Developing country status: Those sound much
Published : Tuesday, 27 March, 2018 at 12:00 AM Count : 1127
Prevailing reality enables us to ascertain what is to be done. If the reality is misjudged or undervalued the things get happened opposite which we do not desire. But, if coming or would be reality is comprehended well there is a possibility to make a history of success and of defying fear and hesitation. The history of our liberation war, history of our erecting the Padma Bridge, the history of shouldering eight mega projects and history of fighting terrorism and rise of the people against war criminals give us lesson. Every light is having with its shadow. But why some of us scholarly are giving more weight on the shadow of our graduation from LDC to developing country status? Why are not they counting our inherently entrenched vigour with emotional uplift? This graduation will bring a lot of opportunities for us and quite a few challenges as well. There will be benefits but there will be costs to pay also. Our vigour will overcome these challenges for a smooth graduation process. When we were in LDCs, our mind set and national efforts and arrangement were designed accordingly for getting concessional help. But graduation process will bring psychological boost. That will be translated into real works and planning. Economists argue the new status will help in branding Bangladesh. Investors will get a new vista in the country given its strength in certain areas such as the size of the Gross Domestic Product (GDP), exports and population compared to other LDCs.
These will help Bangladesh's credit worthiness which is reflected through better credit rating. Bangladesh will have more opportunities for taking commercial loans from the international market at a competitive interest rate. Such branding will help it to mobilise resources from the global market through sovereign bond. The private sector will also have the opportunity to generate capital from the global financial market. Albeit Bangladesh has to recur the cost of development finance and higher debt servicing liabilities. The graduation will cease the facilities to access to concessional finance for LDCs. But credit is not small here. Bangladesh has changed herself from an aid-dependent country into a trade dependent one over the years.
However, the role of official development assistance for poverty alleviation and other social securities cannot be avoided. As a lower middle income country, Bangladesh is no more eligible for low interest loans. Dr Fahmida Khatun of CPD wrote that after graduation, Bangladesh has to go for blended finance that includes loans from the development institutions and other sources with a high interest rate, and shorter repayment period. However Bangladesh should also explore more resources from institutions such as the Asian Infrastructure Investment Bank (AIIB), New Development Bank (NDB) and other commercial sources. Bangladesh's major challenge will be to face "preference erosion" due to the LDC graduation. Bangladesh is entitled to have duty-free access to the European market under the "Everything but Arms" initiative. This is a huge opportunity for the country as more than 60 per cent of its exports go to the European market. Except for the apparel exports to the USA, Bangladesh receives duty-free market access for all products in all developed countries. Even some developing countries such as India provide duty free market access for all products. She said, due to graduation, Bangladesh will lose about 8 per cent of its total exports because of the imposition of additional tariff on the exports by 6.7 per cent without a preferential treatment.
A CPD study shows that the loss will be equivalent to USD 2.7 billion, but here is a breath taking space. After the graduation in 2024, there will be a grace period of another 3 years when Bangladesh will enjoy all LDC specific benefits. So there are approximately 10 years for the country to prepare itself to start the new stride. But how to get rid of it? CPD says, firstly, the overall capability of the economy has to be improved. This should be achieved through diversification of the economy, technological upgrade, training and skill development of human resources and institutional strengthening. In order to attract foreign investment, the economy has to go through structural changes, achieve resource efficiency and improve productivity. Bangladesh has to gear up to face the challenges of the forth Industrial Revolution. The labour force displaced due to technological upgrade should be able to find themselves engaged in self-employment through micro, small and medium enterprises. Secondly, in order to make up for the loss to be incurred by the preference erosion and end of various institutional support measures. Bangladesh must improve its export competitiveness and diversity both markets and products for export. Besides, Bangladesh has to play a proactive role at the regional and sub regional initiatives, such as BBIN, BCIM and BIMSTEC for more meaningful partnerships. At the same time, it should remain active at the World Trade Organization to realise any potential benefit.
In the post-graduation period, the country will still be eligible for Generalised System of Preferences or GSP Plus benefits for market access. In order to access this, countries usually have to comply with stringent conditions such as improved work conditions, higher poverty alleviation efforts, women's empowerment and reduction of carbon emission. Our economy's resiliency has made things possible in a major leap forward. Bangladesh has become eligible to graduate to a developing country from a least developed one as it has met all the three criteria for the first time for getting of the LDC bloc. The three criteria are Gross National Income (GNI) per capita, Human Assets Index (HAI) and Economic Vulnerability Index (EVI). According to the UN's graduation threshold, GNI per capita of a country has to be 1230 USD or above. Bangladesh's Gross National Income (GNI) per capita is now 1272 USD. In terms of the Human Assets Index (HAI), a country must have a score of 66 or above. Bangladesh's is now 72.8, well above the threshold. The HAI is an indicator of nutrition, health, adult literacy and secondary school enrolment rate. In the economic vulnerability Index (EVI), a country's score has to be 32 or below. Bangladesh's score is 25 in the EVI, an indicator of natural and trade related shocks. So, our achievements prove that we are in dynamism.
The writer is a freelance contributor