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News from New York: Least Developed Counties (LDCs)

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Challenges of the 21st Century-7
The Fate of the World’s 49 Poorest Countries

Nepal needs 55 years and more to be out of the Least Developed Countries (LDCs) List

New York, July 17, 2008- New York, July 17, 2008- There is an elite group composed of the world’s richest and most industrialized countries. It is called G8 or The Group of Eight. It’s members are Canada, France, Germany, Italy, Japan, Russia, the United Kingdom, the United States, and the European Union. There is another category of countries known as countries of emerging economies or economic super power nations of the future, like Brazil, China and India.

But there are also the “unfortunate” 49 poorest countries of the world, known as the Least Developed Countries or LDCs, a term coined by United Nations and one of its main bodies, The United Nations Conference on Trade and Development (UNCTAD).

According to UNCTAD’s “The Least Developed Countries Report 2008: Growth, poverty and the terms of the development partnership” which was released today, those 49 countries are distributed among the following regions:
Africa (33): Angola, Benin, Burkina Faso, Burundi, Central African Republic, Chad, Comoros, Democratic Republic of the Congo, Djibouti, Equatorial Guinea, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Niger, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone, Somalia, Sudan, Togo, Uganda, United Republic of Tanzania and Zambia;
Asia (10): Afghanistan, Bangladesh, Bhutan, Cambodia, Lao People´s Democratic Republic, Maldives, Myanmar, Nepal, Timor-Leste and Yemen;
Pacific (5): Kiribati, Samoa, Solomon Islands, Tuvalu and Vanuatu;
Caribbean (1): Haiti.

And sadly, Nepal, my home country, is one of them.

How does UN enlist or group these poorest of the poor countries in the Least Developed Countries (LDCs) category?

UNCTAD states in its press release that “the list of LDCs is reviewed every three years by the Economic and Social Council (ECOSOC) of the United Nations based on recommendations by the Committee for Development Policy (CDP).

For its 2006 review of the list, the CDP determined that a country may be designated as an LDC if it meets the following three criteria:

A "low-income" criterion, based on the gross national income (GNI) per capita (a 3-year average, 2002-2004), with thresholds of US$750 for cases of addition to the list;

A "human assets" criterion based on a composite index (the Human Assets Index) which consists of indicators on nutrition, health, school enrolment and literacy;

An "economic vulnerability" criterion based on a composite index (the Economic Vulnerability Index) which includes indicators on natural disasters, trade shocks; exposure to shocks, economic smallness, and economic remoteness.

For all three criteria, different thresholds are used for addition to and graduation from the list of LDCs. A country will qualify to be added to the list if it meets the three criteria and does not have a population greater than 75 million. A country will qualify for graduation from LDC status if it has met graduation thresholds under at least two of the three criteria in at least two consecutive reviews of the list.
 
The LDC category was established in 1971. Since then, only two countries (Botswana and Cape Verde) have "graduated" from the category. Cape Verde graduated in December 2007.”

Where does Nepal Stand?

Nepal ranked at 142nd of total 177 countries in the United Nations Development Programme (UNDP)’s Human Development Index 2007/2008. Nepal is ahead of 28 of its 49 fellow LDCs in this index. According to UNDP it take measures of social progress, economics, efficiency, equity, participation and freedom, sustainability and human security to determine the Human Development Index of each country.

Nepal’s Misery: 50 Years and more to get out of LDCs?

UNCTAD’s report estimates that Nepal and 11 other least developed countries (LDCs) will reach the income threshold in more than 50 years. Joining in Nepal’s least team nations are: Gambia, Democratic Republic of the Congo, Rwanda, Madagascar, Malawi, Liberia, Niger, Central African Republic, Guinea-Bissau, Haiti and Benin. Nepal is listed just above Benin, the last country on the list.

How is calculated growth and graduation from LDCs status?

UNCTAD says "The recent high rates of the LDCs’ GDP growth raise the issue of how this affects their graduation prospects. It must be stressed that decisions about graduation from the LDC category — which the United Nations Economic and Social Council reviews every three years based on recommendations provided by the Committee for Development Policy – are based on three criteria: (a) low income; (b) human assets; and (c) economic vulnerability. A country needs to meet at least two of the three graduation thresholds to qualify for graduation."

Is Poverty LDCs’ misery?

UNCTAD report estimates that there are 277 million people living in extreme poverty in the least developed countries (LDCs). This means that 36% of the population of these countries lived on an income of less than US$1 a day in 2005.

The report further explains that apart from its extreme form, there is also a wider form of poverty, total poverty, which includes all those who live on less than US$2 a day ( in terms of PPP (Purchasing Power Parity) of 1985). Considering this higher poverty threshold, three fourths of the population in LDCs lived in poverty in 2005. This means the vast majority of the populations in these countries did not have enough income to meet basic needs of food, shelter, health, education, and other material aspects of well-being. However, the 2005 total poverty rate represents a decline from a peak of 81% in 1994.

“The number of people living in poverty in LDCs actually grew from 2000 to 2005. The population living on less than US$1 a day rose from 265 million to 277 million and those living on less than $2 a day rose from 535 million to 581 million. Although poverty rates have been falling, the total population of the LDCs has been expanding quickly, and this has resulted in a rising number of poor.”

The 581 million poor living in the LDCs on less than $2 a day in 2005 were distributed as follows: 375 million in Africa, 204 million in Asia and 2 million in island LDCs.

The UN Millennium Development Goals (MDGs) and LDCs

To meet the poverty targets set in the United Nations Millennium Development Goals, the report says that the LCDs collective poverty rate would have to fall to 20% in 2015. However, UNCTAD projections show that if present trends continue, these countries will reach a rate of 33% in 2015. This means that there will be 116 million more people living in extreme poverty by 2015 than there would have been had the MDG target been met.

According to the report many poor in LDCs spend 70-80% of their incomes on food. They are therefore being hit even harder by the recent sharp increases in domestic food prices.


The report indicates that 36 out of 50 LDCs were net food importers in 2004-2006. This means that higher international food prices will result in rising food import bills, in most cases widening already existing trade deficits.

The UNCTAD report also highlights that the poor capacity of most LDCs to produce food for their populations is partly due to long-standing neglect of agriculture by policymakers. For example, public spending on agricultural research and development corresponded to just 4.2% of agricultural GDP in 2004, less than half the level of other developing countries (10.7%).

In a press release UNCTAD says that as of June 2008, eight LDCs had experienced food riots due to sharply increased food costs: Burkina Faso, Guinea, Haiti, Mauritania, Mozambique, Senegal, Somalia and Yemen.

What are the Millennium Development Goals?

"The Millennium Development Goals (MDGs) are eight goals to be achieved by 2015 that respond to the world's main development challenges. The MDGs are drawn from the actions and targets contained in the Millennium Declaration that was adopted by 189 nations-and signed by 147 heads of state and governments during the UN Millennium Summit in September 2000.

The eight MDGs break down into 21 quantifiable targets that are measured by 60 indicators.

Goal 1: Eradicate extreme poverty and hunger
Goal 2: Achieve universal primary education
Goal 3: Promote gender equality and empower women
Goal 4: Reduce child mortality
Goal 5: Improve maternal health
Goal 6: Combat HIV/AIDS, malaria and other diseases
Goal 7: Ensure environmental sustainability
Goal 8: Develop a Global Partnership for Development."
 Read more» Source: undp.org

Is there anyone to fund LDCs ?

LDCs have few takers (givers!) in terms of foreign direct investment (FDI). In 2006 just 0.7% went to these countries, below the 1.9% of 2003. In 2006, this amounted to US$ 9.4 billion in foreign investment in LDCs.

But the good news is that the remittances of LDC nationals working abroad to their home countries reached the record level of US$13 billion in 2006. The report says ”Remittances are particularly important for Haiti, Lesotho, and Nepal - where they amount to more than 15% of gross national income (GNI) - and for Cape Verde, Gambia, Guinea-Bissau and Uganda - where they correspond to between 9% and 13% of GNI. Overall remittances to all LDCs amounted to 3.9% of GNI, more than double the share of other developing countries (1.7%).

The greatest recipients of workers´ remittances among the LDCs are Bangladesh - which in 2006 received US $5.5 billion - and Yemen, Nepal and the Comoros - which received more than US$1 billion each.”

According to the data published in the report Nepal received USD $ 1.211 billion dollars remittances in 2006.

-Pradeep Thapa Magar, New York. Comments: 551-358-7726

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