Least developed countries lldcs

What Are Least Developed Countries (LLDCs)?

Least Developed Countries (LLDCs) are a category of low-income countries identified by the United Nations as facing severe structural impediments to sustainable development. This classification, falling under the broader umbrella of International Development Finance, acknowledges that these nations are highly disadvantaged in their development process due to structural, historical, and geographical reasons¹⁹. LLDCs typically exhibit low levels of economic development, weak human assets, and high economic and environmental vulnerability. The aim of identifying LLDCs is to rally international support measures specifically tailored to their unique challenges.

History and Origin

The concept of Least Developed Countries was established by the UN General Assembly in 1971. This recognition by the international community stemmed from a need for special support measures to assist the poorest among the developing countries¹⁸. Since their inception, the list of LLDCs has been reviewed triennially by the United Nations Economic and Social Council, based on recommendations from the Committee for Development Policy (CDP)¹⁶, ¹⁷. These periodic reviews ensure the criteria remain relevant and responsive to global development challenges, allowing countries to graduate from the category as they achieve sustained progress¹⁵. Significant international conferences, such as the Fifth United Nations Conference on the Least Developed Countries (LDC5), have been convened to outline programs of action, including the recently adopted Doha Programme of Action (DPoA) for the decade 2022-2031, aiming to address the unique needs and facilitate irreversible graduation for these nations.¹⁴(https://www.un.org/ldc5/)

Key Takeaways

• LLDCs are recognized by the United Nations as the most vulnerable and disadvantaged countries globally.
• Their classification is based on three main criteria: low Gross National Income (GNI) per capita, weak human assets, and high economic and environmental vulnerability.
• The UN reviews the list of LLDCs every three years to assess progress and recommend countries for graduation.
• LLDCs benefit from special international support measures, including preferential market access and development assistance.
• Over 75% of the population in LLDCs still lives in poverty, highlighting the persistent challenges faced by these nations.¹³

Formula and Calculation

The classification of Least Developed Countries is not based on a single financial formula but rather on a set of three composite criteria reviewed every three years by the Committee for Development Policy (CDP). These criteria involve thresholds for:

1. Gross National Income (GNI) per capita: A low-income threshold, typically averaged over three years. For inclusion, a country's GNI per capita must be below a certain figure (e.g., USD $1,088 for the 2024 review), while a higher threshold applies for graduation eligibility (e.g., USD $1,306 for the 2024 review).¹²
2. Human Assets Index (HAI): This index measures the level of human capital and well-being, encompassing indicators related to health (e.g., under-five mortality rate, maternal mortality) and education (e.g., adult literacy rate, gross secondary school enrollment ratio).¹¹
3. Economic and Environmental Vulnerability Index (EVI): This index reflects a country's vulnerability to external economic and environmental shocks. Indicators include factors like remoteness, dependence on agriculture, population size, merchandise export concentration, and exposure to natural disasters.¹⁰

To be classified as an LLDC, a country must satisfy all three criteria and agree to the classification. For eligibility to graduate, a country must reach specific thresholds in at least two of the three criteria in two consecutive triennial reviews, or its GNI per capita must exceed at least twice the graduation threshold.⁹

Interpreting the LLDC Status

The status of Least Developed Countries serves as a critical indicator for policymakers, international organizations, and investors. It signals that a country faces deep-seated structural challenges that impede its ability to achieve sustained economic growth and improve living standards. For example, the high Economic Vulnerability Index score indicates a susceptibility to external shocks, such as volatile commodity prices or climate-induced disasters, which can severely impact their fragile economies.⁸

Understanding a country's LLDC status helps in prioritizing development assistance and tailoring support programs. It also provides context for evaluating investment opportunities, as LLDCs often present higher risks but also potential for significant returns if development efforts succeed and structural barriers are overcome. The ongoing monitoring of the Human Assets Index helps gauge progress in crucial areas like health and education, which are fundamental to long-term development.

Hypothetical Example

Consider a hypothetical country, "Island Nation X," which is being reviewed for its Least Developed Country status. Its GNI per capita is well below the UN's inclusion threshold, averaging $800 over the past three years. Its Human Assets Index score is low, reflecting high child mortality rates and low secondary school enrollment. Furthermore, the Economic and Environmental Vulnerability Index shows a high score due to its heavy reliance on a single agricultural export and frequent exposure to tropical storms.

Based on these indicators, Island Nation X meets all three criteria for inclusion as an LLDC. This classification would make it eligible for special support measures from the international community, such as preferential trade agreements for its agricultural products, technical assistance to diversify its economy, and aid for disaster preparedness. Over time, with sustained efforts in capacity building and strategic investments, Island Nation X might gradually improve its economic indicators and human assets, eventually becoming eligible for graduation from the LLDC category.

Practical Applications

The LLDC classification has several practical applications in global economics and international trade:

• Preferential Treatment: LLDCs often receive preferential market access for their exports, special provisions within multilateral agreements (like those of the World Trade Organization), and targeted technical assistance to boost their participation in global markets.
• Aid and Development Focus: International organizations and donor countries often prioritize foreign direct investment and aid flows to LLDCs to support their development efforts, improve infrastructure, and strengthen governance. The International Monetary Fund (IMF), for instance, provides concessional financial support, including interest-free loans, to low-income countries, many of which are LLDCs, to help them achieve macroeconomic stability and poverty reduction.⁷(https://www.imf.org/en/About/Factsheets/IMF-Support-for-Low-Income-Countries)
• Policy Guidance: The classification helps guide national fiscal policy and monetary policy decisions within LLDCs, encouraging reforms that address structural weaknesses and foster sustainable development. This often includes efforts towards meeting the Sustainable Development Goals set by the UN.
• Debt Relief Initiatives: Many LLDCs are burdened by high external debt. The international community, often through multilateral institutions, implements debt relief initiatives to free up resources for essential development spending.

Limitations and Criticisms

While the LLDC classification serves a crucial purpose in channeling international support, it also faces certain limitations and criticisms:

One common critique is the challenge of accurately measuring and comparing the complex factors that contribute to a country's development status. The indices, while comprehensive, may not always capture the full nuances of a country's economic and social realities. Furthermore, the process of graduation can be challenging. Some countries that meet graduation thresholds may fear losing the preferential trade and aid benefits associated with LLDC status, potentially slowing down their reform efforts or facing a sudden reduction in support. This "cliff effect" can make a smooth transition difficult and has led to discussions about developing more flexible and gradual transition support mechanisms. Critics also point out that despite decades of the LLDC category, many countries remain highly vulnerable, suggesting that the effectiveness of the support measures needs continuous evaluation and adaptation in the face of evolving global challenges, such as those amplified by globalization.

Least Developed Countries vs. Developing Countries

The terms "Least Developed Countries" (LLDCs) and "Developing Countries" are often used interchangeably, but they represent distinct categories in the context of international development.

• Least Developed Countries (LLDCs): This is a specific, formal classification by the United Nations. Countries designated as LLDCs are the most vulnerable and poorest among the developing countries, meeting stringent criteria related to low GNI per capita, weak human assets, and high economic and environmental vulnerability. They receive the highest degree of international attention and specific support measures designed to address their acute structural handicaps. Currently, there are 45 LLDCs.⁶
• Developing Countries: This is a much broader and less formally defined category. It generally refers to nations with lower levels of economic development compared to developed countries, often characterized by lower per capita income, less advanced industrial bases, and lower Human Development Index scores. The group of developing countries includes a vast range of economies, from the most vulnerable LLDCs to rapidly growing emerging markets. All LLDCs are by definition developing countries, but not all developing countries are LLDCs.

The key distinction lies in the severity of structural impediments and the specific, targeted international support mechanisms allocated to LLDCs, which are not universally applied to all developing countries.

FAQs

What are the main criteria for a country to be classified as an LLDC?

A country is classified as a Least Developed Country based on three main criteria: its Gross National Income (GNI) per capita, its Human Assets Index (HAI), and its Economic and Environmental Vulnerability Index (EVI). These criteria are reviewed every three years by the United Nations.⁵

How many LLDCs are there currently?

As of recent reviews, there are 45 countries classified as Least Developed Countries by the United Nations. These countries are predominantly located in Africa and Asia.⁴

What benefits do LLDCs receive?

LLDCs receive special international support measures. These can include preferential market access for their goods and services, increased official development assistance, technical assistance, capacity building support, and specific provisions in international agreements aimed at promoting their sustainable development.³(https://unctad.org/topic/least-developed-countries)

Can a country graduate from LLDC status?

Yes, a country can graduate from Least Developed Country status. To be eligible for graduation, a country must meet specific thresholds in at least two of the three classification criteria (GNI, HAI, EVI) for two consecutive triennial reviews. After meeting these conditions, there is typically a three-year transition period before graduation becomes official. Bhutan and Vanuatu are recent examples of countries that have successfully graduated.²

What is the Doha Programme of Action?

The Doha Programme of Action (DPoA) is a comprehensive plan adopted in March 2022 at the Fifth United Nations Conference on the Least Developed Countries (LDC5). It outlines a roadmap for the sustainable and irreversible development of LLDCs for the decade 2022-2031, aiming to help them address various challenges including the impacts of the COVID-19 pandemic and climate change, and achieve the Sustainable Development Goals.¹