Least-Developed Countries
94 Views · Updated December 5, 2024
Least Developed Countries (LDCs) are nations that are at the lowest levels of economic development, income, health, and education globally. The United Nations uses a set of criteria to identify these countries, including Gross National Income (GNI) per capita, the Human Assets Index (HAI), and the Economic Vulnerability Index (EVI). These countries typically face severe poverty, significant infrastructure deficits, very high unemployment rates, and extremely low living standards. The economies of LDCs primarily rely on agriculture and the export of primary products, with very underdeveloped industrial and service sectors. The international community often provides various forms of development aid and support to these countries to help improve their economic conditions and living standards.
Definition
Least Developed Countries (LDCs) are nations that exhibit the lowest indicators of socioeconomic development, with low income, weak human assets, and high economic vulnerability. The United Nations uses criteria such as Gross National Income (GNI) per capita, Human Assets Index (HAI), and Economic Vulnerability Index (EVI) to identify these countries. LDCs often face severe poverty, inadequate infrastructure, high unemployment rates, and low living standards.
Origin
The concept of Least Developed Countries was first introduced by the United Nations in 1971 to identify and assist countries that are most disadvantaged in terms of economic and social development. The initial list included 25 countries, and it has been updated over time to reflect changes in the global economic and social landscape.
Categories and Features
LDCs are typically categorized into three main types: low-income countries, countries with low human assets, and countries with high economic vulnerability. Low-income countries are characterized by extremely low GNI per capita; countries with low human assets have poor health and education indicators; and countries with high economic vulnerability face risks such as natural disasters and economic instability. The economies of LDCs mainly rely on agriculture and the export of primary products, with underdeveloped industrial and service sectors.
Case Studies
Bangladesh was once classified as an LDC but successfully improved its economic and social development through a series of reforms and international aid, graduating from the LDC list in 2026. Another example is Ethiopia, which has been working to improve its economic situation through agricultural development and infrastructure projects, although it still faces significant challenges.
Common Issues
Investors often worry about political instability and economic risks when considering LDCs. While these countries may offer high-return investment opportunities, they also come with high risks. Investors should carefully assess these risks and consider diversifying their investments to mitigate them.
Disclaimer: This content is for informational and educational purposes only and does not constitute a recommendation and endorsement of any specific investment or investment strategy.