Lower-middle income country: How much optimism is there for Bangladesh?

It sounds good to hear that Bangladesh has stepped into the group of lower-middle income countries. Justifiably, a feeling of pride seems to respond in the heart of the Bangladeshis. At the first day of this month, the World Bank (WB) announced that Bangladesh would be in the middle income group by 2016 if the country achieves a growth rate of 7.5 per cent from its own resources. Annually, a benchmark for 185 countries is prepared by the WB - categorises countries having Gross National Income (GNI) per capita of $905 or below as low income group, those between $906 and $3,095 as lower-middle income group, between $3,096 and $11,115 as higher-middle income group, and $11,116 or above as high income group. This categorisation helps the WB to ascertain how to deal with its loan disbursement among the member countries.
Considering this news, how much optimism is there for us? The economists predict that it will make us confident in the global arena despite the sign of some pitfalls. The sign recommends us to know the challenges and prepare ourselves to brace the crosswinds. It alerts the citizens about the so-called "middle-income trap" that may embrace a country when it elevates to middle income category. Many countries belonging to the lower-middle income group could not free themselves from that 'cocoon' (group) for several years. They have failed to ensure better opportunities for their citizens. Therefore, they could not elevate themselves to higher income groups. It is our warning sign - they have been trapped to see the same status for too long.
Actually, Bangladesh needs to get a formal announcement by the UN before it gets the final approval for inclusion in the group of lower-middle income countries. The proposal must be passed in UN's board meeting after observations for a particular period to decide whether the country belongs to this group or not. This stepping from low income group to the lower-middle income one shows a very marginal difference. Bangladesh claims that its per capita income is $1,314 despite UN reports decreasing it to $926. Once, Bangladesh had snatched jobs from countries like South Korea, Thailand and Singapore when they geared up to the higher ground. While Bangladesh faces no possibility of competition with low income countries, we will be challenged gradually by the hi-tech products of developed countries. We should consider upgrading our productivity through technological innovation and manpower development. Deliberate transformation of our agricultural workforce into industrial ones will increase poverty as it leads to low wage and unemployment - example includes India and Thailand.
How to keep in check the rising inequality? How to make basic services accessible to the poor? These pose to be significant challenges. Proper policies, institutions and financing are needed. As countries remove trade barriers, they are simultaneously exposed to vulnerabilities due to any global crisis. The financial sector should be reformed while Bangladesh slowly integrates with the global financial markets. Development agencies will hardly give soft loans. The rate of interest may be higher and the shorter repayment period, offered to low income countries, may be missed by. Currently, Bangladesh gets loan which is repayable in 39 years. Plus, it gets another six years to repay it. This opportunity may disappear. The rate of interest is now 0.75 per cent which may be slipped as well. Lower-middle income countries get loan on 5 per cent interest. If the economic complications of Bangladesh are not taken into consideration by the global financial and donor agencies, the increased interest rate will devastate the economy. The government should urgently seek the attentions of the international community in this regard.    
Moreover, income inequality in Bangladesh remains high because it is underpinned by unequal distribution of economic opportunities. Luckily, inclusion of opportunity has largely improved in recent years. Further improvements will require the stimulation of employment and the growth of productivity by turning the poor into human assets. In the near future, the employment challenge for Bangladesh is to absorb higher numbers of labour entrants at rising levels of productivity. Climate change will have both ex-post and ex-ante impacts on growth. While ex-post impacts on growth is unlikely to be large over the next decade, ex-ante actions by households to reduce their exposure to climate variability can lead to lower productivity and income growth.
In order to achieve its goal of higher-middle income status by 2021, Bangladesh should annually increase the growth rate of Gross Domestic Product (GDP) from the current 6 per cent to 7.5 or 8 per cent whilst sustaining remittance growth at more than 8 per cent. In fact, a faster growth depends on four major factors - increased investment, faster human capital accumulation, enhanced productivity growth, and increased outward orientation. A renewed focus is needed on key policy actions that are important in every aspect to raise the growth rate of GDP to 7.5 or 8 per cent, making it more inclusive and sustainable. Infrastructural development, better business environment, and investment in human development are compulsory across all fronts.
Furthermore, the average income of the people of Bangladesh has increased by 75 per cent, compared to that of 1990. Poverty has also dropped to less than 40 per cent from 58 per cent in 1992. The microcredit organisations have made a huge contribution to bring down the poverty rate. Nevertheless, their collective role is not sufficient enough to achieve economic breakthrough and neither it is sufficient to achieve the goal.
Additionally, versatile measures are necessary to create huge opportunities for employment, poverty alleviation, creation and distribution of wealth, welfare-oriented administration, transparency, accountability and overall development of manpower and its proper utilisation. The exports from Ready-made Garments (RMG), processed food, leather, pharmaceuticals, ceramics, home textiles and low-tech products should be boosted.
We are facing strong challenges from China, India, Vietnam and Philippines. In order to survive market competitions, fresh export-oriented industries are essential. The private sector needs absolute priority. Industrial development is never possible without initiatives of the private sector. Value should also be given to Small and Medium Enterprises (SME) to suit the needs of densely-populated country. The latest quagmire of overseas employment will take much effort and time to set it on a sound footing. The achievement so far we have made has mainly been possible due to the endless contribution of the expatriate workers and professionals who are hardly assisted by the diplomatic missions of Bangladesh. The government has failed to show any effective means to address their problems. Our dream is far from being realised. Still, we hope for the best.

The writer is a manager at BRAC Education Program.
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