Meeting document: Enhancing productive capacities and the role of the private sector in Least Developed Countries

Despite their efforts, LDC economies continue to suffer from limited productive capacities and structural weaknesses which impede their growth prospects and constrain their ability to produce efficiently and competitively.

Productive capacities are developed through investments in physical, human, social and environmental capital, and through technological acquisition and innovation. The process results in the diversification of national economies, structural transformation and a more beneficial integration into the global economy.

While the private sector is the main driver of this process, in LDCs it is largely dominated by small and informal enterprises which are constrained by a lack of resources and capacity. For this reason, they require public support.

The provision of public goods and infrastructure and the facilitation of diversification are broad roles governments play in a market-based approach. Moreover, interventions have to be embedded in a broader national development strategy and a supportive macroeconomic framework.