Exactly Who Make Up the Least Developed Countries in the World?

The world’s least developed countries (LDCs as defined by the UN) currently consist of 49 countries (1 in the Americas – Haiti; 33 in Africa; and 15 in Asia and the Pacific). To be considered a LDC there are 3 major criteria:

  1. Have a per capita GNI (gross national income) of under $905. Over $1,086 qualifies for graduation.
  2. A low human capital status which is based on nutrition, health, and education measures.
  3. Have a high economic vulnerability status based on indicators of population size, share of agriculture, forestry and fisheries in gross domestic product, levels of homelessness due to natural disasters, agricultural instability, and instability of exports of goods and services.

These are not easy measures to quantify, especially considering the infrastructure and difficulties many of these countries present. Now, being classified as an LDC singles the country out to receive more focused public support with the goal of overcoming their structural handicaps and impediments to development. There is of course a stigma attached to this: simply, the country is poor, un-equipped and cannot develop without wealthy world aid. Since the LDC category has been released only two countries have opted out of being included: Ghana and Zimbabwe. There is no obligation to be included and they felt the stigma was not worth the aid.

So one might ask, what is the graduation rate of LDCs into the developing world? Over the past 30-40 years only 2 countries have graduated out: Cape Verde most recently and Botswana. There are currently 3 countries slated to graduate out next year: the Maldives, Samoa, and Equatorial Guinea.

Some of these countries have handicaps that will be very difficult to overcome, namely those that are landlocked or are very small island nations that can be wiped away at any moment. So especially with the latter, a Haiti for example can theoretically make great strides and be thrust back into LDC status with a natural disaster. It is a fragile border many of these countries straddle between the LDC and developing world.

Overall, what many of these countries need is sustained growth in the manufacturing sector. Most of the LDCs rely on single commodities to stimulate growth with little export diversification thus leaving them susceptible to eventual downturns. You also see a lot of foreign direct investment going into extractive industries (mining, oil) which can slowly erode a country both physically and psychologically.  

Good governance, anti-corruption measures, a modern legal system, etc. are what’s needed, but easier said than done. An interesting new development is LDCs have increased their trade dramatically over the past 10 years with other countries in the southern hemisphere. This notion of “South/South” trading has caught on making them less dependent on the highly developed nations to buy and trade. Whether this is a trend that has developed as a result of the world’s economies becoming more integrated over time remains to be seen. The frustration I suppose comes from the inevitable – shocks will occur and unless one prepares to absorb and overcome them, hovering in and out of LDC status is a foreseeable future for these 49 countries.

1 Comment

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One response to “Exactly Who Make Up the Least Developed Countries in the World?

  1. After reading this article I am glad that my country Ghana opted out. Talk of attracting aid, with conditionality’s that does nothing but push Us out of ever becoming independent economically and becoming even more dependent on these Aids. Ghana has all the said qualities that moves one from the LDC bracket using the classifications given in this article. Good governance, anti-corruption measures, a modern legal system, etc. are what’s needed, which we have currently in Ghana. Growth rate to date is hovering around 7.6% for a growing economy. inflation is 8.9% which is also not bad for a developing economy. This notion of “South/South” trading has caught on making well with our industries and economy making us less dependent on the highly developed nations to buy and trade. Whether this is a trend that has developed as a result of the world’s economies becoming more integrated over time remains to be seen. But for Ghana we will still practice prudent management of our economy till we get it right. So I say again, we don’t need this labeling to make our economy grow.

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