Pros And Cons Of LDC Graduation

Starting from 2026, Nepal is on the verge of making a historic transition. Nepal is all ready to graduate from a Least Developed Country (LDC) to a developing country in November 2026. For decades, our country has been listed as one of the least developed countries and categorised among the world's poorest countries. Many see this transition as an indicator of the nation's progress and development. But is this transition really that optimistic? Behind this beautiful and progressive change, a bitter question is hiding: Does this new transition reflect the reality of ordinary Nepalis or is it just a mask to hide the true structural weaknesses?  

A developing country is generally defined as a nation with a lower level of industrialisation, lower standards of living and lower GDP, compared to more economically advanced countries. The United Nations classifies countries using three major criteria: Gross National Income (GNI) per capita, Human Assets Index (measures health and education) and Economic Vulnerability Index. Among these three criteria, Nepal met the thresholds in the human assets index, which led to graduation of Nepal from least developed to a developing nation. Whereas in the remaining criteria, Nepal's performance is not so good. Nepal's progress is strong among social factors, but economic and industrial growth are still weak.

Better life 

This reflects that Nepali citizens are receiving better education and living longer lives, but they are not earning well and finding employment opportunities. Therefore, the title of developing country only reflects partial progress but not a real and complete change. Over the past few decades Nepal has achieved significant milestones and made meaningful progress. In terms of poverty, it had declined significantly, dropping from over 40 per cent to 17 per cent in recent years. Nepal's literacy rate is approximately 77.4 per cent. Additionally, the rates of child mortality have decreased. Gender parity in school enrollment has largely been achieved. There has been progress in infrastructure and road connectivity is getting better and we can also see the rise of many entrepreneurs. 

Even though many of these achievements are uneven but they still matter. These are the result of continuous efforts of the government, international support and local communities.  Compared to before, we are getting better, but we cannot judge the overall development by comparing it with the past but we also need to look at the present scenario and future sustainability.  The base of Nepal's economy is still very weak and lacks a strong industrial base. It highly depends upon imports. Nepal imports approximately US$13-14 billion worth of goods annually. Our economy highly depends upon remittances from foreign employment. Every day, over 1500 individuals leave for foreign employment. If we look at the country’s Gross National Income per capita, it has only recently crossed the minimum threshold required for graduation. 

When we think about graduating from the LDC category to developing one, most of us think that it brings only benefits. But how true is this? We know graduation brings prestige but it comes with a price. Being listed in the LDC category, our country has benefited from various international supports, including international aid, duty-free access to international markets, technical assistance, infrastructure development assistance, and many more. Even the Nepali students get a need-based scholarship. But once Nepal graduates, most of these benefits will be withdrawn one by one. Export industries may face higher tariffs, making them less competitive in global markets. Studies have suggested that exports could decline by around four per cent due to these changes. 

Despite these challenges, graduation also comes with its own advantages. The change in status carries symbolic weight. It will also alter the way the world perceives our country. If we look at the current situation, we are labeled as the poorest country. But the status of a developing nation can improve the country’s international image. More importantly, graduation also encourages a shift in mindset. It acts as a force that pushes the nation toward self-reliance, reducing dependency upon foreign aid and emphasising the utilisation of domestic resources. This can catalyze policy reforms, innovation, and economic diversification.

Challenges

For many Nepali citizens, the transition cannot bring immediate change. Their life will go on as it is. But as time passes, their daily life will be shaped by familiar challenges. The immediate change can include limited job opportunities, rising living costs, and dependency on foreign income. Due to changes like a decrease in external support, various trade sectors may face setbacks. However, the changes also depend upon how we manage to adapt in this transition.  If the government successfully strengthens industry, creates employment and opportunities, citizens could benefit from better economic opportunities and improved quality of life. 

We should see this transition as a turning point instead of a conclusion. We should take this transition as an opportunity to address structural issues like unemployment, a weak economy and a lack of effective governance. We should focus on removing the gap. It highlights our real achievements in health, education, and resilience. But on the other hand, it also acts as a challenge as it exposes deep economic vulnerabilities and poor governance. Development is not defined by international classification but by the lived experiences of citizens. If young people continue to leave the country, if industries remain weak, and if inequality and discrimination remain persistent, then the status of “developing nation” does not make sense.

(Tamrakar is pursuing a Bachelor's degree at St. Xavier's College, Maitighar, Kathmandu.)