LDC graduation an opportunity, not burden: Selim Raihan
Smooth Transition Strategy must be prioritised if graduation deferred, he says
Graduation from least developed country status should be taken as an opportunity rather than a burden, Selim Raihan, executive director of the South Asian Network on Economic Modeling (Sanem), has said.
A three-year extension period, if granted, must be used purposefully for clear sequencing and prioritisation of actions under the Smooth Transition Strategy (STS), he said at an event titled "Bangladesh's Economic Transition: Trade, Competitiveness, and Structural Reform" in Dhaka yesterday (12 April).
Currently, the STS suffers from a free-riding problem due to its broad but insufficiently focused design, said Selim Raihan, who is also an economics professor at the University of Dhaka.
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Mustafizur Rahman, distinguished fellow at Centre for Policy Dialogue (CPD), said FDI must be part of Bangladesh's post-LDC graduation strategy and that the STS document's 157 action points need to be sequenced, clustered, and prioritised for effective implementation.
He added that China imports over $3 trillion worth of goods and questioned whether Bangladesh is positioning itself to take advantage of these opportunities.
He also pointed out that Bangladesh's export composition between 2010 and 2021 remained virtually unchanged with low-technology products accounting for 90% in sharp contrast to Vietnam.
The event, held at a hotel in Dhaka, presented findings from six policy research papers authored by Selim Raihan. The papers are part of SANEM's ongoing collaboration with the Australian High Commission to make ten policy papers covering the economy, trade, investment, and structural reforms.
One paper highlighted the paradox of Bangladesh's leather industry, which earns about $1 billion and employs nearly 200,000 workers but remains locked in low-value crust leather exports.
It proposed a three-pillar framework focused on environmental compliance, stronger governance, and global positioning, including a Leather Sector Development Authority and a "Bangladesh Leather" brand.
On trade and industrial policy, it outlined a four-pillar strategy centred on diversification, social inclusion, environmental sustainability, and market integration.
A discussion at the event raised Bangladesh's heavy reliance on garments compared to Vietnam's diversified exports, highlighting the need for structural transformation.
On trade deals, using Global Trade Analysis Project (GTAP) modelling, the study simulated scenarios from post-LDC graduation without preferences to potential FTAs with major partners and RCEP accession.
The findings showed welfare losses after graduation, while RCEP and a China FTA offered the strongest export gains. However, tariff rationalisation, customs modernisation, and productivity improvements delivered the largest welfare benefits, indicating trade deals alone are insufficient.
On geopolitical risks, GTAP simulations of a prolonged Middle East conflict suggested combined shocks from higher energy prices, freight costs, and lower remittances could cut GDP by up to 2.9%, reduce exports by 5.8%, and raise consumer prices by 6.1%.
