Improved trade performance is necessary to escape the complex poverty trap in LDCs, but mere increasing exports do not necessarily lead to poverty reduction, says an Unctad report.

Export expansion apart, import-substitution and increase in domestic demand should be major policy priorities to cut poverty in the LDCs including Bangladesh, suggests the report.

"International development policies and assistance have failed to link the global trade with poverty reduction for the LDCs,
" observed the UN body in its Least Developed Countries (LDCs) Report 2004 released yesterday.

Focusing on the nexus between trade and poverty, the report says international trade cannot work in reducing poverty in countries where the level and efficiency of investment are not adequate to support sustained economic growth.

The UN body recommended an agricultural development-led industrialisation strategy, which includes investment in infrastructure and technological progress in agriculture together with forward linkages into ago-processing activities.

The Centre for Policy Dialogue (CPD), a local think-tank, launched the report at a function at its office in Dhaka yesterday at the request of the United Nations Conference on Trade and Development (Unctad).

Launching the report, Professor Mustafizur Rahman, research director of CPD, suggested designing Bangladesh's poverty reduction strategies in the light of recommendations of the latest Unctad LDC report.

"The strategy should be integrated with the international trade in a way that it can help alleviate poverty," he said.

The report recommended that LDCs can strengthen the links between international trade and poverty reduction by mainstreaming both trade and development into their poverty reduction strategies.

Investment and technological progress are the engines of sustained economic growth through which substantial poverty reduction can be achieved in the LDCs, says the report. "International trade is the fuel for the engine."

Prof Mustafiz said agriculture constitutes over 60 percent of the labour force in most of the LDCs, but the rate of their agricultural exports is generally low.

"Against this background, there is no guarantee that export expansion will lead to a form of economic growth that is inclusive," he observed.

"The developed countries need to change their policy of giving huge subsidy to the agriculture sector," Mustafiz said underscoring the need for increasing regional cooperation as suggested in the Unctad report.

The report mentioned that international development assistance to the LDCs has increasingly shifting away from production sectors and economic infrastructure to supporting basic human needs.

"In the early 1980s, 45 percent of total bilateral aid commitments by developed countries to LDCs went to the development of productive sectors and economic infrastructure. But by 2000-2001, this had fallen to 23 percent."

Speaking at the report launching, Debapriya Bhattacharya, executive director of CPD, said disparity between the rich and the poor has increased over time. "At the same time disparity between the rich and poor nations has also intensified."

Commenting on the report, Ananya Raihan, research fellow of CPD, said the report lacks the issue of opening the market for labour force.