May 1, 2023

Overcoming the Least Developed Countries (LDC) Conundrum

Tetet Nera-Lauron

In 1971 the United Nations identified 24 of the most fragile and vulnerable countries and created the designation Least Developed Countries (LDCs). To be considered an LDC, a country has to have gross national income per capita of about $1,000 a year, low levels of human development, and high levels of economic vulnerability. More than five decades later, there are now 46 countries on the list of LDCs, with a total population of more than 1 billion people, or roughly 13% of global population. More than half of these people live in extreme poverty, meaning they live on less than $1.90 a day. The LDCs account for barely 1.3% of total global production and around 1% of world trade. These countries show that a significant proportion of the world’s population has been “left behind” by the Western development process. They face a long road to achieve economic stability, and an even longer road before their people no longer face poverty and exclusion.

As stated in the Sustainable Development Report 2022, the LDCs are the worst performers in terms of progress toward achieving the SDGs. This is due to the fact that they have been hit hardest by the multiple crises including the COVID-19 pandemic, climate crisis, growing inequalities, rising debt burdens and economic shocks. This makes development one of the most urgent human rights imperatives, especially in the least developed countries.

The 5th United Nations Conference on the Least Developed Countries (LDC5) took place in Doha, Qatar from March 5-9th, 2023 with the theme “From Potential to Prosperity.” The once-in-a-decade summit took place with just under eight years to achieve the Sustainable Development Goals. It concluded with the adoption of a political declaration by world leaders to set into motion another 10-year plan known as the Doha Program of Action (DPoA 2022-2031) to put the world’s most vulnerable countries back on track to achieving the SDGs.

The DPoA consists of six key focus areas including eradicating poverty, leveraging the potential of science and technology to fight against multidimensional vulnerabilities, addressing climate change, environmental degradation, recovering from the pandemic and building resilience against future shocks, including overcoming the socio-economic fallouts following the war in Ukraine. Advances toward irreversible and sustainable “graduation” from LDC status is the expected outcome of the DPoA.


40 years of broken promises and failed commitments

The United Nations Economic and Social Council (ECOSOC) reviews countries’ status every three years and identifies those in need of targeted interventions to address the structural problems they face. Four UN conferences on the LDCs have been convened so far: Paris (1981 and 1990), Brussels (2001) and Istanbul (2011), with each resulting in a decade-long framework for international cooperation. These frameworks include International Support Measures (ISMs) which provide special concessions on loans and grants, preferential terms of international trade, and support for participation in international development forums. 

LDCs’ continuing vulnerability confirms the very unimpressive results of the past 40 years. Only six countries have “graduated” from the list: Botswana (1994), Cabo Verde (2007), Maldives (2011), Samoa (2014), Equatorial Guinea (2017) and Vanuatu (2021). Despite supposedly being a framework of shared development objectives and differentiated responsibilities, a review of the outcomes noted many commitments unrealized, with support measures largely insufficient. While LDCs have the primary responsibility to ensure their graduation, the international community, a.k.a. development partners, have actually failed to make good on their promised support.

The problems go beyond unfulfilled commitments, and LDCs need more than financing to deal with their myriad challenges.

UN Secretary General Antonio Guterres said “the global financial system has been extremely unfair” to LDCs. Speaking at the opening of the LDC5 in Qatar, he said the world’s most vulnerable countries have been handed “the rawest of deals.“ The income and wealth generated in LDCs leave LDCs through both legal and illicit financial flows, stripping away much-needed resources for development efforts. In the last two decades alone, more financial resources have gone from developing to developed countries, amounting to $496 billion. This far exceeds the $97 billion received in aid from developed countries. The poorest countries now spend over a tenth of their export revenues, or $9 trillion, just to pay the interests on external debt. LDCs are in a debt trap; they must obtain new loans just to finance their debt servicing obligations. About 60% of LDCs are already in debt distress, a situation that seriously undermines a country’s ability to provide public services, undertake climate action and ensure human rights because of staggering debt payments.

At the LDC5 Civil Society Forum, UN Special Adviser on Africa Cristina Duarte said that the 33 African LDCs find themselves trapped by three paradoxes. They are: rich in economic and financial resources, but are drowning in debt; energy rich, but facing an energy crisis; and abundant in agricultural resources but have faced food insecurity in the past 50 years. She stressed the need to address of the root causes of LDCs’ structural issues, and cautioned against “short-term or even false solutions.”

The LDCs have a clear set of asks to enable them to overcome the multiple crises and forge ahead. These include:

  • comprehensive debt cancellation;
  • an increase in aid and other resource allocations for LDCs;
  • technology transfer and free licenses for vaccines; and 
  • a fundamental reform of the international financial architecture.

These would allow them greater freedom to grow their economies, create decent jobs, generate resources internally and provide social protection for their citizens. The Doha Program of Action, however, reflects virtually none of this. Its 309 paragraphs talk about many of the key problems facing LDCs, but have very little about actually addressing these from an LDC point of view. Further commitments made at the LDC5 Conference totally miss out on tackling any of the structural changes demanded.


From “graduation” to transformation 

The LDC group is the only body whose sole purpose is to end itself. The poorest economies aspire to graduate from the LDC category as it shows the extent of economic and social progress achieved, and reflects a country’s resilience to various types of financial and climate shocks. However, it is possible that, despite having met the criteria for graduation, structural weaknesses in their economies still afflict LDCs.

The cost of graduating out of the LDC category will therefore be high, impacting international support measures offered to them. For instance, there will be a phase out of certain exemptions on trade and intellectual property rules. They will also fall out of LDC-specific aid allocations and other preferential terms for their export products. With the global polycrisis and the continuing effect of the COVID-19 pandemic hitting the world’s poorest countries the hardest, these will be additional challenges post-graduation. Without a real transformation in their economies, an abrupt removal of support would have negative repercussions, and there is a real danger of slipping back on to the LDC list. The same discussions of the last 40 years about LDC vulnerability will just continue.

Demba Moussa Dembele, Chair of the civil society LDC Watch, cautions “the pursuit of old and failed policies may only worsen the economic and social situation of LDCs in a way never seen before. A radical change in approach to LDCs’ problems is required, both in terms of economic policies and in international cooperation.”

The international community is failing to address the structural roots of LDC underdevelopment:  weak production capacity, lack of financial resources, and other negative effects from centuries of colonial plunder. Our capitalistic society continues to disadvantage the world’s poorest countries in favor of the global North, its institutions and its corporations.

LDCs hardly have a voice in major international institutions, leaving them little to no power to shape decision-making. Collectively, the LDCs only have 3.5% voting rights at the International Monetary Fund that observes the “one dollar, one vote” set-up, meaning richer countries votes account for a greater proportion of the vote share. This unequal, undemocratic system works to further marginalize LDCs particularly in light of the conditions imposed for borrowing. Moreover, the World Bank locks debtor countries in a donor-driven reform agenda despite its harmful impacts on the lives and livelihoods of people. The Organization for Economic Cooperation (OECD) aid regime actually benefits wealthy donors more as resources flow back to transnational corporations engaged in providing mega-infrastructure projects and others. Or how only because of intense public campaigning that it was only very recently that the World Trade Organization agreed to temporarily waive intellectual property patents on COVID vaccines, but still postponing discussions to extend the waiver to treatments and tests.

There is a need to think through the architecture in which LDCs find themselves in. It was set up to create structural inequalities so that certain countries remain where they are in terms of the global power structure. What LDCs need the most is the policy space to challenge the dominant narrative of a market-and-private sector-led development as a way out. A paradigm shift that will help LDCs reclaim their fiscal sovereignty is key to making graduation sustainable and transformative.

Destination: a rights-based future

Multilateral political decision-making and norm setting needs to be more democratic. Despite its shortcomings, the United Nations remains the place where every country has one vote, not necessarily determined by how much money one puts in.

Since its inception in 1945, human rights is at the core of the United Nation’s work with the adoption of the UN Charter. Prior to 1997, however, most UN development agencies pursued a “basic needs” approach where beneficiaries’ basic requirements were identified and supported through service delivery. A human rights-based approach became the cornerstone of reform efforts in 1997 to guide international development cooperation. This affirmed State obligations established by international law to enable the realization of civil, cultural, economic, political and social rights at global, regional, sub-regional and national levels.

The UN Declaration on the Right to Development  (RTD) adopted in 1986 offers a comprehensive framework and approach to policies and programs including the process of economic growth consistent with human rights standards. Negotiations are ongoing for a Convention on the Right to Development that contains binding, concrete, detailed and implementable norms for the realization of the right to development.

As is evident from the wording, RTD is both an individual and collective right. Grounded on the principles of social justice, the RTD espouses the fair (re)distribution of resources including public services such as health care, education and social security as well as the ability to make a living through decent work. Another important element of the RTD is self-determination, i.e. States’ and peoples’ sovereignty over the management and utilization of their natural resources, including in the formulation and implementation of development programs.

Worth noting that the draft Convention contains a commitment to foster international solidarity and cooperation in many areas of concern to developing countries, including technology transfer, access to essential medicines, debt sustainability, aid, international trade and policy space in decision-making. A binding Convention on the Right to Development would be an important impetus for reforming the international economic architecture to address long-standing structural inequities that have disadvantaged LDCs for so long. But then again, elements of the RTD are already enshrined in many human rights treaties.

Human rights obligations of States, particularly in the area of economic, social and cultural rights, have the potential to protect the world’s poorest economies from macro-economic policy conditions that are detrimental to their countries and peoples. Additionally, human rights as the foundation of national development policy-making and implementation would also have an overall positive outcome. A strong human rights orientation will allow for the creation, alignment and coherence of national and international policies that will support rights-based national development in the LDC countries.

Despite these however, many developing countries until recently have been apprehensive about pursuing a human rights foundation for development policy as this has been used to justify economic conditionality for accessing aid, trade, investments and finance. There is indeed basis for this concern, although developed countries are also accountable for being remiss in upholding their obligations to enable the realization of human rights for all, including the right to development, in pursuit of their international economic development agenda.

A human rights framework is a key structural entry point for LDCs to review and improve on the implementation of international support measures, especially in regards to aid, debt, international trade and investments. Major aspects in the current global finance and trade architecture increasingly undermine the ability of LDCs to deliver on the commitments they have made to ensure fundamental human rights such as food, housing, healthcare, education and decent work.  Even the commitment to achieve gender equality and the empowerment of women and girls runs the risk of failure if left unresolved. Human rights can help safeguard against debt, trade, investment, and finance policies eroding the fundamental human rights of people and communities that the LDC governments pledged to protect.

A truly human rights-based approach to international development cooperation has the potential to usher in new cooperative arrangements among countries and peoples. International solidarity and equity will guide the observance of the principles of national sovereignty, self-determination, equality, and mutual benefit. This will democratize global economic governance. This could result in the rescinding of trade and investment treaties that amplify the power of transnational corporations and curtail efforts of Southern countries to pursue their sovereign path to development. It could repudiate the global debt problem that has crippled the global South due to lender-imposed neo-liberal policies of privatization, liberalization, deregulation and austerity. And a human rights-based approach could stop the dominance of international financial institutions that are under the control of a few powerful countries.

This is the needed foundation for the world’s poorest countries and peoples to realize their right to development.