Bangladesh's LDC graduation: risks & readiness

Bangladesh is at a landmark in the nation’s life—one of jubilation and an invitation to strategic contemplation. Bangladesh. With its anticipated graduation from the United Nations’ List of Least Developed Countries (LDCs) by 2026, the nation is poised to turn a new page in its development history. The graduation is a strong indication of Bangladesh’s progress in achieving phenomenal success in poverty reduction, improvements in health and education, increased per capita income, and macroeconomic stability.
But with this latter benchmark comes also a set of structural and economic problems. Graduation means the end of some of the world’s special treatment—above all, access to the world’s markets duty-free and concessionary lending and technical assistance—on which the country’s export-led success and infrastructure growth have relied all these years. For a nation that still lags in addressing chronic inequality, climate vulnerability, and productivity disparities, the post-graduation phase must be met with a different agenda and policymaking approach.
This article addresses the most relevant risks and drivers of readiness concerning LDC graduation, including the risk of trade concession losses, the shift in the investment climate, and the need to establish national competitiveness. Since Bangladesh stands at the threshold stage, the question is not whether it will happen but whether it can thrive after graduation. It is a time to reflect, look forward, and move forward with resolve to ensure this milestone is not a stumbling block but a stepping stone towards shared and sustainable prosperity.
The Loss of Preferential Market Access: The most direct and far-reaching consequence of Bangladesh’s graduation from LDC status is the phased withdrawal of preferential market access that is currently available under international trade regimes, such as the European Union’s Everything But Arms (EBA) policy. These trade patterns have played a crucial role in driving Bangladesh’s export-led growth, particularly in the ready-made garments (RMG) sector, which accounts for more than 80 per cent of the country’s total exports and employs over four million workers, the vast majority of whom are women.
Bangladesh will face higher tariffs—12 per cent in some of the most valuable markets—if other trade facilitations are not realised. This directly threatens Bangladeshi products in the global market. In line with this, the government has doubled efforts to achieve the Generalized Scheme of Preferences Plus (GSP+) with the European Union, demanding rigorous compliance with labor, environmental, and human rights conventions.
Meanwhile, Bangladesh is also diversifying its export basket, shifting its focus from textiles to sectors such as ICT, pharmaceuticals, leather, and jute goods. Trade diplomacy has also been undertaken to sign new bilateral and regional trade agreements in Asia, Africa, and Latin America. Value addition is also being enhanced as factory standards are raised to international levels and production facilities are modernised, enabling Bangladesh to remain a competitive partner in evolving global supply chains.
Investment Climate: Though an LDC, Bangladesh benefited from concessional credits, technical assistance, and differential treatment in accessing international aid-for-trade program benefits. With these privileges now poised to end, the spotlight falls on domestic readiness and institutional strengths in attracting high-quality investment.
The government of Dr. Muhammad Yunus has drawn up a vision-led forward roadmap to decouple aid dependence and trigger investment-driven growth. The highest priority is being accorded to the following:
Policy Predictability. A coherent, transparent regulatory framework for reducing risk perceptions of investors.
• Infrastructure Upgradation: Significant investments in ports, power, and transport corridors to reduce logistics costs and improve efficiency.
• Economic Zones and Industrial Parks: Bangladesh Economic Zones Authority (BEZA) is fast-tracking the establishment of industrial enclaves with plug-and-play infrastructure and fiscal incentives.
• Digital Governance: e-registration, e-taxation, and single-window services are some of the measures being introduced to simplify investor procedures and eliminate bureaucratic barriers.
• Legal and Judicial Reforms: Measures are being taken to reform the enforcement of contracts, land acquisition, and arbitration processes to instill confidence in investors.
• In addition to these, Bangladesh is also actively wooing diaspora investment under special bonds and incentive programs while encouraging local entrepreneurs to improve their access to finance, training, and markets. These across-the-board reforms reflect the country’s need to consolidate its fragile investment success into a strong and durable foundation.
Creating Competitiveness for a Post-LDC Economy: As Bangladesh advances towards graduation from the LDC existence, national competitiveness is no longer a requirement—it is a strategic necessity. Graduation will put the country on a level playing field with advanced developing economies; hence, it is imperative to transition from low-cost to high-value, innovation-driven industries.
The RMG sector, the cornerstone of Bangladesh’s export economy for decades, must undergo structural changes. This involves investing in automation and digitalisation to improve productivity, adopting sustainable and ethical business practices to meet evolving consumer and regulatory demands, and advancing up the value chain by building design capabilities, enhancing branding, and diversifying product lines.
Garment non-appearing industries are emerging as new sources of competitiveness:
• Pharmaceuticals: Through high API (Active Pharmaceutical Ingredient) strength and export to over 150 export markets, the sector can become a $5 billion industry by 2030.
• Information and Communication Technology (ICT): Digital Bangladesh and the nascent tech startup ecosystem are driving exports in software, BPO, and digital services.
• Agro-processing: As the world demands more safe, traceable food, Bangladesh’s robust agricultural base can be leveraged through modern processing, packaging, and export chains.
• Shipbuilding and Light Engineering: With its skilled labor force and competitive production costs, Bangladesh is making promising progress in these sectors as a niche manufacturing hub.
To consolidate and scale up these gains, human capital development is crucial. The interim government is further investing in Technical and Vocational Education and Training (TVET), as well as academia-industry partnerships and digital literacy programs. Bangladesh’s demographic dividend, comprising more than 60 per cent of the population aged under 35 years, can be reaped only if the youth are future-proofed with the necessary skills. Additionally, the formation of the Dhaka-Chattogram Economic Corridor and improvements in connectivity with regional transportation networks are enhancing the efficiency of trade logistics. Customs modernisation, electronic certificates of origin, and integration into global value chains are also becoming a priority to reduce the time and cost of doing business. Bangladesh’s ability to transform its enormous potential into long-term competitiveness will shape its post-LDC success story. Innovation, diversification, and wise investment in systems and individuals will be the cornerstones of this advancement.
Strategic Readiness to Face a Post-LDC World: The interim government has proposed a national roadmap for readiness that outlines the key vulnerabilities and opportunities associated with graduation from LDC status. These are:
• Institution Building: Establishing a robust institutional setup of trade policy, intellectual property rights, and alternative dispute resolution mechanisms.
• Human Capacity Development: Initiating national vocational and technical education programs to bridge the skills gap and meet global labor market needs.
• Innovation Ecosystem: Promoting research and innovation by industry-university partnerships and startup incubation centers.
• Green Industrial Policy: Enabling sustainable industrialization by green finance, eco-labelling, and low-carbon production methods.
• Social Protection: Enhancing the social protection system to include the poor and vulnerable in the economic transformation process.
The interim government is also leveraging international goodwill to secure strategic partnerships with countries and multilateral organisations for dignified and graceful graduation.
Conclusion: Graduation from LDC status is not a ceremonial upgrade; it is a landmark in the growth history of Bangladesh. It sires global respect but also demands institutional strength, fiscal resilience, and vision-oriented governance. The path ahead will require astute policymaking, economic inclusiveness, and collaboration in the public, private, and international sectors. Together, with determination, Bangladesh can turn this transition into an opportunity—not only to consolidate its previous achievements but also to leap ahead as a proud, self-sustaining, and competitive middle-income country. As Bangladesh steps into the global scene with a fresh image, let it not forget: the fight is far from won, but the promise of a better, more honourable tomorrow has never appeared so within reach.

Dr Serajul I Bhuiyan is a professor and former Chair of the Department of Journalism and Mass Communications at Savannah State University, Savannah, Georgia, USA.
sibhuiyan@yahoo.com