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Selected Facts and Figures on ´growth, poverty and the terms of development partnership´
17 July 2008
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Poverty in LDCs
277 million people live in extreme poverty in the least developed countries (LDCs). This means that 36% of the population of these countries lived on an income of less than US$1 a day in 2005. That represents a decline from 44% in 1994. Poverty is measured in terms of purchasing power parity (PPP) of 1985, which allows a comparison of living costs among different countries.
- Apart from its extreme form, there is also a wider form of poverty, total poverty, which includes all those who live on less than US$2 a day (also in terms of PPP of 1985). Considering this higher poverty threshold, three fourths of the population in LDCs lived in poverty in 2005. This means the vast majority of the populations in these countries did not have enough income to meet basic needs of food, shelter, health, education, and other material aspects of well-being. The 2005 total poverty rate represents a decline from a peak of 81% in 1994.
- The number of people living in poverty in LDCs actually grew from 2000 to 2005. The population living on less than US$1 a day rose from 265 million to 277 million and those living on less than $2 a day rose from 535 million to 581 million. Although poverty rates have been falling, the total population of the LDCs has been expanding quickly, which has resulted in a rising number of poor.
- The 581 million poor living in the LDCs on less than $2 a day in 2005 were distributed as follows: 375 million in Africa, 204 million in Asia and 2 million in island LDCs.
Trends in social development and the Millennium Development Goals (MDGs)
- For LDCs to meet the poverty targets set in the United Nations Millennium Development Goals, their collective extreme poverty rate would have to fall to 20% in 2015. However, UNCTAD projections show that if present trends continue, these countries will reach a rate of 33% in 2015. This means that there will be 116 million more people living in extreme poverty in 2015 than there would have been had the MDG target been met.
- In one third of LDCs, average food consumption is below the minimum considered adequate for proper bodily functioning. The proportion of population which is undernourished in these countries was 31% in 2002, almost double the rate of other developing countries (17%). Almost half of LDCs are projected not to meet the MDG target of halving the proportion of people suffering from hunger by 2015.
- Primary education is the area where LDCs have achieved the most progress towards reaching MDG targets. Net enrolment in primary education in LDCs jumped from 47% in 1991 to 76% in 2005. The ratio of girls´ to boys´ enrolment in primary school increased from 0.79 in 1991 to 0.89 in 2005.
- 14 out of every 100 children born alive in LDCs died before their fifth birthdays as of 2002. The proportion was almost double that of other developing countries, where 8 out of every 100 children born alive died before their fifth birthdays.
- The share of people without access to safe drinking water in LDCs was 37% in 2004. This is still high, but a decline from 47% in 1991.
The global food crisis and LDCs
- Many poor in LDCs spend 70-80% of their incomes on food. They are therefore being hit very hard by the sharp increases in domestic food prices of 2007-2008.
- 36 out of 50 LDCs were net food importers in 2004-2006. This means that higher international food prices will result in rising food import bills, in most cases widening already existing trade deficits.
- The poor capacity of most LDCs to produce food for their populations is partly due to long-standing neglect of agriculture by policymakers. For example, public spending on agricultural research and development corresponded to just 4.2% of agricultural GDP in 2004, less than half the level of other developing countries (10.7%).
- As of June 2008, eight LDCs had experienced food riots due to sharply increased food costs: Burkina Faso, Guinea, Haiti, Mauritania, Mozambique, Senegal, Somalia and Yemen.
Economic performance of LDCs
- In 2005 and 2006, the real gross domestic product (GDP) of the LDCs as a group grew by more than 7%. This was the strongest growth performance in 30 years.
- The following economies grew above 7% in 2005 and 2006: Afghanistan, Angola, Bhutan, Cambodia, Ethiopia, Lao People´s Democratic Republic, Maldives, Mauritania, Mozambique, Myanmar, Sierra Leone and Sudan.
- Recent economic growth has varied widely among LDCs. Despite their recent record overall GDP growth of 7%, in 16 LDCs (one third of the total), GDP per capita grew by less than 1% or declined.
- The value of merchandise exports from LDCs rose by 80% from 2004-2006, reaching US$99 billion in 2006. As with GDP growth, export growth was unevenly distributed. Seventy-six per cent of the total increase in LDCs´ merchandise exports from 2004 to 2006 can be attributed to oil- and mineral-exporting countries.
- In 2006, the vast majority of LDCs (42 out of 50) had a deficits in merchandise trade (that is, imports were higher than exports) and in 37 of them, this deficit was larger in 2006 than it was in 2003-2004.
- Oil and food together constituted 30% of LDCs´ merchandise imports in 2006. This is far higher than the share for other developing countries of 19%.
- LDCs have attracted a falling share of world foreign direct investment (FDI). In 2006 just 0.7% went to these countries, below the 1.9% of 2003. In 2006, this amounted to US$ 9.4 billion in foreign investment in LDCs.
- LDC Remittances abroad of profits from FDI more than tripled from an annual average of $ 3.7 billion in 2000-2003 to $12.3 billion in 2006.
- Net disbursements of official development assistance (ODA) from developed and/or rich countries to LDCs rose from US$17 billion in 2000 to $28 billion in 2006 (in real terms, i.e discounting the effects of inflation). However, this increase is actually only reversing the downward trend of the 1990s. In 2006, real net ODA disbursements per inhabitant of LDCs were 17% lower than they had been in 1990.
- The remittances of LDC nationals working abroad to their home countries reached the record level of US$13 billion in 2006. Remittances are particularly important for Haiti, Lesotho, and Nepal - where they amount to more than 15% of gross national income (GNI) - and for Cape Verde, Gambia, Guinea-Bissau and Uganda - where they correspond to between 9% and 13% of GNI. Overall remittances to all LDCs amounted to 3.9% of GNI, more than double the share of other developing countries (1.7%).
- The greatest recipients of workers´ remittances among the LDCs are Bangladesh - which in 2006 received US $5.5 billion - and Yemen, Nepal and the Comoros - which received more than US$1 billion each.
- The LDCs´ total foreign debt stock reached a record level of US$163 billion in 2004 after three successive annual increases. The level fell to $157 billion in 2005 and more dramatically to $132 billion in 2006. The reduction resulted largely from implementation of the enhanced Heavily Indebted Poor Countries (HIPC) initiative and from adoption of the Multilateral Debt Relief Initiative (MDRI) in 2006.
- To date, 35 LDCs have prepared full poverty reduction strategy papers (PRSPs) and 17 have finalized a second PRSP document.
- The LDCs most dependent on ODA are Afghanistan, Burundi, Democratic Republic of the Congo, Guinea-Bissau, Kiribati, Liberia, Malawi, Rwanda, Sao Tome and Principe, Solomon Islands, Timor-Leste, and Tuvalu. In these countries, ODA amounted to more than one fourth of GDP in 2006.
- The following countries of the OECD Development Assistance Committee in 2006 met their aid to LDCs target agreed at the III United Nations Conference on the LDCs (held in Brussels in 2001): Belgium Ireland, Luxembourg, Netherlands, Norway, Sweden and United Kingdom.