Bangladesh is Booming- on the way to achieve ‘Developing Country’ Status
Feature Desk
Bangladesh has stepped into a new journey as it qualified to graduate into a developing nation from a Least Developed Country (LDC) after 45 years. The United Nations Committee for Development Policy (UN CDP) recommended the graduation in its final evaluation on 26 February. Bangladesh is scheduled to officially become a developing country in 2026 as the UN committee recommended that the country should get five years, instead of three, to prepare for the transition due to the impact of the Covid-19 on its economy.
What is CDP?
The Committee for Development Policy(CDP) is a subsidiary body of the United Nations Economic and Social Council (ECOSOC). The task of the CDP is to provide independent advice to the Council on development policy issues. The Committee is also responsible for deciding which countries can be considered least developed countries (LDCs). The Committee has 24 members, nominated in their personal capacity by the United Nations Secretary-General and appointed by ECOSOC for a period of three years. The Secretariat of the Committee for Development Policy, in the United Nations Department of Economic and Social Affairs, Economic Analysis and Policy Division, provides substantive and administrative assistance to the Committee.
What is LDC?
Income criterion: Based on a three-year average estimate of GNI per capita for the period 2011-2013, based on the World Bank Atlas method (under $1,025 for inclusion, above $ 1,230 for graduation)
Human Assets Index (HAI): (a) nutrition: percentage of population undernourished; (b) health: mortality rate for children aged five years or under; (c) education: the gross secondary school enrolment ratio; and (d) adult literacy rate.
Economic Vulnerability Index (EVI):(a) population size; (b) remoteness; (c) merchandise export concentration; (d) share of agriculture, forestry and fisheries; (e) share of population in low elevated coastal zones; (f) instability of exports of goods and services; (g) victims of natural disasters; and (h) instability of agricultural production
The exit of a country from the LDC group essentially means acquiring a seal of global approval regarding its enhanced development achievements.
Positive aspects of LDC graduation:
- Enhanced confidence of international financial actors.
- Reduced cost of international borrowing.
- Upgrade in country credit rating and augmenting generation of investible resources.
- Graduated countries experienced enhanced domestic tax collection and higher flow of FDI.
- Access to external development finance did not diminish abruptly.
Likely Challenges of Bangladesh:
- Relinquishing of preferences and privileges.
- Severe shock for garment exports.
- Graduation may affect subsidy to agricultural sector and support to infant industries.
- Loss of special access to climate finance.
- Pharmaceutical industries will stop enjoying patent waiver.
Bangladesh should draw up a robust “LDC Transition Strategy of Plan – 2026” and align that with 8th Five-Year Plan (2021-25), 9th Five Year Plan (2026-2030) and Second Perspective Plan (2021-41) – Bangladesh Delta plan 2100. It is not just Bangladesh which needs to make efforts, world bodies like UN, WTO, Bretton wood[1] institutions etc. have to bring LDC transition measures for initial few years.
[1] The Bretton Woods Institutions are the World Bank and the International Monetary Fund (IMF). They were set up at a meeting of 43 countries in Bretton Woods, New Hampshire, USA in July 1944.