID-19 pandemic has taken its toll on their economies, rolling back some of the progress made towards sustainable development and possibly leading to long-term damage. Not only has the crisis laid bare structural weaknesses of LDCs, but also the deep-seated flaws of the international support measures at their disposal. It has also brought back to the fore the pivotal role of productive capacities for a sustainable, inclusive and resilient recovery.

UNCTAD's The Least Developed Countries Report 2020: Productive Capacities for the New Decade maintains that the broadening and full utilization of LDC productive capacities remains central to upgrade LDC economic structure, and bridge their development gaps vis-à-vis other countries. In the same vein, using UNCTAD's Productive Capacities Index as a yardstick, the report documents how the performance of LDCs against the objectives enshrined in the Istanbul Programme of Action has been uneven and overall lackluster, with only a handful of LDCs displaying sustained progress.

The advent of digitalization and the Fourth Industrial Revolution are modifying the very nature of productive capacities and reshaping global value chains. Advanced technologies offer ample scope for spillovers and productivity gains, but also risks deepening entrenched inequalities and technological divides.

Against this background, bold concerted policies to strengthen LDC productive capacities are as imperative as ever; in fact, the report maintains that they should constitute a key pillar of any sustainable recovery and development strategy.

Report by Unctad