Context:-Bhutan became the seventh nation to graduate from the United Nations’ (UN) list of Least Developed Country (LDC).
- The Least Developed Countries (LDC) 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, Least developed countries (LDCs) are low-income countries confronting severe structural impediments to sustainable development.
- They are highly vulnerable to economic and environmental shocks and have low levels of human assets.
- LDC at present – Currently, the UN lists 46 countries that qualify as LDCs.
- Of those, 33 are from Africa, nine from Asia, 3 from the Pacific and 1 from the Caribbean.
- Criteria – The UN identifies 3 criteria for a country to be classified as an LDC:
- Income – Gross National Income (GNI) per capita below the threshold of USD 1,230 over a three-year average.
- Human Assets – Perform poorly on a composite human assets index based on indicators including nutrition, health and education.
- Economic Vulnerability – Demonstrate economic vulnerability such as being prone to natural disasters and possessing structural economic constraints.
- The criteria are reviewed on a 3-year basis (triennial) by the UN.
- Getting off the LDC list – To graduate from the Least Developed Country (LDC) list, a country must meet certain criteria in the above 3 areas in the triennial review.
- A nation must have a GNI per capita of at least USD 1,242 for 2 consecutive triennial reviews in order to meet the income requirement.
- 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.
- A nation also must show that it has improved its ability to withstand external economic shocks in order to pass the economic vulnerability test.
- Advantages of being an LDC – Least Developed Country LDCs also enjoy duty-free and quota-free (DFQF) access to the markets of developed countries.
- LDCs are also eligible for loans with special terms for development, which include ‘Official Development Assistance’ (ODA) or ‘aid’.
Botswana is the first country to achieve graduation in 1994. Its strong economic performance driven by its diamond mining industry and investments in education and infrastructure was a major reason.