Bangladesh needs policy changes to avoid middle-income trap: Economists

Bangladesh needs effective measures to develop human capital, and policy changes to attract foreign investments, without which the country might get caught in the middle-income trap, said experts at a programme on Tuesday.

About 80% of countries get stuck at middle-income trap after graduating from the Least Developed Country (LDC) status, said Dr Ahsan H Mansur, executive director of the Policy Research Institute, at the programme titled "Korea-Bangladesh Economic Cooperation: Sharing Development Experience and Exploring Opportunities", organised in a Dhaka hotel on Tuesday.

Referring to South Korea's development, he said the country has maintained about 6% growth over the last six decades. Bangladesh has also experienced a 6% growth over the past decade.

However, maintaining the growth will not be easy for Bangladesh as the country has to overcome corruption to face challenges related to graduation from the Least Developed Country status, he said.

The economist also said the government should emphasise creating skilled manpower for the job market, ensuring healthcare services, and strengthening institutional capacity for further development.

At the programme, South Korean Ambassador to Bangladesh Park Young-sik said the country is marching towards LDC graduation in 2026, and aiming to realise a "Smart Bangladesh" as a developed country by 2041. Both the journeys offer great opportunities and challenges simultaneously.

"The LDC graduation will give a positive signal to the international business community, making it easier to attract foreign capital needed for Bangladesh's infrastructure development," said the Korean Ambassador.

Before the LDC graduation, the Bangladesh government should focus on increasing its manufacturing sector's productivity. They also need to change some policies to encourage foreign direct investment in this sector.

Mentioning that South Korea is the fifth largest foreign investor in Bangladesh, Park Young-sik said initially his country invested in the readymade garments sector, but in recent times their investments expanded to the automobile, mobile phone and electronics manufacturing sectors.

He said projects for building Meghna Bridge on the Bhulta-Araihazar-Bancharampur road, and for supplying treated water from the Meghna River to Bangabandhu Sheikh Mujib Shilpa Nagar – which are being discussed through the Joint PPP Platform Meeting – can become a litmus test for South Korean companies to consider further investments in Bangladesh. 

State Minister for Foreign Affairs Md Shahriar Alam said both Bangladesh and South Korea will collectively bring the best out of the comprehensive partnership, particularly in terms of the diplomatic, economic and people-to-people relations.

The state minister thanked the South Korean government for expanding the "Employment Permit System" quota for the Bangladeshi workers to 10,000 this year, and employing them in the shipbuilding sector.

Shahriar hoped that the South Korean government would consider increasing the intake of Bangladeshi workers to recruit them in agriculture, fisheries, shipbuilding and other service sectors.

He further said South Korea can provide support for improving the Bangladeshi workers' technical and language skills.

State minister for ICT Zunaid Ahmed Palak said the Bangladesh government has taken a number of initiatives to adopt AI technologies for achieving a sustainable economy.