Services expansion not scaling prosperity in least developed economies
Summary
The UNCTAD report emphasises that services can support structural transformation only when embedded within coherent national development strategies and backed by an enabling global environment.
The Least Developed Countries Report 2025, released by UN Trade and Development (UNCTAD) on 10 February 2026, finds that services are expanding rapidly across the least developed countries.
According to the report, the growth is concentrated in low-productivity activities that sustain livelihoods but do not generate prosperity at scale. “Despite the growing role of services, average per capita growth in least developed countries remained weak in 2024,” the report noted.
“Employment in these economies is still dominated by informal retail, personal services and subsistence activities, while higher-productivity services that could support industrialisation and competitiveness remain underdeveloped."
The economies face an “unprecedented employment challenge”. Between now and 2050, they will need to create jobs for around 13.2 million new labour market entrants each year, making employment creation a defining constraint for development strategies, the report noted.
The report emphasises that services can support structural transformation only when embedded within coherent national development strategies and backed by an enabling global environment. Without this, the expansion of services risks deepening marginalisation rather than reducing it.
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