Avoiding middle-income trap

Bangladesh has now reached an important juncture of economic growth by way of coming out of the least development country (LDC) group. The country at this crucial phase requires right policies and timely actions in order to avoid being placed into the 'middle-income trap' like a number of other countries that have already been languishing in that bracket. A number of countries across the world are stuck in the lower-middle income status and remain unable to move up the echelon for long. Bangladesh should therefore be prepared for the probable impact of graduation. To formulate effective strategies to avoid that risk, it is high time for the country to face the challenges of graduation to move forward; as the country will gradually lose preferential trade opportunities in the developed countries.

The probable impact of Bangladesh's loss of preferential facilities in major export destinations will be felt on its export, sustainable growth of gross domestic product (GDP) and other socio-economic indicators. The country is now enjoying preferential trade access benefits of varying degrees offered by more than 40 countries across the world. Economists predict that once the country graduates from the LDC bracket, it is likely to lose about US Dollar 2.7 billion in export earnings every year. To overcome the ensuing challenges, those concerned think that it is necessary for us to ensure much-needed (i) political stability, (ii) financial sector reform(s), (iii) access to reliable and affordable power, (iv) efficient infrastructure - including port facilities and improved highways, (v) export diversification and (vi) enforcement of laws to reduce cost of doing business in the country. All of these are also required in quest of achieving over 8.0 per cent GDP growth target.

Bangladesh, however, is currently faced with one of the worst man-made disasters created by an imprudent neighbouring country. The United Nations (UN) estimates that about 1.1 million Rohingya refugees, as of February 2018, have fled Myanmar's violent campaign of ethnic cleansing to cross into Bangladesh border. Bangladesh had no option, but to give shelter to the refugees by keeping its border open and hosting them for an indefinite period. The influx of Rohingya refugees has thus created a considerable pressure on the economy and overall social security. About 6,000 acres of hilly land area have already been deforested to house the Rohingyas in Cox's Bazar. Leading think-tank Centre for Policy Dialogue (CPD) estimates that the total value of the deforested land used for the Rohingya camps is equivalent to over Taka 7.41 billion or USD 86.67 million. Bangladesh being the world's most densely populated country is carrying on its shoulder such a heavy socio-economic burden right now.

Apart from this, the country is a low-lying deltaic region and is almost regularly attacked by seasonal floods in the monsoon, accompanied by other natural calamities like droughts and cyclones. Such calamities cause heavy losses to lives, standing and other crops and properties in this agrarian country. These small means coupled with such usual disadvantages notwithstanding, the country has moved forward socio-economically. The only consolation is that the country is dwelled by time-tested brave people, who courageously face all natural calamities that frequent the country, and fearlessly drag the economy forward. It apparently leads us to hope that this country will continuously move forward without being trapped into the 'middle-income' bracket if appropriate and timely socio-economic policy measures are taken to compliment the usually enthusiastic efforts of the courageous people to take it socio-economically forward.

Sarwar Md. Saifullah Khaled is a retired Professor of Economics, BCS General Education Cadre. 

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