Policymakers in the least developed countries are under pressure to transform carbon markets into a viable pathway to deliver on the Sustainable Development Goals and low-carbon structural transformation. This begs the question of whether and how these markets can both address the unique challenges of these countries and help them to contribute to global efforts to mitigate climate change. The report highlights the outcomes of past and current participation by least developed countries in carbon markets and identifies opportunities and risks from the emerging framework for carbon markets under the Paris Agreement. Towards the maximization of the benefits of carbon markets for LDCs the report provides actionable recommendations for least developed country policymakers and climate negotiators and for their development partners.

LDCs which bear the least historical responsibility for climate change are on the front lines of the climate crisis. The Report highlights the development strategies and policies which they need to enact to reach the ambitious objectives to which they have committed and the painful trade-offs between climate action and accelerated progress towards fulfilling their right to development they will need to navigate in the challenging international economic and environmental context. Nowhere is the need for a “Just energy transition” starker than in the LDCs but the Report shows that despite this harsh reality international support for LDC adaptation and sustainable development has fallen remarkably short of what is needed both in terms of climate finance and of access to clean technologies. The Reports calls on the international community to be mindful of the institutional and capacity constraints that create scope for maladaptation in LDCs and to enhance targeted assistance to LDCs in line with their need for special and differential treatment.

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.