Bangladesh has over fulfilled all the three criteria – namely Gross National Income, Human Assets Index and Economic Vulnerability Index – needed for graduation to developing country status. The country now awaits a formal approval of United Nations Economic and Social Council for inclusion in the list of developing countries.
A lot will change once Bangladesh formally sheds its LDC status and attains the developing nation one. It will bring a lot of opportunities and some challenges as well. Overcoming these challenges is critical for a smooth graduation process. It is better for Bangladesh economy to get strengthened and prepared to meet the eventualities of the post-LDC competitive world economy than remaining an LDC forever. President Abdul Hamid on Wednesday stressed the need for better branding, enhanced productivity and improved quality of Bangladeshi products to remain competitive in the global market after graduating from LDC status.Bangladesh's major challenge will be “preference erosion” due to the graduation. Bangladesh gets duty-free access to the European market under the “Everything but Arms” initiative, a huge opportunity as more than 60 per cent of Bangladeshi export goes to the European market. Bangladesh also receives duty-free market access for all products in all developed countries. Due to the graduation, Bangladesh will have to pay additional tariff on its exports by 6.7 per cent without LDC preferential treatment incurring a loss of about eight per cent of total exports.
Over the years, Bangladesh transformed itself from an aid-dependent country into a trade-dependent one. Post-LDC Bangladesh is no more eligible for the low interest overseas loans which helped in the country’s transition. Taking development loans from financing institutions and other sources with a higher interest rate and shorter repayment period will strain the economy as Bangladesh will still require assistance for poverty alleviation, social sector activities and infrastructural development. We must meet future economic challenges by improved overall capability through product diversification, efficient resource management, technological upgradation, structural changes, human resource development and institutional strengthening.