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Industrial policy is once again becoming a favoured tool to address countries’ development challenges. As the Asia-Pacific Countries with Special Needs Development Report: Structural Transformation and its Role in Reducing Poverty1 highlights, industrial policy is particularly relevant for effective structural economic transformation in least developed countries (LDCs), landlocked developing countries (LLDCs) and small island developing States (SIDS), a group collectively refered to as ‘countries with special needs’, and one that is characterised by various vulnerabilities and significant challenges to reduce poverty. Indeed, the report demonstrates that poverty cannot be reduced sustainably without productivity enhancing structural transformation. It also shows that structural transformation in Asia-Pacific LDCs, LLDCs and SIDS has been sluggish and thus the poverty reduction has been slow. Despite some evident successes, particularly in reducing extreme poverty, 2 out of 5 people still live for less than $3.20 a day in these economies, compared to 1 out of 15 among other developing countries of the Asia-Pacific region.

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Macroeconomic Policy and Financing for Development Division +66 2 288-1234 [email protected]