An Atypical Approach to Graduation from the LDC Category: The Case of Bangladesh

Abstract

From the creation of the category in 1971, the number of least developed countries (LDCs) has almost doubled to account for 48 members by 2011. Only three countries have managed to exit from the category thus far, and two more are in the pipeline. The recognition of the difficulty of leaving the category is entrenched in the overarching goal of the Fourth UN Conference on LDCs, which specifically calls for halving the number of LDCs within the next decade. The existing asymmetries between the entrance and the graduation criteria have favoured inclusion. Of the three exit criteria, those countries that have graduated, or are in the process of doing so, have all met the low-income exit threshold. This study argues for a graduation path that is not linked to income performance, rather on human capital development. In so doing, it identifies a different, non-conventional route to graduation. Bangladesh makes a good example for it as it is through the development of its human capital assets that it could (a) stop being an LDC and (b) accelerate its rate of economic and income growth. If the appropriate human capital enforcement policies are implemented in the coming 22 years, Bangladesh could meet the graduation thresholds by 2027, graduate out of the LDC group in 2033 and keep all the benefits linked to the LDC status until 2036. At the domestic level, actions aimed at leaving the LDC category have to be framed by, and within, a national employment-generating strategy. The article concludes with specific policy recommendations, particularly related to human capital development, for nearing the estimated graduation date. JEL: O10, O29, O53

Steps toward Smooth Graduation of Bangladesh from Least Development Countries

“…This study is based on secondary data obtained from various reliable sources. This kind of methodology is used by some other researchers to conduct a similar analytical study (Akanda, 2015;Bhattacharya & Borgatti, 2012;Kumar, 2014). Secondary data from United Nations Conference on Trade and Development (UNCTAD), United Nations General Assembly (UNGA), United Nations Development Programme (UNDP), World Bank, Committee for Development Policy (CDP), newspapers, reports, and articles have been used in this research.…”

“…Besides, poor governance, political unrest and both internal and external conflict are common there (Chen et al, 2020). They fall into the trap of a vicious cycle of poverty due to low productivity, low investment, and vulnerability to external terms-of-trade shock (Bhattacharya & Borgatti, 2012). Some of them have been able to diversify into the manufacturing sector especially in labor-intensive industries like textiles, clothing etc (Table 1).…”

Efforts of Nepal's Least Developed Countries (LDC) Graduation and Its Challenges

“…High economic vulnerability and a lack of human capital are the two fundamental weaknesses that the UN Committee for Development Policy (CDP) views as essential to the classification of LDCs (CDP, 2005). The most recent revision, which occurred in 2003, resulted in the adoption of the following modifications: (a) GDP was replaced by GNI (per capita, Atlas method); (b) the enhanced physical quality of life index was replaced by the human asset index (although its constituent indicators changed, they still reflect variations in the member countries' levels of education, health, and nutrition); and (c) an expanded economic vulnerability index (Bhattacharya and Borgatti 2012). Bhattacharya and Borgatti have mentioned that the graduation thresholds were raised in the revisions of 2000 and 2003.…”

“…The term "LDCs," which stands for "less developed countries among the developing countries," has been used by the UN to refer to a subgroup of low-income developing countries since the category was formally established by a United Nations (UN) resolution in 1971 (Bhattacharya and Borgatti 2012). Bhattacharya and Borgatti have further explained that the number of least developed nations (LDCs) has nearly doubled since the category's inception in 1971, accounting for 48 members by 2011.…”