An Atypical Approach to Graduation from the LDC Category: The Case of Bangladesh

From the creation of the category in 1971, the number of least developed countries (LDCs) has almost doubled to account for 48 members by 2011. Only three countries have managed to exit from the category thus far, and two more are in the pipeline. The recognition of the difficulty of leaving the category is entrenched in the overarching goal of the Fourth UN Conference on LDCs, which specifically calls for halving the number of LDCs within the next decade. The existing asymmetries between the entrance and the graduation criteria have favoured inclusion. Of the three exit criteria, those countries that have graduated, or are in the process of doing so, have all met the low-income exit threshold. This study argues for a graduation path that is not linked to income performance, rather on human capital development. In so doing, it identifies a different, non-conventional route to graduation. Bangladesh makes a good example for it as it is through the development of its human capital assets that it could (a) stop being an LDC and (b) accelerate its rate of economic and income growth. If the appropriate human capital enforcement policies are implemented in the coming 22 years, Bangladesh could meet the graduation thresholds by 2027, graduate out of the LDC group in 2033 and keep all the benefits linked to the LDC status until 2036. At the domestic level, actions aimed at leaving the LDC category have to be framed by, and within, a national employment-generating strategy. The article concludes with specific policy recommendations, particularly related to human capital development, for nearing the estimated graduation date. JEL: O10, O29, O53