2022: | 23.5 million |
2020: | 19.2 million |
2017: | 0.1 million |
2012: | 0.2 million |
A sad prediction by an eminent economist, about a decade ago – In The Bottom Billion: Why the Poorest Countries are Failing and What Can Be Done About It (2008), Paul Collier says the poorest countries — over 50 of them, with a combined population of 1 billion — had entered a development trap. The light-manufacturing-export success of Asia and Latin America had blocked the “trade rout” out of poverty for others, particularly in Africa. Geography, regional conflicts, and resource dependence made economic growth difficult and domestic economic reform often futile. Absent major unexpected change, their future looked bleak:
“In the modern world of globalization, there are some fabulous ladders; most societies are using them. But there are also some chutes, and some societies have hit them. The countries at the bottom [ed. note: about 58 in his count, with a population of a billion] are an unlucky minority, but they are stuck.”
The alternative book, Charles Kenny’s Getting Better: Why Global Development is Succeeding (2012), proposed the contrary: basic domestic-policy measures in the poorest countries were visibly succeeding, incomes were rising and social indicators improving, and life at the “bottom” was not stuck:
“[T]hose countries with the lowest quality of life are making the fastest progress in improving it across a range of measures including health, education, and civil and political liberties. The progress is the result of the global spread of technologies and ideas – technologies like vaccinations, and ideas like ‘send your daughter to school.’”
With the intervening decade’s experience, Kenny’s optimistic side of the debate has gained some strength. Anecdotally, cases like Senegal’s sudden bloom as a wig exporter to the U.S. — 200,000 wigs ten years ago for $4 million, nearly 24 million wigs in 2022 for $44 million, and just a bit fewer in 2023, fourth in the world as a wig supplier behind only China, Indonesia, and fellow-LDC Bangladesh — suggest that the trade route is not blocked. Rather, unique local industries like Dakar’s inventive hair-sculpting salons and wig factories can, with a bit of luck and advertisement, quickly attract international attention, scale up, and become large export earners and employers. (See below for a few mini-case studies: coffee from Timor-Leste, clothes from Cambodia and Haiti, and diamonds from ex-LDC Botswana.) More generally, the World Bank’s estimate of the actual number of poor people in the “bottom” tier — those in absolute poverty, scraping out a living on $2.15 a day or less — has fallen by about 40%, from 1.13 billion in 2010 to 690 million in 2022, as their (real-dollar) per capita income has risen from $896 to $1,117.
From a different angle, the suddenly rapid shrinking of the United Nations’ official list of “least-developed” countries (“LDCs”), suggests a similar national-level trend. The UN has been keeping this list since 1971, with updates every three years to add new countries or remove ones that have grown out of LDC status. (More detail on how it works below.) An observer studying the list 15 years ago would have to conclude along with Dr. Collier that it had a flypaper-like quality of almost never releasing anyone – in the 35 years from 1971 to 2006, only Botswana “graduated” (the U.N.’s term), having managed a surge of diamond wealth particularly well.
In the 18 years since, though, six countries have exited the list – Cabo Verde in 2007, the Maldives in 2011, Samoa in 2014, Equatorial Guinea in 2017, Vanuatu in 2020, and Bhutan last December. A cautious person might be still skeptical that this signifies a trend. The six recent graduates are all quite small, combining for 4.7 million people or 0.5% of the worldwide LDC population; four are tropical island countries able to tap tourism revenue; and the fifth, Equatorial Guinea, has a lot of oil, and the number of people living in LDCs remains above 1.1 billion people and an eighth of the world’s population. But this noted, the U.N. has already scheduled five more graduations in the next three years — Sao Tome e Principe this December; Bangladesh, Laos, and Nepal in December 2026; the Solomon Islands in December 2027 — which will not only shrink the list but reduce the global LDC population by over 200 million.
Looking only slightly further ahead, the U.N.’s spring 2024 “Triennial Review” of the LDC list will consider nine more potential graduates with 110 million more people for 2027 and 2028, including Cambodia, Comoros, Djibouti, Kiribati, Myanmar, Timor-Leste, Tuvalu, and Zambia. Senegal, with its suddenly booming wig industry, is also on the possible-graduate list, with a Senegal’s figures mirror this, with the same GNI per capita up from $1,117 to $1,410, literacy up ten points, life expectancy three years longer, and the count of Senegalese people in deep poverty down from 42% to 9%.
Not all are likely to go through — Myanmar’s economy has spiraled downward since the coup d’etat late in 2020, and Tuvalu and Kiribati have extreme climate-change vulnerability. But the list by 2028, along with the count of looks likely to be a lot smaller. To borrow Kenny’s phrase, it does seem that things are getting better. And not slowly.
The UN’s Least-Developed Country list.
… its explanation of LDC graduation and Triennial Reviews.
… its most recent graduate, the Himalayan monarchy Bhutan, six weeks ago (Dec. 13, 2023).
And the World Bank’s poverty-reduction data-snapshot for Senegal.
Some more explanation:
By “least-developed country,” the UN does not mean “poorest relative to other countries” — say, the twenty poorest as against the 20 richest of the world’s 197 countries. Rather, the term “LDC” is meant as an objective descriptor, using a stable set of three metrics for income, health and education, and economic and environmental “vulnerability” to describe a country in difficult straits. The metrics as of the 2021 “Triennial Review” are:
(a) A national per capita income below $1,088, essentially $3 per person per day;
(b) A low “Human Assets Index” number which combines three health indicators (maternal mortality, under-five mortality, stunting) and three education indicators (middle school graduation, adult literacy, and gender parity in middle-school-level education); and
(c) An “Economic and Environmental Vulnerability Index” similarly calculated from a set of five economy-related topics (the agriculture + fisheries + mining share of GDP, “remoteness and landlockedness,” high export reliance on single products or industries, and export volatility), and four environmental or geographical issues (share of people in low-lying coastal areas and arid zones, instability of farm production, and number of disaster victims).
To get off the LDC list, a country must exceed the indicators in two of these three areas. This can involve bringing GDP per capita up above $1,388 and reaching designated above-LDC scores on one of the two indexes, or meeting the indexes without the GDP growth. (Though this latter option seems quite rare.) Having done it once, the country gets a second review three years later. If it passes this second exam, it can “graduate” (in the U.N.’s phrasing) and leave the list. A quick table of the list’s extent since its first edition 53 years ago, and the beginnings of dramatic change around 2020:
2028: | 33-40? |
2027: | 42 |
2024: | 45 |
2020: | 47 |
2010: | 48 |
2000: | 51 |
1971: | 52** |
* Note that the numbers in this list are anachronistic, as over half of the current LDCs were colonies or parts of other countries in 1971. The original list had 24 countries at the time, and tended to grow larger for about 40 years as countries became independent. For example, the U.N. added Eritrea, Timor-Leste, and South Sudan after their official independence dates in 1993, 2002, and 2011.
Trade routes out:
Cambodia: Congress reopened normal trade with Cambodia in 1992. A generation later, Cambodia is the U.S.’ seventh-largest source of clothing, at $11 billion for about 1.25 billion articles of clothing weighing 240,000 tons. Better Work Cambodia, the International Labour Organization’s flagship garment-industry monitoring and training program, is the brainchild of former Commerce Minister Cham Prasidh and negotiations with the Clinton administration in the garment industry’s early 1990s days. Launched in 2001 and replicated in seven other countries, it provides safety inspection and training, rights on the job, and skill development for women workers in 703 garment factories around Phnom Penh.
Timor-Leste: Independent since 1999, Timor-Leste sells Americans about 1700 tons of top-tier coffee each year. The U.N’s look at Timor-Leste’s potential graduation later this decade worries about the possible loss of special LDC trade benefits (in this case the EU’s “Everything But Arms” duty-free program), as the EU oddly applies a 7.5% tariff to roasted coffee (though zero for non-roasted). The U.S. is zero-tariff all the way down for coffee and tea.
Botswana: The Diamond Technology Park just outside Gaborone looks to help Botswanans add value to the stones before they leave Africa. Space for cutters, jewelry-makers, gem and mineral research, and more.
Haiti: The U.S.’ HOPE & HELP programs provide duty-free treatment for about $1 billion in Haitian-made clothing each year, supporting most of Haiti’s industrial jobs and about 7% of GDP. The program is set to expire in just over a year. PPI’s take last summer.
Senegal: Not much written on Senegal’s wig-export boom so far, but QZ has an in-depth and prescient look at Dakar’s very large domestic hair-sculpting, wig-making, and salon industry just before the international takeoff.
And some data and intellectual background on the “bottom billion”:
Paul Collier is worried (2008).
Charles Kenny thinks it’s going better than many realize (2012).
… and a 2023 data update from the World Bank, estimating the number of people in absolute poverty through 2022 and assessing the impact of the COVID-19 pandemic as three lost years for poverty reduction.
Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.
Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.
Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.
Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.