I learned earlier this week that Dan Gay has been visiting Vanuatu.
He is my second favourite economist and is currently working with the UN for the Committee for Development Policy (CDP). One of the main focus areas for this agency is monitoring the development progress of countries like Vanuatu and working with them to manage graduation from the status of ‘Least Developed Country’ (LDC).
As we know, Vanuatu is scheduled to graduate from the LDC list in 2020.
Every three years the CDP reviews the data on LDC and applies three tests to decide if they are ready to graduate off the list. There are currently 47 countries on the list, including several in our region – Kiribati, Solomon Islands, Timor-Leste and Tuvalu.
The three tests that the CDP apply relate to: gross national income, a human assets index (this looks at data that shows how well a country is doing at keeping people alive, healthy, and educated) and an economic vulnerability index (this looks at things that might have a negative impact on economic development such as natural disasters or a population that is growing too quickly/slowly). There are other factors taken into account as well, including the views of a country’s government about whether they think graduation is a good idea.
Obviously, being ready to graduate from the LDC category is a good news story. It means that a country has in place the resources to be more self-supporting rather than having to rely on outside assistance to generate enough money to pay for public services. Graduation recognises that a country has made economic and social progress over time that can hopefully be sustained into the future.
But it also presents a number of challenges, which is why there is a long process of preparation for graduation. In Vanuatu, we are already in this process. Plus, once a country has graduated there is support and assistance for the transition period.
Earlier this year, in an article for Devex, Fekitamoeloa Katoa ‘Utoikamanu reflected on what factors are most likely to lead to a smooth transition from LDC status. In particular he noted that each country might require specific types of assistance to ensure that the graduation was one that was sustainable. He talked of the importance of creating a buffer to guard against the risk of newly graduated countries slipping back because of something they may have no control over, such as a sudden drop in commodity prices or a natural disaster.
One of the things ‘Utoikamanu points to as being very beneficial for countries that are about to graduate from LDC status is a clear vision for national development that can guide policy, investment, and political decision-making. In Vanuatu we have the National Sustainable Development Plan to provide the foundation of current and future decision-making.
Other countries that have been down this path have lessons to share that we can benefit from as we prepare for this development milestone.
One of the most significant impacts of LDC graduation is on international development assistance. Some forms of assistance will no longer be available, that is true. And there is something of a debate, in which Dan is a leading voice, about what forms of international assistance are most useful for graduating countries.
In this sphere, as in all others, it is very important that Vanuatu policy makers lead the discussion and the decision-making. If we are committed to measuring our development and progress with reference to things other than economic production (e.g. by measuring the wellbeing of our population or the environmental sustainability of our economy) then we need to make sure these concerns are articulated clearly and assertively in discussions with development partners.
We talk often about how important political stability is for Vanuatu. And it is certainly true that we are better off having stability rather than instability, with all the expense and use of energy that it involves. But political stability is only beneficial if it provides the space and leadership for policy coherence and implementation.
Vision, leadership and the capacity to learn are key to ensuring that after 2020 and LDC graduation we not only survive but we put ourselves in the best possible position to thrive.