Continuation of the democratic process and political stability must be ensured before graduation from the least-developed country bracket, said a noted economist yesterday.
The graduation from the LDC would be smooth if there is quality governance, no threat of violence, no threat of political instability, said Rehman Sobhan, chairman of the private think tank Centre for Policy Dialogue.
Sobhan's comments came at a dialogue styled 'Bangladesh's graduation from the LDC group - pitfalls and promises' at a hotel in Dhaka yesterday.
Gowher Rizvi, prime minister's foreign affairs adviser, acknowledged that much needs to be done to ensure quality governance. Bangladesh's graduation narrative is different from its peer countries like Bhutan and the Maldives, according to Sobhan.
For instance, the Maldives is a country of single driver economy: the tourism.
“But, Bangladesh is different as there are several major key drivers of economy,” he said, while citing the thriving entrepreneurial class that has developed a competent garment sector and small and medium enterprises.
Bangladesh has a strong and dynamic workforce, mostly from rural areas, which have been contributing to productivity.
“Such a good number of labour force is not available in Bhutan.”
Migrant workers are another important factor in Bangladesh's economic development, Sobhan said, adding that one will be hard-pressed to find someone in the rural areas who do not have any relative working abroad and sending remittance.
The farmers are also contributing to the economy: still 45 percent of the country's population live in the villages.
The non-governmental organisations have also played an important role in the development process.
“The sky is the limit for Bangladesh,” Sobhan added.
The country is set to graduate into the developing country bracket in 2024 and it will get a grace period of three years to consolidate its new economic standing.
“Bangladesh's graduation is expected to be a landmark success in contemporary development experience,” said Debapriya Bhattacharya, distinguished fellow of the CPD.
It is the only country to meet all three criteria for graduation.
However, the ongoing Rohingya refugee crisis is a blip in what has otherwise been a smooth-sailing passage to the developed country bracket.
Graduation from the LDC bracket will lead to erosion of trade privileges and loss of concessional lending terms from development partners.
After graduation, Bangladesh's exports will face an additional 6.7 percent tariff, which could result in an estimated export loss of about $2.7 billion, said Mia Seppo, United Nations resident coordinator in Bangladesh.
The sum is 8 percent of Bangladesh's export receipts in 2015.
United Nations Conference on Trade and Development estimated that exports may fall by 5.5 percent to 7.5 percent after graduation, Seppo said.
“Bangladesh as an LDC is a major user of the duty-free market access.”
In 2016, the value of exports from Bangladesh to preference granting countries was $24.7 billion, which accounted for 72 percent of the total exports.
Regional trade agreement and bilateral initiatives cover about 90 percent of the exports. “Thus, preferential market access is of special significance,” she added.
Mustafizur Rahman, another distinguished fellow of the CPD, suggested technology upgrades, skills endowment, productivity enhancement and higher competitive strength.
“Bangladesh will need to give high priority to all these areas by sound policymaking and high-quality implementation,” he added.
The country needs to look for more macroeconomic stability, said Khondaker Golam Moazzem, research director of the CPD.
Zahid Hossain, lead economist of the World Bank's Dhaka office, suggested engaging more female workers in the production cycle.
Currently, female participation is 36 percent.
If the current 36 percent participation can be improved to 48-50 percent, the GDP will grow 0.7-0.8 percent more, he said.