November 23, 2017//-The Committee for Development Policy (CDP), a group of independent experts reporting to the United Nations Economic and Social Council (ECOSOC) says that five countries have so far graduated from the Least Developed Country (LDC) status to developing countries.
These countries are: Botswana in December 1994, Cape Verde in December 2007, Maldives in January 2011, Samoa in January 2014 and Equatorial Guinea in June 2017.
This is contained the Least Developed Countries Report 2017 titled ‘Transformational Energy Access’.
In a resolution adopted in December 2015, the General Assembly endorsed the CDP recommendation of 2012 to graduate Vanuatu. In doing so, the Assembly took into consideration the setback that Vanuatu had suffered as a result of Tropical Cyclone Pam in March 2015.
The General Assembly decided, on an exceptional basis, to delay the country’s graduation to December 2020.
The Committee’s 2015 recommendation to graduate Angola was endorsed by the General Assembly in February 2016 through a resolution that set February 2021 as the country’s graduation date. This decision was an exceptional measure to take into account the high vulnerability of the commodity-dependent Angolan economy to price fluctuations.
In a June 2015 resolution, ECOSOC recalled the CDP’s 2012 recommendation to graduate Tuvalu from LDC status, and deferred to 2018 the Council’s consideration of this potential graduation case.
Once a recommendation to graduate a country has been endorsed by ECOSOC and the General Assembly, the graduating country benefits from a grace period (normally three years) before graduation effectively takes place.
This period, during which the country remains an LDC, is designed to enable the graduating State and its development and trading partners to agree on a “smooth transition” strategy, so that the planned loss of LDC status does not disrupt the country’s socioeconomic progress.
A smooth transition measure generally implies extending to the graduated country, for a number of years after graduation, a concession to which the country had been entitled by virtue of its LDC status.
Graduation of Equatorial Guinea
Equatorial Guinea was the fifth country to graduate (as mentioned above), but the first ever to do so based on the “income-only” criterion. Its GNI per capita – $16,089 – was almost six times the income-only graduation threshold of $2,824.
Notwithstanding such an impressive level of per capita income – the highest on the African continent – substantial challenges remain for Equatorial Guinea on its long road to sustainable development and the achievement of the Sustainable Development Goals (SDGs), according to the report.
The country did not meet the graduation threshold for the HAI or the EVI in the last review of the LDC category. Equatorial Guinea faces challenges, such as high concentration of its economy in the oil sector, and associated difficulties in diversifying production and exports.
The extractive industry is by far the largest in the economy, accounting for 41 per cent of GDP (together with utilities industries) in 2014. This is double the share of
manufacturing and is also higher than the contribution of the services sector to GDP (28 per cent). Agriculture, by contrast, contributes just 1 per cent of the country’s economic activities.
This high degree of concentration is reflected in the country’s exports. In 2015, Equatorial Guinea had an exports product concentration index of 0.69, compared to an average for LDCs of only 0.26.
There were 37 other LDCs with more diversified merchandise exports that same year. This level of export concentration makes the country highly vulnerable to oil price-related and other external shocks.
A key priority for Equatorial Guinea is to accelerate structural transformation significantly in order to diversify its economic base and reduce dependence on oil exports, as otherwise current high levels of income may not be sustained.
Known oil reserves are expected to be depleted by 2035. Oil-spurred economic growth has so far failed to translate into substantial employment creation. With unemployment at 22 per cent, job creation should be a priority to ensure a more equitable distribution of oil-related wealth.
To achieve economic and social progress, the country will also have to invest its oil rents productively in infrastructure and human-resource development,
matched by an upgrading of the agricultural sector, diversification of rural activities and proactive efforts to develop new export sectors and sources of job growth.
What are the least developed countries?
47 countries
Currently designated by the United Nations as “least developed countries” (LDCs).
These are: Afghanistan, Angola, Bangladesh, Benin, Bhutan, Burkina Faso, Burundi, Cambodia, the Central African
Republic, Chad, the Comoros, the Democratic Republic of the Congo, Djibouti, Eritrea, Ethiopia, the Gambia,
Guinea, Guinea-Bissau, Haiti, Kiribati, the Lao People’s Democratic Republic, Lesotho, Liberia, Madagascar,
Malawi, Mali, Mauritania, Mozambique, Myanmar, Nepal, the Niger, Rwanda, Sao Tome and Principe, Senegal,
Sierra Leone, Solomon Islands, Somalia, South Sudan, the Sudan, Timor-Leste, Togo, Tuvalu, Uganda, the United
Republic of Tanzania, Vanuatu, Yemen and Zambia.
Every 3 years
The list of LDCs is reviewed every three years by the Committee for Development Policy (CDP), a group of independent experts reporting to the United Nations Economic and Social Council (ECOSOC). The CDP, in its report to ECOSOC, may recommend countries for addition to, or graduation from, the list of LDCs.
The following three criteria were used by the CDP in the latest review of the list, in March 2015:
A per capita income criterion
based on a three-year average estimate of the gross national income (GNI) per
capita, with a threshold of $1,035 for identifying possible cases of addition to the list, and a threshold of $1,242 for possible cases of graduation from LDC status;
A human assets criterion
involving a composite index (the Human Assets Index, or HAI) based on indicators
of: (i) nutrition (percentage of undernourished population); (ii) health (child mortality ratio); (iii) school enrolment
(gross secondary school enrolment ratio); and (iv) literacy (adult literacy ratio);
An economic vulnerability criterion
It is involved a composite index (the Economic Vulnerability Index, or EVI) based on indicators of: natural shocks (index of instability of agricultural production; share of victims of natural disasters); trade-related shocks (index of instability of exports of goods and services); physical exposure to shocks (share of population living in low-lying areas); economic exposure to shocks (share of agriculture, forestry and fisheries in gross domestic product (GDP); index of merchandise export concentration); smallness (population in logarithm); and remoteness (index of remoteness).
For all three criteria, different thresholds are used for identifying cases of addition to the list of LDCs, and cases of graduation from LDC status.
A country will qualify to be added to the list if it meets the thresholds for addition
under all three criteria and does not have a population greater than 75 million. Qualification for addition to the list will effectively lead to LDC status only if the Government of the relevant country accepts this status.
A country will normally qualify for graduation if it has met the graduation thresholds under at least two of the three criteria in at least two consecutive triennial reviews of the list.
However, if the three-year average per capita GNI of an LDC has risen to a level at least double the graduation threshold, and if this performance is considered durable, the country will be deemed eligible for graduation regardless of its score under the other two criteria. This rule is commonly referred to as the “income-only” graduation rule.
In a resolution adopted in December 2015, the General Assembly endorsed the CDP recommendation of 2012 to graduate Vanuatu. In doing so, the Assembly took into consideration the setback that Vanuatu had suffered as a result of Tropical Cyclone Pam in March 2015. The General Assembly decided, on an exceptional basis, to delay the country’s graduation to December 2020.
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