Commentary: Bhutan and Nepal - 2 ‘least developed countries’ that could change the face of Asia
Because the development performance of least developed countries (LDCs) has been so disappointing, only four have graduated to developing country status in the time since the category was established in 1971. None of these are in Asia.
A ccording to a recent UN report, “48 of the world’s most vulnerable countries will lose ground in economic development and face increasing levels of poverty” between now and 2030. The 2016 report of the United Nations Conference on Trade and Development on Least Developed Countries presents some worrisome facts indeed.
Least developed countries (LDCs) are those that suffer from severe structural impediments to achieve sustainable development. Membership is revised every three years based on the average gross national income (GDP plus net income received from overseas), human assets (level of population undernourished, underfive mortality rate, gross secondary enrolment ratio and adult literacy rate), and economic vulnerability (such as population, remoteness, merchandise export concentration, natural disasters, instability of agriculture production, and instability of goods and services exports, among other factors).
ON THE ROAD TO DEVELOPMENT
The UN report notes that while the 48 LDCs comprise around 880 million people – accounting for 12 per cent of the world’s population – they face such serious structural barriers to growth that they account for less than 2 per cent of world GDP and around 1 per cent of world trade.
In LDCs broadly, the percentage of people who live in extreme poverty has doubled to nearly 40 per cent since 1990, populations without access to basic services, such as water, has more than doubled, and two- thirds of people do not have electricity.
Because the development performance of LDCs has been so disappointing, only four have graduated to developing country status in the time since the category was established in 1971. They are Botswana ( 1994), Cape Verde ( 2007), Maldives ( 2011) and Samoa ( 2014). None of the countries are in Asia.
Progress is so slow that only 16 LDCs are expected to escape from this low development category by 2025. In Asia, these countries are likely to be Afghanistan, Bangladesh, Bhutan, Laos, Myanmar, Nepal and Yemen. Among them, Bangladesh, Bhutan, Laos and Myanmar are expected to do better and achieve broadbased development, diversification and structural economic transformation. And their foundations are likely to be more robust for continued development.
LDCs are classified according to their export specialisation, or type of exports that account for at least 45 per cent of total exports of goods and services during the 2013- 2015 period. Yemen is considered to be a fuel exporter, Bangladesh, Bhutan and Cambodia are manufacturing exporters, Laos and Myanmar are mixed exporters, and Afghanistan and Nepal are service exporters. BHUTAN AND NEPAL In the case of Bhutan, the report has some serious shortcomings. It has ignored that Bhutan has been an important exporter of hydroelectricity to India. Between 1997 and 2002, electricity sales to India contributed to approximately 45 per cent of the country’s gross national revenue.
This has translated, and will continue to translate, into better quality of life for the population, including access to basic services, improved health and education, and industrial and commercial developments.
Hydropower has become the backbone of Bhutan’s economy. Thanks to electricity sales, Bhutan’s per capita GDP has become one of the highest in South Asia. This was US$ 2,580 in 2015 ( equivalent to 20 per cent of the world average), compared to US$1,615 in 2006.