A crippling debt burden, declining commodity prices, poor trade conditions, civil strife and HIV/AIDS are wiping out the benefits of improved economic performance in the world's poorest countries, the UN said Thursday.
The UN Conference on Trade and Development called for an end to "development pessimism", warning that it was an illusion to think that mass poverty should be tackled by more free trade alone.
UNCTAD said in a report that the 50 least developed countries (LDCs) face an "immense challenge" in pulling out of a "domestic vicious circle" of structural problems that are stifling the impact of growth.
Those problems could be solved by a combination of reinvigorated development aid to support infrastructure as well as enhanced trading conditions for poor countries, the report argued.
Instead, LDCs are seeing preferential trade conditions eroded, notably on textile products, while development aid has declined and is focused more on providing short-term relief from ill-health or poverty than on long-term public investment, it added.
Public resources needed for good government are limited, 5.1 billion dollars a year are spent on servicing debt, prices for commodities that account for 67 percent of LDC exports have fallen sharply and many of the poorest countries are the hardest hit by HIV/AIDS or conflicts.
Real growth has expanded steadily since the early 1990s in LDCs as a whole and their economic performance in recent years has exceeded that of developing countries, the report said.
Yet, about half the population in the world's poorest countries live on less than one dollar a day and that proportion has remained largely unchanged since the 1990s, according to the UN. Two-thirds of the LDCs are in Africa.
Between 2000 and 2002 annual Gross Domestic Product (GDP) grew by an average of 4.9 percent in real terms in the poorest countries as a group.
Over the same period GDP per head rose by 2.6 percent a year, against 1.8 percent for other developing countries.
But UNCTAD also noted a gap opening up between the strongest LDCs where growth exceeded three percent, while it stagnated or fell in 24 of the poorest countries.
Only seven LDCs - oil-rich Angola, Bhutan, Chad, Eritrea, Mozambique, Rwanda and Sudan - reached an international annual growth target of seven percent for LDCs set by the UN in 2001.
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