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The Transition of Nepal into a Mid-Income Developing Country

A.    The Least Developed Countries

Low real per capita income, pervasive poverty, low literacy rates, short life expectancies, resource underutilization, and susceptibility to environmental and economic shocks are characteristics of least developed countries, often known as undeveloped countries. A significant portion of the populace in an underdeveloped economy cannot afford adequate standards of living. The Underdeveloped nations are typically characterized by:

  • Low level of living, economic growth rate, and per capita income
  • High economic inequality or an unequal distribution of wealth and income
  • Significant reliance on the agricultural sector and an antiquated industrial structure
  • The rapid population growth rate, high rates of unemployment, and underemployment
  • Large imports and little exports
  • Lack of funding, technology, and technical expertise
  • A poverty cycle characterized by inadequate social and physical infrastructure

A nation can be classified as a UDC based on three factors: economic and environmental vulnerability index (EVI), human assets index (HAI), and per capita income (PCI). Forty-five countries were listed as LDCs at the end of 2023. Despite the one billion people of this economic region, least developed countries (LDCs) contribute less than two percent of the global gross domestic product and one percent of the world's commerce in products.

B.     The Criteria for Graduation

    By fulfilling two of the three requirements established by the UN, a nation can move from being classified as a low-income country (LDC) to a mid-income developing nation: per capita income (PCI), human asset index (HAI), and economic and environmental vulnerability index (EVI).

Graduation represents a step toward achieving some of the sustainable development goals (SDGs), as the goals contain some of the LDC indicators. Nevertheless, graduation nations will still have difficulties achieving Agenda 2030's goals. Better domestic policy decisions and foreign backing within a revitalized multilateral system are necessary for progress towards these larger goals.

C.     The Graduation of Nepal

    Nepal is set to graduate on November 24, 2026 AD, having already met two requirements but requesting an early graduation date due to the horrific earthquakes in 2015 AD.


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