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The Tipping Point: Bangladesh's Graduation from the Group of Least Developed Countries
... From a fragile socioeconomic set-up at independence in 1971, it has emerged as a "development surprise" (Mahmud, 2008). 11 Although the country continues to confront many challenges, its record of solid macroeconomic stability, acceleration in per capita income growth, reduction in population growth, decrease in child mortality, improvements in child nutrition, expansion of primary and secondary education, reduction of gender inequality in education, maintaining food production close to self-sufficiency level, sustained trends of decline in income -poverty and maintaining an external debt level much lower than many other developing countries is considered remarkable (Razzaque, 2018). ...
... In 2015, Bangladesh made an important transition from a low-income to a lower-middle-income country as per the World Bank defined classification of global economies. Compared with many other countries at a similar stage of development, Bangladesh has achieved faster progress in 11 A summary of Bangladesh's major achievements leading to LDC graduation can be found in Razzaque (2018). 12 The data on Bangladesh cited in this section if not otherwise mentioned are sourced from various reports of the Bangladesh Bureau of Statistics (BBS). ...
With the Rise of China, world trade and globalisation are now passing through turbulent times. Since the global financial crisis of 2008, there has been a sustained deceleration in international trade and investment flows marked by globalisation backlash, tariff wars, and COVID19 induced heightened policy measures focusing on diversifying supply sources away from China and decoupling of the world’s two largest economies—United States and China—to undo interlinked supply chains built over several decades. The emerging geoeconomic order, putting the existing architecture of the global trade and investment under pressure, brings a new spotlight on the development prospect of a country like Bangladesh, which has registered impressive socio-economic advancement over the past decades and is now set to graduate from the group of least developed countries (LDCs). Bangladesh would expect a credible, inclusive, and rules-based international trading system to support its development transition and in attracting investments and exploring new trading opportunities. The unsettling global trade environment is thus of particular concern. Bangladesh also wants to benefit from being geographically located in the vicinity of the world’s two largest growth centres in India and China. The geopolitical rivalry of the two countries, however, makes the region a geoeconomics powerplay ground. Within the general tumultuous terrain of global and regional cooperation, there are certain opportunities—for example, securing trade preferences, foreign investment, and financial assistance—that must be exploited prudently without being a victim of geopolitical competition of rival economic powers.
... From a fragile socioeconomic set-up at independence in 1971, it has emerged as a "development surprise" (Mahmud, 2008). 11 Although the country continues to confront many challenges, its record of solid macroeconomic stability, acceleration in per capita income growth, reduction in population growth, decrease in child mortality, improvements in child nutrition, expansion of primary and secondary education, reduction of gender inequality in education, maintaining food production close to self-sufficiency level, sustained trends of decline in income -poverty and maintaining an external debt level much lower than many other developing countries is considered remarkable (Razzaque, 2018). ...
... Compared with many other countries at a similar stage of development, Bangladesh has achieved faster progress in 11 A summary of Bangladesh's major achievements leading to LDC graduation can be found in Razzaque (2018). 12 The data on Bangladesh cited in this section if not otherwise mentioned are sourced from various reports of the Bangladesh Bureau of Statistics (BBS). ...
... From a fragile socioeconomic set-up at independence in 1971, it has emerged as a "development surprise" (Mahmud, 2008). 11 Although the country continues to confront many challenges, its record of solid macroeconomic stability, acceleration in per capita income growth, reduction in population growth, decrease in child mortality, improvements in child nutrition, expansion of primary and secondary education, reduction of gender inequality in education, maintaining food production close to self-sufficiency level, sustained trends of decline in income -poverty and maintaining an external debt level much lower than many other developing countries is considered remarkable (Razzaque, 2018). ...
... Compared with many other countries at a similar stage of development, Bangladesh has achieved faster progress in 11 A summary of Bangladesh's major achievements leading to LDC graduation can be found in Razzaque (2018). 12 The data on Bangladesh cited in this section if not otherwise mentioned are sourced from various reports of the Bangladesh Bureau of Statistics (BBS). ...
World trade and other major forces of globalization are now passing through a turbulent time as the rise of geoeconomics—the use of various economic and trade policy instruments by global and regional economic powers to promote their national interests and geopolitical influence— undermines the rules-based multilateral trading system led by the World Trade Organization (WTO). Since the global financial crisis of 2008, there has been a sustained deceleration in international trade and investment flows marked by globalization backlash, tariff wars, and Covid-19 induced heightened policy measures focusing on diversifying supply sources away from China and decoupling the world’s two largest economies—United States and China—to undo interlinked supply chains built over several decades. Indeed, China’s emergence as a major trading and economic powerhouse has had a profound impact on the geopolitical landscape marked by a proliferation of geoeconomics tools, putting the existing trade and economic cooperation architecture under pressure. There could be a prolonged period of uncertainty as some of the leading economies scramble for their economic and geopolitical gains. As Bangladesh is graduating out of the group of least developed countries (LDCs) and aiming for consolidating its economic success while exploring new trading opportunities, the unsettling global trade environment is of particular concern.
The emerging geoeconomic order brings a new spotlight on the development prospect of a country like Bangladesh, which has registered impressive socio-economic advancement and expects a credible, inclusive, and rules-based international trading system to support its development transition from an LDC to developing country status. Over the past decades, international trade as a vehicle for economic growth became established in the development strategies of many developing countries. The United Nations’ 2030 Agenda for Sustainable Development recognizes it as a means for achieving various Sustainable Development Goals (SDGs). However, the WTO-led multilateral trading system (MTS) now faces an existential threat as the long-running Doha Development Round of negotiations, initiated in 2001, is now stalled and the geopolitical competition accentuated by the Covid-19 pandemic has triggered global and regional powers to unleash a new array of geoeconomics instruments.
As Bangladesh wants to benefit from being geographically located in the vicinity of the world’s two largest growth centres in India and China, the geopolitical rivalry of the two countries, however, makes the region a geoeconomics powerplay ground. Within the general tumultuous terrain of global and regional cooperation, there are, however, certain opportunities—e.g. obtaining trade preferences, investment, and financial assistance—that must be exploited prudently without being a victim of geopolitical competition of rival economic powers.
Having provided a brief analysis of some of the major relevant trends, this paper presents several broad recommendations for Bangladesh to navigate the unfolding geoeconomics landscape while advancing its economic development and minimizing any backlash from hegemonic tensions. Amongst others, working with other developing countries, Bangladesh must proactively push for strengthening the multilateral trading system with a transparent dispute settlement procedure by incorporating reforms to contain the indiscriminate use of geoeconomics tools. At the regional level, ensuring regional prosperity through enhanced trade and improved connectivity should continue to be pursued. Bangladesh must also maintain productive relations with both China and India, judiciously using their financial assistance and trade preferences, while not falling into the power orbit of anyone. Along with trying to revitalize SAFTA and bring dynamism into BIMSTEC, Bangladesh should pursue RCEP membership, which—because of the involvement of such prominent economies as Australia, China, Japan, Republic of Korea, and New Zealand, amongst others—attaches importance to trade openness and reinforces the credibility of a trading bloc by establishing a coherent free trade zone and facilitating cross-border investment flows within the region. Being part of a strong trading bloc can also act as a shield against being subject to indiscriminate geoeconomics tools deployed by any regional powers.
This paper further recommends that given the escalated geopolitical tensions, trade and development prospects facing Bangladesh in the immediate aftermath of its LDC graduation can be greatly insulated by securing a favourable post-LDC trading arrangement from the EU. Therefore, one of the key priorities should be to explore opportunities for an EU GSP regime which will be as close as the EBA.
Managing a productive bilateral relationship with the United States will also be critical. While the U.S. stance on the global trade and investment regime and regional trade deals is still evolving, Bangladesh should be ready to consider participation in any possible FTA and/or regional trading bloc initiative that the United States could be pursuing in the future.
Finally, notwithstanding the challenges of the external environment, Bangladesh must work on improving the overall competitiveness of the economy to sustain export growth. Tackling the high cost of doing business, dealing with weak and inadequate infrastructural facilities and inefficient inland road transport and trade logistics, strengthening institutions, etc. are important tasks in this regard. In the era of geoeconomics and heightened geopolitical tensions, it is also important to build diplomatic and trade negotiation capacities so that the development objectives can be effectively pursued.
... The impending graduation from LDC status represents a major transition in terms of development for Bangladesh. For a country of more than 160 million people and a land area half the size of the UK, confronting daunting challenges of frequent natural disasters, political unrest and weak governance, to make this transition possible is nothing less than an amazing achievement (Razzaque, 2018b). This is global recognition of the socio-economic development that Bangladesh has been able to achieve. ...
... It is to be noted that there is also a provision for the 'income-only' graduation rule under which, if the 3-year average per-capita gross national income of an LDC has risen to a level at least double the graduation threshold, the country could be eligible for graduation regardless of its situation under the other two criteria. 2 A summary of Bangladesh's major socio-economic achievements leading to graduation from LDC status can be found in Razzaque (2018b). 3 World merchandise exports declined by a staggering US$2.5 trillion in 2015 (from the previous year), and then again fell by more than $500 billion in 2016. As many as 183 countries had experienced reduced export earnings in 2015 (compared with the previous year), while for 112 countries export earnings similarly declined in 2016. ...
Bangladesh is likely to graduate out of the group of least developed countries (LDCs) by 2024. While this represents a major transition in terms of its development, demonstrating the country’s impressive socio-economic achievements, it also gives rise to concern about potentially sizeable costs due to the resulting loss of access to various support measures associated with LDC status. The most important consequence will be forgone EU trade preferences, taking advantage of which, among others, Bangladesh’s export-oriented apparel industry flourished, creating direct employment opportunities for 4 million people – most of whom are women. This paper focuses on the EU market to analyse the potential implications of LDC graduation for Bangladesh’s apparel exports. By using a partial equilibrium model, it estimates that discontinuing tariff preferences could lead to a potential export loss of more than US$1.6 billion. While the methodological approach employed in this paper has certain caveats, there is no denying that terminating duty-free access in the EU, resulting in a tariff hike of 9.6 per cent, will put serious pressure on Bangladesh’s export competitiveness. This paper gathers several buyers and exporters’ perceptions to provide insights into the issues and offers some broad recommendations to mitigate any adverse effects.
... iv. Nepal can also learn from the experience of Bangladesh's export success in apparels in its economic transformation (Razzaque, 2018), and emulate strategies for success in exporting carpets. a. ...
Nepal has long aspired to graduate from the Least Development Country (LDC) to Developing Country category as defined by the United Nations system. Nepal had met two of the three graduating criteria and could have technically graduated from the LDC status in 2015. However, based on the Nepal government’s request to defer the review, the new 2021 assessment by the United Nations Committee for Development Policy (CDP) recommended that the country should graduate from the LDC status by 2026. The graduation requires not only meeting pre-defined development-related thresholds, but also maintaining sustained improvements in at least two consecutive assessments in two of three areas: gross national income (GNI) per capita, human assets index (HAI), and economic and environmental vulnerability index (EnVI). Nepal’s economy is dependent on several environment-related factors such as agriculture, tourism, hydro-power, and natural resources. This economic development is also solidly tied to the environmental well-being of the country. The authors agree with the Nepal government’s desire to graduate from the LDC status. In this paper, we review the graduation process, assess indicators of the Environmental Vulnerability (EnVI), review the current situation with respect to environmental vulnerability, and point out where it needs to develop appropriate goals, policies, and programs to help the country graduate and join the ranks of developing countries.
... iv. Nepal can also learn from the experience of Bangladesh's export success in apparels in its economic transformation (Razzaque, 2018), and emulate strategies for success in exporting carpets. a. ...
Nepal has long aspired to graduate from the Least Development Country (LDC) to Developing Country category as defined by the United Nations system. Nepal had met two of the three graduating criteria and could have technically graduated from the LDC status in 2015. However, based on the Nepal government’s request to defer the review, the new 2021 assessment by the United Nations Committee for Development Policy (CDP) recommended that the country should graduate from the LDC status by 2026. The graduation requires not only meeting pre-defined development-related thresholds, but also maintaining sustained improvements in at least two consecutive assessments in two of three areas: gross national income (GNI) per capita, human assets index (HAI), and economic and environmental vulnerability index (EnVI). Nepal’s economy is dependent on several environment-related factors such as agriculture, tourism, hydro-power, and natural resources. Thus, economic development is also solidly tied to the environmental well-being of the country. The authors agree with the Nepal government’s desire to graduate from the LDC status. In this paper, we review the graduation process, assess indicators of the Environmental Vulnerability (EnVI), review the current situation with respect to environmental vulnerability, and point out where it needs to develop appropriate goals, policies, and programs to help the country graduate and join the ranks of developing countries.
Keywords: Nepal, Least Developed Country, Developing Country, landlocked, environment, climate, vulnerability, United Nations.
... The impending graduation from LDC status represents a major transition in terms of development for Bangladesh. For a country of more than 160 million people and a land area half the size of the UK, confronting daunting challenges of frequent natural disasters, political unrest, and weak governance, to make this transition possible is nothing less than an amazing achievement (Razzaque, 2018b). This is a global recognition of the socio-economic development that Bangladesh has been able to achieve. ...
Bangladesh has tremendous progress in its economic development and its impending graduation from the group of least developed countries, set to take place in 2024, represents a major development transition. Along with its various achievements in terms of rising per capita income, declining poverty incidence, women's improved economic empowerment, etc., Bangladesh - among LDCs - also stands out as an impressive success story of an export-led growth and development process. The LDC graduation, however, requires preparing for the resultant discontinuation of international support measures, particularly those related to trade preferences that have profoundly benefited Bangladesh. Sustaining the apparel export performance and unleashing the export potential of many other sectors will be two critical factors in ensurng a smooth transition process.
This volume, comprising 13 chapters, contributes to the policy discourse on LDC graduation by providing objective assessments of some of the major issues that now require urgent policy attention.
Part I of this volume highlights the longstanding challenges facing the export sector and the likely implications of graduation from the perspective of the private sector.
In Part II, Bangladesh's trade relationships with four key trading partners viz. the European Union, the United States, India, and China are discussed. The chapters identify areas of greater engagement with these partners in the light of LDC graduation realities.
Finally, Part III ascertains the export potential of six selected sectors (leather, plastic, furniture, pharmaceutical, jute, and services) and offers policy recommendations essential for enhanced export receipts.
Overall, the analyses presented in this volume include, among others, the factors affecting export competitiveness, major changes in market access provisions after LDC graduation, ways forward for securing most favourable trading arrangements with important trading partners, and support measures needed to boost and diversify exports.
... Notwithstanding the impressive achievements of sustained economic growth and poverty reduction, close to 40 million people still live in poverty and another 30 million are considered 'vulnerable' given the risk they face in slipping back to poverty due to a modest loss of income 1 A summary of major socio-economic advances made by Bangladesh culminating in its graduation from the group of the least developed countries can be found in Razzaque (2018). ...
Bangladesh has made spectacular strides forward in its economic development, registering impressive achievements of sustained economic growth and poverty reduction. Nevertheless, a significant proportion of the population (24.3%) still lives in poverty and almost 70 million people (about 43% of the population) are considered poor and vulnerable. Over the past decades, the government of Bangladesh has implemented various types of safety net programmes to address risks faced by poor and marginalised groups. Currently, Bangladesh spends about 2 percent of the GDP on social security, comprising over 100 programmes. However, due to inadequate funding, and implementation-related difficulties and malpractices that result in a high degree of targeting errors, improving efficiency and effectiveness of these programmes poses a major challenge. The adoption of the National Social Security Strategy (NSSS) in recent times has been a major policy advancement that aims to overcome programmatic and implementation loopholes by undertaking wide-ranging reforms and by streamlining the operational procedures involving the social security system. These reform initiatives are timely and should enhance access for the targeted population groups. However, given the nature of the reforms involving several implementing ministries, the full and effective implementation of the NSSS will take several years. In the meantime, building the knowledge base of the existing access barriers is most appropriate to keep such a crucial issue as part of the relevant policy discourse, which can prompt measures in alleviating the problem at least in the short to medium term. In this context, the current study sheds light on the targeting efficiency of SSPs and provides fresh insights into the factors leading to high exclusion problems faced by the citizens belonging to the poorest and vulnerable groups. While the NSSS reform agenda take largely a supply-side and top-down approach, this study makes an in-depth assessment of the demand side issues based on empirical and qualitative field-work-based research to offer complementary perspectives.
The research literature designates English language proficiency to contemplate as the hierarchy of individual development to Bangladeshi graduates, while insufficient English language proficiency contains several disadvantages in carrier development. Although the contradictions exist in the literature, ELP may oscillate among various groups of graduates grounded on the socioeconomic contextual of Bangladesh. In these circumstances, the study focuses on the hindrances of ELP among the diverse social groups of graduates and how they cope with interferences in career building. The study was conducted in a sequential explanatory design method where the survey and interviews were directed to collect data. The data were collected in random sampling technique for survey while interviews were in stratified random sampling technique. Then the study crossed descriptive analysis in quantitative and thematic analyses in qualitative for triangulation purposes. The study indicates discrimination as ELP's hindrances strongly varies based on their education level. In contrast, dissatisfaction varies according to income level, and economic imbalance varies among the living status of Bangladeshi graduates. However, the study suggests to increase awareness of language use in career building among the graduates and concern authorities. Moreover, the study recommends to conduct more research on the language use in career building in different dimensions.
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