UNCTAD Report: Services Reshape Least Developed Countries‘ Economies, But Productivity Gaps Pose Steep Hurdles

The United Nations Conference on Trade and Development (UNCTAD) released its flagship Least Developed Countries Report 2025 on February 10, 2026, revealing that while the services sector has rapidly emerged as a critical source of growth and employment across LDCs, job creation remains heavily skewed toward low-productivity and informal activities that sustain livelihoods but fail to generate broad-based prosperity. The report highlights that average labor productivity in LDCs stands at merely 9% of the median level in developed economies, while their global export share of digitally-delivered services has plummeted to an all-time low of 0.16%.

With approximately 13.2 million new labor market entrants needing employment annually until 2050, UNCTAD cautioned that services are no shortcut to development; without concurrent gains in productivity, strategic investment in digital infrastructure, and stronger linkages to manufacturing, services-led expansion risks reinforcing marginalization. The agency urged LDCs to embed services development within coherent national strategies supported by a conducive global environment.