Bangladesh would have to wait 10 more years than expected to graduate from the league of least developed countries (LDCs), as the country still lags behind economic vulnerability and human assets index despite faring well in some socio-economic indicators.
The latest developments indicated Bangladesh to fail exiting from LDCs club by 2021 as predicted earlier.
The observation emerged with the release of the United Nations Conference on Trade and Development (UNCTAD)’s Least Developed Countries Report 2014 at the CIRDAP auditorium in Dhaka yesterday.
Center for Policy Dialogue (CPD) arranged a press conference to launch the report subtitled “Growth with Structural Transformation: A Post-2015 Development Agenda.”
Since 1971, only four LDCs – Botswana, Cape Verde, the Maldives and Samoa – advanced to the group of developing countries, with Equatorial Guinea and Vanuatu expected to join them in June and December respectively in 2017, and the potential candidates are Angola and Kiribati.
Bangladesh got its LDC membership in 1973 and for the last three decades it has been enjoying all the benefits of the group. The number of LDC countries is now 48.
“Despite good progress in some socio-economic indicators, Bangladesh still needs to wait 10 years more to get out of LDCs status,” CPD distinguished fellow Debapriya Bhattacharya told the press conference.
He said the country needs to work more vigorously in reducing the risk of economic vulnerability and enhance human assets along with lifting per capita income to rise above the status of a LDC.
“The LDCs excelled in economic growth during the last decades, quality of livelihood did not significantly improve which, in turn, undermined progress towards achieving the MDG targets,” he said.
To graduate, Bangladesh needs to have per capita income of $1,242 in 2015. Recently, the government put the per capita income figure at $1,044.
The country scored 32.4 points in the Economic Vulnerability Index. LDCs which plan to graduate from the group must bring down their scores below 32. As for the Human Assets Index, the country will have to add over 11 more points to its current score of 54.7, according to the report.
The list of LDCs is reviewed every three years by the Economic and Social Council of the United Nations, based on recommendations by the committee for development policy.
A country will qualify for graduation from LDCs if it has met the graduation threshold of at least two of the three criteria – per capita income, human asset and economic vulnerability – during the period covered by at least two consecutive triennial reviews of the list.
Explaining the LDCs’ drawbacks, Bhattacharya said Bangladesh’s development amongst the LDCs is remarkable due to improved growth, remittance influx, enhanced food security and resilience to environmental disaster etc.
“But the country lags behind in primary areas such as income and employment generation, diversification of existing exportable items, low per capita income due to large population etc.”
He said, as a result, Bangladesh cannot go beyond the wage-low productivity-low income cycle.
Becoming a middle income country also does not mean graduating from the LDCs group because it requires improving on social indicators, which many LDCs failed to achieve despite generating high income and growth through exporting natural resources and tourism promotion, said the CPD distinguished fellow.
In this context, CPD Executive Director Professor Mustafizur Rahman said Bangladesh cannot meet the post-2015 goals without addressing human and economic development altogether because development in the 21st century is not linear, there are qualitative changes in the age of globalisation.
CPD Research Fellow Towfiqul Islam Khan presented the report.
For smooth transition for graduating from the list of LDCs, the UNCTAD report recommended for putting more emphasis in generating income and employment, structural transformation through increased industrial productivity and good governance in order to reduce economic vulnerability that persistently hold back LDCs including Bangladesh from generating enough momentum to graduate.
It also recommended LDCs to prioritise resource mobilisation for public and private investment, industrial and sectoral policies to channel resources into most productive sectors and activities and macroeconomic policies which foster economic growth.
The LDC report found the reasons for the LDC Paradox and said failures to graduate from LDCs partly reflected an external problem that is limited progress on MDG 8 (a global partnership for development), falling far short of development partners’ aid commitments and serious erosion of LDCs’ trade preferences relative to other developing countries.