Economic and environmental vulnerabilities of the Maldives and graduation from LDC status

Abstract

The Maldives is a small island developing state, heavily dependent on fisheries and tourism, which are major sources of foreign exchange earnings and government revenue, and which together account for about 40 percent of gross domestic product. The success of these industries depends on climatic conditions. This renders the country very vulnerable economically and environmentally. The Least Developed Country status of the Maldives is under threat because the country has experienced relative economic improvements that, ironically, have to a large extent been possible by virtue of the support accorded to the Maldives as an LDC. This chapter argues that the criteria used in assessing LDC status need to be refined so as to give more weight to economic vulnerability. The chapter also proposes that no country should be graduated until the criteria are appropriately refined, so as to avoid the risk that the country in question ends up worse-off in spite of its economic successes.