Paving the path to prosperity for Europe and Asia’s Landlocked Developing Countries
24 August 2023
Europe and Asia's Landlocked Developing Countries (LLDCs) stand at a critical juncture in their development journey.
They are confronted with intricate development challenges, emanating from their lack of direct access to the sea, geographical remoteness, and lack of integration with world trade and global value chains. They contend with high trade costs, limited transport infrastructure, and cumbersome border and customs regulations — all of which undermine the competitiveness of their exports and hinder economic growth. The impacts of the COVID-19 pandemic, combined with extreme weather events, geopolitical tensions, and the global macroeconomic downturn, have further compounded these pre-existing structural challenges, eroding some of the hard-won achievements of the past decade.
So where do we go from here?
The challenges are daunting, but there is a window of opportunity to reshape the trajectory of development for Europe and Asia's LLDCs. Next year, world leaders will gather in Kigali, Rwanda, to agree on a new programme of action to transform the livelihoods of over half a billion people living in landlocked developing countries globally. In the lead-up to this momentous conference, the United Nations is joining the 14 LLDCs in Europe and Asia, along with their transit neighbours, development partners, and other stakeholders this week in Bangkok. The meeting will undertake a comprehensive review of the implementation of the Vienna Programme of Action for LLDCs (VPoA) - a major international development compact agreed upon in 2014, outlining key areas of development to improve landlocked economies. It will also discuss priorities for the formulation of the next Programme of Action. For Europe and Asia, these priorities should include, among other important elements, the following five key areas.
Transit and Trade facilitation
The urgency of better integrating Europe and Asia's LLDCs into the global trade landscape and value chains cannot be overstated, and freedom of transit - allowing LLDCs to move freely through their neighbouring countries under mutually agreed terms - holds the key to achieving this. By providing LLDCs with unimpeded access to international markets, freedom of transit can help Euro-Asia's LLDCs to diversify their economies, attract investments, and integrate into global trade networks. In turn, this will also help transit countries to harness untapped potentials of enhanced connectivity, trade, and regional integration.
The continued establishment of efficient border infrastructure, such as one-stop border posts, SMART corridors, and intelligent transport systems (ITS), also remains of equal importance in their bid to increase trade. These measures have the potential to streamline and accelerate the movement of goods, ultimately reducing bottlenecks and trade expenses. But none of this would be possible without adequate infrastructure in the LLDCs, their transit neighbours, and stronger partnership and collaboration to enhance connectivity.
Infrastructure development is a catalyst for overcoming the inherent geographical challenges and other structural constraints faced by LLDCs. Adequate and well-maintained infrastructure, including road, rail, and air networks, can facilitate the efficient movement of goods and people across borders, reducing transportation costs and transit times, while IT infrastructure is vital for digital solutions, streamlining trade processes, fostering economic diversification, and harnessing the potentials of e-commerce. It is important to highlight the strides that have been achieved in enhancing transport networks across many Euro-Asian LLDCs, such as the Asian Highway Network, Trans-Asian Railway Network, and Euro-Asian Transport Links. However, several LLDCs in Europe and Asia continue to grapple with inadequate infrastructure and disjointed connections between different modes of transportation. Prioritizing investments in infrastructure developments, particularly robust transportation networks will also enable the efficient movement of raw materials and finished products from LLDCs to global markets, facilitating value addition and fostering the growth of new manufacturing sectors.
For instance, in Bhutan - reliability and quality of roads continues to be an issue due to its rugged terrain while Nepal is confronted with multiple challenges such as a lack of operational efficiency and an inability to attract investment through public-private partnerships. During the next programme of action, Euro-Asia's LLDCs need to significantly boost investment in infrastructure development that can complete missing links, both domestically as well as along the Asian Highways, Trans-Asian Railways and Dry Ports. Investing in robust transportation networks will also enable the efficient movement of raw materials and finished products, facilitating value addition and fostering the growth of new manufacturing sectors, which brings us to yet another crucial area.
Diversifying economies and embracing digital technologies
LLDCs need to create more diversified and resilient economies while embracing technological advancements. Diversifying LLDC economies will help mitigate the risks associated with commodity price fluctuations and market uncertainties and provide a more stable path for equitable growth and development. Every chance to connect with regional and worldwide value chains should be explored to overcome the challenges posed by limited domestic markets. LLDCs should also explore new technologies that allow local enterprises to sell into global markets. More involvement in online businesses, digital services, and helping small businesses and women entrepreneurs are important too. We have witnessed it time and again - by bridging digital and connectivity gaps, LLDCs can effectively improve productivity and competitiveness on the global stage.
Building sustainable and climate-resilient economies
As a result of their location and greater reliance on climate-sensitive sectors like agriculture, Euro-Asia's LLDCs continue to be disproportionately affected by the adverse impacts of climate change. At the same time, their capacity to adapt to climate change is constrained by limited resources and productive capacities, weak infrastructure, and institutional shortcomings. Addressing these limitations through sustainable development strategies, technology transfer and investments in climate-resilient infrastructure can enhance resilience against climate shocks. Simply put – preparedness, capacity to respond, climate-resilient roads, bridges, and disaster-resistant buildings can minimize the impact of extreme weather events, by reducing disruptions to trade and economic activities.
Another crucial avenue for LLDCs lies in prioritizing clean energy. In South and Southeast Asian LLDCs, hydropower development emerges as a pivotal opportunity for generating clean energy and fostering regional cooperation. Notably, countries like Laos, Bhutan, and Nepal possess abundant rivers, translating into significant hydropower potential. This potential not only shapes their economic growth but also positions them as exporters of clean energy. Additionally, Euro-Asia's LLDCs need to have an enhanced voice in global climate negotiations and discussions, for their needs and priorities to be incorporated into the global climate discourse.
Financial Support and capacity building
Given the heightened dependence of Euro-Asia's LLDCs on external finance both to address their macroeconomic challenges and to finance their development needs, they are highly reliant on developments in the global economy, including the international financial markets and the aid architecture. LLDCs often face limitations in terms of mobilising the financial resources necessary to support their development needs. During the current poly-crisis, these financing needs have widened further, with many LLDCs carrying growing debt burdens, which impede their development efforts.
The next Programme of Action needs to focus urgently on the debt issue in a comprehensive manner. Adequate financial support from various sources, including domestic revenues, international aid, and multilateral institutions, will be essential to bridge funding gaps and enable critical development projects. Development partners, International Financial Institutions, Regional Development Banks, multilateral institutions, and the private sector should prioritize targeted assistance in financing for development and long-term solution to debt. , This is indispensable in addressing the multifaceted challenges of LLDCs.
Ultimately, Euro-Asia's LLDCs cannot do it alone.
Forging the widest possible coalition of multi-stakeholder partnerships among LLDCs and transit countries as well as development partners and the private sector, is now more critical than ever as we embark on a new decade of action for LLDCs. The global community must stand together to support these countries, fostering an environment of growth, prosperity, and integration into the global economy. Only through collaboration, innovation, and a shared vision, the LLDCs can overcome their challenges and embark on a journey towards a brighter future for their people.
With the Third United Nations Conference on LLDCs on the horizon, the regional review meeting in Bangkok this week presents a unique opportunity for Euro-Asia's LLDCs to rally global support and forge partnerships for transformative change. The meeting will set the stage for meaningful dialogues, innovative ideas, collective aspirations, exchange of best practices and experiences among LLDCs, transit countries, and development partners, as leaders and policymakers strive to unlock the immense potential of LLDCs in Asia and Europe.
Together, we can create pathways to prosperity for Euro-Asia's LLDCs and ensure that they are not left behind in our shared journey toward sustainable development.
Rabab Fatima is the United Nations Under-Secretary-General and High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States.