Least Developed Countries Report

For Least Developed Countries (LDCs) to progress towards the Sustainable Development Goals, they need to transform the structure of their economy. This, in turn, requires entrepreneurship that innovates. The entrepreneurial landscape in LDCs is dominated by micro and small enterprises with low chances of survival and growth, and scant innovation. While LDCs are part of global value chains, these provide only limited opportunities of entrepreneurship development and upgrading. Most LDCs policies and programmes for entrepreneurship aim at job creation, poverty reduction and women and youth empowerment. For entrepreneurship to be a driving force towards structural transformation, policies need to target and support high-potential firms.

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.

As we reach the target date to meet the Millennium Development Goals (MDGs), the LDC Report analyses the performance of the LDCs in progressing towards these goals and provides a framework for their development policies in the post-2015 period. The Report shows that there is a high degree of differentiation among LDCs’ performance towards the MDGs, but most of these countries will not be able to attain most MDGs. This disappointing outcome is surprising given that LDCs have experienced historically high economic growth rates over the last 20 years, and domestic and international policies for LDCs have set MDGs as top priority. In the coming post-2015 period, the LDCs will face the challenge of achieving the sustainable development goals (SDGs), for which structural transformation will be a precondition.

This report calls for the creation of a new international development architecture (NIDA) for the LDCs aimed at: a) reversing their marginalization in the global economy and helping them in their catch-up efforts; b) supporting a pattern of accelerated economic growth and diversification to improve the well-being of all their people; and c) helping them graduate from LCD status. The NIDA for LDCs would be constituted through reforms of the global economic regimes which directly affect development and poverty reduction in LDCs, and through the design of a new generation of special international support mechanisms for the LDCs aimed at addressing their specific structural constraints and vulnerabilities. Increasing South-South cooperation could play an important role in a NIDA for LCDs. The Report proposes five major pillars of the NIDA: finance, trade, commodities, technology, and climate change mitigation and adaptation and identifies a forward-looking action.

This report assesses recent trends in growth and poverty in the least developed countries (LDCs), as well as changes in terms of development partnership. It discusses the fact that rapid economic growth in the LDCs has been associated with a slow rate of poverty reduction and slow progress towards the Millennium Development Goals. The report also considers progress towards country-owned development strategies in LDCs and the role of recipient- led aid management policies at the country level as a practical policy mechanism to strengthen country ownership.

The Least Developed Countries are a group of 50 countries which have been identified as “least developed” in terms of their low GDP per capita, their weak human assets and their high degree of economic vulnerability. The 2006 Report focuses on the development of productive capacities for sustainable pro-poor economic growth strategies and an analysis of the progress made on some of the quantified targets of the Programme of Action agreed during the Third UN Conference on the Least Developed Countries.

The Least Developed Countries Report 2002 is in two parts. The first part reviews recent economic trends and assesses the progress in the 1990s towards fulfillment of development targets contained in the Programme of Action adopted by the Third United Nations Conference on the Least Developed Countries. The second part, on escaping the poverty trap, is the first analysis of poverty in all the LDCs. It is based on a new set of poverty estimates for LDCs that suggest that extreme poverty may have been under-estimated in the poorest countries, particularly in Africa, and over-estimated in other countries. The Report examines the reasons why extreme poverty is pervasive and persistent in most LDCs, and the implications for the design of poverty reduction strategies and international policy. An important discovery of the Report is the close link between primary commodity dependence and extreme poverty.

As the twentieth century drew to a close, it became clear that the least developed countries (LDCs) had generally failed to derive appropriate benefits from the ongoing processes of liberalization and globalization. This report examines the recent economic developments and outlook in the LDCs; reviews development finance, external debt and investment; assesses the programme of action for the LDCs for the 1990s; and discusses marginalization, productive capacities and the LDCs. Satistical charts and graphs are also included.