Leaving LDC by 2024 and meeting obligations
Published : Thursday, 16 January, 2020 at 12:00 AM Count : 152
Due to the improvement of health and education, shortcomings and economic progress, Bangladesh, as the least developed country (LDC) in terms of population and economic size are likely to stay away from the LDC status by 2024. For the first time since independence, the country is expected to meet three primary criteria for graduation to become a middle-income country.
The Review Committee for Development Policy (CDP) meets at the United Nations headquarters in New York, March 12-16, 2018, and evaluates the country's per capita income, a human resource index and an economic vulnerability index. It is expected that the country must cross the two gates of the three criteria in two consecutive three-year reviews to consider graduation.
Daniel Gay, an LDC expert on the UN DESA's Development Policy and Analysis Department, said, "Bangladesh has made huge gains in health, education, infancy and life expectancy. These have driven economic growth as a result and subsequently reduced economic vulnerability, so this is truly a success story".
As you might know, every three years, the CDP, which consists of 24 independent development experts from around the world, reviews the list of LDCs based on a rigorous approach, using comprehensive sustainable development indicators. At the last review meeting, Bangladesh was able to secure its position to be considered for graduation as a middle-income country by 2024. Again, as per the current research, since 1996, per capita, gross national income has exceeded the LDC average and has recently risen above the margin used by the CDP. The economy has grown tremendously through the export of textiles and clothing, developed remittances, natural gas, shipbuilding and seafood, as well as information, communication and medicines are all emerging sources of foreign exchange and economic development.
These economic advances have helped people living in poverty. About 50 million people have given up extreme poverty since 1990, and as per the World Bank's statement, the poverty rate has dropped from 40 per cent to 14 per cent since 1990. Bangladesh's thriving non-governmental organisations helped to provide vital health and education services to the poor by translating the human resources index used in the CDP into rapid improvement.
However, I personally do not agree with all of this information, as the underlying situation is different than what international organisations imply. Bangladeshis are still struggling to find better health in hospitals and other health centres in the country. The education system of the country is still primordial. The modern education system must be adopted to create a prosperous society. A major policy change requires in both health and education sector in Bangladesh.
Bangladesh's GDP growth rate is prognosticated to be 8 per cent in 2020. Statistics put it ahead of other Asian countries, including India. When it became independent in 1971, Bangladesh was incredibly poor. GDP growth was negative 14 per cent, political instability spread, and floods and famines destroyed the country. The topics have been removed. Statistics from the Asian Development Bank show that the average growth rate is now higher in Bangladesh than the Asian average.
Again, the success of economic growth rate in Bangladesh has mostly arrived from the private sector. The garment industry that started in Bangladesh in the 1970s is now almost a US$ 40 billion-dollar industry expecting to reach US$ 50-60 billion within the next few years of time. Other service sector - including microfinance and computing - accounts for 53% of the country's GDP.
Most importantly, the current research indicates that population growth is significantly helping to increase per capita incomes due to slowdown. According to the latest research and data from the World Economic Forum, the number of employed workers living below the poverty line has dropped from 73.5 per cent in 2010 to 10.4 per cent in 2018, which is somewhat progressive.
Nonetheless, another study reflects that the minimum wage of Bangladesh's RMG industry is the poorest in the world. Most informal sector has not yet found a better wage structure compare to other countries in Asia. For example, China and Indonesia both increased their RMG minimum wages by 285 per cent and 195 per cent, respectively from 2000 to 2014, resulting in more buyers or foreign investors in the sector in Bangladesh. We know that the export of clothing from China and Indonesia is declining. China's labour will soon become much more expensive than other developing countries. Not only China but also some Asian countries that are significantly considering developing IT and other skilled industries to compete with other Western and European countries.
As such, my question is if we do not increase the minimum wages for our RMG workers then they will be further exploited which will ultimately reduce national productivity. The government, RMG merchants and international buyers must look at this issue more carefully towards the sustainability of RMG in Bangladesh. The research also shows that most informal sector yet to find a better wage structure which is way behind than the other Asian countries. Most importantly, Bangladeshi labour must be skilled and educated, in addition to suitable training to compete with the domestic and international labour markets.
Considering the wage structure of most informal workers in Bangladesh, the working conditions of labour are still the most burning issues, it should be considered as this could be one of the major obstacles to a sustainable Bangladesh. Workers' well-being is often ruthlessly ignored by employers in the state and other stakeholders.
Now the question of whether Bangladesh's strong economic performance can be sustained is that as things stand? The country's prospects are great, but there are risks that need to be taken into account by policymakers. At first, when a country's economy collapses, corruption, curiosity and inequality continue to rise, and if not checked, can even stop the growth process, and Bangladesh may face the same upshots.
Outlook's country notes highlight structural policy challenges in emerging Asian countries cover policy areas, including education and training, tourism, finance, taxes, digitalisation, pre-economic corridors, small and medium-sized enterprises (SMEs), energy, innovation and FDI. If I consider Bangladesh along with other economically advanced Asian countries, some of the sectors will need some more modernization and appropriate infrastructure to provide better services to the citizens that some other Asian countries have already offered.
Most importantly and surprisingly, Bangladesh does not have any relationship with any regional or special agreement among Asian countries other than its relationship with SAARC, by far. The South Asian Association for Regional Cooperation (SAARC) was established in Dhaka on December 8, 1985, by signing the SAARC Charter. Not surprisingly, this regional association is becoming very inefficient due to regional conflicts between member states. Millions of people are moving beyond its proper facilities to the way it was designed and established.
On the other hand, socio-economic and political progress has been seen in many ASEAN countries through regional integration between the member states. Consolidation can improve the chances of economic growth and resilience. Though ASEAN played a central role in many emerging Asian integration efforts, extensive structures are increasingly being used to address common challenges. ASEAN+3 (ten ASEAN member countries and China, Japan and Korea) being active in financial issues and ASEAN+6 countries (ASEAN +3 members, Australia, India and New Zealand) were the regional participants in the East Asia Summit, and as the Russian Federation and the US joined the association - it leveraged the status of ASEAN a lot.
Since 2012, ASEAN+6 countries have been discussing Regional Comprehensive Economic Partnership (RCEP) and proposed free trade agreement. Several countries in this region - Brunei Darussalam, Malaysia, Singapore and Vietnam are signatories to the Comprehensive and Progressive Agreements for Trans-Pacific Partnership (CPTPP). Most emerging Asian countries (except Cambodia, Lao PDR, Myanmar and India) are also members of the Asia-Pacific Economic Cooperation (APEC). Now is the right time for Bangladesh to increase economic and political relations between Asian countries and every strategy should be followed to become a member of ASEAN and APEC, as Bangladesh has been making steady economic progress in the last few years or so.
Now the question is what is Bangladesh's position on the strategies that other Asian countries are already following? Of course, not all strategies will be useful to Bangladesh. However, the state government should focus more on what will really help Bangladesh to gain wealth to become as the world's 25th largest economies by 2033.Moreover, it is also important to know that most Asian countries have adopted a stable economic, political and democratic strategies by ensuring institutional democracy, and Vietnam is the most beautiful example of their institutional development and Bangladesh can follow the same model.
Finally, as we know, GDP growth is not just an indicator of becoming a middle-income country. It is important to note that in 2018, the CDP Review Committee could not select a country to leave the LDC because most LDC countries could not comply with the basic obligation. Therefore, the Bangladeshi government and other partners have been called upon to adopt a dynamic strategy and ensure institutional democracy, a fair and impartial election, the participation of all parties in parliament and the most important social justice, which is now largely missing for graduation in 2024.
The author is an Australian academic