The Impact of Foreign Trade in the Graduation Process of Asian Least-Developed Countries (LDCs)

Abstract

The importance of development studies comes from the need to assess and solve economic problems. Graduation from LDC status represents an important milestone in their development path. This research tries to deepen on the relationship between the fulfillment of the “graduation criteria” established by the United Nations and the evolution of the foreign trade indices of a group of Asian LDCs about to graduate (Bangladesh, Bhutan, Laos, Timor-Leste, Nepal, and Myanmar), checking how trade, one of its engines for economic development, has involved during the last years and, specifically, on their way to graduation. First, the characteristics of the LDCs and the criteria to exclude them from the list are analyzed. Second, a set of indices are presented to find out the trade flows throughout the period observed. Finally, conclusions and future lines of research are proposed. The results show that all the countries studied have succeeded in expanding their share in world trade. The high participation of Bangladesh is justified by the size of its economy and its weight within the textile trade. Regarding diversification, all of countries present a highly concentrated pattern of exports and their exchanges are carried out with few countries. This lack of trade diversification places them in a vulnerable position. The relative trade balance index indicates that all of them are competitive with their trading partners in the products analyzed and the six have comparative advantage. To conclude, the analysis confirms that the trade structure of the LDCs considered has improved, but with differences due to their characteristics.