Apparel Sourcing Intelligence - Worldwide

Bangladesh crosses first hurdle for leaving “Least Developed Nation” category

On March 15, the UN’s Committee for Development Policy announced that Bangladesh had met all three criteria for graduating from the group of least-developed countries (LDC).

The achievement – probably the greatest in the history of capitalism – confirms the extraordinary economic and social advances of a country condemned at its birth in 1971 by US diplomats as a “basket case.” While much of its social advances come from exceptionally frugally-funded public services, the main source of its economic advance over the past 45 years has been its garment-making industry.

As it emerged from its role as Eastern Pakistan in a 1971 civil war, Bangladesh had about the same annual GDP/head as Haiti ($95) – only with far worse prospects and without Haiti’s huge potential advantage of sharing an island with a major international tourisy destination or being just two hours’ flight from the USA.

By 2016, that GDP had grown to about $1,400 – almost entirely the result of its garment assembly operations. By 2001, Bangladesh had become the world’s fifth largest garment exporter, and by 2016 it exported almost as many clothes to the EU (its major clothing destination) as China.  Practically none of its clothing factories involve any foreign investment – and so far, scarcely any other industries (apart from those depending on clothing) have established themselves.

Bangladesh’s “graduation” is remarkable: the only other LDCs to move out of the classification have been either tiny (the March meeting agreed that Bhutan, Kiribati, and the Solomon Islands would graduate) or rich in natural resources (Botswana, with some of the world’s biggest diamond mines, and petroleum exporter Equatorial Guinea are among the few earlier  countries). And Bangladesh is by far the biggest: when it leaves it will remove a third of the LDC group’s total population.

Bangladesh will not necessarily lose the duty-free advantages its imports get today from most rich countries (apart from the US): the EU, for example, is well advanced in agreeing a new trade concession for the country after it ceases to be an LDC in the early 2020s.

To come off the list, Bangladesh had to cross the relevant thresholds in two out of three development indexes:

  • Gross income over $1230 a year (Bangladesh estimates $1600 in 2017)
  • Improving quality of life, as measured by nutrition levels, infant mortality, literacy, and enrollment in secondary education. Bangladesh now performs better on this measure than India
  • Declining vulnerability of its economy

Bangladesh has now crossed all three thresholds