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Issues on the horizon

  • Published at 06:51 pm April 5th, 2018
  • Last updated at 01:22 am April 6th, 2018
Issues on the horizon

Bangladesh, the largest least developed country (LDC) in terms of population and economic size, looks likely to graduate from LDC category by 2024. It’s been possible because of better health and education, lower vulnerability, and an economic boom over the last decade.

The Committee for Development Policy (CDP) confirmed recently that, for the first time, Bangladesh has met the criteria for graduation from LDC, reaching all three thresholds for graduation. Accordingly, the country will likely be recommended for graduation at the following triennial review in 2021 after meeting the criteria for the second time.

The Istanbul Program of Action for the LDCs set the ambitious goal of enabling half of LDCs to meet the criteria for graduation by 2020. Since the establishment of the category of LDCs in 1971 by the UN, so far, five countries have graduated. The 2015 Triennial Review identified seven countries that have already met the criteria and are expected to graduate in the coming years. In addition, three more countries have met the graduation criteria during the 2018 review for the first time.

In the context of consequences of graduation for Bangladesh, in a particular juncture right now and keeping the larger picture in view, that of SDGs, one would be constrained to focus on economic growth. This is somewhat obvious because Bangladesh’s success towards graduation came on the back of a decade in which its economy grew at over 6.26% per annum.

In this, productivity will also be an important factor as, post-graduation, the most growth-driving sectors of Bangladesh will come under varying degrees of stress. For implementing SDGs and to ensure smooth graduation, productivity must be uppermost in the mind of policy-makers.

According to the World Economic Forum’s (WEF) Global Competitiveness Report 2017 (GCR), Bangladesh fared well. That was before we got wind of Bangladesh’s eligibility for graduation from the LDC category. GCR is based on the Global Competitiveness Index (GCI), calculated on 12 pillars and 114 indicators, informed by hard data from World Bank, IMF, and other relevant organizations.

It is also based on “perception data” from WEF’s own Executive Opinion Survey 2017 involving 14,375 representative respondents. The GCR 2017 ranked 137 countries. It is, by any measure, a significant achievement that Bangladesh scaled up six places to 99 from last year’s 106. But, to put this into perspective, one has to mention that from the region India is at 40, Sri Lanka 85, Nepal 88, Bhutan 82, and Pakistan at 115.

In the context of higher growth required for Bangladesh to implement SDGs, the GCR is directly relevant to the factors that contribute to productivity and measure thereof. Many of the indicators of the GCI were built into the 12 pillars having direct linkages to the goals and indicators of the 2030 Sustainable Development Agenda.

The GCR identifies the following four major challenges to growth: i) Structural headwinds ii) Technological change and innovation iii) Disruptive inequalities iv) Uncertainty of globalization. Clearly, all of these, to varying degrees, would be applicable to countries, including Bangladesh, struggling with the daunting task of implementing SDGs.It may be assumed that in our development policy-making, structural headwinds, and uncertainty of globalization may have been factored into. It is still important to address what has been done and what would need to be done in terms of approaching technological change and innovation and the resultant disruptive inequalities.

Bangladesh has, of late, figured prominently in the WEF Annual Meetings. In Davos, in January 2017, Prime Minister Sheikh Hasina was the first elected Bangladesh leader to do so. Again, in January, Foreign Minister Mahmood Ali took part in this year’s Annual Meeting. Keeping in view this high-level participation, one may hope that Bangladesh would strive to explore policy options facing the obvious challenges springing from the transformative, new technology revolution.

One could discern a good deal of resonance of these factors with what Bangladesh has been doing or should be doing

The Founder and Executive Chairman of WEF Professor Klaus Schwab, is one of the luminaries of the CDP having chaired the committee from 1996 to 1998. He considered this technology upheaval as the Fourth Industrial Revolution (4IR). With unforeseen level of connectivity at the heart and technologies developing at blistering pace, 4IR is steeped in profound uncertainty, with the prospect to reshape all dimensions of our existence -- economic, social, cultural, and human.

Its effect is still not gauged for societies, the disruptive potential is so deep and wide and the velocity, depth, width, and systemic impact so overwhelming that it leaves no option to “reject and live without it,” as Prof Schwab puts it. Consequently, stakes are apparent both at the national and for the global level calling for multi-stakeholder cooperation across countries, economies, sectors, and peoples.

In some shape or form, strands of what is a fundamental feature of 4IR have been in currency for some time. Connectivity, for example, is a sine qua non for 4IR.

Given its pronounced involvement with 4IR, it is only natural that technological change and disruptive inequalities are given a fair degree of prominence in WEF’s analytical paradigm. But that is not without reason. One could discern a good deal of resonance of these factors with what Bangladesh has been doing or should be doing.

First, technological change and innovation -- emphasis should be put on broad-basing education to include ever increasing numbers of learners in all strata of the society as necessary good groundwork. However, the challenge that underlies the next step is clear -- that of mainstreaming STEM education, as appropriate.

Then the issue of facilitating migration of technological change and innovation from laboratory to the society through enhanced “technology adoption” for greater public use is a quite an uphill task with high prospective dividend. Time to be content with sporadic brilliance in Math Olympiads is over.

Second, we have to put in place the right mix of governmental intervention with the “invisible hand” of the market in internalizing the benefits of globalization, though our economy is not yet immune to the uncertainties of globalization. Strong institutions and efficient and upright public service are two of the areas where we have a lot more to do. How much investment would be required to do all that is yet to be assessed.With populist policies making inroads in traditional donor countries, there is a writing on the wall saying “do it yourself, don’t expect any foreign investment (public).” Even, to attract investment, stable and stabilizing financial sector is underlined as a pre-condition -- an area of domestic policy-making.

This begs a bit of explanation. In the development financing debate, slowly but surely, a creeping paradigm is that it is mostly a national responsibility. Therefore, domestic resource mobilization, and private-public partnership should be the order of the day, forgetting the ODA, grant, and even FDI.

WEF being what it is -- a rich man’s club of the most private nature -- would not say or do anything that contradicts what is described above. Apart from episodic, highly watered-down references here and there (AAAA or IPOA), the experience of negotiating on this point with developed country partners seems to fully conform to this trend.

That should mean we have to look hard at domestic resource mobilization and, to the extent possible, given various challenges faced, use public-private partnerships as a source of development financing, more specifically, for infrastructural development.

This aspect assumes criticality as we embark on figuring out the “financing strategy” for implementation of SDGs. In that context, one point appears significant for Bangladesh -- in view of the pace of trade liberalization, market squeeze, and lack of innovation -- which is whether export-led growth model will remain valid or not.

Another issue of crucial importance and, at the current time, of relevance is “flexibility in labour market,” a must for the structural transformation of the future that is ordained by 4IR in order to achieve optimal “reallocation of resources” from a less productive to a more promising sector. Alongside, the dichotomous relationship between “workers’ protection and the labour market flexibility,” the conventional wisdom is “more of one is always at the expense of the other.” But this year’s ranking refuted that. Switzerland, at the top of the GCI ranking, along with Germany, Denmark, and the Netherlands, achieved both ends of the spectrum, a commendable feat, no doubt.

It warrants some soul-searching for many developing countries, including Bangladesh, as she starts to figure out what is known as a “smooth graduation strategy” including industrial policies to enhance productive capacities and raise competitive strength of the economy. It warrants focus on a long-term development pathway, product and market diversification, structural transformation contingent on rural development, mobilizing domestic resources, and, above all, doing all that it takes to make SDGs momentum and sustainable graduation mutually reinforcing.

M Shameem Ahsan is Ambassador and Permanent Representative of Bangladesh in Geneva.