LDC graduation: The truth that is not spoken

In the upcoming November, Bangladesh will formally ''graduate'' from the list of Least Developed Countries (LDCs)—this fact is now widely known. The government, international organisations, and mainstream media are portraying it as a ''milestone of development.''

However, beneath this narrative of apparent success lie some uncomfortable truths that are rarely discussed. From the credibility of information to the nature of labour exploitation, the depth of inequality, and institutional weaknesses, questions arise in every aspect: are we truly prepared, or has merely a ''narrative'' been constructed?

The first and most fundamental question regarding LDC graduation concerns the integrity of data. According to recent white papers and reports from multiple research institutions, the data from the Bangladesh Bureau of Statistics (BBS) has been distorted for a long time under political pressure.

Questions have been raised about critical indicators such as GDP growth, inflation, and population. A report mentions that the ''GDP growth rate was predetermined, and then back-calculations were used to reconcile the figures.'' Both the World Bank and the Asian Development Bank have repeatedly highlighted significant discrepancies between Bangladesh's official statistics and their projections.

This data crisis is not just an academic debate. Each of the three criteria for LDC graduation—per capita income, human asset index, and economic and environmental vulnerability index—relies on this data. If the foundational data is questionable, then how strong is the claim of ''graduation''? There is controversy over the population figures as well. Many experts believe the actual population is 15 to 20 per cent higher than the official estimates, which artificially inflates the per capita income calculation.

The second often-overlooked issue is who really bears the cost of Bangladesh's export success. The narrative that the ready-made garments (RMG) sector accounts for 84 per cent of total exports and has qualified the country for LDC graduation is prevalent everywhere. However, it is seldom discussed that this success is built on one of the lowest wages in the world.

According to recent research by Nottingham University and GoodWeave International, 32 per cent of adult garment workers receive less than the minimum wage. Child labour, particularly in subcontract factories, is still ongoing. In a survey, all underage workers were found to be employed illegally.

Here a structural contradiction is evident: Bangladesh's ''comparative advantage'' actually lies in its ability to supply cheap labour. As per the Economics Observatory, ''Bangladesh's success in the global market has always relied on providing the lowest possible labour costs.'' The current minimum monthly wage is approximately $113, while a minimum of $460 is needed according to local living costs. This gap is not just a statistic; it reflects the daily deprivation of millions of families.

The third uncomfortable truth is the growing depth of inequality. According to the Global Inequality Report 2026 by the Paris School of Economics, the top 10 per cent of households in Bangladesh control 58 per cent of the total wealth, while the top 1 per cent alone holds almost a quarter. On the other hand, the bottom 50 per cent of people own only 4.7 per cent of the wealth. This inequality has not decreased over the past decade; rather, it has slightly increased. The Gini coefficient rose from 0.46 in 2010 to 0.57 in 2022.

Understanding the political economy of these statistics is essential. Bangladesh's development strategy largely depended on export-oriented industrialisation and the ''trickle-down'' theory. But in reality, the benefits of growth have ''trickled up''—not down but moved upward. Even when high GDP growth was being shown, employment was not increasing at the same rate. This is a classic example of ''jobless growth.''

The fourth overlooked issue is the future of the pharmaceutical industry after LDC graduation. Bangladesh’s pharmaceutical sector meets 98 per cent of the country’s drug demand and exports to over 150 countries. This success is due to a special waiver under the World Trade Organisation's TRIPS agreement, which allows LDC countries to replicate patented drugs and produce generics. After graduation, this waiver will end in 2026, even though the original term was until 2033. This could significantly increase the prices of life-saving drugs like insulin and cancer medications, potentially placing them beyond the reach of ordinary people.

The fifth rarely discussed issue is the crisis of climate financing. Bangladesh is one of the most climate-vulnerable countries in the world, yet its contribution to global emissions is only 0.4 per cent. While under LDC status, Bangladesh received concessional financing from various funds including the Green Climate Fund and LDC Fund. After graduation, these benefits will reduce or cease.

The IMF report clearly states, ''After graduation, Bangladesh may lose access to concessional climate financing.'' At the same time, Bangladesh’s tax-to-GDP ratio is only 8 to 9 per cent, far below the developing countries’ average of 15 per cent. In this situation, how will the enormous cost of climate adaptation be borne?

The sixth and perhaps the most sensitive issue is the political use of LDC graduation. The current government has used this ''graduation'' as the centerpiece of their development narrative.

Slogans like ''Role Model of Development,'' ''Developed Country by 2041'' have been crafted around this graduation. But questions are now arising about how reliable was the data on which this narrative was built? The white paper states, ''The story of development from a statistical perspective was exceptional, but they were a deception on the public.''

The seventh overlooked issue is the deep deficit in institutional capacity. According to the World Bank index, Bangladesh lags behind in regulatory quality and government effectiveness. Non-performing loans in the banking sector have exceeded $25 billion. The business environment is still entangled in complex bureaucratic processes. One expert comments, ''When it comes to reforms, the pace is painfully slow, and here lies the real risk.'' The preparedness score for graduation is only 4.2 out of 10.

The eighth neglected aspect is the failure to diversify exports. Despite decades of talking about export diversification, in reality, 84 per cent of total exports still come from ready-made garments. Leather, IT, light engineering—none of these sectors have yielded the expected results. Export destinations are also limited: most exports go to only 9 to 10 countries. More worrying is that 93 per cent of total exporters are low-tech producers, compared to 33 per cent in Vietnam and 21 per cent in India.

The ninth issue is the geopolitical reality. Bangladesh's graduation is happening at a time when the global trade system itself is in crisis. The United States' reciprocal tariff policy, Europe's Carbon Border Adjustment Mechanism (CBAM), and overall protectionist tendencies—all pose challenges to Bangladesh's export-dependent model. One analyst comments, ''LDC graduation and geo-economic competition—the intersection of these two disruptive forces has created a complex challenge on Bangladesh''s path to development.''

The tenth and perhaps the most fundamental question is: for whom is the LDC graduation? What change will this ''graduation'' bring to a worker who still receives a quarter of the living wage? What will happen to the farmer who is affected by climate change every year when concessional funding ends? How much will the costs increase for the patient who used to buy generic medicines at affordable prices after TRIPS compliance? These questions are often absent in mainstream discussions.

In reality, LDC graduation is merely an administrative classification. It is not an indicator of a country's actual development, improvement in people's quality of life, or structural transformation. The United Nations Committee for Development Policy itself acknowledges that the criteria for graduation ''cannot capture many underlying weaknesses—structural vulnerabilities, weak industrial base, low skills, low productivity of labour and capital.'' Moreover, average numbers conceal vast inequalities.

Critics often argue that graduation should be deferred. But this argument also has flaws. If deferred, Bangladesh will remain on the LDC list in this region with only Afghanistan—which is not desirable for international image; rather, the real need is to accelerate structural reforms in anticipation of graduation and to find alternatives for the benefits being lost.

A significant absence in the discussion of LDC graduation is the question of ''whose development.'' Bangladesh’s growth has primarily concentrated wealth in the hands of a specific class. Discussion is held on illicit financial flows, capital flight, tax evasion—but effective measures remain limited. An Al Jazeera report mentions that 11 Bangladeshis were named in the Pandora Papers, who have hidden assets in offshore accounts. If these fleeing assets had remained in the country, the picture of development might have been different.

Finally, if we honestly assess LDC graduation, it is simultaneously an achievement and a warning. An achievement in the sense that progress has been made on some indicators, a warning in the sense that the basis of this progress is shaky. The credibility of data is questionable, growth is not inclusive, labour exploitation continues, institutional capacity is weak, and diversification has failed. Acknowledging these realities and moving forward will be a sign of true maturity—not just the certificate of graduation.

The real question is, will we view this ''graduation'' as a beginning or a destination? If we see it as a beginning, then rigorous reforms must begin now—in the tax system, labour rights, governance, export diversification. If seen as a destination, then we’ll just change an administrative label, and the real problems will remain hidden. The decision is ours.

#Syed Abul Basher is an economist and former professor of East West University.

*Email: syed.basher@gmail.com
*Opinions are the author's own

*This article, originally published in Prothom Alo online edition, has been rewritten in English by Rabiul Islam