Originally posted in The Daily Star on 5 March 2023
Bangladesh needs to play a key role at the Doha Conference to create political momentum and translate that momentum into a United Nations resolution with a view to ensuring international support measures for a smooth transition of the graduating least-developed countries, said Debapriya Bhattacharya, a distinguished fellow of the Centre for Policy Dialogue.
“The graduating LDCs need to have various flexibilities for at least a certain period considering the global economic scenario,” he said.
The fifth UN conference on the LDCs, a once-in-a-decade event, will take place in Doha, Qatar on March 6-9 where world leaders will gather, alongside entrepreneurs and civil society representatives, to address LDC-specific challenges.
Bhattacharya said the General Assembly took a resolution 10 years ago and the time has come to review that and create a new mandate.
“The mandate will be helpful to have successful completion of other negotiations for the graduating LDCs,” he said. The negotiations are currently taking place on various platforms, particularly at the World Trade Organisation.
“And Bangladesh will have to play a pivotal role, if not a leading role, in translating the proposed graduating LDC mandate provided by the Doha Programme of Action (2022-31) into a political directive so that the LDCs and their development partners feel encouraged to implement all the commitments substantively.”
He, however, admits that at the end of the day, the primary responsibility of taking the LDCs forward lies with national governments and the international development partners are expected to play a supportive role.
Bangladesh is preparing a smooth transition strategy to graduate from the LDC group by 2026.
“It is important that this strategy is implemented effectively. For that, we need quite a lot of in-country institutional coordination, both in public and private sectors.”
Bangladesh already has a perspective plan, a mid-term plan and various sectoral plans.
“Now the transition strategy has to be aligned and implemented along with these planning government documents. Taking on board entrepreneurs and NGOs will be absolutely essential in this regard,” Bhattacharya said.
Bhattacharya, also a member of the UN Committee for Development Policy that monitors the LDCs, said the excitement about the Doha LDC5 is relatively subdued since there is no last-minute negotiation regarding the outcome document.
“High-level presence on the part of the international development partners is also limited due to other competing global priorities. The stressful economic situation prevailing in the developed countries has also dampened the enthusiasm on the part of the development partners.”
DOHA PROGRAMME AND BANGLADESH
The Doha Programme of Action for the LDCs was adopted in March 2022.
It identifies six core areas of intervention that LDCs need to make to move out of the group. All of these areas are very much relevant to Bangladesh.
First, the programme suggests investments in people so that no one is left behind. But public investment in the health and education sectors in Bangladesh is only 1 per cent and 2 per cent of the gross domestic product, respectively.
“So, ensuring universal quality education and health service would be critical for staying afloat in the impending era of the Fourth Industrial Revolution,” Bhattacharya added.
The second area is the need to leverage science, technology and innovation to expedite the socioeconomic progress of the LDCs.
The economist said Bangladesh has remained quite enthusiastic about the digitalisation of various public services.
“But given the deepening digital divide in the country, a lot needs to be done. We need to prepare for a period of artificial intelligence where there is an opportunity for Bangladesh to leapfrog.”
The third agenda concerns the structural transformation of the economy through productive capacity development. This essentially means that the country will have to urgently diversify within agriculture and beyond, particularly in the manufacturing sector. In this connection, labour productivity growth is going to play a defining role.
The challenges of expanding international trade and deepening regional integration have been singled out as the fourth agenda. In the post-graduation period, international trade in goods and services has to be sustained through the introduction of new export products and by exploiting new markets.
Bhattacharya thinks Bangladesh’s exporters will not only be deprived of duty and quota-free market access, but they will also have to meet conditions in the areas of workers’ rights, environmental standards and intellectual property rights after the country becomes a developing nation.
In the case of regional integration, the economist said the institutional framework of South Asian regional integration currently remains in a state of limbo.
In this context, Bangladesh will have to pursue bilateral free trade agreements and sub-regional cooperation arrangements. Furthermore, the country is expected to utilise fully the opportunities offered by e-commerce in the international markets.
The fifth agenda says combating adverse fallout of climate change and environmental degradation will be very important for the LDCs.
As an environmentally vulnerable country, Bangladesh suffers from all forms of environmental calamities. While the country is pretty good in disaster management, the inability to deal with the other issues may impede its progress in the post-graduation phase.
The sixth and final agenda speaks about renewing international solidarity and strengthening international partnerships.
And Bhattacharya said Bangladesh will face an emerging global environment where aid-based development cooperation is being gradually replaced by trade and investment-driven economic cooperation.
“Enhancing the country’s institutional quality and regulatory predictability has to be a prime concern as it prepares for leaving the LDC group.”
He calls for creating a more enabling environment for foreign direct investment.
GRADUATING LDCS ARE WEAKENING
The state of graduating LDCs remains quite sombre on the eve of the Doha LDC5 as their development scene has become more challenging in the last three years because of the coronavirus pandemic and the war in Ukraine.
Angola and the Solomon Islands have recently deferred their graduation timeline. A few other graduating LDCs remain in the grey area, particularly due to their debt stress and macroeconomic instability.
Bangladesh, the star performer among the LDCs, is steadily progressing towards the finishing line of 2026. However, the country has had to accept an International Monetary Fund programme and resort to high borrowing from the World Bank and the Asian Development Bank to service its twin deficits – fiscal and external balances.
“In this context, the Doha Programme of Action acquires special significance for the LDCs in general and the graduating ones in particular,” said Bhattacharya.
DEALING WITH CORE CHALLENGES
The ambitions and aspirations of the previous four UN Conferences for LDCs have remained largely unrealised, according to Bhattacharya.
He thinks the major explanation lies in the slow growth of the productive capacity in these countries, their inability to spur private investment, reticence towards domestic resource mobilisation, poor quality of human asset formation, and low labour productivity.
“Further, all of these economies remain vulnerable to the external shocks either because of their high concentration of export products and markets or the heavy dependence on tourism and expatriate remittances.”
Many of the LDCs are adversely affected by climate issues too, particularly in the South Pacific region. Many LDCs from Africa are in a state of conflict, resulting in a fragile economy and poor governance. Some Asian countries such as land-locked Nepal and Bhutan are geographically handicapped.
Furthermore, Covid-19 has had a severe impact on most of the countries where vaccination experiences were not satisfactory for all.
“Thus, the marginal status of the LDCs remained unchanged over the five decades,” said Bhattacharya.
However, he wondered whether the depressed state of affairs of the LDCs can be explained only by their structural vulnerabilities.
It is often stated that international development did not live up to their promises in terms of the flow of concessional finance and other support measures. For example, the commitment for official development assistance had been 0.7 per cent of the gross national income of the developed countries, whereas the actual delivery was around 0.3 per cent.
International development partners, however, have offered preferential market access and flexibilities in the trade and intellectual property rights agreements.
So, the fundamental task for the LDCs is to undertake necessary domestic reforms and bolster democratic governance so as to make the best use of the international support measures available to them, Bhattacharya said.
“Indeed, the Doha programme puts due emphasis on the collateral changes expected from the LDCs.”