Vulnerability profile of Bangladesh - UNCTAD

MTAVARES1 — Mon, 17 Jan 2022 16:25:00 +0000

Document Type:

Link to an External Document

Author:

UNCTAD

Document Summary:

This publication was prepared by the United Nations Conference on Trade and Development (UNCTAD) in anticipation of the 2021 review by the Committee for Development Policy of the United Nations of the list of least developed countries. Published January 2022. The present study documents how Bangladesh is approaching the 2021 triennial review after a period of sustained economic growth, underpinned by robust progress in terms of productive capacity development, as measured through the UNCTAD multidimensional Productive Capacities Index (PCI). Economic growth during the last couple of decades has been pulled by the expansion of manufacturing and services, both in terms of composition of output and of labour share, while on the demand side consumption and gross capital formation have been the main drivers of growth. The process of capital deepening has been accompanied by rapid sectoral labour reallocation, away from agriculture and into manufacturing and services, as well as a significant rise in agricultural productivity, resulting in so-called “growth enhancing structural change”. Bangladesh has also witnessed a significant boom in its international trade, with merchandise exports growing fourfold between 2005 and 2019, and imports growing at a slightly greater pace; accordingly, the country has consistently maintained a net trade deficit with respect to both goods and services. Although the outbreak of COVID-19 has triggered multiple shocks hitting both aggregate demand and aggregate supply, existing forecasts suggest that Bangladesh may weather the downturn much better than neighbouring countries, maintaining a positive GDP growth (of between 1.6 and 5 per cent, depending on the source). Several factors can explain this performance, including most importantly: the resilience of the agricultural sector; the adaptability of businesses (e.g. textiles and clothing firms repurposing their factories to produce personal protective equipment); the increase in remittances and some support by multilateral donors; and the coordinated stimulus package enacted by the Government, notwithstanding limited fiscal space. In spite of this, heightened uncertainty looms large on the future outlook, and the COVID-19 shock may exert long-lasting effects in terms of poverty and employment destruction. Against this background, the vulnerability profile finds that Bangladesh is expected to meet all the established LDC graduation criteria for the second time at the 2021 triennial review by the Committee for Development Policy. Of particular interest is the progress recorded by the country in terms of not only GNI per capita – itself a reflection of the rapid growth – but also of the human assets index (HAI). Broad-based improvements in health- and education-related indicators testify to the long-term investments made in broadening access to related services. Meanwhile, in terms of the economic and environmental vulnerability index (EVI), Bangladesh will continue to meet the graduation threshold in spite of its traditionally high export concentration and its heightened proneness to climate change and natural hazards. Given the amplitude of low-lying coastland areas and related communities, environmental vulnerability remains, However, a critical source of concern for the years to come, with attendant investment needs in climate change adaptation and disaster preparedness.The vulnerability profile highlights that, although Bangladesh is approaching LDC graduation on the back of sustained progress and with strong political will, there is no time for complacency. In particular, there are four lingering sources of vulnerability which will continue to shape the trajectory of Bangladesh towards graduation and beyond: (a) Heightened reliance on LDC-specific international support measures (most notably in terms of preferential market-access); (b) Lack of export diversification and over-reliance on low-technology textile and clothing products; (c) Dependence on external development finance, predominantly in the form of migrant remittances, to support capital accumulation; (d) Exposure to the far-reaching effects of climate change, notably in terms of sea level rise and heightened frequency/intensity of natural disasters. Accordingly, the study outlines key policy priorities, in the context of LDC graduation and beyond: (a) Enhancing domestic resource mobilization; (b) Investing in climate-resilient and digital infrastructure; (c) Improving the business environment; (d) Mobilizing renewed investments in human capital and the science, technology and innovation (STI) ecosystem; (e) Anchoring LDC graduation in the national policy strategies and industrial policy framework.

Tags:

Graduation

Vulnerability

UNCTAD

Bangladesh

Publication Date:

Monday, 17 January 2022

United Nations

Document Topic/Theme:

Vulnerability

LDC graduation and smooth transition

Document Type:

UN and WTO reports and publications

Archived:

Symbol year:

2022

Policy responses to economic vulnerability (CDP Background Paper No. 9)

MTAVARES1 — Thu, 15 Jun 2006 15:25:00 +0000

Document Type:

Link to an External Document

Author:

Willene Johnson

Document Summary:

The present paper reviews policy efforts to advance growth and development in the least developed countries, in particular those efforts aimed at promoting well-being by reducing vulnerability to economic shocks. The paper draws on empirical research analysing the relationships between economic vulnerability, growth and policy. Given that domestic policy efforts are weakened by the shocks that characterize vulnerability, the international community has an important role to play in countries.

Publication Date:

Thursday, 15 June 2006

Committee for Development Policy (CDP) Secretariat

Document Topic/Theme:

Finance, debt, macroeconomics

Vulnerability

Document Type:

Articles, policy briefs, working papers, op-eds, project reports, blogs

Archived:

Symbol year:

2006

LDC Portal - International Support Measures for Least Developed Countries - Vulnerability

Vulnerability profile of Bangladesh - UNCTAD

Policy responses to economic vulnerability (CDP Background Paper No. 9)