Graduating to middle-income country status
Friday, 26 November 2010
THE meeting of the least developed countries (LDCs) is scheduled for holding in Turkey early in the new year. The Finance Minister, M A Muhith, gave his views on Bangladesh’s preparations for this meeting in a dialogue held under the auspices of one of the think-tanks of the country last Wednesday. The Minister stated that Bangladesh would stress in the meeting that the developed countries should ensure inflow of the equivalent of 0.2 per cent of their combined GDP to the LDCs. Such a demand has been on the cards since the eighties and agreement of sorts on this was reached with the rich and developed countries at least two decades ago. But the pledge has not materialised for one reason or other: the developed countries did not do the needful to redeem the pledge in many areas and the LDCs also failed in some cases to absorb increased resource flows.
In this context, an LDC like Bangladesh continues to be frustrated in its attempt to score better in its attempts to come out of LDC status considerably due to its inability to absorb aid or non-availability of the same and other forms of assistance at the desired rate in an appropriate form from the developed world. But among the present 49 LDCs, there are some countries like Samoa, the Maldives and Equatorial Guinea which are expected to graduate out of their LDC status as early as 2010 or 2012. On its part, Bangladesh has set a target to make such a transformation by at least 2021. But experts think even this target is not a realistic one. Without improving resource absorption capacities optimally, including the building up and retention of human resources and boosting energy supply, Bangladesh might miss the 2021 deadline.
However, Bangladesh has all the favourable conditions for fast graduating out of the LDC status. But the same depends vitally on the government’s appropriate and timely policies. Indeed, big opportunities are knocking at the door of Bangladesh. China and other East Asian economies, which are the rivals of Bangladesh in its export-oriented garments industries, are fast losing their comparative competitive edges, from reasons of wage escalation in those countries and overall higher production costs. Thus, even under the difficult conditions it otherwise faces, the export-oriented garments sector in Bangladesh is enjoying a boom time as importers are, in a number of cases, turning their back on China and other suppliers. Even many Chinese producers of apparels are thinking of relocating their industries in Bangladesh to take the advantage of its cheap labour and other advantages.
Some high-performing Asian economics are, in fact, finding themselves uncompetitive in a range of products from shoes to toys which can be more competitively produced and exported from Bangladesh. Relocation of the industries of such products in Bangladesh or more preferably the start-up of these industries by Bangladeshi entrepreneurs directly or in joint collaboration with foreign ones, can lead to a vast increase in the export earnings of Bangladesh. The increase in wealth and rapid expansion of employment can significantly add to the economic sinews of this country. In that case, the reaching of the middle income country status may no longer be elusive.
However, the realisation of this bright future of graduating into middle income country status depends critically also on the government’s policies and their timely execution. The government here will have to play its part successfully in making available energy supplies to spur this growth. It should also do its best to create enabling infrastructures and operationalise at the earliest the special enterprise zones for investors in rapid succession.
In this context, an LDC like Bangladesh continues to be frustrated in its attempt to score better in its attempts to come out of LDC status considerably due to its inability to absorb aid or non-availability of the same and other forms of assistance at the desired rate in an appropriate form from the developed world. But among the present 49 LDCs, there are some countries like Samoa, the Maldives and Equatorial Guinea which are expected to graduate out of their LDC status as early as 2010 or 2012. On its part, Bangladesh has set a target to make such a transformation by at least 2021. But experts think even this target is not a realistic one. Without improving resource absorption capacities optimally, including the building up and retention of human resources and boosting energy supply, Bangladesh might miss the 2021 deadline.
However, Bangladesh has all the favourable conditions for fast graduating out of the LDC status. But the same depends vitally on the government’s appropriate and timely policies. Indeed, big opportunities are knocking at the door of Bangladesh. China and other East Asian economies, which are the rivals of Bangladesh in its export-oriented garments industries, are fast losing their comparative competitive edges, from reasons of wage escalation in those countries and overall higher production costs. Thus, even under the difficult conditions it otherwise faces, the export-oriented garments sector in Bangladesh is enjoying a boom time as importers are, in a number of cases, turning their back on China and other suppliers. Even many Chinese producers of apparels are thinking of relocating their industries in Bangladesh to take the advantage of its cheap labour and other advantages.
Some high-performing Asian economics are, in fact, finding themselves uncompetitive in a range of products from shoes to toys which can be more competitively produced and exported from Bangladesh. Relocation of the industries of such products in Bangladesh or more preferably the start-up of these industries by Bangladeshi entrepreneurs directly or in joint collaboration with foreign ones, can lead to a vast increase in the export earnings of Bangladesh. The increase in wealth and rapid expansion of employment can significantly add to the economic sinews of this country. In that case, the reaching of the middle income country status may no longer be elusive.
However, the realisation of this bright future of graduating into middle income country status depends critically also on the government’s policies and their timely execution. The government here will have to play its part successfully in making available energy supplies to spur this growth. It should also do its best to create enabling infrastructures and operationalise at the earliest the special enterprise zones for investors in rapid succession.