Least Developed Country’ status

 Least Developed Country’ status

• Context: Bhutan will become the seventh nation to graduate from the United Nations (UN) list of Least Developed Countries (LDC).

What is a Least Developed Country (LDC)?

• According to the UN, an LDC is defined as “a country that exhibits the lowest indicators of socioeconomic development, with low levels of income, human capital and economic diversification, high levels of economic vulnerability, and a population that is disproportionately reliant on agriculture, natural resources, and primary commodities.”

 The UN identifies three criteria for a country to be classified as an LDC:

• It must have a gross national income (GNI) per capita below the threshold of USD 1,230 over a three-year average.
• It must perform poorly on a composite human assets index based on indicators including nutrition, health and education.
• The country must demonstrate economic vulnerability such as being prone to natural disasters and possessing structural economic constraints.

How does a country get off the LDC list?

• A nation must have a GNI per capita of at least USD 1,242 for two 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 like natural catastrophes or shifts in commodity prices in order to pass the economic vulnerability test.

Advantages of being an LDC

• Being an LDC confers certain economic benefits to the listed 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 loans with a lower interest rate and a longer repayment time than those given to other nations.  

Practice Questions for Prelims

Consider the following statements:
1. WTO does not define any country as a developed or developing country. Members are free to define themselves
2. WTO recognises least developed countries (LDC) relying on classification that is reviewed every five years.
3. China is currently under Developed Country tag.

Which of the given statements is/are incorrect?
a) 1 only
b) 3 only
c) 2 and 3 only
d) 1 and 2 only

Ans. c)

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