From middle income to least developed class

by Usvatte-aratchi

into that land of deprivation, poverty and woe have our leaders delivered this land of promise and plenty.’ I was a member of the Committee for Development Policy (CDP), a group of 24 economists and sociologists, appointed by the Secretary-General of UN, on their own merit, to advise him on development policy. One of their mandates was to review progress or lack thereof in least developed countries every two years and recommend the movement of countries between categories. I do not recall any country that applied that they be reclassified from middle income category to least developed category. There were two countries: Cape Verde in the Atlantic and the Maldives, our neighbour that sought reclassification as developed countries. Income per capita in Cape Verde had risen fast with the exploitation of oil offshore. Maldives had its income increase with the rise in the arrival of tourists. It did not seem to us that their economies were highly vulnerable to natural disasters and vagaries in international trade, as many island economies in the South Pacific and raw material export dependant economies south of Sahara were. (We did not anticipate that a well-established middle-income country could be ground down to poverty by a family of uneducated brigands elected to office by a highly literate electorate.) Although the human development indicators of Cape Verde and the Maldives were well below those of middle-income countries, they were re-classified on strong presentation by those two countries. In other words, countries were keen on climbing the ladder and not in shooting down along a snake.

The idea of least developed countries grew in the 1960s, nursed by Jan Tinbergen of the Netherlands and further nourished by Gamani Corea, both of whom were, Chairman of CDP, in succession. The concessions they (LDCs)were to enjoy grew over time after being introduced in the First Development Decade, a resolution adopted by the General Assembly in 1961. Much of analytical and policy work about LDCs came to be done in a large Division of the UNCTAD Secretariat.

There were a few main considerations that mattered for a country to be classified as least developed and be entitled to international aid flows and loans at rates of interest lower than in international capital markets. Those considerations included the following. Per capita income over several years was lower than a given threshold and the economy was not diversified, that their level of human development was low in comparison and that their economies were vulnerable to natural disasters or vagaries in international trade. Low human capital development was evident from the average expectation of life at birth, infant mortality and maternal mortality rates and literacy, including that of girls. These had to be low to qualify as a least developed country. These numbers were not used mechanically but only after a consideration of factors that contributed to the outcome. Most people here, except the Cabinet of Ministers and their advisors know that human development levels in this country, for more than a generation now, have been stellar high, no thanks to the Family of thieves, morons and rogues that ruled us during the last two decades. We should not give them a chance to bring down the edifice that had been put up over decades with the sweat of taxpayers. A fall in income per capita in difficult economic circumstances will not convince CDP to reclassify an economy.

Further, unless rules have changed since my time, it was the General Assembly of the UN, who after a resolution from ECOSOC who received reports from CDP to the Secretary-General that a resolution would be adopted to re-classify a country. Although the voice of all specialised agencies, who were normally present at meetings of CDP, were heard they were there for purposes of consultation. It was the CDP that made decisions which were transmitted to ECOSOC and the Secretary-General. It is a bit baffling why the Cabinet decided to ask the World Bank for a decision. There must be dozens of officers in the public service who must know these common rules in the UN. The book to read is Caught in a trap (Economica, 2009) written by Patrick Guillaumont, a well-known economist from France and a member of the CDP, at the same time as I was.