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Who Are LDCs?

The LDCs are defined as low-income countries that are suffering from long-term handicaps to growth, in particular low levels of human resource development and/or severe structural weaknesses.
In 1971, the international community recognized the existence of a category of countries whose distinctness lies in the profound poverty of their people and in the weakness of their economic, institutional and human resources, often compounded by geophysical handicaps. Currently, there are 49 countries identified as Least Developed Countries. These countries are particularly ill-equipped to develop their domestic economies which are so vulnerable to external shocks or natural disasters. Thus, the group represents the weakest segment of humanity and presents a major challenge to its development partners.
The United Nations General Assembly decides which countries are included in (or graduate from) the list of LDCs under the recommendation of ECOSOC.

The criteria

In its latest triennial review of the list of Least Developed Countries in 2006, the Economic and Social Council of the United Nations used the following three criteria for determining the new list, as proposed by the Committee for Development Policy:
  • Gross national income per capita: The threshold for inclusion was calculated at $745, a three-year (2002-2004) average Gross National Income (GNI) per capita of the low-income threshold established by the World Bank, based on the World Bank Atlas method [1]. The threshold for graduation was set at $900, or about 20 per cent above the threshold for inclusion, in order to effectively prevent graduating countries subsequently returning to the category owing to short-term declines in their GNI per capita caused by exogenous shocks, or exchange rate variations.
  • A Human assets index (HAI): The HAI used is a combination of four indicators, two for health and nutrition and two for education: (a) the percentage of population and undernourished; (b) the mortality rate for children aged five years or under; (c) the gross secondary school enrolment ration; and (d) the adult literacy rate. As in the 2003 review, the threshold for graduation was established at 10 per cent above the inclusion threshold. Thus, the threshold for inclusion in the list of LDC is an HAI value of 58 and the threshold for graduation is 64.
  • Economic vulnerability index (EVI): The EVI reflects the risk posed to a country‚Äôs development by exogenous shocks, the impact of which depends on the magnitude of the shocks and on structural characteristics that determine the extent to which the country would be affected by such shocks. The EVI is a combination of seven indicators: (a) population size; (b) remoteness; (c) merchandise export concentration; (d) share of agriculture, forestry and fisheries in gross domestic product; (e) homelessness owing to natural disasters; (f) instability of agricultural production; and (g) instability of exports of goods and services.>
The United Nations General Assembly decides which countries are included in (or graduate from) the list of LDCs under the recommendation of ECOSOC.

Eligibility to Graduate from the LDC List

Countries that meet two of the criteria for the first time become eligible for graduation and those that do so in two consecutive reviews qualify for graduation from the list.
The World Bank thresholds for low-income countries during these three years were $755, $745 and $735, respectively.
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