In more than 20 countries, more than a third of the population lives on less than $1 a day. All but two of these countries are in Africa, home to 30 LDCs.

"This report is particularly important because it focuses on a new area that we usually don't associate with the least developed countries, which is their emerging interest to use science and technology as a vehicle for economic transformation," Calestous Juma, director of the Science, Technology and Globalization Project at Harvard University, told reporters Thursday in New York.

Juma said the report, "Knowledge, Technological Learning and Innovation," lays out why science and technology matters for the LDCs, countries that have been identified as "least developed" in terms of their low per capita gross domestic product, their weak human assets and their high degree of economic vulnerability.

"It is evident reading through the report that the least developed countries will continue to be poor if they don't significantly invest in their capacity to learn, to industrialize," he said.

Most LDCs have opened their economies and are now highly integrated with the rest of the world, the report said, but even when they are increasing exports and attracting foreign investments, most of them are not climbing the economic and technological ladder.

Their economies remain locked into low value-added commodity production and low-skill manufacturing.

The report interprets the current pattern in LDCs as economic liberalization without learning, and global integration without innovation. This spells increasing marginalization for the 767 million people who now live in LDCs.

LDCs must innovate their way out of poverty, the report said. Knowledge is becoming increasingly important in global production and competition -- but this is where they are at their weakest.

Their domestic firms and farms have low technological capabilities; skills are underdeveloped; and the domestic institutions that could support technology acquisition and diffusion are lacking or ineffective.

The governments of LDCs should adopt policies to spur science, technology and innovation, as well as improve infrastructure, human capital and financial systems, the report recommends.

UNCTAD, in past LDC reports, has taken the view the key to sustained economic growth and poverty reduction in LDCs is the development of productive capacities and related creation of productive employment.

The latest report backs up the view by focusing on knowledge accumulation, technological learning and the ability to innovate as vital processes toward genuine productive capacity development in these countries.

Knowledge is becoming more and more important in the global sphere of competition and production, the report said, adding there is a danger that LDCs will be increasingly marginalized if they do not enhance the knowledge content of their economies and achieve economic diversification through learning and innovation.

It shows the current pattern of technology flowing to LDCs through international trade, foreign direct investment and intellectual property licensing does not contribute to narrowing the knowledge divide.

Sustained economic growth and poverty reduction are not likely to take place in countries where viable economic re-specialization would remain impossible in the absence of significant progress in technological learning and innovation capacity-building, the report said.

It suggests national governments and development partners could meet the challenge, notably through greater attention to science, technology and innovation policies, stringent intellectual property rights protection and preventing massive losses of skilled human resources through migration.

The report is the first comprehensive insight into the development objective of technological learning and innovation capacity-building in LDCs. It is intended to increase awareness of this issue and enrich the policy dialogue toward the new "paradigm shift" on poverty reduction through productive capacity-building.

Recently a number of LDCs have experienced growth spurts associated with high commodity prices. But this cannot be sustained in the long run, the report said.

These nations must develop their productive capacities and diversify their economies by increasing the application of knowledge and technology to agriculture, manufacturing, and services, it said. LDCs cannot expect to be at the frontiers of technology. But, extremely important innovation also occurs with the commercial introduction of products and processes that are new to a country or to an enterprise.

Such innovation is at the heart of economic diversification, productivity growth and technological upgrading in "follower" countries such as LDCs.

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