12/09/2023 - After several decades of sustained progress, it is time for Bangladesh to step up its economic model to ensure sustainable and smooth graduation from least-developed country (LDC) status, according to the Production Transformation Policy Review of Bangladesh launched today in Dhaka.

Bangladesh has achieved remarkable progress since independency in 1971. It has shifted from an economy marked by extreme poverty and famines to the third global Ready Made Garments (RMG) manufacturing powerhouse, after Vietnam and India. Manufacturing plays a central role in the country’s economy. Between 2000 and 2022, value added from the sector almost doubled as a share of GDP - from 11 to 22%. RMG is pivotal for the economy, with 20 products accounting for 84% of total domestic exports. Bangladesh has also nurtured the creation of domestic industrial capabilities in emerging, more technologically advanced sectors, including electronics and pharmaceuticals. Today, Bangladesh, is the only LDC involved in pharmaceuticals and medicines’ manufacturing. Domestic production meets 98% of the country’s needs.

However, to sustain such achievements, Bangladesh needs to continue diversifying its production structure and exports, tackle its vulnerability to natural disasters and reduce its exposure to fluctuations in global commodity markets. The country  must also prepare for a turning point:  Bangladesh’s graduation from the United Nations’ category of least-developed countries (LDCs), set in principle for 2026, requires an updated domestic policy approach to comply with the international rules applied to developing countries as well as a revamping of international partnerships to continue supporting the country’s development, including by fostering a more effective business dialogue and by bridging gaps in physical and digital infrastructure. It is also important to continue advancing on the use of digital technologies in business, and update the regulatory framework, including the amendments of the 2018 Digital Security Act.

A change in the approach from international partners is also essential. They need to engage with Bangladesh beyond areas such as responsible business conduct and infrastructure development and establish new forms of partnerships to ensure inclusive and sustainable development and support the greening of Bangladesh's energy mix and industrial processes.

To build on international good practices and prepare for a successful transformation, the government of Bangladesh engaged in a 20-month consultative process with the Organisation for Economic Co-operation and Development (OECD) Development Centre through the Production Transformation Policy Review (PTPR) tool. This PTPR has been implemented in collaboration with the United Nations Conference on Trade and Development (UNCTAD), with support from the European Union. The resulting report launched today in Dhaka highlights the country’s assets, including its strategic geo-location and the government’s commitment to diversifying the economy. Based on a comprehensive diagnosis, including in-depth analysis of the pharmaceutical and electronics sectors, the review identifies three priorities for reforms:

• Future-ready the State.  This requires fostering domestic resource mobilisation and endowing the State with the necessary institutional and administrative capacities.
• Shift the mindset in doing business. Bangladesh should gradually shift from a price-led competitiveness model to an innovation-driven one. This would entail investing more in innovation and technological upgrading. Foreign Direct Investment could play a bigger role in fostering innovation.
• Modernise the policy approach. Policies will need to be upgraded and shift from focusing on market access and tariff management to more modern policy tools capable of adequately incentivising innovation and fully harnessing the country’s market potential and strategic geographical location.

 

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Media queries should be directed to:

-        OECD Development Centre: Annalisa Primi (Annalisa.Primi@oecd.org; tel.: +33 145 24 75 35) or the  Press Office: Bochra.Kriout@oecd.org; tel.: +33 145 24 82 96.

-        UNCTAD: Giovanni Valensisi (giovanni.valensisi@unctad.org) or the Press Office, Dan Teng’o (dan.tengo@unctad.org)

 

About the OECD Development Centre’s productive transformation policy reviews (PTPRs):

PTPRs advise governments on how to transform their economies in response to major global trends. These consultative and collaborative processes involve multiple stakeholders, both nationally and internationally. The Bangladesh PTPR involved the Government of Vietnam and the UN Committee for Development Policy (CDP) as international peers, as well as numerous public and private actors. It provides in-depth analyses of the electronics and pharmaceutical sectors.