The Least Developed Countries and World Trade

Of the 49 countries classified by the UN as LDCs (Least Developed Countries) the majority, or 34 of them, are found in sub-Saharan Africa. Over 600 million people live in LDCs, around ten percent of the entire world population. Their share of world GDP, however, amounts to less than one percent. The LDCs have been successively marginalized in the global economy. Their share of world trade has shrunk from over 1% twenty years ago to one third of one percent today. A mere 0.2% of the world's foreign direct investments goes to LCDs. The debt situation has worsened. In most LDCs foreign debt - in both absolute terms and in relation to exports and GDP - is substantially greater than then or twenty years ago. At the same time, ODA to LDCs has fallen sharply. To a certain extent, economic stagnation in LDCs can be traced to external factors, such as falling terms of trade, shrinking ODA and trade barriers on export markets. However, the dominant reasons are of an internal nature and are related to the extreme poverty and prevailing political climate in these countries: lack of education, inadequate physical infrastructure, political instability and civil strife, poorly developed democratic traditions and institutions, in many cases also corruption and abuses of power. The HIV/AIDS disaster has also exacerbated poverty. In most African LDCs, HIV/AIDS has already dramatically reduced average life expectancy and the human, social and economic costs will be vast in coming decades. The HIV/AIDS disaster has also exacerbated poverty. In most African LDCs, HIV/AIDS has already dramatically reduced average life expectancy and the human, social and economic costs will be vast in the coming decades.