Legal benefits of being an LDC and graduation

To become an LDC, a country must satisfy all the following four criteria:

  • low-income (an average Income of less than $745 per person per year);
  • weak human resources;
  • economic vulnerability;
  • a population of below 76 million.

A country under consideration has to give its consent before its status as an LDC is approved by the United Nations Economic and Social Council (ECOSOC).

What benefits do LDCs receive?

The international support measures associated with LDC status are related to trade preferences, development financing, including Official Development Assistance, debt relief, technical assistance and other forms of support.

LDCs that are members of the World Trade Organization (WTO) benefit from special and differential treatment regarding WTO-related obligations.

Benefits in the United Nations Economic and Social Council (ECOSOC).

How do countries graduate from the list of LDCs?

To ‘graduate’ out of the LDC category, a country must reach the threshold levels at least two of the aforementioned three criteria, or its income per capita must exceed twice the threshold level. The likelihood that the level of income per capita is sustainable must be deemed high.

Given the benefits associated with being an LDC, countries may resist ‘graduation’, so to help them to adjust to the loss of these benefits, there is a three year “smooth transition” period.

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