Enhancing Productive Capacities and Transforming Least Developed Country Economies Through Institution-building: Upcoming United Nations Conferences and the Way Forward

• Expanding and upgrading productive capacities in LDCs is critical to building economic resilience and supporting structural transformation. • Functional institutions are drivers of productive capacities and economic growth when they formulate and implement effective development policies. • Strong institutions are needed to facilitate an integrated and inclusive approach to policymaking. • Use of the Productive Capacities Index can play a critical role in helping LDCs to identify and understand key issues that affect the functioning of institutions. The least developed countries (LDCs) are vulnerable to exogenous economic, environmental and health-related shocks, such as the coronavirus 2019 (COVID-19) pandemic, due to the low level of development of their productive capacities. The fifteenth session of the United Nations Conference on Trade and Development (UNCTAD XV) will be held in October 2021 and the fifth United Nations Conference on the Least Developed Countries (LDC5) will be held in January 2022; both conferences will aim to seek ways and means of expanding productive capacities, critical to building socioeconomic resilience and enabling LDCs to achieve structural transformation and sustainable economic growth. In this policy brief, UNCTAD intends to shed light on the role of institutions in fostering productive capacities, and examines Institutions as one of the eight categories of the UNCTAD Productive Capacities Index.1 In the context of the formulation and implementation of policies and strategies in support of LDCs, recommendations are provided to support the building of stronger and more effective institutions, a prerequisite for fostering productive capacities.