Bangladesh also needs to focus on science, technology and innovation, says Giovanni Valensisi, economic affairs officer of the UNCTAD
Bangladesh has relied heavily on international support measures in the past, most notably preferential market access, but with graduation from a least developed country (LDC) to a developing one, the country will lose such support.
To ensure that phasing out these support measures does not affect progress, the country needs mainstream graduation into an industrial policy framework by gradually building up competitiveness, says Giovanni Valensisi, economic affairs officer of the United Nations Conference on Trade and Development (UNCTAD).
Bangladesh also needs to focus on science, technology and innovation, the economist said while speaking at the virtual launching of UNCTAD LDC Report 2021 on Monday.
“Bangladesh’s growth performance has been resilient. In the past, there were only two episodes of growth deceleration — during independence and during the 1997 financial crisis,” Valensisi said.
With Covid-19, the country displayed fairly encouraging resilience and maintained some positive level of GDP growth even though there was a clear slowdown.
“What is critical is to maintain investment, not only physical investment but also in terms of human capital,” he said, adding: “We also need to ensure that vulnerable categories are protected, especially because bankruptcies or closures may lead to losing productive capabilities.”
According to the economist, Bangladesh also needs to maintain its momentum of structural transformation.
Average labour productivity in Bangladesh between 1995 and 2018 has grown at approximately 6% per year and manufacturing was critical to this as it displayed “within sector productivity growth which was fairly significant”.
But it also absorbed labour from less productive sectors and lifted the average, Valensisi said.
Agriculture displayed very fast-growing labour productivity within the sector, but the share of employment accounted for by agriculture declined over time.
In the services sector, sectoral contribution to labour productivity by certain services grew very fast, but others did not grow as much, he also said.
“To maintain the momentum in structural transformation, we need to exploit and stimulate a denser network of input-output linkages within the domestic economy, but should also try to stimulate the growth of modern services,” the UNCTAD official said.
To reach this goal, it is important to focus on economic diversification and doing so by adopting and implementing bold industrial policies, he added.
Calling domestic resource mobilization as a crucial determinant of institutional capacities to adopt and implement a sustainable development investment framework, he said that SDG financing needs for Bangladesh are considerable — about $66.3 billion per year at 2015 prices according to government estimates.
Commerce Secretary Tapan Kanti Ghosh, who attended as chief guest at the event, said Bangladesh has been negotiating for continuation of tariff benefits for 12 years after graduation.
“However, the extension may be given for six years. Still, it would be good for us," he said.
The secretary also sought cooperation from other countries to give Bangladesh the GSP Plus status in the EU countries after graduation.
Professor Mustafizur Rahman, a distinguished fellow of the Centre for Policy Dialogue (CPD), agreed with the secretary, adding that it will be good for the country if the extension is given even for seven years.
Among others, UN Resident Coordinator for Bangladesh Mia Seppo and Rolf Traeger, chief of LDC Section at UNCTAD, also spoke at the event.
The LDC Report 2021 will officially go live at 11pm on Monday.
The report is calling for increased investment in productive capacities and state capacity in LDCs as the Covid-19 crisis and the emerging two-speed global recovery threaten to reverse many hard-won development gains in these countries.
Development of productive capacities in LDCs is necessary for boosting their ability to respond to and recover from crises such as the pandemic, and to advance towards sustainable development, the report says.
The report is the 25th version of UNCTAD's flagship publication.
Currently, 46 countries including Bangladesh, are categorized as LDCs. Bangladesh is set to graduate from the LDC category by 2026.
Of the 46 LDCs, 36 are now members of the World Trade Organization (WTO) while eight more are negotiating to join the organization.