This study sheds light on the graduation record of Least Developed Countries (LDCs) by analysing the effectiveness of existing trade-related support measures for graduating and graduated countries, particularly in the context of the WTO. It raises concerns over the reluctance of some LDCs to graduate, from fear of losing LDC-specific ingternational support measures. To ensure a smooth transition, the study suggests that supporting graduating countries with additional and targeted measures would create incentives for them to graduate while helping them achieve a soft-landing as middle-income economies. It proposes a set of principles that could be used to guide the formulation of such support measures.
In November 1971, the United Nations General Assembly established a special category for the “least developed” of developing countries with a view to supporting their development through specifically targeted International Support Measures (ISMs). The decision signalled the commitment of the international community to ensure that countries that suffer from structural impediments, and lack of resources and skills are not disadvantaged in their efforts to attain growth, diversify their economies and integrate into the global economic system. The support to LDCs is framed through a decennial Programme of Action that identifies priority areas and the goals to be achieved by LDCs within a decade. In 2021, the UN will organize the Fifth UN Conference on Least Developed Countries (LDCs) to review the current Programme of Action for the period 2011- 2021 (the Istanbul Programme of Action – IPoA) and decide on the next programme covering the period 2021-2030. This event will provide an opportunity to review achievements under the IPoA, particularly the most ambitious but seminal goal of “enabling half the number of least developed countries to meet the criteria for graduation by 2020”. It will also be an occasion for celebrating the fiftieth anniversary of the establishment of the LDC category and reviewing the progress made in five decades of international support to the LDCs.
Drawing from the wide range of literature available on LDCs, this paper sheds light on LDC graduation record and the effectiveness of the existing trade-related support measures for graduating and graduated countries, particularly in the context of the WTO. The paper argues that LDCs’ record on graduation from the category has been generally poor, especially in the four decades of the category’s existence. However, there has been some improvement in the current decade, although it is evident that the target of enabling half the number of LDCs to meet the criteria for graduation by 2020 set in the IPoA will not be achieved. More worrying is the reluctance of some countries to graduate from the LDC category despite meeting the criteria for graduation and the recommendation by the UN General Assembly (GA) that they should exit the list of LDCs. The paper argues that a key factor behind their reluctance is the fear of losing LDC- specific ISMs and the lack of clarity and a systemic approach to the existing mechanism for smooth transition. It argues, furthermore, that supporting graduating countries with additional and targeted measures would create the incentive to graduate and enable graduating countries to adjust to the withdrawal of LDC-specific ISMs and achieve a soft-landing as middle-income economies. To that end, the paper suggests a set of principles that could be used to guide the formulation of the support measures required for post-graduation soft-landing.