Women working in a potato field in Bangladesh

Least Developed Country graduation: Past, present and future

By Jose Antonio Ocampo, Professor at Columbia University and chair of the ECOSOC Committee for Development Policy. Former UN Under-Secretary-General for Economic and Social Affairs and Finance Minister of Colombia

As the world prepares for the 5th United Nations Conference on the Least Developed Countries (LDC5) in Doha[1], we need to ask not only whether this category is still relevant today but also what graduation from this status implies. After the LDC category was created fifty years ago, the number of such countries grew steadily due to the emergence of newly independent countries that faced significant disadvantages as well as major setbacks experienced by other developing countries. Nonetheless, LDC status was envisaged as a temporary phase in a country’s development trajectory: the concept of graduation was introduced twenty years after the LDC category itself.

Yet between 1991 and 2010, only two out of a maximum of 50 countries graduated. By the end of this period, two other countries were officially graduating and four had met the graduation criteria for the first time, which is the initial step in the multi-stage graduation process. Even when graduation was achieved, it was perceived as a punishment – in the form of losing international support – rather than as cause of celebrating a development success.  

This track record has led people to question the viability and usefulness of the LDC category. In doing so, there is a risk of overlooking its positive aspects. It is the only development category the United Nations has ever agreed upon; it is regularly reviewed by the Committee for Development Policy, an independent expert body of the United Nations; and it is based on multiple dimensions of development and the constraints LDCs may face by using three criteria – GNI per capita, human assets (education and health), and economic and environmental vulnerabilities, taking into account data availability. Indeed, rather than casting doubt on the conceptual merits of the category, it would be better to assess the limitations of international support measures in favour of LDCs.

In any case, it is safe to conclude that previous concerns about the LDC category have been overtaken by results and outcomes. While the objective (agreed at LDC4 in 2011) of enabling half the LDCs to meet the graduation criteria has not been fully met, progress has been remarkable. As of 2022, 16 out of 46 LDCs have met the graduation criteria at least once, seven of which are officially graduating. Another four have graduated over the past decade. Given this progress, rather than questioning the category, it is essential to strengthen graduation procedures and ensure that graduation is possible if and only if countries are making sustained progress.

There has also been a change in perception, with LDC graduation increasingly seen by countries as recognition of their development progress and a matter of national pride. At the same time, belonging to the LDC category has become more instrumental to these countries’ development. Many have successfully combined LDC support, particularly duty-free quota-free market access to developed and many developing countries, with well-guided domestic policies.

While meeting the criteria remains the cornerstone of any graduation decision, increased focus is being placed on ensuring that graduation is indeed a milestone on the pathway towards sustainable and inclusive development. The graduation framework set by the Committee for Development Policy accordingly puts more emphasis on consultation, monitoring, improving country-specific analysis, and increased capacity building for managing graduation. Recent updates include more extensive consultations with governments, the United Nations and other international organisations on the ground, country-specific graduation assessments, and supplementary graduation indicators. These processes allow the Committee for Development Policy to make fully informed decisions and to highlight policy priorities within an improved graduation narrative that goes far beyond a mere classification exercise based on numerical thresholds.

The upcoming LDC5 conference in Doha will be critical for current and future graduations. It is an opportunity to agree on specific graduation support to ensure LDCs graduate sustainably. While the bulk of such support will have to be provided by development and trading partners, the graduation process will also be strengthened by incorporating the sustainable graduation support facility that United Nations entities are developing to deliver specific and targeted assistance. Importantly, it also includes the enhanced monitoring mechanism that the Committee for Development Policy is developing, introducing a crisis response process, and establishing linkages between monitoring and support.

Doha is also expected to include commitments to enable additional countries to meet the graduation criteria. Unfortunately, the outlook for future graduations may be worse than it was two years ago as a result of the COVID-19 pandemic. The Committee for Development Policy has highlighted the need for extended preparatory periods for the countries that it has recommended for graduation. It also underscored that the impact of the pandemic may be more severe for countries below or marginally above graduation thresholds, meaning that many countries’ aspirations to graduate may not be fulfilled over the next decade.

COVID-19 is not the only major threat. The climate crisis is creating additional setbacks for LDCs, many of which are highly vulnerable in environmental terms. Also, many LDCs were not on track to meet the SDGs even before the pandemic, with insufficient productive capacity as the key constraint for a necessary inclusive and sustainable transformation of their economies. Hence, the most valuable outcome from Doha for LDC graduation may be an agreement on additional support measures for all LDCs to reach this objective, and to guarantee that their graduation process is successful.

[1] Set to take place in January, the event has been postponed due to the pandemic. A decision on new dates is expected to be taken by the General Assembly in January.

Photo by Sk Hasan Ali, Shutterstock