The concept of Least Developed Countries or LDCs originated in the late 1960s. The first group of LDCs was listed by the United Nations back in 1971. LDCs are usually low-income countries confronting severe structural impediments to sustainable development. While there were only 25 countries in the list of LDCs back in 1971, the number has grown to 46 now. Bangladesh was listed as an LDC in 1975. So far, a total of seven countries have been able to graduate from the LDC category. These are- Botswana (1994), Cape Verde (2007), Maldives (2011), Samoa (2011), Equatorial Guinea (2017), Vanuatu (2020) and Bhutan (2023).

The Committee for Development Policy (CDP) – a subsidiary body of the United Nations Economic and Social Council (ECOSOC), is mandated to review the category of LDCs every three years and monitor their progress after graduation from the category. The identification as well as graduating from the LDC status is currently based on three criteria. These are: (a) GNI per Capita, (b) Human Assets Index (HAI), and (c) Economic and Environmental Vulnerability Index (EVI). An LDC must meet any two of the three criteria in two consecutive triennial reviews to be recommended for graduation. Alternatively, the GNI per capita of an LDC should be at least twice the graduation threshold in two consecutive triennial reviews (income-only criterion).

Bangladesh has made remarkable progress in various socio-economic parameters over the last few decades. The country met all the graduation criteria from the LDC status in 2018 and 2021 reviews consecutively. As a result, the UN-CDP recommended Bangladesh for graduation with a five-year preparatory period on 26 February 2021. Bangladesh is the first country that was recommended for graduation by meeting all three criteria. The recommendation was duly endorsed by the United Nations Economic and Social Council (ECOSOC) on 08 June 2021. Subsequently, United Nations General Assembly (UNGA) took note of Bangladesh’s graduation recommendation during its 76th session held in November 2021. The country is set to leave the list of LDCs by 2026 after enjoying a preparatory period of five years.

* Average of last three years (calculated by ATLAS method)

For the 2018 triennial review, the minimum threshold for GNI per capita was fixed at US$ 1,230, while it was refixed at US$ 1222 for the 2021 triennial review. A steady rise in the GNI per capita guaranteed Bangladesh exceeding the graduation threshold for the first time in 2018 (with 104 per cent more than the graduation threshold). Meanwhile, the country’s GNI per capita rose by 150 per cent of the graduation threshold of the 2021 triennial review. As a result, Bangladesh fulfilled this graduation criterion again quite comfortably.

Human Assets Index (HAI) is based on the indicators of child (under five) mortality rate, maternal mortality ratio, prevalence of stunting, gross secondary school enrolment ratio, adult literacy rate, and gender parity index for gross secondary school enrolment. Bangladesh, for the first time, exceeded this particular graduation threshold during the 2018 triennial review (with a score that is 111 per cent more than the graduation threshold). The country’s score stood at 114 percent of the graduation threshold for this criterion in 2021.

Following the adoption of the outcome of the comprehensive review of the LDC criteria by the CDP, the structure of the EVI has been modified (CDP, 2020). With this revision, the EVI has been simplified and now consists of two sub-indices, one on economic vulnerability and the other on environmental vulnerability with each sub-index containing four indicators, with an equal weight of 1/8. The indicator on “Population size” was removed from the EVI. The Economic vulnerability indicator “Remoteness” has been renamed as “Remoteness and land locked ness”. The Environmental vulnerability indicator “Victims of natural disasters” has been renamed as “Victims of disasters” to better align it with common United Nations terminology and to highlight that disasters are not always natural. Meanwhile, an additional indicator called “Share of population living in dry lands” has been added to the EVI. Bangladesh’s performance under the graduation threshold relevant to the economic and environmental vulnerability criterion demonstrated sustained improvements between 2012 and 2015 triennial reviews, with the EVI score hitting a plateau thereafter. The EVI score of Bangladesh in 2018 was 25.2, which was 21 per cent below the graduation threshold. During the 2021 triennial review, the country again met this graduation threshold with a comfortable margin (16 percent below the threshold).

Graduation from LDC status may result in:

• Better credit rating for the country, wider credit access

• Greater investment opportunities- FDI, PPP, access to non-traditional financing

• Greater access to global job market

• Reinforcing other national and global development agenda

• Self-reliance and self-dignity at the global stage

• Bangladesh prepared the Smooth Transition Strategy (STS) with support from UN DESA and SSGP, including a time-bound reform action plan. The STS Subcommittee, co-led by ERD and CAO, led preparations through consultations; other subcommittees created action plans.
• A High-Level Expert Committee, led by the Hon’ble Special Assistant, M/o Finance has been formed to guide and monitor STS implementation.
• Draft M&E frameworks have been developed for 37 lead agencies to track STS progress.
• A National Committee on LDC Graduation (NCG), chaired by the Principal Secretary, and seven subcommittees coordinate the transition process.
• ERD is implementing the “Support to Sustainable Graduation Project (SSGP)” to manage all graduation-related activities.
• SSGP conducted studies on the impact of graduation on key sectors like RMG, investment, logistics, and pharmaceuticals.
• Bangladesh has submitted annual progress reports on LDC graduation to the UN CDP since 2021.
• Bangladesh, through the WTO LDC Group, advocated for extended LDC-specific market access post-graduation. In response, the WTO General Council in October 2023 urged members to allow a smooth transition before withdrawing such benefits. Additionally, at the 13th Ministerial Conference in February 2024, members agreed to continue LDC-specific technical assistance for three years after graduation.
• The National Tariff Policy 2023 was developed to rationalize the tariff structure in line with WTO rules and to facilitate future Free Trade Agreements (FTAs) following LDC graduation.
• Bangladesh is engaging in FTA discussions with several potential partners and is in formal negotiations with Japan for an Economic Partnership Agreement (EPA), with initial talks also held with India, China, South Korea, and others.
• The Patent Act has been updated recently with a view to mitigating the IPR related challenges to be faced by the pharmaceuticals sector in the aftermath of LDC graduation.
• National Logistics Policy has been formulated, outlining the policy measures to be taken for the improvement of logistics infrastructure in the country.
• The government is gradually phasing out export cash incentives to enhance competitiveness.
• The government has finalized a Graduation Support Package with WIPO to strengthen the country’s Intellectual Property Rights (IPR) regime.
• The UN-DESA prepared an ex-ante impact assessment, while UNCTAD prepared a vulnerability profile identifying vulnerabilities that the country may face after graduation.
• SSGP organized a series of workshops, seminars and FGDs at the national and subnational levels to raise awareness about LDC graduation and to make the process inclusive.