Least Developed Countries Report

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2225-1723 (online)
http://dx.doi.org/10.18356/7b6b1fe1-en
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UNCTAD´s Least Developed Countries Report provides a comprehensive and authoritative source of socio-economic analysis and data on the world´s most impoverished countries. The Report is intended for a broad readership of governments, policy makers, researchers and all those involved with LDCs´ development policies. Each Report contains a statistical annex, which provides basic data on the LDCs.
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The Least Developed Countries Report 2016

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The Least Developed Countries Report 2016

The Path to Graduation and Beyond: Making the Most of the Process You do not have access to this content

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Author(s):
UNCTAD
07 Dec 2016
Pages:
215
ISBN:
9789210597234 (PDF)
http://dx.doi.org/10.18356/57f9a7a4-en

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Graduation is the process through which least developed countries (LDCs) cease to be members of the LDC category, in recognition of their advances in development. In principle, it marks a shift from dependency to a greater degree of self-sufficiency and emergence from the development "traps" which beset LDCs. However, the loss of access to international support measures (ISMs) tied to LDC status at graduation can give rise to important economic costs, including an estimated 3–4 per cent of export revenues in the case of trade preferences. During the 45 years since the establishment of the LDC category, only four countries have graduated from LDC status; and the Report's projections indicate that the target of half of the LDCs graduating by 2020 is unlikely to be met. This partly reflects the inadequacy of the existing ISMs. The projections also suggest a fundamental shift in the composition of the group, which by 2025 will consist almost entirely of African countries and include only one small-island economy. The Report argues that graduation should be viewed as part of a longer and broader development process, and emphasizes the need for "graduation with momentum" - an approach which goes beyond fulfilment of the statistical criteria for graduation to lay the foundations for future development. This means prioritizing structural transformation of the economy, development of productive capacities, upgrading technology and raising productivity. The Report highlights several policy areas essential to achieve "graduation with momentum" - rural transformation, industrial policy, science, technology and innovation policy, finance and macroeconomic policy, employment generation and women's empowerment. It calls on the international community to contribute by fulfilling their commitments in areas such as aid and technology. It also suggests possible revisions to the graduation criteria to reflect more appropriately issues such as structural transformation, environmental sustainability and gender equality.

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  • What are the Least Developed Countries?

    Forty-eight countries are currently designated by the United Nations as “least developed countries” (LDCs). These are: Afghanistan, Angola, Bangladesh, Benin, Bhutan, Burkina Faso, Burundi, Cambodia, the Central African Republic, Chad, the Comoros, the Democratic Republic of the Congo, Djibouti, Equatorial Guinea, Eritrea, Ethiopia, the Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, the Lao People’s Democratic Republic, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Nepal, the Niger, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone, Solomon Islands, Somalia, South Sudan, the Sudan, Timor-Leste, Togo, Tuvalu, Uganda, the United Republic of Tanzania, Vanuatu, Yemen and Zambia.

  • Acknowledgements

    The Least Developed Countries Report 2016 was prepared by UNCTAD. Contributors to this Report are: Rolf Traeger (team leader), Mehmet Arda, Bineswaree Bolaky, Lisa Borgatti, Agnès Collardeau-Angleys, Pierre Encontre, Christian Kingombe, Ralph-Christian Maloumby-Baka, Pauline Mauclet, Madasamyraja Rajalingam, Matfobhi Riba, Giovanni Valensisi, Stefanie West and David Woodward (the LDC Report team). The work was carried out under the overall guidance and supervision of Taffere Tesfachew, Director, Division for Africa, Least Developed Countries and Special Programmes until April 2016; and thereafter of Guillermo Valles, Director and Officer-in-Charge, Division for Africa, Least Developed Countries and Special Programmes.

  • Abbreviations
  • Classifications used in this report

    Unless otherwise specified, in this Report the least developed countries (LDCs) are classified according to a combination of geographical and structural criteria. The small island LDCs that are geographically in Africa or Asia are thus grouped with the Pacific islands, due to their structural similarities. Haiti and Madagascar, which are regarded as large island States, are grouped with the African LDCs. South Sudan declared its independence on 9 July 2011, and became both an independent State and a United Nations Member State on 14 July 2011. Accordingly, starting with 2011, data for South Sudan and the Sudan, where available, are shown under the respective country name. For periods prior to the independence of South Sudan, data for the Sudan (former) include those for South Sudan unless otherwise indicated. The resulting groups are as follows:

  • Overview

    Following several years of apparent resilience to the international economic and financial crisis, economic growth in the least developed countries (LDCs) has declined steeply since 2012, reaching a low of 3.6 per cent in 2015. This is the slowest pace of expansion this century, and far below the target rate of at least 7 per cent per annum recommended by the 2011 Programme of Action for the Least Developed Countries for the Decade 2011–2020 (the so-called Istanbul Programme of Action (IPoA)). Thirteen LDCs experienced a decline in gross domestic product (GDP) per capita in 2015. This performance has been strongly influenced by the sharp decline in commodity prices, which has particularly affected African LDCs. Such weak economic growth is a serious obstacle to generating and mobilizing domestic resources for structural transformation and investment in the development of productive capacities. It also hampers progress towards the United Nations Sustainable Development Goals. This economic slowdown is likely to be reinforced by the current world economic climate, which remains lacklustre in its recovery.

  • Introduction: Recent economic trends and outlook for LDCs

    After having apparently shown resilience for some years to the international economic and financial crisis, economic growth in the least developed countries (LDCs) has declined steeply since 2012, reaching a low of 3.6 per cent in 2015. This is by far the slowest pace of expansion this century and it is far below the targeted rate of at least 7 per cent per annum recommended in the 2011 Programme of Action for the Least Developed Countries for the Decade 2011– 2020 (the Istanbul Programme of Action (IPoA)). Such a low economic growth rate renders it difficult to generate and mobilize domestic resources to sustain efforts at structural transformation and the building of productive capacities through investment. By the same token, it also slows down the progression of countries towards graduation out of the LDC category, which is analysed in detail in this Report. The growth slowdown is likely to be reinforced by the current world economic climate, which continues to be characterized by a sluggish recovery.

  • Graduation: A milestone, not the winning post

    While the 2030 Agenda for Sustainable Development (2030 Agenda) and the Sustainable Development Goals imply a much stronger focus on the least developed countries (LDCs) than did the Millennium Development Goals (UNCTAD, 2015a), they do not include an explicit goal for graduation from LDC status. However, such a goal was previously established by the Programme of Action for the Least Developed Countries for the Decade 2011–2020 (the Istanbul Programme of Action (IPoA)), adopted in 2011. This included for the first time an explicit target for graduation — that at least half of the 49 countries classified as least developed at the time should satisfy the criteria for graduation from LDC status by 2020. Though not embodied in the 2030 Agenda, this represents a bold step by the international community to move LDC graduation towards the centre of international attention.

  • The national dynamics of graduation
  • The contribution of international support measures to graduation

    Over the years, the growing recognition by the international community of least developed countries’ (LDCs) special needs has led to the establishment of a number of international support measures (ISMs) in their favour, beyond those available to other developing countries (ODCs). The continued relevance of the LDC category and of related ISMs has been reaffirmed repeatedly in the key international agreements of 2015, including the 2030 Agenda for Sustainable Development (2030 Agenda), the Addis Ababa Action Agenda of the Third International Conference on Financing for Development (Addis Ababa Action Agenda), the Sendai Framework for Disaster Risk Reduction and the Paris Agreement of the twenty-first session of the Conference of the Parties (COP21) to the United Nations Framework Convention on Climate Change (UNFCCC).

  • Post-graduation processes and challenges

    Since the adoption of the 2011 Programme of Action for the Least Developed Countries for the Decade 2011–2020 (the Istanbul Programme of Action (IPoA)), the feasibility of its graduation target has received considerable attention (Guillaumont and Drabo, 2013; Kawamura, 2014). Much less attention has been devoted to the question of least developed countries’ (LDCs) development trajectory beyond graduation, apart from discussion among practitioners of the smooth transition process. This may reflect the focus of the international community on achieving the graduation target itself, or a perception that, once LDCs have graduated, they will be similar to other developing countries (ODCs), and thus face analogous development challenges.

  • The path to graduation and beyond

    The 2011 Programme of Action for the Least Developed Countries for the Decade 2011–2020 (the Istanbul Programme of Action (IPoA)) included a target that half of the 49 countries with least developed country (LDC) status at the time should meet the statistical criteria for graduation by 2020. This was the first time that the international community had adopted an explicit target for graduation from the LDC category. Now, halfway from the setting of the target to the date for its attainment, it seems clear that it will not be met. The projections presented in chapter 2 of this Report suggest that only 16 (one third) of the current LDCs (in addition to Samoa, which graduated in 2014) can be expected to satisfy the full graduation criteria by 2021. This suggests that policies at the national and/or international level — that is, national graduation strategies and/ or the international support measures (ISMs) for LDCs — have so far fallen significantly short of the expectations of the IPoA.

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