Chapter four
criteria for entering the Least Developed Countries (LDC)
1. Income Criterion
2. Human Assets Index (HAI)
3. Economic and Environmental Vulnerability Index (EVI)
– pathway for graduation from Least Developed Country (LDC) status, as defined by the
United Nations, involves a structured and multi-step process based on clear eligibility
criteria and review mechanisms.
Eligibility Criteria
Income Criterion GNI per capita must exceed a defined
threshold (e.g., $1,306 in 2024, subject to
updates).
Human Assets Index (HAI) Measures health and education levels
(includes child mortality, nutrition, school
enrollment).
Economic and Environmental Vulnerability Measures structural vulnerability to
Index (EVI) economic and environmental shocks.
2. Triennial Reviews and Graduation Recommendation
– Every three years, the CDP conducts a review of LDCs.
– If a country meets the criteria in two consecutive reviews, it becomes eligible for
graduation.
– The CDP may recommend graduation based on strong performance even if one criterion
is only marginally met.
3. GRADUATION PROCESS
Recommendation CDP recommends graduation to the UN
Economic and Social Council (ECOSOC).
Endorsement ECOSOC endorses the recommendation.
General Assembly Approval The UN General Assembly formally confirms
the graduation decision.
Preparation Period (3 years) Country prepares for graduation with UN
support and a transition strategy.
Official Graduation The country is removed from the LDC list.
COMMON CHARACTERISTICS OF LDCS:
Lower levels of living and productivity
Lower levels of human capital investment (health-care, education, skills)
Higher levels of income inequality and poverty
Higher population growth rates
Greater social fractionalization
Larger rural population, but rapid rural-urban migration
Lower levels of industrialization and manufactured exports
Adverse geography and resource endowment
Underdeveloped financial and other markets
Colonial legacy and external dependence
Structural Diversities in the Less Developed Countries
- Natural Resource Endowment
- Colonial History
- Cultural and Ethnic Diversity
- Political Systems
- Level of Integration in Global Economy
Geographic Location
Major Obstacles to Economic Development
- Lack of Capital
- Debt Burden
- Poor Infrastructure
- Weak Institutions
- Inadequate Human Capital
- Political Instability and Corruption
- Overdependence on a Few Exports
- Environmental Degradation
What Low-Income Countries Today Differ from Developed Countries in Their Earlier Stages
1. Physical and human resource endowments
2. Per capita incomes and levels of GDP
3. Climate
4. Population size, distribution, and growth
5. Historic role of international migration
6. International trade benefits
7. Scientific innovation & technological advancement
8. Effectiveness of domestic institutions
Meaning and Characteristics of Modern Economic Growth
Sustained Increase in Income per Capita
- Structural Transformation
- Technological Innovation
- Capital Accumulation
- Urbanization
- Global Integration
Chapter Six