Reports and Publications


ESCAP produces a number of publications each year examining the breadth and implications of economic and social policy making in the Asia and Pacific region. The Countries with Special Needs Development Report is the annual flagship publication. Other analytical products such as working papers, policy briefs and information materials are available to download.


Graduation of Bhutan from the group of least developed countries: Potential implication and policy imperatives

thumbnail_pic Despite confronted with such unfavourable conditions as mountainous topography and being landlocked and susceptible to natural disasters, Bhutan has demonstrated a strong track record in sustaining economic growth and reducing poverty over the past two decades or so. Its progress in other socio-economic indicators as reflected in its success in achieving many of the 2000-15 Millennium Development Goal (MDG) targets is also worth noting. It is unique in approaching development by valuing collective happiness as the goal of governance. Bhutan successfully met the least development countries (LDCs) graduation criteria in two United Nations triennial reviews of 2015 and 2018 and is set to graduate from the group of LDCs in 2023. The transition involves loss of certain trade preferences and other international support measures. However, as the significance of these benefits has been quite limited for Bhutan, LDC graduation should not be a major cause for concern. While most LDC-specific privileges are related to international trade, Bhutan’s overwhelming dependence on trade with India is governed through a bilateral trade agreement insulted from LDC status. Overseas development assistance is important for Bhutan although its significance in the economy has fallen. Graduation should not have much implication for development financing as development partners do not use LDC status as an important factor in deciding about aid allocation. For Bhutan, dealing with general development challenges should remain important policy priorities. It has embraced a proactive policy stance for graduation by combining its eighth five-year development plan, Sustainable Development Goals (SDGs) and Gross National Happiness (GNH) indicators. Bhutan has huge potential for developing supply-side capacities and generate employment opportunities through further development of such sectors as tourism, agribusiness, ICT and hydropower. Major impediments for exerting dynamism in these sectors include lack of investment, infrastructure deficit, and poor connectivity. Diversification of economic activities is a challenge for which one priority attention should be on developing the private sector.

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A Review of Access to Finance by Micro, Small and Medium Enterprises and Digital Financial Services in Selected Asia-Pacific Least Developed Countries

thumbnail_pic Micro, Small and Medium Enterprises (MSMEs) are key to the economies of various countries. Their numbers and contribution towards employment is well documented and there is acceptance amongst policy makers that these enterprises are critical for economic development. Increasingly, access to finance has been recognised as a major hurdle in their development or growth. Amongst, the countries reviewed in this paper - Bangladesh, Bhutan, Cambodia, Lao People’s Democratic Republic, and Nepal – Bhutan is the only target country where the supply of finance to MSMEs is favourable with nearly 68% of the demand being met. Cambodia has the highest finance gap followed closely by Lao Peoples Democratic Republic and Nepal. While examining the finance gap of microenterprises and SMEs, the gap revealed in Bhutan, Cambodia, Lao People’s Democratic Republic and Nepal are not substantial. However, in Bangladesh the differences are much larger between microenterprises and SMEs with only 14% of microenterprise demand being met. The review also explores the number of women owned MSMEs (WMSMEs) in the countries and the access to finance for such enterprises. It shows that the finance gap is amongst the lowest in Bangladesh (6%), Bhutan (19%) and Nepal (9%). In Cambodia and Lao People’s Democratic Republic, the share is higher at 32% and 42% respectively. But in both South East Asian countries women owned MSMEs also are a larger proportion of MSMEs. There are a number of demand and supply reasons or constraining factors leading to issues in access to finance. The common factors pertain to awareness, risk, knowledge, and products and processes. Women owned enterprises too face these challenges, but these may be more severe as they are often entrenched in gender stereotypes, limited education opportunities and restricted mobility, perception that women cannot manage businesses or lack leadership skills, and women are also often required to perform the dual role of business women and homemakers. Most of the countries are still in the process of framing laws pertaining to contract enforcement and resolution of insolvency. Specifically, on the demand side, enterpreneurship is not viewed as a career option and risk acceptance is overall low. While these constraints exist, there are several policy initiatives undertaken by regulators and governments in these countries to increase access to finance. These approaches involve a mix of regulatory and financial approaches, including efforts to develop the financial infrastructure, such as, secured transaction laws, creation of collateral registries, developing credit bureaus, and payment and settlement systems. Other actions include interest subsidies, dedicated funds and institutions. But these are in various stages of enactment and implementation. Cultural shifts in terms of acceptance of entrepreneurship have also been observed in many of these countries, with governments adopting policies to encourage entrepreneurship. While Digital Finance Services (DFS) initiatives specifically linked to increasing MSME access to finance are few, and there are no specific policy initiatives (in the target countries) linking the two, development of DFS and its spread is likely to positively affect MSME access to finance. This is because DFS helps to create a digital footprint that when combined with other accumulated data can yield business intelligence to make decisions related to credit risks, for example. In all the countries reviewed, there is a notable push in terms of policy and mobile connectivity that favour the growth of digital payments. Number of bank and non-bank agents in all the five countries has shown significant increase as has the adoption of payment services by populations. This has in part been supported by the high levels of 2G and 3G mobile service penetration. A lot of the policy and regulatory effort by the target countries is in the right direction which requires further encouragement and a more nuanced approach towards MSMEs. Policy makers need to continue to build their own capacity on MSME access to finance. In terms of financial infrastructure, what matters is that it is effective and reliable. This should be the continued focus of policy makers and regulators in the target countries. Alternative source of finance should be encouraged, but with the understanding of the varied sources and their applicability to different stages of enterprises. It is vital that women owned MSMEs be treated as a distinct category and attempts made to use data and training to remedy the perception issues. Finally, DFS offers immense potential and efforts need to be made move beyond payments and into digital lending, savings and insurance simultaneously building up consumer protection policies related exclusively to DFS.

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Asia-Pacific Small Island Developing States: Development challenges and policy solutions

thumbnail_pic Asia-Pacific small island developing States (SIDS), are a diverse group, despite the broad perception to the contrary. Nevertheless, although they differ in size of landmass, population, national economies and the level of development, they share common development challenges. Those challenges can be classified as economic (small sized, undiversified economies, remotely located and exposed to external shocks), environmental (existential threats related to climate change and environmental degradation), political (ethnic conflicts and political instability) and social (violence towards vulnerable groups). Some of the challenges – such as environmental and economic vulnerabilities – cannot be addressed without concerted efforts and the support of the international community. This support is framed within the United Nations’ programmes of action, and more specifically, the SAMOA Pathway for SIDS (2014-2024) and the Istanbul Programme of Action for Least Developed Countries (LDCs) (2011-2021). The solution to the development predicaments of SIDS also lies in a particular type of structural economic transformation, which does not follow the traditional path from agriculture to industry and then to services. As building a manufacturing base in remote islands located far away from global markets is not a viable option, structural transformation in SIDS must be well targeted and aimed at productive, niche services and modernised agriculture and fishery, and at utilising the resources of their exclusive economic zones. This sectoral development of both sectors, if accompanied by productivity gains, will effectively enhance the development trajectory. Subsequently, these actions must be underpinned by economic policies to build economic resilience, create productive capacities and productive employment, and to utilise new mechanisms to finance developmental advancements.

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Nepal's graduation from LDC: Potential implications and issues for consideration

thumbnail_pic Nepal has achieved significant socio-economic progress despite being confronted by unfavourable conditions such as its being landlocked and susceptible to natural disasters. It has demonstrated a paradoxical development pattern in which a relatively low long-term average economic growth has been accompanied by brisk poverty reduction. The country met criteria for graduation from the group of least developed countries (LDCs) in two consecutive United Nations triennial reviews in 2015 and 2018. With a per capita income of just 60 per cent of the graduation threshold level of per capita income, it was quite extraordinary for Nepal to meet the other two graduation criteria, the Human Asset Index and the Economic Vulnerability Index. It provides a classic case in which a country’s achieving LDC graduation thresholds do not adequately reflect its challenges of achieving sustainable development through building productive capacities as envisaged in the Istanbul Programme of Actions (IPoA) for LDCs. Most concrete LDC-specific international support measures (ISMs) are related to international trade from which Nepal has not been able to benefit much. While the IPoA and 2030 Sustainable Development Agenda anticipated LDC trade share to double by 2020, in reality, it has declined with Nepal’s merchandise exports falling in both absolute and relative terms. The 2018 United Nations Committee for Development Policy (CDP) decision to defer the recommendation of graduation until the next review was a judicious one and further deferments could also be considered as part of ISMs in helping Nepal consolidate its socio-economic achievements and securing Sustainable Development Goals. For Nepal, dealing with general development challenges, promoting external competitiveness, trade capacity building, and exploring enhanced trading opportunities in neighbouring and regional partner countries, amongst others, should remain important policy priorities.

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LDC Graduation: Challenges and Opportunities for Vanuatu

thumbnail_pic Vanuatu will graduate from the least developed country (LDC) category on 4 December 2020. This will be a momentous occasion, heralding a new era in the nation’s development journey. However, it will be essential to carefully manage the transition leading up to, and following graduation. A smooth transition will be dependent on improving institutional and productive capacity; providing the stimulus for the private sector to flourish; ensuring inclusive, culturally sensitive development; and working to mitigate the country’s deep-seated vulnerabilities.

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Preparing to graduate: Issues, challenges and strategies for Kiribati's LDC graduation

thumbnail_pic This paper outlines the recent development trajectory of Kiribati in relation to the least developed country (LDC) categorisation and the prospect of Kiribati’s graduation out of LDC status. In particular, the paper discusses the economic vulnerability of Kiribati’s economic and fiscal position due to recent increases in fishing license revenue, and presents a framework for policies moving forward. The framework aims to mitigate the fishery revenue as a source of risk by (1) making the most of current resources (through public financial management reform and prudent fiscal management), (2) ensure the sustainability of the key resource (protect fish stocks), and (3) create an environment for new opportunities through establishing the precursors to tourism-orientated development (through deregulation and investment in public infrastructure). More broadly, the paper advocates for a risk-averse approach to policymaking in Kiribati through broad-based improvements in public financial architecture and investment rather than targeting higher-level interventions.

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Fostering Peaceful Sustainable Development in the Pacific under the 2030 Agenda

thumbnail_pic Often characterised as a region of relative peace due to the absence of inter-state conflicts, the Pacific island region is not immune to violent conflict. Episodes of violence, political unrest and instability have hampered development; a ‘business as usual’ approach to development does not guarantee that the Pacific will remain peaceful in the future. The link between peace and development is a central tenet of the 2030 Agenda and the Sustainable Development Goals (SDGs) acknowledging the inter-connectedness between the drivers of poverty and conflict. This presents an opportunity to integrate and expand on traditional concepts of development and security. A holistic consideration of the social, economic, environmental and governance factors underpinning peaceful and prosperous societies sits at the heart of this transformation. Political and policy responses can either pave the way for peace and development—or build up tensions and, eventually, trigger conflict.

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Water Security in Central Asia and the Caucasus – A Key to Peace and Sustainable Development

thumbnail_pic This paper aims at understanding the root causes of water conflict in Central Asia, and the role of water in the Nagorno-Karabakh conflict in the Caucasus. It attempts to shed light at the complex nature of water security, and its importance in the states’ security and sustainable development. The paper suggests that given a cross-cutting nature of water resources, there should be a more holistic approach to understanding the drivers of water conflict in both sub-regions, and to finding the ways for its resolution. A number of recommendations have been provided that may be utilized for addressing the complexity of water conflicts and to help in establishing a mutually beneficial cooperation between states.

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Estimating infrastructure financing needs in Asia-Pacific least developed countries, landlocked developing countries and small island developing

thumbnail_pic This paper develops a framework to estimate infrastructure financing needs of the Asia-Pacific least developed countries (LDCs), landlocked developing countries (LLDCs) and small island developing States (SIDS) by 2030. The framework takes into account the financing needs to close existing infrastructure gaps, keep up with growing demands for new infrastructure, maintain existing infrastructure and mitigate the vulnerability of infrastructure to climate-related risks. Based on a panel of 71 developing economies from 1990 to 2015 and the application of unit costs to the level of physical infrastructure stock projected to 2030, the required resources are estimated to amount to 7.6% of GDP per annum on weighted average, which exceeds current levels of infrastructure funding of 5-7% of GDP. This indicates that existing sources of financing are insufficient to meet the large and growing needs of infrastructure financing in these economies. The paper finds that a large proportion of financing needs in LDCs and SIDS arises from the current infrastructure shortages, particularly in the transport and the energy sector, implying that provision of universal access to basic infrastructure services would require large outlays of resources. Results also suggest that LLDCs and some SIDS require over one-third of their spending to be allocated to maintenance and replacement of existing assets, while those in low-lying coastal areas face substantial long-run costs in improving infrastructure to mitigate climate change and protecting it against loss and damages caused by extreme weather events.

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Fostering Productivity in the Rural and Agricultural Sector for Inclusive Growth and Sustainable Development in Asia and the Pacific

thumbnail_pic This paper is motivated by the need to identify potential links between productivity in the rural and agriculture sector in The A-P with a view to proposing policies and strategies on how strengthening productivity in the rural and agriculture sector will contribute to the realization of SDGs. In order to identify broad regional trends, the paper analyses the circumstances of 23 countries of the ESCAP region , but policy discussions are limited to a selected few from among the 23 countries.

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An analytical framework for identifying optimal pathways towards sustainable development

thumbnail_pic The freedom accorded to governments on how to achieve the ambitious and holistic 2030 Agenda for Sustainable Development raises the critical issue of how countries should adapt the Sustainable Development Goals at the national level. This paper presents an analytical framework that merges methods from complexity science with economic analyses to address this issue of adaptation. The proposed framework 1) highlights the interlinkages, including complementarities, synergies and trade-offs across different Goals, 2) measures the country’s capacities to achieve the Goals, and 3) identifies optimal pathways for progress towards sustainable development. Using Bangladesh, Kazakhstan, and Fiji as examples, the derived pathways for progress are seen to align well with traditional development theory. However, the paths are reflective of the specific circumstances of each country, which in turn dictates their development paths. Overall, the framework provides a guidebook that may inform national deliberations on the adaptation by proposing pathways for progress that take into account interdependencies across different sectors as well as countries’ unique circumstances.

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Pathways for adapting the Sustainable Development Goals to the national context: the case of Pakistan

thumbnail_pic The 2030 Agenda for Sustainable Development is a laudable attempt to portray a comprehensive global vision towards progress in a plethora of socioeconomic and environmental issues that we face today. However, this holistic view of progress presents countries with substantial difficulties in implementation in that the 17 goals and 169 targets are inherently complex and intertwined. Recognizing these difficulties, we are utilizing cutting-edge methods from complexity science coupled with economic analysis to consider the Sustainable Development Goals (SDGs) as a complex system, in an attempt to identify the pathways Pakistan can take in implementing the broad spectrum of goals and targets. Ultimately, we seek to provide for a guidebook that Pakistan can complement with its national development plan, Vision 2025, in the early stages of implementation of the SDGs, fully regarding their unique situations and development paths.

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Financing strategies for LDCs graduation in Asia and the Pacific: Key sources, trends and prospects

thumbnail_pic The United Nations recognizes that productivity capacity building is the key for self-sustained growth and graduation of LDCs in Asia and the Pacific. To achieve this objective, substantial financing must be mobilized to invest in infrastructure, social development and climate changechallenges. Despite the significant progresses made by the Asia-Pacific LDCs in restoring macroeconomic stability, deepening the banking sector and attracting FDI and remittances, for many, fiscal spaces remain narrow and financial markets largely inefficient and undiversified. An ambitious financing strategy would be needed to close the financing gap for graduation and to promote sustainable development, which includes strengthening of fiscal space, financial intermediation and exploring innovative financing mechanisms such as blended finance, promoting new form of development partnership and climate finance. In particular, the paper shows that an estimated total of $19 billion could be raised annually by the Asia-Pacific LDCs through targeted efforts to broaden tax bases, create enabling environment for FDI and reduce transaction costs of remittances, among others. An additional USD $15 billion could further be raised if DAC members fulfil their commitment of contributing 0.15-0.20 per cent of GNI for LDCs development.

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Building productive capacities: Challenges and opportunities for Least Developed Countries

thumbnail_pic Building productive capacities is a top priority for least developed countries to promote development and graduate from the status of least developed country. This paper discusses the challenges and the opportunities for these countries to build their productive capacities. It argues that the main challenge is to manage the long-term effects of the increase in the terms of trade of commodities and reduction of terms of trade of manufactures, which threaten their growth trajectory. The paper presents a method to identify the opportunities for diversification that promotes the generation and acquisition of productive capacities. It also presents a list of potential new products and export markets that could be targeted by government and private sector for achieving higher long-term gains.

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