​Background

For landlocked developing countries (LLDCs), the challenge to achieve sustainable and inclusive economic
growth and development is exacerbated by the need to overcome the additional obstacles arising from
their geographical position. Their remoteness from the sea and their dependence on the trade and
transport networks of transit neighbours translate into higher trade costs, hindering their integration into
the global economy. In addition to their geographical predicaments, many LLDCs are dependent on the
exports of primary commodities, rendering them vulnerable to price shocks.

Rising commodities prices have helped the 12 LLDCs in the Asia-Pacific region achieve average GDP
growth rates exceeding 7% between 2003 and 2013, supporting progress on poverty-reduction and other
socio-economic indicators. However, the end of the commodities boom led to a fall in average GDP growth
from 5.8% in 2014 to 3.5% in 2016. While average growth has since recovered to 5.2% in 2018, it remains
far below the rates achieved previously. The slowdown is threatening to reverse some of the socioeconomic
gains achieved, and in some countries poverty rates are on the rise.

One of the main reasons for the poor performance of LLDCs in recent years is their continuing dependence
on primary commodities. Out of the 32 LLDCs in the world, 26 of them are dependent on primary
commodities for more than 60% of their exports. This means that economic growth is highly concentrated
in a single sector that is not very labour-intensive, and the gains of growth are not automatically shared
broadly. Furthermore, growth is highly vulnerable to external shocks, such as changes in world prices of
commodities. Overcoming commodity-dependence and embarking on a sustainable and inclusive growthpath
requires achieving structural economic transformation, and diversifying exports away from primary
commodities.

To date, Asia-Pacific LLDCs have not made progress towards achieving structural transformation. The
share of the manufacturing sector in total GDP of Asia-Pacific LLDCs declined from 16% in 2000 to 13.5%
in 2016. While this share is still higher than the world average for LLDCs, the trend is one of premature
de-industrialization. Similarly, there has been no improvement in the diversification index, which
measures the degree to which the export structure of LLDCs differ from the global average.

Objectives

This workshop aims to strengthen the capacities of policymakers and experts of LLDCs in the Asia-Pacific
region in designing and implementing policies aimed at promoting structural economic transformation in
their countries. The workshop will focus on three policy areas: productive capacities, export diversification
and capital market development. The workshop also facilitates experience sharing among the countries
of the region including transit neighbours.

The workshop will comprise three parts. The first part will address the concept of productive capacities,
and its principal components. It will also present the newly developed Productive Capacities Index (PCI),
which allows countries to assess their performance on building productive capacities. The second part of
the workshop will cover the policies and measures required to support the diversification of exports in
LLDCs. The third, final part will address policies to further develop domestic capital markets, which play
an important role in enhancing fiscal resources and boosting private investments, both of which are crucial
ingredients to support productive capacities.