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Event Report

The webinar, Bangladesh’s Upcoming LDC Graduation: Implications, Challenges, and The Way Forward is part of NIICE’s Economists Lecture Series and was held on Friday, 3 June 2022 from 9:30 am to 11:00 (Nepal Time). The event was presented by Professor Mustafizur Rahman, a Distinguished Fellow at the Centre for Policy Dialogue.

LDC (Least Developed Country) Graduation has been a focal point for the Centre for Policy Dialogue, concurrent with Bangladesh’s dual graduation in its post-independent developmental journey. First, from LIC (low-income country) to LMIC (lower middle-income country), and then from LDC to a developing country status, to be effective in 2026 following a recommendation by ECOSOC at the 40th Plenary of the 76th meeting of the UN General Assembly. Initially included in the group of LDCs in 1975, Bangladesh met all three graduation eligibility criteria in 2018 but later requested a two-year deferment period due to constraints brought about by the COVID-19 pandemic. The LDC Graduation testifies to the country’s socio-economic progress in terms of per-capita income, enhancement of human resources, and capacity to deal with economic vulnerabilities.

Implications

With a population of 168 million, Bangladesh is the first major LDC to graduate, and its graduation journey will be closely watched by the international community. This is striking to note as the six previously graduated LDCs are mostly small island economies with a combined population of not more than 6 million. In pursuance of Foreign Direct Investments (FDI), an LDC graduation will certainly provide positive implications for Bangladesh’s image and branding, economic benefits, and favourable borrowing terms as the country’s credit rating goes up.

Challenges

Questioning the process of sustainable dual graduation, Professor Rahman laid down current global scenarios that LDCs have to grapple with: graduating in the shadow of the pandemic (decelerated growth rates, increased number of new poor, impacted labour markets and income), embedded structural weaknesses, a much weakened WTO (particularly its systemic issues, operational modalities, and the rise of protectionism), frustrating experience with the implementation of the decadal IPOA, the ascendancy of mega-regional groupings which poses adverse implications for LDCs, the impact of dual graduation (LDC graduation and middle-income graduation), and the changed rules of eligibility (Human Assets Index and Economic Vulnerability Index were fixed at 66 and above 32 and below in 2012).

Going Forward

Professor Rahman elaborated that Bangladesh will need to be guided by Three Identities—as a Future Developing Country as an LDC, and as a Graduating LDC through:

• Leveraging its LDC status over the next 5 years
• Strive to secure a new set of International Support Measures (ISMs) as a graduating LDC
• Most importantly, adequately preparing for Sustainable Graduation by implementing and complying with the LDC Graduation Strategy

Such guidance will be felt in both Domestic Space through (a) policy-making and policy flexibilities, and (b) obligations, compliance, and enforcement leading relating to WTO Agreements, and the Global Space concerning the (c) terms of market access, and (d) degree of reciprocity in dealing with partners. When undertaken, Bangladesh will thus enjoy the Special and Differential Treatment Provisions by the WTO. Steps have been done early on in preparation with The Bangladesh General Economics Division’s LDC Graduation Strategy,  the government’s 8th Five Year Plan (FYP), and the Prime Minister’s Office’s constitution of a high-level committee tasked to monitor the implementation of the LDC Graduation Strategy.

Professor Rahman also tackled the Proposed Action Agendas in Going Forward. To raise productivity and competitiveness, Bangladesh must shift from a traditional economy to a new, digital-based, and service-oriented economy. Bangladesh must also implement a renewed emphasis on regional cooperation (e.g. market diversification, integration with Southern Asian markets), ensuring inclusive Dual Graduation (e.g. addressing the growing nature of income inequality, investing in education), build the Required Negotiating Capacity (key strategy: attract investments to take advantage of preferential market access).

Prepared by Anna Bio, NIICE Intern