The year 2021 marked 50 years since the creation of the category of least developed countries (LDCs) by the United Nations General Assembly. This significant milestone follows the end of the Istanbul Programme of Action (IPoA) for the LDCs, which ran from 2011 to 2020. It also precedes the dawn of a new programme of action set to span the decade from 2022 to 2031, the implementation of which will largely coincide with the final decade of the 2030 Agenda for Sustainable Development.
During the past decade, and indeed since the inception of the LDC category, LDCs have faced an array of persistent – and often inter-related – challenges hindering their development. Their economies are beset with an assortment of binding structural constraints, such as a lack of economic diversification; often high levels of dependence on a few primary commodities; limited productive capacity, especially in manufacturing; low productivity levels; chronic shortages of human capital; and underdeveloped private sectors. Productive capacity in most LDCs is also undermined by significant economic infrastructure deficits. This is evident, for example, in unreliable energy infrastructure, a shortage of adequate road networks, and expensive and unreliable information and communications technology (ICT) infrastructure, which result in limited access to the internet and a lack of progress in digital transformation.
Underdeveloped digital infrastructure, limited technological capabilities and generally slow uptake of digital technologies, coupled with low levels of digital literacy and skills, have generated persistent digital divides within LDCs and between them and their more developed counterparts. As the growth of the digital economy continues to accelerate, and the world transitions to a more digital future, these digital divides are widening the gap between LDCs and other developing countries.
Many of the challenges facing LDCs are compounded by vulnerability to climate change and natural disasters. When taken together with weaknesses in areas related to governance and institutional development, as well as inadequate health and social protection systems, these manifold challenges manifest in an overall lack of resilience to external shocks and contribute to generally poor economic performance and developmental outcomes. Financial constraints stemming from very high levels of external debt and limited capacity to mobilise domestic financial resources have resulted in stark gaps in the availability of finance to address these challenges, build resilience and, ultimately, achieve developmental objectives.
Over the past decade, the IPoA’s ambitious policy agenda has sought to address many of these constraints by setting out a vision and strategy for sustainable development of the world’s LDCs. Compared with its predecessors,[1] the IPoA placed greater emphasis on strengthening the productive capacities of LDCs and promoting diversification to structurally transform their economies. It sought to overcome the myriad structural impediments in LDCs with a view to eradicating poverty and enabling graduation from the LDC category. These overarching aims were underpinned by broad objectives to achieve sustained, equitable and inclusive economic growth; build human capacities; reduce vulnerability; expand financial resources; and enhance good governance at all levels. The objectives of the IPoA were highly complementary to those of the Sustainable Development Goals (SDGs), with particularly strong alignment with the SDGs targeting the elimination of hunger (SDG 2), the generation of decent work opportunities and economic growth (SDG 8), the development of industry, innovation and infrastructure (SDG 9), greater peace and justice and strong institutions (SDG 16) and partnerships (SDG 17) (UNESCAP, 2021).
Efforts to achieve the IPoA’s objectives, goals and targets were made more difficult because its implementation took place amid a challenging global context. Periods of significant global upheaval buttressed both the beginning and the end of the IPoA implementation period. The IPoA was preceded by the global financial crisis, during which major distress in global financial markets and banking systems sparked a worldwide economic downturn, which lasted from 2007 to 2009. In turn, the emergence of the COVID-19 pandemic and its severe and far-reaching consequences for the global economy dominated the final year of the IPoA. In the intervening years, the persistence of unresolved trade and technology conflicts between the world’s two largest economies, the USA and China, a global trade slowdown, rising trade protectionism, the reconfiguring of supply chains, a productivity slowdown in many of the world’s developed economies, uncertainties about the outcome of Brexit negotiations between the UK and the EU, and rising inequality globally have all transpired to create an extremely challenging backdrop to what was already an uneven development trajectory for many LDCs.
These dynamics in the global economy have inevitably affected progress in addressing these challenges, and the economic fallout from the COVID-19 pandemic has only served to intensify many of the developmental constraints facing LDCs. Consequently, the LDC development agenda remains unfinished, with scope both for LDC governments to ramp up their efforts to advance structural transformation and build productive capacities and for their development partners in the international community to expand support measures directed to LDCs (UNCTAD, 2021c).
This report takes stock of the progress made and challenges encountered by LDCs during implementation of the IPoA, focusing on the 14 Commonwealth countries classified as LDCs between 2011 and 2020.[2] Given the emphasis in the IPoA on developing productive capacity and enhancing diversification as means to advance structural economic transformation, the report focuses primarily on the progress of Commonwealth LDCs over the past decade in those areas of the IPoA that relate most directly to the broader agenda of economic transformation. The report also looks ahead to opportunities to address the special needs of Commonwealth LDCs and to improve their trade and development prospects by building an ambitious new programme of action spanning the decade 2022-2031. With an eye on the Fifth United Nations Conference on the Least Developed Countries (LDC5) taking place from 23 to 27 January 2022, the report recommends specific international support measures to boost LDC development and proposes a 10-point plan of action highlighting priorities for Commonwealth LDCs. This is intended to guide and inform discussions at LDC5.
The remainder of the report is structured as follows. Chapter 2 reflects on the overall progress Commonwealth LDCs made in building productive capacity and transforming the structure of their economies under the IPoA, focusing on the years preceding the emergence of the COVID-19 pandemic. Chapter 3 takes a detailed look at the trade performance of Commonwealth LDCs during the pre-pandemic IPoA implementation period, charting their progress in growing trade and diversifying exports and markets, and identifying the principal challenges hampering further trade expansion. Chapter 4 examines the extent to which Commonwealth LDCs managed to mobilise financial resources to support development and capacity-building over the course of the pre-COVID IPoA years. Thereafter, Chapter 5 focuses on the final year of IPoA implementation to assess the economic and socio-economic impacts of the COVID-19 pandemic on Commonwealth LDCs, and considers the implications of these for the countries’ future development. Against this backdrop, Chapter 6 reflects on the graduation prospects of Commonwealth LDCs. It identifies remaining challenges hampering their progress towards graduation from the LDC category, and considers sustainability and transition concerns for recently graduated (Vanuatu) and soon-to-graduate (Solomon Islands, Bangladesh) Commonwealth LDCs. The themes of crisis and resilience are picked up again in Chapter 7, which examines the relationships and interactions between environmental challenges, natural disasters, trade and economic development in Commonwealth LDCs, and assesses their implications for Commonwealth LDCs’ graduation progress and prospects. Considering the analyses from the previous chapters, Chapter 8 concludes and outlines a Commonwealth 10-point programme of action for LDCs highlighting key priorities for the next decade.
[1] The IPoA was preceded by the Substantial New Programme of Action for the 1980s for the Least Developed Countries, the Paris Programme of Action for the Least Developed Countries for the 1990s and the Brussels Programme of Action for the Least Developed Countries for the Decade 2001–2010.
[2] Vanuatu is included among the LDCs analysed in this report since it remained a LDC throughout the IPoA implementation period until its graduation from the category in December 2020.