5 countries that have recently graduated from LDC status: How they are doing now

Least developed countries(LDCs) is a term used globally to signify the most disadvantaged of the developing countries, according to the UN. 

Three criteria are used to decide if a country will receive LDC status, and those are a measure for income per capita, a human assets index and an economic and environmental vulnerability index.

To qualify, a country must reach two of the three thresholds, while also allowing a data assessment, receive a recommendation from the Committee for Development Policy (CDP), receive government consent and finally have the recommendation approved by the Economic and Social Council (ECOSOC) and then endorsed by the UN General Assembly.

Exiting the LDC category requires the country in question to surpass at least two of the criteria thresholds for two consecutive reviews or when its GNI per capita is at least twice the income inclusion threshold for two reviews.

As of 2024, there are 44 countries on that list. Here are the five countries which recently graduated from LDC status.

São Tomé and Príncipe

A small island nation of the west coast of Africa, São Tomé and Príncipe is the most recent nation to graduate from LDC status in December of 2024. 

Its graduation reflected the progress made in key areas such as the Human Assets Index and Gross National Income per capita, says the UN office at Geneva, however it continues to remain economically vulnerable, especially to external shocks such as climate related events.

The United Nations continues to work with the island's government initiatives for economic development, such as eco-friendly tourism and the agricultural production of chocolate. 

They have also invested in renewable energy such as the country's first solar park, as part of their ongoing efforts for resilience and sustainable growth.

Bhutan

Bhutan graduated from its LDC status at the end of 2023 after decades of social and economic developments, including improvements in poverty reduction, education, and life expectancy. 

They have also actively pursued economic diversification, focusing on sectors such as hydropower, tourism, manufacturing, and information technology, according to the World Trade Organization. 

Despite its achievements, the country continues to face challenges,  such as rising unemployment and emigration. The COVID-19 pandemic severely impacted the tourism sector, a significant contributor to the economy, leading to increased government investments in alternative sectors such as cryptocurrency mining.

Reduced development aid and loss of preferential treatment following graduation also pose challenges, alongside more competitive market conditions, necessitating the need to enhance quality of the export basket.

Vanuatu 

Vanuatu is a small island state in the west Pacific and was the 6th nation to graduate from LDC status in 2020. 

Despite its graduation, Vanuatu's economy remains vulnerable to natural disasters and its reliance on sectors like tourism.

The island nation developed a Smooth Transition Strategy aimed at ensuring minimal disruption to its development trajectory, which focuses on building resilience and sustaining their development gains.

While the recognition has been noteworthy, the graduation has also meant that there has been a loss of development aid. At the same time, preferential market access for exports may also be lost soon, impacting certain sectors of the economy. 

Service export (tourism), major income source of the country, has reduced significantly, but the economy is expected to rebound to growth 4-4.5% in coming years.

Equatorial Guinea

Though it graduated from LDC status in 2017, Equatorial Guinea has struggled to achieve its sustainable development goals. 

During its graduation phase, it also became the first country to leave the LDC category since the adoption of the Sustainable Development Goals.

A key reason for its graduation was an oil-propelled GNI per capita ($16,089) six times above the "income-only" graduation threshold ($2,484) at the time.

According to UNCTAD (UN Trade and Development), the country relies heavily on its oil exports, which are 90% of its merchandise exports, making it extremely vulnerable to oil fluctuations, and highlighting its need for economic diversification.

Much of their population continues to live in poverty, and residents of Annobón, a remote island province, have faced severe repression after protesting against environmental damage caused by mining operations.

Samoa

According to the World Trade Organization(WTO) the island nation of Samoa graduated from its LDC status in 2014. Prior to graduation, Samoa faced fiscal challenges, including increasing deficits due to financial commitments for post-cyclone recovery efforts. Since then they have focused on building institutional capacity, addressing skill shortages and enhancing their project implementation.

In the decade since its graduation they have shown notable progress in laying down a foundation for sustainable development.