On February 22-26, 2021, at the second triennial review by the Committee for Development Policy of the United Nations (UN-CDP), Bangladesh received the final recommendation to graduate from the least developed country (LDC) category. Once again the country has met all three criteria to graduate from the LDC group. These are per capita gross national income (GNI), human assets index (HAI) and economic vulnerability (EVI) index. As Bangladesh celebrates the golden jubilee of its independence, it is safe to say the country has achieved another important milestone in its pursuit of development.
The exit now is to take place in 2026; meaning five more years of access to preferential market access facilities enjoyed by the LDCs thanks to the various unilateral, and bilateral, regional and global initiatives, and five more years to build up its strength to compete with countries in the international market. While the E.U. has offered to extend the preferential market access for an additional three years following graduation (i.e. till 2027 in case of Bangladesh), there is no denying that future market access scenario for Bangladesh will undergo profound changes in the coming years.
Previously, Bangladesh was set to exit the group in 2024 before the outbreak of COVID-19 and the world came to a screeching halt. In response to a recent intervention by the government of Bangladesh, the UN-CDP has agreed to extend the transition period by two more years. Our neighbors, Nepal, Bhutan and Laos have suffered the same fate, it seems.
Why All the Fuss
In simple words, the exit of a country from the LDC group is regarded as acquiring a seal of global approval regarding its development achievements, its receiving validation at the most international levels.
This new identity indicates the country’s strength and capacity. A graduated country holds an improved image and branding in the global landscape. With this comes the promises of attracting more foreign investors into the country. Global lending agencies feel reassured on the ability of the country to pay back loans and in flows more funds at much reduced/ preferential rates.
How to Best Use the Five Years?
The World Bank’s country review for Bangladesh says that the COVID-19 pandemic will deepen the challenges including a decline in exports, lower private investment, and job losses. Investment and exports are likely to continue to suffer amid uncertainty about the recovery of global demand. The poor and vulnerable are more impacted with income loss and poverty may rise. The implementation of the government’s COVID-19 response program will remain a paramount priority.
Creating more and better jobs for its youth remains a critical priority for Bangladesh to turn around and achieve its development vision. There needs to be a massive push by the government to remove the barriers to higher investment posed by low access to reliable and affordable power, poor transportation infrastructure, limited availability of serviced land, uncertain and complex business regulation, among others. Challenges related to COVID-19, rapid urbanization and climate change need to be addressed through long-term planning.
The strength and resilience of the economy of Bangladesh have stood the test of time. Bangladesh’s strive towards economic and social progress during the last five decades has been remarkable. With the right policies and timely action, Bangladesh can accelerate its recovery from the economic downturn and continue to progress towards upper-middle income status.