The least developed countries (LOCs) are a group of countries that have been classified by the United Nations as least developed in terms of their low GOP per capita, their weak human assets and their high degree of economic vulnerability. This Report assesses recent trends in growth and poverty in these countries, as well as changes in the terms of development partnership. The strong growth performance of the LOCs as a group has been one of the most encouraging features of the global economy so far in this decade. Their economic expansion since 2000 has been stronger than in the 1990s, and a spurt of growth in 2005 and 2006 gave LOCs their strongest growth performance for thirty years. Against this background, the Report asks: How sustainable is economic growth and how many LOCs are participating in the growth surge? To what extent is economic growth leading to improvements in human well-being? In particular, how much is rapid growth translating into accelerated poverty reduction and improved progress towards the Millennium Oevelopment Goals? To what extent do LOCs have effective leadership and ownership in the design and implementation of their national development strategies? The Report finds that rapid economic growth in the LOCs has been associated with a slow rate of poverty reduction and slow progress towards the Millennium Oevelopment Goals. The LOCs as a group are not on track to achieve the goal of reducing the incidence of poverty by half between 1990 and 2015. There is no evidence of any significant acceleration in social progress since 2000, despite the adoption of the Millennium Oeclaration and more socially-oriented policy reforms. The LOCs are al so very vulnerable to a slowdown in growth, as they are still characterized by low levels of domestic resource mobilization and investment, high levels of commodity dependence, very weak development of their manufacturing industries, weak export upgrading, worsening trade balances, and rising food and oil import bilis. The achievement of more sustainable and inclusive economic growth in the LOCs requires effective national development strategies as well as effective aid. Enhanced country ownership of national strategies and policies is essential for a strong development partnership. The Report finds that significant steps are being taken to enhance country ownership, but various processes continue to weaken country ownership in LOCs. This is having adverse consequences on development effectiveness. The Report identifies some practical measures, including the adoption of aid management policies by the LOCs, which could help rectify this situation, ensuring better outcomes and more balance in the terms of development partnership.
