Falling Graduation Prospects: Low-Income Countries in the 21st Century

Over the past 25 years, progress has mostly bypassed the world’s 26 poorest countries. Home to more than 40 percent of people struggling on less than $2.15 a day, these countries are the central focus of global efforts to end extreme poverty. Yet their progress has stalled amid heightened conflict, frequent economic crises, and persistently feeble growth. This report, which is part of the upcoming release of the January 2025 Global Economic Prospects flagship, is the first to systematically examine the progress of today’s cohort of low-income countries in the first 25 years of this century and their prospects for attaining middle-income status over the next 25 years. It finds that today’s batch—22 of which are in Sub-Saharan Africa—faces greater constraints than their predecessors. Seventeen of them are racked by conflict or fragility, with lethality rates 20 times the level in other developing economies. Nearly all are especially vulnerable to climate change. Most are either in debt distress or at high risk of it. Half are landlocked, bordered by other poor countries, which limits their ability to boost growth through trade. To climb the income ladder over the next 25 years, low-income countries can take inspiration from other poor countries that managed to leap to middle-income status in earlier decades, the analysis shows. Girded by political stability and growth-supporting policies, about half of those countries achieved sustained growth accelerations—long periods of robust economic expansion—that propelled them out of low-income status. These growth spells tended to follow reforms that channeled public and private resources into investment and improved the business environment.