Least Developed Countries (LDCs) are low-income countries that are facing huge structural obstacles to sustainable development. Such countries are vulnerable to economic and environmental shocks and have low levels of human assets.
LDCs have Gross Domestic Product (GDP) significantly lesser than average and are characterized by rampant poverty, environmental and developmental hazards, political instability and widespread conflicts. The basic yardsticks employed by the UN to define LDCs are low income, weak human assets and economic vulnerability.
There are currently 46 countries on the list of LDCs which is reviewed every three years by the Committee for Development Policy (CDP) of the UN Economic and Social Council (ECOSOC). CDP uses the following three criteria to determine LDC status:
- Per capita income (gross national income per capita)
- Human assets (indicators of nutrition, health, school enrolment and literacy)
- Economic vulnerability (indicators of natural and trade-related shocks, physical and economic exposure to shocks, and smallness and remoteness.
As of 2022, six countries have graduated from LDC status: Botswana in 1994, Cape Verde in 2007, Maldives in 2011, Samoa in 2014, Equatorial Guinea in 2017, and Vanuatu in 2020.
UNCTAD supports the graduating countries in their preparation for a smooth transition to post-LDC life. Four UN conferences regarding LDCs have been held till date. The Fourth Conference adopted the Program of Action for the Least Developed Countries for the decade 2011-2020 known as Instanbul Program of Action (IPoA).
Problems/Challenges Faced by LDCs
a. Soaring debt
b. Export marginalization
c. Lack of access to energy
d. Climate vulnerability
e. Unskilled human resources, brain-drain
f. Lack of transparency and good governance
g. High population growth
What are the International Support Measures for LDCs?
After being recognized as LDCs, those countries may be eligible for a number of special international, regional and bilateral support measures. They receive the following supports in the areas of foreign aid, trade and capacity building:
Development Financing/Foreign Aid
- Enhanced financing opportunities like increased ODA and debt relief
- Opportunities of access to concessionary financing from multilateral and regional development banks.
Preferential Market
- Duty-free and quota-free market access for products of LDCs as well as regional or bilateral preferential market access opportunities.
- EU’s Everything but Arms (EBA) initiative gives the LDCs duty-free access to the EU for all products except arms and ammunitions.
Special Treatment Regarding WTO-Related Obligations
- Simplified procedures in the accession of the LDCs in the World Trade Organization.
- Encouragement for LDCs’ participation in world trade.
- Special consideration of the needs and difficulties of the LDCs in the application of sanitary and Phyto-sanitary measures.
- Consideration for technical assistance to LDCs in carrying out periodic trade policy review, etc.
Technical Cooperation
- Enhanced bilateral cooperation.
- Aid-for Trade initiative for trade capacity building in LDCs.
- Travel support for the participants from LDCs to UN conferences and meetings.
Nepal’s Graduation from the LDC Category
The UN General Assembly has approved a proposal to upgrade Nepal, along with Bangladesh and Lao People’s Democratic Republic, from the least developed country category to a middle-income developing country by 2026.
A resolution was unanimously adopted during the 76th session of the United Nations General Assembly which endorsed the graduation of Nepal from the LDC category with the preparatory period of five years. Therefore, until December 2026, Nepal will continue to receive all concessions and support measures as an LDC.
The five-year preparatory period has been provided for a smooth transition, mainly due to the Covid-19 pandemic, which would otherwise be only for three years. In the last two triennial reviews conducted by the Committee on Development Policy (CDP) of ECOSOC in 2015 and 2018, Nepal had met two of the three criteria i.e., human asset index and economic vulnerability index. However, it couldn’t meet the per capita income criterion.
In fact, Nepal had requested for postponement of the graduation considering the impacts of the 2015 earthquakes. A country becomes eligible for graduation from LDC after meeting two of the three criteria.
