Least Developed Countries Report 2018 – UNCTAD

Development – “Least Developed Countries”

Least Developed Countries Report 2018
Entrepreneurship for structural transformation: Beyond business as usual
UNCTAD 2018 :: 190 pages
Nowhere else in the world is radical economic transformation more urgent than in the least developed countries, which have the challenge of accumulating productive capacities at an unprecedented speed, in the face of the rapid reorientation of global production and digital transformation, to achieve the Sustainable Development Goals by 2030.

At the centre of radical economic change is transformational entrepreneurship. The Least Developed Countries Report 2018: Entrepreneurship for Structural Transformation – Beyond Business as Usual demonstrates how transformational entrepreneurship generates many of the social and economic innovations that underpin sustainable development. Transformational entrepreneurs create new products and business models; they offer dignified employment; their success leads to broader improvements in the quality of life and even bolsters fiscal sustainability. Dynamic entrepreneurs also make a greater contribution to wealth accumulation and distribution.

In the least developed countries, however, underdevelopment and unfavourable forms of participation in global trade constrain the emergence of the dynamic, opportunity-seeking entrepreneurs needed for structural transformation. The dearth of dynamic local entrepreneurship endangers structural transformation and ultimately weakens national ownership and the potential impact of attaining the Sustainable Development Goals in the least developed countries.

The weakness of dynamic entrepreneurship has important implications in the least developed countries, where entrepreneurship policy is often mobilized as an alternative to unemployment and a remedy for structural inequalities. This type of policy is often an imperfect way of fostering high-impact and dynamic entrepreneurship, which requires a distinct and strategic approach and deliberate long-term nurturing that entail coordinated and coherent action and smart policies across a range of relevant policy areas.

The Least Developed Countries Report 2018 presents a compelling case for a structural transformation-centred approach to entrepreneurship policy in the least developed countries. The report underscores entrepreneurship policy based on a fundamental recognition of disparities in the contribution of different types of entrepreneurship to structural transformation and wealth creation. It establishes a more active and proactive stance for the State in steering the emergence of dynamic and transformational local entrepreneurship. Importantly, it calls upon the least developed countries not to overlook the pivotal and complementary role played by large enterprises, alongside medium-sized and smaller enterprises, with a view to the least developed countries formulating deliberate strategies to nurture entrepreneurship that has impact. By encouraging least developed country policymakers to
avoid policies that might undervalue the benefits of entrepreneurship, this report makes an invaluable contribution to least developed country efforts to add value to their implementation of the 2030 Agenda for Sustainable Development.
Mukhisa Kituyi
Secretary-General of UNCTAD

What are the Least Developed Countries?
Geneva, Switzerland, (20 November 2018)
There are 47 countries currently designated by the United Nations as Least Developed Countries (LDCs) to which UNCTAD devotes its annual Least Developed Countries Report published today. They are:
Afghanistan, Angola, Bangladesh, Benin, Bhutan, Burkina Faso, Burundi, Cambodia, Central African Republic, Chad, Comoros, the Democratic Republic of the Congo, Djibouti, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, Lao People’s Democratic Republic, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Nepal, Niger, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone, Solomon Islands, Somalia, South Sudan, the Sudan, Timor-Leste, Togo, Tuvalu, Uganda, United Republic of Tanzania, Vanuatu, Yemen, Zambia.

This list is reviewed every three years by the Committee for Development Policy, a group of independent experts that reports to the United Nations Economic and Social Council (ECOSOC). In reporting to ECOSOC, the committee may recommend countries for addition to, or exclusion from (so-called “graduation” from), the list of LDCs.

The committee used per-capita income, human assets, and economic vulnerability criteria in its most recent review in March 2018 (see box below). For all three criteria, the committee uses different thresholds to identify countries to be added to the category and for countries which will graduate.

A country will qualify to be added if it meets the addition thresholds on 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 relevant country accepts this status.

A country will typically 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 triennial reviews of the list.

However, if the three-year average per-capita gross national income of a least developed country has risen to a level at least double the graduation threshold (i.e., $2,460), and if this performance is considered sustainable, the country will be deemed eligible for graduation regardless of its score under the other two criteria.

The overall graduation landscape following the March 2018 review comprises:
:: Five cases of graduation: Angola, Bhutan, Sao Tome and Principe, Solomon Islands and Vanuatu, of which two have a known graduation date: Vanuatu (December 2020) and Angola (February 2021);
:: Two hypothetical graduation cases, subject to a decision by member States: Kiribati and Tuvalu
:: Two cases in which the Committee for Development Policy deferred consideration of the question of graduation: Nepal and Timor-Leste
:: Three cases of pre-eligibility for graduation (and likely full eligibility in 2021): Bangladesh, the Lao People’s Democratic Republic and Myanmar

This means that as of 2018 there were 12 countries eligible or pre-eligible for graduation from LDCs. Adding these 12 qualifying cases to the two countries that have graduated since 2011 (Samoa and Equatorial Guinea) – and considering the addition of South Sudan in 2012 – the overall graduation performance by 2018 amounts to a 29% qualification ratio…