Priority 5: Structural economic transformation

Many landlocked developing countries remain reliant on a few export commodities, which often have low value addition. In order for landlocked developing countries to fully utilize their export and trade potential, it is important to undertake measures that could promote structural economic transformation capable of reducing the negative impact of their geographical disadvantages and external shocks, creating jobs and ultimately leading to poverty eradication and inclusive and sustainable growth and development. Increased value addition and economic diversification are key to such structural economic transformation. Institutional capacity-building and human resources development are equally important for landlocked developing countries.

Improving the manufacturing capacity of landlocked developing countries — including their contribution to regional and global value chains — can achieve the triple objective of creating better-paying jobs, increasing revenue and reducing the bulk of their primary exports. Higher-value and low-bulk exports are particularly crucial for landlocked developing countries. In this context, it is important to place proper emphasis on the development of manufacturing, agriculture and the services sector, including finance, information and communication technologies and tourism, as appropriate to national circumstances. Tourism can play an important role in building the economic sector, providing employment and generating foreign exchange.

Science, technology and innovation play a critical role in achieving structural economic transformation, productive capacity development and value addition. Conducive national policies, international support and foreign direct investment are necessary to facilitate access to science, technology and innovation, and landlocked developing countries should promote investment in science, technology and innovation for sustainable development.

The private sector contributes to economic growth and poverty eradication through the building of productive capacity, creation of decent jobs, promotion of innovation, economic diversification and competition. In landlocked developing countries, the private sector is actively involved in activities related to transit and trade facilitation, including as traders, freight forwarders, insurance providers and transporters, and the sector is a source of tax revenue and domestic investment and is a partner for foreign direct investment. Public-private partnerships can play an important role in infrastructure development.

Specific objectives are:

(a) To increase value addition in the manufacturing and agricultural sectors, with the aim of achieving inclusive growth and sustainable development;

(b)  To increase economic and export diversification;

(c)  To promote service-based growth, including from tourism, with a view to increasing its contribution to the national economy;

(d) To encourage the inflow of foreign direct investment in high-value added sectors.

Actions by landlocked developing countries include:

(a) To develop a structural transformation strategy aimed at improving science, technology and innovation, export diversification, productivity, efficiency and competitiveness in the agriculture, manufacturing and service sectors, including tourism;

(b) To encourage innovative solutions, entrepreneurship and the use of modern, cost-effective and locally adapted technologies with an emphasis on sectors such as agriculture, transport, information and communication, finance, energy, health, water and sanitation, and education, as well as the development of effective public and private partnerships;

(c) To build a critical mass of viable and competitive productive capacity in manufacturing, agriculture and services;

(d) To promote the attraction of more diversified foreign direct investment through the creation of a conducive environment, with the aim of enhancing value addition, productive capacity, transit transport infrastructure and completion of missing links connecting landlocked developing countries within the regional network;

(e) To undertake measures to modernize the services sector by strengthening links between and among financial intermediaries, creative industries and business, and legal and technical services;

(f) To create industrial clusters, such as export-processing zones and regional centres of excellence, with the aim of fostering knowledge networks and connectedness among companies;

(g) To prioritize private sector development, in particular small and medium-sized enterprises;

(h) To develop an industrial policy that takes into account the need for improved access to financial resources, development of appropriate human capacity and investment in supportive economic infrastructure as a way to further strengthen the private sector;

(i) To strengthen, as appropriate, an effective competition policy that supports business activity and further consolidates a supportive legal and regulatory framework, and to create macroeconomic conditions and systems that can facilitate the development of the private sector;

(j) To utilize the International Think Tank for Landlocked Developing Countries for sharing experiences, know-how, research and other resources on issues related to trade, transit, transport and capacity-building among landlocked developing countries. Landlocked developing countries that have not yet done so should ratify the Multilateral Agreement for the Establishment of an International Think Tank for Landlocked Developing Countries.

Actions by development partners include:

(a) To support the efforts of landlocked developing countries to improve their productive capacities and create economic diversification;

(b) To contribute to the efforts of landlocked developing countries to share innovative technologies, scientific knowledge and technical know-how, and best practices;

(c) To support the efforts of landlocked developing countries to increase the value addition of their agricultural and industrial output;

(d) To support landlocked developing countries in building institutional and human capacities aimed at improving their ability to attract foreign direct investment in high-value added sectors and to enhance negotiation skills for bringing in responsible investment;

(e) To support landlocked developing countries to enable them to pursue the effective partnerships necessary for capacity-building, sustainability and quality enhancement, as well as for sectoral development, including of tourism;

(f) To support landlocked developing countries in building resilience, developing capacity to respond effectively to external shocks and addressing their specific supply-side constraints.

Contact itlldc


Tel: +976-11-351971

Fax: +976 11 322127

visit ittlldc headquarters

UN House

United Nations Street-14

Sukhbaatar district

Ulaanbaatar 14201


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