IAS Gyan

Daily News Analysis


13th March, 2023 International Relations

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Context: Bhutan, the mountainous, landlocked country that is consistently ranked one of the happiest in the world, will on December 13th of this year, become the seventh nation to graduate from the United Nations’ (UN) list of Least Developed Countries (LDC.)


What is a Least Developed Country (LDC)?

  • They are developing countries listed by the UN that exhibit the lowest indicators of socioeconomic development.
  • The concept first originated in the late 1960s and was codified under UN resolution 2768 passed in November 1971.
  • According to the UN, an LDC is defined as “a country that exhibits the lowest indicators of socioeconomic development, with low levels of income, human capital and economic diversification, high levels of economic vulnerability, and a population that is disproportionately reliant on agriculture, natural resources, and primary commodities.”
  • The UN identifies three criteria for a country to be classified as an LDC:
    • It must have a gross national income (GNI) per capita below the threshold of USD 1,230 over a three-year average.
    • It must perform poorly on a composite human assets index based on indicators including nutrition, health and education.
    • The country must demonstrate economic vulnerability such as being prone to natural disasters and possessing structural economic constraints.
  • Countries must meet a selection from all three criteria simultaneously and are reviewed on a three-year basis by the UN.
  • Currently, the UN lists 46 countries that qualify as LDCs. Of those, 33 are from Africa, nine from Asia, three from the Pacific and one from the Caribbean.

How does a country get off the LDC list?

  • At the UN 2021 triennial review of LDC countries, the organisation recommended that Bangladesh, Laos, and Nepal be removed from the list.
  • To graduate from the LDC list, a country must meet certain criteria in the three areas stated before namely, income, human assets, and economic vulnerability.
    • A nation must have a GNI per capita of at least USD 1,242 for two consecutive triennial reviews in order to meet the income requirement.
    • The nation must also show that this level of income can be sustained over the long term.
    • By using measures like education, health, and nutrition, a nation must show that it has improved its human capital in order to achieve the human assets requirement. This entails expanding literacy rates, lowering malnutrition rates, and enhancing access to healthcare and education.
    • A nation also must show that it has improved its ability to withstand external economic shocks like natural catastrophes or shifts in commodity prices in order to pass the economic vulnerability test. Diversifying the economy, investing in infrastructure, and raising the standard of institutions and governance are all ways to do this.

Advantages of being an LDC:

  • Being an LDC confers certain economic benefits to the listed country.
  • LDCs also enjoy duty-free and quota-free (DFQF) access to the markets of developed countries.
    • This means that LDCs are not restricted by trade restrictions or tariffs when exporting their goods to wealthier nations.
    • For LDCs, this is a significant advantage because it enables them to expand their exports and get access to new markets, which can boost their economic development.
  • LDCs are also eligible for loans with special terms for development, which include loans with a lower interest rate and a longer repayment time than those given to other nations.
    • The term “Official Development Assistance” (ODA) or “aid” is frequently used to describe this form of support.
    • This money is intended to aid LDCs in their initiatives to meet their fundamental requirements, promote sustainable economic growth and development, and fight poverty.

Concluding Remarks:

Graduation from LDC status is a major achievement, but it can be a double-edged sword. On the one hand, it signals that a country has made significant progress in its economic and social development. On the other hand, it can also create new challenges and risks, as the country may lose access to some of the trade-related benefits and support that it had as an LDC.


Q) Graduation from LDC status is a major achievement, but it can be a double-edged sword. Critically Analyse. (150 words)