Kathmandu, July 21:

Channelling a higher portion of aid into the productive sectors and into upgradation of infrastructure such as upgrading roads, ports and electricity supplies, improving domestic financial system and upgrading technological support is crucial to boost poor countries’ economies.

Dr Shankar Sharma, former vice-chairman of National Planning Commission (NPC) after launching United Nations Conference on Trade and Development (UNCTAD), the Least Developed Countries (LDCs) Report-2006 that focused on developing productive capacities said that it is crucial for boosting productive capacity. It may turn out to be useful if we could increase investment in the infrastructure sector.

“The growth rate of urbanisation is going up due to good business and economic activities,” he said.

“Poverty reduction, child mortality and gender equality need greater attention in the LDCs like Nepal,” Sharma added. He was worried about the weak infrastructure in Nepal. “To boost overall development in Nepal, budget size should be increased and increment in per capita is inevitable,” he said.

“The resources are going to the rural areas. We should not compromise with the resources being used in the productive sectors also,” Sharma added.

UNCTAD is missing some thing on foreign aid front, he said adding that the UNCTAD report records ODA (foreign loans and grants) amounting to Rs 30 billion to Nepal but the budget have recorded only Rs 19 billion.

“If we go by the the figure, Rs 11 billion is missing,” Dr Sharma said. He strongly suggested the government to effectively manage foreign aid. He also said that efficiency in investment is eroding in Nepal for which concerned authorities should take serious note.

Bharat Bahadur Thapa, secretary at the ministry of industry, commerce and supplies speaking on the occasion stressed on the need to focus on productivity enhancement with effective infrastructure development. He said that educational improvement, skills enhancement, modernised education, management improvements are some of the ingredients that boost productivity.

Gabriele Kohler, regional advisor, social policy, United Nations Children’s Fund, regional office for South Asia, presented a report on production capacity, employment crisis, policy constraints and demand constraints to boost productivity in LDCs. Productive resources such as natural resources, human resources and financial capital are also mentioned in the report. She said that few LDCS are generating sufficient production, manufacturing and services sector jobs to absorb growing labour force.

As per the UNCTAD’s report, worlds 50 poorest nations are in the process of urbanisation without creating productive non-farm jobs. They must find a way to foster viable businesses and expand non-agricultural employment in the competitive and open markets. “If the employment challenge is not effectively addressed, there will be an increased pressure for international migration,” states the report.

According to the report, overall growth rate of LDCs was 5.9 per cent in 2004 but there is a widespread sense that this is not translating effectively into poverty reduction and improved human well-being.

“The key to poverty reduction in LDCs is a process called developing productive capacities. Most of the LDCs have lowest and poorest-quality of transport, telecommunications and energy infrastructure, therefore, improving physical infrastructure is a most,” it states.

Trade expansion and foreign direct investment have also been touted as the key to poverty reduction in the report. In recent year, only six per cent of the population aged 20-24 in LDCs was enrolled in tertiary education, compared to 23 per cent in other developing countries and 57 per cent in OECD countries, report states.