Least developed country

What Is a Least Developed Country?

A Least Developed Country (LDC) is a nation identified by the United Nations (UN) as exhibiting the lowest indicators of socioeconomic development, coupled with severe structural impediments to sustainable development. This classification falls under the broader field of international economics. The concept of Least Developed Countries emerged in the late 1960s to acknowledge that the poorest and weakest segment of the international community required special support measures²⁴.

The designation of a Least Developed Country aims to draw international attention to the unique challenges these nations face and to mobilize support, including preferential market access, financial assistance, and technical cooperation. Countries categorized as Least Developed Countries typically face challenges such as low and unequally distributed income, scarcity of domestic financial resources, reliance on agrarian economies, and vulnerability to external shocks²³.

History and Origin

The concept of Least Developed Countries originated in the late 1960s, and the first group of LDCs was officially listed by the UN General Assembly in its resolution 2768 (XXVI) on November 18, 1971. This establishment recognized that certain developing countries were exceptionally disadvantaged and needed targeted international support to overcome deep-seated structural impediments to their progress²².

Since 1971, the United Nations has consistently recognized these nations as the "poorest and weakest segment" of the global community²⁰, ²¹. The criteria for identifying Least Developed Countries have been periodically reviewed and refined by the Committee for Development Policy (CDP), a subsidiary body of the UN Economic and Social Council (ECOSOC), to ensure they accurately reflect the socio-economic realities and vulnerabilities of these nations¹⁹.

Key Takeaways

• A Least Developed Country (LDC) is a classification by the United Nations for countries with the lowest socioeconomic development indicators and significant structural impediments to growth.
• The UN established the LDC category in 1971 to provide special international support measures.
• LDC status is determined by three criteria: gross national income (GNI) per capita, human assets, and economic and environmental vulnerability.
• LDCs receive preferential treatment in areas such as trade, aid, and technical assistance from the international community.
• Graduation from LDC status is a recognition of significant progress in development and requires meeting specific thresholds in two consecutive triennial reviews.

Interpreting the Least Developed Country Classification

The Least Developed Country classification serves as a critical indicator for assessing the overall economic health and development challenges of a nation. It highlights countries that face the most profound structural barriers to sustainable growth, including limited infrastructure and significant poverty levels. This designation is not static; it is regularly reviewed, and countries can graduate from LDC status once they meet specific development benchmarks.

The criteria used by the UN to identify a Least Developed Country are designed to capture a holistic picture of a nation's development, moving beyond just income levels to include social and environmental factors. A high score on the Economic and Environmental Vulnerability Index, for instance, suggests a country is highly susceptible to external economic shocks or natural disasters, providing insights into its fragility and resilience.

Hypothetical Example

Consider a hypothetical country, "Alandria," that is being reviewed for Least Developed Country status. Alandria has an average Gross National Income (GNI) per capita of $950 over three years, which falls below the current threshold for inclusion. Its human assets index (HAI) score indicates low levels of adult literacy and high child mortality rates, reflecting significant human resource weakness. Furthermore, Alandria heavily relies on exporting a single primary commodity, making its export revenues highly volatile and demonstrating high economic vulnerability.

Based on these factors—low GNI, weak human assets, and high economic vulnerability—the UN's Committee for Development Policy would likely recommend Alandria for inclusion in the Least Developed Country category. This classification would then make Alandria eligible for various forms of international support, such as development aid and preferential market access, aimed at helping it address its structural impediments and achieve sustainable development.

Practical Applications

The Least Developed Country designation has significant practical implications across various facets of international relations and development finance. For instance, the World Trade Organization (WTO) recognizes the UN list of Least Developed Countries and offers them special treatment. This includes greater market access opportunities, such as duty-free and quota-free access for their products, and flexibilities in implementing WTO rules. These measures are designed to help LDCs increase their exports and attract foreign direct investment.

I¹⁸nternational organizations and development partners channel significant resources and technical assistance towards Least Developed Countries to help them achieve the Sustainable Development Goals. This includes support for building productive capacity, improving healthcare systems, strengthening educational outcomes, and addressing climate change vulnerabilities. Th¹⁶, ¹⁷e focus on LDCs within the multilateral trading system underscores the global commitment to integrate these economies more fully into the world economy, despite the challenges they face. The WTO, for example, produces reports assessing the trade impacts of LDC graduation and works to boost trade opportunities for these nations..

#¹⁵# Limitations and Criticisms

While the Least Developed Country classification provides a framework for international support, it also faces certain limitations and criticisms. One challenge is the potential for a "graduation cliff," where countries lose preferential access to markets and other benefits upon graduating from LDC status, potentially hindering their continued economic growth. Th¹⁴is can create a disincentive for countries to push for the reforms necessary to graduate, fearing a loss of vital support.

Furthermore, the broad criteria used for classification may not fully capture the nuanced challenges faced by individual Least Developed Countries. Some critics argue that the reliance on certain economic indicators or vulnerability assessments might overlook specific local contexts or unique structural issues. For example, some Least Developed Countries are also classified as "emerging markets," highlighting the diverse economic profiles even within the LDC group. Ad¹³ditionally, LDCs often contend with high debt burdens and vulnerability to external shocks, which can impede their progress regardless of the support measures in place.

#¹²# Least Developed Country vs. Developing Country

The terms "Least Developed Country" (LDC) and "Developing Country" are often confused, but they represent distinct categories within global economic classifications.

A Least Developed Country is a specific, formal classification by the United Nations for countries at the lowest end of the development spectrum. These nations meet stringent criteria related to low gross national income per capita, significant human resource weakness, and high economic and environmental vulnerability. Th¹⁰, ¹¹e designation triggers a range of special international support measures.

A Developing Country, on the other hand, is a broader, less formal term used to describe nations that are in the process of industrializing and improving their living standards, but have not yet achieved the characteristics of a developed country. This category encompasses a wide range of economies with varying levels of development, income, and structural capacities. All Least Developed Countries are, by definition, developing countries, but not all developing countries are Least Developed Countries. The key difference lies in the severity of structural impediments and the specific international recognition and support mechanisms tailored for LDCs.

FAQs

What are the main criteria for a country to be classified as a Least Developed Country?

A country is classified as a Least Developed Country based on three main criteria by the UN's Committee for Development Policy: a low gross national income (GNI) per capita, a low score on the Human Assets Index (measuring health and education outcomes), and a high score on the Economic and Environmental Vulnerability Index (measuring susceptibility to shocks).

#⁸, ⁹## How many Least Developed Countries are there currently?
As of December 2024, there are 44 countries still classified as Least Developed Countries by the United Nations.

#⁷## What benefits do Least Developed Countries receive?
Least Developed Countries receive special international support measures, including preferential market access for their exports, official development assistance, technical cooperation, and special provisions within multilateral agreements like those of the World Trade Organization. Th⁵, ⁶ese benefits aim to help them overcome their unique development challenges.

Can a country graduate from Least Developed Country status?

Yes, a country can graduate from Least Developed Country status if it meets the established thresholds for at least two of the three classification criteria in two consecutive triennial reviews by the Committee for Development Policy. Si⁴nce the category's inception, eight countries have successfully graduated, including Botswana, Cape Verde, Maldives, Samoa, Equatorial Guinea, Vanuatu, Bhutan, and São Tomé and Príncipe.

³Why is the Least Developed Country classification important?

The Least Developed Country classification is important because it highlights the countries most in need of international support to achieve sustainable development. It mobilizes targeted assistance and preferential treatment, helping these nations build productive capacities, improve living standards, and integrate into the global economy.¹, ²