Human development and vulnerability in the least developed countries: connecting development indicators across silos

Assa, Jacob (1); Chibuye, Miniva (2) (2019). 'Human Development and Vulnerability in the Least Developed Countries: Connecting Development Indicators Across Silos' Paper presented at the annual conference of the HDCA 2019, London, UK.

Abstract

The criteria for inclusion in and graduation from the Least Developed Countries (LDCs) category have always included three dimensions – income per capita, human development and vulnerability (both economic and environmental) – although the specific indicators have evolved over time. They are thus, in principle, in line with the spirit of Agenda 2030 and the Sustainable Development Goals (SDGs). In practice, however, countries only need to meet two of the three criteria to graduate, and none of those that have  graduated so far have ever met the vulnerability criteria. Furthermore, several countries graduated using the income-only rule (when their income per capita is more than double the threshold for graduation). Thus, de facto economic growth receives an outsized (and sometimes the only) emphasis in evaluating progress in LDCs, to the neglect of human development and vulnerability.

                The five countries which have already graduated and the six which are scheduled for graduation are thus exposed to increased vulnerability, and even their economic performance has not always been sustainable. The crash of the commodity super-cycle has erased many of the recent development gains of some LDCs, casting doubts on the trade-growth driven model. Structural transformation – a key goal of the Istanbul Programme of Action for LDCs – has also not taken place in most graduating LDCs.

                This paper uses the full official dataset from the Committee for Development Policy (CDP) for 145 developing countries and performs a principal component analysis (PCA) to understand the key reasons for variation among developing countries as well as the interaction between indicators and across the criterias’ silos. We find that non-income dimensions of human development – education, nutrition and health – account for about 40% of the variation in the data, while indicators of vulnerability make up over 50%. Income per capita explains less than 10% of total variation. We then discuss several alternative weighting schemes, including a PCA-based HAI and EVI as well as a composite index of structural impediments using all CDP indicators with PCA weights. Finally, we discuss the policy implications of the various alternatives, noting that the current criteria incentivize policy-makers to focus on a short-run, primary commodity export growth strategy rather than embracing a broader vision of structural transformation and sustainable human development.

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