About Least Developed Countries
Since 1971, the United Nations has recognized the Least Developed Countries (LDCs) as the “poorest and weakest segment” of the international community.
The LDCs host about 40% of world’s poor. Many are suffering conflict or emerging from one. LDCs account for 13% of world population but only about 1.3% of global GDP and less than 1% of global trade and FDI. Even if on the rise, still barely a fifth of the population in LDCs has access to the internet.
The low level of socio-economic development in LDCs is characterized by historically weak development capacity, low and unequally distributed income and scarcity of domestic financial resources. LDCs typically rely on agrarian economies which subsequently can be affected by a vicious cycle of low productivity and low investment, especially as wealthier countries develop and utilize more productive farming technologies. Generally, LDCs rely on few primary commodities as major sources of exports and fiscal earnings, causing them to be vulnerable to external terms-of-trade shocks. Some LDCs have been able to diversify into the manufacturing sector though often remain limited to products in labour-intensive industries, such as textiles and apparel.
These development constraints are responsible for insufficient domestic resource mobilization, low economic management capacity, weaknesses in programme design and implementation, chronic external deficits, high debt burdens and heavy dependence on external financing in LDCs.
Least Developed Countries Category
The LDC category was established by the UN General Assembly in 1971 as an acknowledgment that special support measures were needed to assist the least developed among the developing countries.
The United Nations defines LDCs as countries that have low levels of income and face severe structural impediments to sustainable development.
Income: Countries must have an average per capita income of below USD$1,025 for inclusion, and above USD$1,230 for graduation;
Human Assets: Countries must also have a low score on the Human Assets Index, a tool that measures health and education outcomes, including under-five mortality rate, maternal mortality, adult literacy rate and gender parity for secondary school enrolment;
Vulnerability: Countries must score high on the Economic and Environmental Vulnerability Index, which measures factors like remoteness, dependence on agriculture and vulnerability to natural disasters.
For more information on these measurements, see here.
INCLUSION: To be classified as an LDC, a country must satisfy all three criteria and agree to the classification. Today, 47 countries are classified as Least Developed.
GRADUATION: To be eligible for graduation, a country must reach thresholds in two of the three criteria in two consecutive reviews. Alternatively, a country may graduate based on the income-only criterion. To read more about the graduation process, see here.