Bangladesh may fall into 'middle-income trap' if it does not fulfill major prerequisites for LDC graduation, Asian Development Bank President Masatsugu Asakawa said Tuesday and listed the dos.
Tapping higher domestic and foreign investments, improving supply-side capacity, diversifying export basket and having strong institutions and governance are among the conditions he spelt out for its transition to a higher-middle-income country (HMIC) from the current status.
"It also needs to pursue the greener and more resilient economic growth in the future days," Mr Asakawa said while speaking at a discussion on 'Middle Income Trap and Way Forward' in Dhaka.
The discussion meeting was organised following the celebration of 50 years of Bangladesh-ADB partnership in the country's development drive.
Bangladesh joined the ADB in 1973, and in 1982 became first ADB member to host a field office. The Asian Bank has mobilised around $50 billion in loans, grants, and technical assistance for the country, including co-financing.
Professor David Hume of Manchester University and Prof Yaseu-Sabaka of Japan presented two keynotes at the programme with Bangladesh Bank (BB) Governor Abdur Rouf Talukder attending as chief guest.
Principal Secretary to the Prime Minister Tofazzol Hossain, former MCCI President Barrister Nihad Kabir and environment expert Prof Saleemul Huq spoke on the occasion.
Lauding Bangladesh's economic progress over the last one decade, the ADB President said Bangladesh needs immediate actions for enhancing its productivity and for getting on greener- growth trajectory in keeping with the growth momentum.
Keynote speaker Prof David Hume said if Bangladesh felt complacent on its current success, it would be in trouble.
Terrible complacency of Ghana regarding their middle-income status has pushed the country into a vulnerable situation now, he noted to substantiate his alert message.
"So, if you (Bangladesh) want to avoid the middle-income trap, you have to go for policy reforms and institutional evolution," Prof Hume said.
He also cautioned about adopting external development models and suggested implementing the embedded or homegrown Bangladesh model for uplifting the country to a higher-middle- income and developed nation by 2041.
Japanese professor Sabaka thinks that if Bangladesh wants to transcend the 'middle-income trap', mere development of human capacity is not enough. "You have to develop a quality human capital."
Showing a study outcome, the professor showed that the countries which are in MIC status for long, their physical capital is 55.5 per cent, the labour-force participation is 21.9 per cent, the human capital 12.8 per cent and the productivity contribution is 9.8 per cent.
"But those countries which have graduated from MIC to high-income country have a 50-percent participation from physical capital, 10.3 per cent from the labour, 11.4 per cent from the human capital and 28.3 per cent from the productivity," he told the meet.
About a major reform plan on the financial front Bangladesh Bank Governor Abdur Rouf Talukder said the central bank would go for market-based foreign-exchange and lending rates by June.
"Besides, the central bank is working to keep the inflation under control through different monetary mechanisms," he told the cutting-edge function regarding the country's socioeconomic transition.
The governor also laid emphasis on enhancing Bangladesh's productivity and capacity to avoid the MI trap.
Barrister Nihad Kabir said the country needs to scale up its workforce, diversify productions and exports, and go for high-tech system of production to become HMIC.
"We have more than 150 green and US Green Building Council (GBC) LEED-certified ready-made garment factories in Bangladesh. But the factory owners have failed to enhance their product prices with those huge efficiency and compliant manufacturing units," she added.
She called for ensuring high access to funds for the local companies so that they could expand their business for facilitating the country's development.
Prof Saleemul Huq cautioned about the future climate-change impact on Bangladesh as well as across the globe.
"If the countries do not go for checking carbon emission and climate-friendly development, the world will become severely vulnerable within next 50 years," he told the audience.
Principal Secretary Tofazzol Hossian said Bangladesh government has taken necessary policy in its all development plans keeping in mind the middle-income trap.
ADB Director-General Woochong Um said challenges facing Bangladesh could get the country into MI trap.
So, it needs to go for reform, export diversification, ensuring good governance, up-skilling the human capital, better urbanization, increasing tax-GDP base and climate-resilient growth, he added.
Meanwhile, Prime Minister Sheikh Hasina inaugurated the function on Bangladesh-ADP relation of 50 years in the morning in presence of the visiting ADP president in Dhaka.
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