In March 2023, Bhutan became the seventh nation to graduate from the United Nations (UN) list of Least Developed Countries (LDC). How did Bhutan graduate from the Least Developed Country status? Read on to know more. This is an important topic for the IR as well as economy segments of the IAS exam.
Did Bhutan graduate from LDC?
Bhutan, a mountainous country, will be graduating from the United Nations (UN) list of Least Developed Countries (LDC) on December 13th, 2023.Â
- While this is a cause for celebration, it raises concerns about how Bhutan will compensate for the loss of certain trade privileges associated with being an LDC.
Least Developed Countries:
- LDCs are developing countries with the lowest indicators of socioeconomic development.Â
- The UN identifies three criteria for a country to be classified as an LDC: gross national income (GNI) per capita, composite human assets index, and economic vulnerability.Â
- Currently, the UN lists 46 countries that qualify as LDCs.
Graduating from LDC:
- To graduate from the LDC list, a country must meet certain criteria in three areas, namely income, human assets, and economic vulnerability.Â
- To achieve these goals, a country might need to implement a combination of policies, including promoting economic growth, improving governance, addressing environmental challenges, and investing in human development.
How did Bhutan graduate from the LDC list?
Bhutan was included in the first group of LDCs in 1971. However, over the last few decades, it has shown remarkable progress in a variety of socio-economic aspects.Â
- Bhutan’s economy grew more than eight times in the last two decades, from under USD 300 million in 2000 to USD 2.53 billion in 2017, with an average annual growth rate of over 7%.
- The percentage of people living in poverty, based on their daily income, declined from 17.8% in 2003 to 1.5% in 2017, while the percentage of those living below the national poverty line decreased from 23.2% in 2007 to 8.2% in 2017.
- Bhutan increased its exports of hydropower to India, which now makes up 20% of its economy, as a key driver of its economic growth.
- The country also launched Brand Bhutan to diversify its exports and target high-end markets with specialized exports of high-value, low-volume Bhutanese goods.
- The sectors involved in the production of these goods include textiles, tourism, handicrafts, culture, and natural resources.
Advantages of being an LDC
- LDCs (Least Developed Countries) have some economic benefits such as duty-free and quota-free (DFQF) access to developed countries’ markets and special loans for development with lower interest rates and longer repayment periods.
- LDCs heavily rely on raw material exports and are vulnerable to catastrophic natural and economic disasters and climate change threats.
- Small island developing states, which account for 10 of the LDCs, are particularly affected by these challenges.
- When a country graduates from LDC status, it needs to redouble its efforts to build its productive capacities, diversify its economy, and create new opportunities for employment and income generation.
- However, leaving the LDC category may also bring new challenges and risks, such as losing access to some of the trade-related benefits and support.
- For some LDCs, the special privileges do not contribute significantly to their economy as they heavily rely on trading with specific countries that are not entitled to LDC privileges.
How Bhutan graduated from the ‘Least Developed Country’ Status:- Download PDF Here
| Related Links | |||
| World Trade Organization | Alternative Dispute Resolution | ||
| European Union | United Nations | ||
| International Organizations and Their Headquarters | UPSC 2023 Calendar | ||
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