Bangladesh’s Transition from the Least Developed Country: Navigating Export Challenges in a New Era

Abstract

Bangladesh is heading toward a Developing Country with incremental growth, and Bangladesh’s current merchandise export reached USD 53.93 billion in FY2023-24. Still, export concentration on RMG and lack of product diversification may make Bangladesh uncompetitive in the world market after Graduation. Bangladesh has met three criteria for Graduation, including the Human Asset Index (HAI), the Economic Vulnerability Index (EVI), and the Gross National Income (GNI) indices, to graduate from the Least Developed Countries (LDC) to developing ones in the third triennial review. Given this view, the study aims to assess trade preference loss and to determine the impact of graduation on exports. A combination of qualitative and quantitative approaches is followed in the study, where for quantifying the impact on export, Trade Intelligence and Negotiation Adviser (TINA) is used, and 20 KIIs are taken with the purposive sampling method to evaluate the Smooth Transition Strategies (STS) of Bangladesh. Using exploratory research methodology, the study identifies the potential problems and prospects of LDC graduation and assesses trade preference loss using TINA Simulation Tools to measure LDC preference loss. Referring to the number of UNCTAD reports, articles and secondary literature, the research sheds light on how sustainable economic growth can be secured through diversified products and internal resource mobilisation. In the post-graduation era, Bangladesh will face several challenges related to preferential market access, minimum value addition conditions, and other LDC-related leverage in developed countries’ markets. As a result, the trade loss in the post-graduation era may range from US$4.7 billion to US$17 billion as per the TINA LDC preference loss simulation. The paper identifies inefficiency in resource mobilisation and export concentration as the major hindrances to overcoming the hurdles of graduation. It is crucial for Bangladesh to include trade concerns at each level of the development planning cycle to guarantee a seamless transition process for Bangladesh. This has to be supported by robust inter-ministerial coordination and consultation procedures involving various stakeholders, both from the public and private sectors. With this participatory approach and implementation of pragmatic STS, Bangladesh can go through the process of a smooth transition to becoming a middle-income country in the near future.