Least developed countries (LDCs) are a category of low-income countries that face severe structural impediments to sustainable development. The concept falls under the broader financial category of [development economics]. These nations are characterized by their vulnerability to economic and environmental shocks, as well as significant challenges in human assets.62 The United Nations established the LDC category in 1971 to acknowledge the need for special international support measures for the poorest and weakest developing countries.60, 61 The term "least developed countries" is often used in discussions regarding international aid, trade preferences, and global development initiatives.
History and Origin
The designation of least developed countries originated from a growing recognition within the international community in the late 1960s that certain developing countries faced unique and persistent challenges. These challenges went beyond those experienced by other developing nations, warranting specific and targeted support. The United Nations General Assembly formally established the LDC category in 1971.58, 59 This move was a direct acknowledgment that structural impediments, often rooted in historical and geographical factors, made it difficult for these countries to achieve sustainable growth and improve living standards.57 Since its inception, the list of least developed countries has been periodically reviewed, with criteria adjusted to reflect evolving economic realities and development understanding. The most recent comprehensive review of the LDC criteria was undertaken between 2017 and 2020, with further refinements in 2023, scheduled to be first applied in the March 2024 triennial review.56
Key Takeaways
- Least developed countries (LDCs) are identified by the United Nations based on low income, weak human assets, and high economic and environmental vulnerability.54, 55
- The LDC category allows these countries to receive preferential support, including special market access and technical assistance.53
- Graduation from LDC status signifies progress in development, but it also means a loss of some international support measures.52
- Many LDCs face significant challenges related to debt, commodity dependence, and climate change.51
Interpreting the Least Developed Countries
The classification of a country as a least developed country is a crucial indicator of its economic and developmental standing. It signifies that the country experiences severe structural challenges that hinder its ability to achieve sustainable economic growth and improve the well-being of its population. The criteria for inclusion in and graduation from the LDC category are reviewed triennially by the United Nations Committee for Development Policy (CDP).50
The assessment involves three primary criteria:
- Gross National Income (GNI) per capita: This measures the average income of a country's citizens. For inclusion, the GNI per capita must be below a certain threshold (e.g., USD $1,088 for the 2024 review). For graduation, it must be above a higher threshold (e.g., USD $1,306 for the 2024 review).48, 49
- Human Assets Index (HAI): This index assesses human capital development, considering indicators such as nutrition, health (e.g., under-five mortality rate, maternal mortality ratio), and education (e.g., gross secondary school enrollment ratio, adult literacy rate).45, 46, 47
- Economic and Environmental Vulnerability Index (EVI): This index measures a country's susceptibility to economic and environmental shocks. Factors include remoteness, dependence on agriculture, export concentration, instability of exports, and vulnerability to natural disasters.42, 43, 44
To be included in the list of least developed countries, a country must satisfy all three criteria and its population must not exceed 75 million.41 To be eligible for graduation, a country must meet the thresholds in at least two of the three criteria for two consecutive triennial reviews, or its GNI per capita must be at least twice the graduation threshold, with a high likelihood of sustainability.39, 40 The status as a least developed country impacts a nation's access to various forms of international aid, preferential trade agreements, and technical assistance programs.
Hypothetical Example
Imagine a hypothetical country, "Abalonia," which has a GNI per capita of $900, a low score on the Human Assets Index due to high child mortality and low adult literacy, and a high score on the Economic and Environmental Vulnerability Index because it relies heavily on a single agricultural export and is prone to droughts. Based on these indicators, Abalonia would likely be classified as a least developed country by the United Nations. This classification would then qualify Abalonia for special support measures from international bodies, such as duty-free and quota-free market access for its products in certain developed markets, and increased development aid to address its structural challenges.
Practical Applications
The designation of least developed countries has several practical applications in global economics and international relations.
- Trade Preferences: LDCs often receive preferential market access from developed countries, including duty-free and quota-free access for many of their exports. This aims to boost their [export] earnings and integrate them into the global trading system.37, 38 The World Trade Organization (WTO) facilitates these benefits, discussing LDC trade challenges and priorities.36
- Development Assistance: A significant portion of [official development assistance] is directed towards least developed countries to help them build infrastructure, strengthen human capital, and diversify their economies.35 The UN Capital Development Fund (UNCDF), for example, focuses on making finance work for LDCs.34
- Debt Relief: Given their high levels of debt distress, many least developed countries are candidates for [debt relief] initiatives, aiming to free up resources for development spending.33
- Technical Assistance and Capacity Building: International organizations provide specialized technical assistance to LDCs to enhance their institutional capacity, improve governance, and foster sustainable development. This can include support for developing effective [trade policy] and engaging in multilateral trade negotiations.32
These practical applications are designed to help LDCs overcome their structural handicaps and achieve sustainable development, ultimately leading to their graduation from the category.
Limitations and Criticisms
While the least developed countries category provides crucial support, it also faces certain limitations and criticisms. One concern is the potential for a "graduation cliff," where countries lose access to beneficial support measures abruptly upon exiting the LDC list. This can disrupt their development trajectory and even lead to a reversal of progress.30, 31 Organizations like the UNCTAD and the Center for Global Development emphasize the need for "smooth transition" strategies to mitigate these risks, recommending continued preferential treatment for a period after graduation.28, 29
Another criticism relates to the effectiveness of the support measures. Despite preferential access and aid, LDCs' share in global exports has largely stagnated, failing to meet targets set by international programs.26, 27 Factors such as weak productive capacity, a narrow export base, and vulnerability to commodity price volatility continue to hinder their trade performance.25 Furthermore, the criteria used for classification, while comprehensive, may not fully capture the nuanced challenges faced by every individual country, leading to debates about the fairness or timeliness of designations and graduations. The external financing available to LDCs is also often described as expensive and insufficient, exacerbating their existing debt burdens.24
Least Developed Countries vs. Developing Countries
The terms "least developed countries" (LDCs) and "developing countries" are often used interchangeably, but they represent distinct classifications within global economics.
| Feature | Least Developed Countries (LDCs) | Developing Countries |
|---|---|---|
| Definition | Identified by the UN as low-income countries facing severe structural impediments to sustainable development.23 | A broader, less formally defined category of countries with lower average incomes and less developed industrial bases than developed countries. |
| Criteria | Specific UN criteria: GNI per capita, Human Assets Index (HAI), and Economic and Environmental Vulnerability Index (EVI).21, 22 | No universally agreed-upon formal criteria; often based on economic indicators like GNI per capita, industrialization levels, and human development. |
| International Support | Entitled to special international support measures, including preferential trade access, aid, and technical assistance.20 | May receive some development assistance and preferential treatment, but generally less extensive than for LDCs. |
| Vulnerability | Highly vulnerable to economic and environmental shocks.19 | Varying degrees of vulnerability; generally less vulnerable than LDCs. |
| Graduation | Formal process of "graduation" from LDC status once criteria are met.18 | No formal "graduation" process into developed country status, but economies evolve. |
The key difference lies in the level of structural handicaps and the specific international support mechanisms triggered by the classification. LDCs represent the "poorest and weakest segment" of the international community, requiring the highest degree of attention and targeted interventions.17 The broader category of developing countries encompasses a much wider range of nations, some of which are rapidly industrializing, while others still face significant developmental hurdles.
FAQs
How many countries are currently designated as Least Developed Countries?
As of April 2024, there are 44 countries classified as Least Developed Countries by the United Nations.15, 16 These countries are distributed across Africa, Asia, the Caribbean, and the Pacific.14
What are the main benefits of being classified as a Least Developed Country?
LDCs receive several benefits, including preferential market access for their exports (e.g., duty-free and quota-free access to certain markets), increased [foreign aid], and technical assistance from international organizations.12, 13 These measures aim to support their economic growth and help them integrate into the global economy.
How does a country graduate from Least Developed Country status?
A country can graduate from LDC status if it meets specific thresholds for at least two of the three UN criteria (GNI per capita, Human Assets Index, and Economic and Environmental Vulnerability Index) in two consecutive triennial reviews by the Committee for Development Policy.10, 11 The graduation process involves a preparatory period and a smooth transition strategy to ensure sustainable progress.9
What challenges do Least Developed Countries face in achieving sustainable development?
Least developed countries face numerous challenges, including high levels of poverty, limited [productive capacity], vulnerability to external economic shocks and natural disasters, dependence on primary commodities, and often significant debt burdens.5, 6, 7, 8
What is the role of the United Nations in identifying and supporting Least Developed Countries?
The United Nations plays a central role in identifying and supporting least developed countries. Its Committee for Development Policy (CDP) reviews the LDC category every three years based on established criteria.4 Various UN entities, such as the Office of the High Representative for the Least Developed Countries (UN-OHRLLS), UNCTAD, and the UN Capital Development Fund, work to coordinate support measures, advocate for LDCs, and help them achieve their development goals.1, 2, 3