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This paper has four objectives. First, it assesses progress made by Cambodia, Lao PDR and Myanmar (CML) towards graduating from their Least Developed Countries (LDC) status, and summarizes potential impacts from the loss of International Support Measures (ISMs) on the “smooth” and “sustainable” transition after graduating, especially in the context of new challenges arising from the on-going COVID-19 pandemic and rising trade tensions. Second, it examines the extent of these economies diversification and identifies impediments to structural transformation. Third, it reflects on possible pathways to structural transformation and recommends strategies for building productive capacity and resilience to external shocks, highlighting the role of regional cooperation in this regard. Fourth, it identifies areas needing capacity building support from the international community, including the United Nations Sustainable Development System (UNSDS), in particular the Economic and Social Commission for Asia and the Pacific (ESCAP). The paper takes the view that “smooth” and “sustainable” graduation critically depends on acquiring productive capacity for dynamic structural transformation of the economy.

 

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