Despite higher economic growth the 50 least developed countries of the world failed to effectively translate that into poverty reduction and improve human well-being, a latest UN report said.

The problem, according to the LDC Report 2006 of the United Nations Conference on Trade ad Development (UNCTAD) unveiled Friday, is that LDCs have simply failed to create productive non-farm jobs to provide a decent living.

The report pinpoints that rapid urbanization, decline in size of farm plots, weak government support, problems of financing and price shrinkage, and low connectivity has forced LDC people to shift out of agriculture.

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, the report adds.

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.

Referring to low productivity of workers, the report says that in 2000-2003, LDCs required 5 workers to produce what one worker produced in developing countries, and 94 workers to match the productivity of one worker in a developed country.

Speaking at the report release programme, former vice-chairman of National Planning Commission (NPC) Dr Shankar Sharma, said, “The growth rate of urbanisation is going up due to good business and economic activities,” adding, “The resources are going to the rural areas. We should not compromise with the resources being used in the productive sectors also.”

Dr Sharma said 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.

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.