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Production Transformation Policy Review (PTPR) is an initiative to support graduating LDC for policy dialogue on the global value chain, production through development being implemented by OECD Development Centre with the financial support from European Commission.
The Peer Learning Group (PLG) Meeting was organized in the framework of the Production Transformation Policy Review (PTPR) of Bangladesh on September 8, 2022, which is being carried out at the request of the Government of Bangladesh. So far, a number of PTPR has been carried out by the centre for Colombia in February 2019, Chile on January 09, 2018, Dominican Republic in July 2020, Egypt July 8, 2021 while the PTPR for Shenzhen, China, is waiting along with Bangladesh.
PTPR is prepared in collaboration with the United Nations Department of Social and Economic Affairs (DESA), the UN Committee for Development Policy (CDP) and its Secretariat, the UN Conference on Trade and Development (UNCTAD), and the UN Industrial Development Organisation (UNIDO).
The PTPR-PLG meeting is open to public and private stakeholders willing to share knowledge and accompany the PTPR process. PTPR-PLG members commit to sharing knowledge, information and lessons learned when participating in the PTPR-PLG meeting and during the review process.
There were presentations of different countries’ examples of what and how they have contributed in that respect and the government’s policies. The experiences of India were useful, which showed a clear segmentation of a population tree, it showed that about four million people are rich under the income group bracket more than Rs 17 lakh, against which Bangladesh has 1.6 million people. They have 228 million people who belong to the middle class (income bracket Rs 3.4-17); in Bangladesh it is about 15.24 million. They identified the next category at 462 million within the income bracket of Rs 1.5-3.4 as aspirers, the comparative picture for BGD is 67.74 million. The remaining are in the category of deprived people, amounting to about 500 million (income below Rs 1.5); in Bangladesh, the amount is about 84.67 million.
Bangladesh must identify the gaps to understand its situation and design policies accordingly to bridge the digital divide. There is ample improvement in several aspects of digital technology, however, an integrated and coordinated approach is required and accordingly need to enact policies.
Another session was focused on more FDI and mobilizing it to diversify Bangladesh’s production and export base. Despite targeted efforts to increase Foreign Direct Investment (FDI), Bangladesh still attracts little FDI. The average net FDI inflow is below 1% of GDP, 70% of which is on a single sector of energy, with other emerging countries such as Vietnam at 6% and Morocco at 2.5%.
Bangladesh has opted for a model of FDI attraction based on special economic zones and currently has the plan to create 100 new zones by 2030. Increasing FDI and mobilizing it to achieve the national ambitions of diversifying the economy and making it more productive and environmentally sustainable is a challenge for the country. This session focuses on identifying actionable policy responses, based on international peer dialogue, for Bangladesh to attract more FDI and to leverage FDI to diversify the nation’s production and export base.
What can governments do to attract FDI in attracting sectors to diversify their production and export base? The most critical discussed point is how to avoid the risks associated with the potential of enclave-led growth and how to promote that the benefits of FDI trickle down to the local economy.
A presentation on these issues from BIDA explained the policies and incentives allowed for local and foreign investment. The presentation of Morocco informed about the creation of the National Investment Commission (CNI), which will be responsible for: - approving investment agreements benefiting from standard allowances - deciding on the strategic nature of projects and eligibility of Moroccan companies to export schemes - evaluating the effectiveness of the measures/schemes put in place - proposing any measure for improving the investment environment.
The OECD Development Centre implements it with the financial contribution of the European Commission. It benefits from collaboration with the United Nations Department of Social and Economic Affairs (DESA), the UN Committee for Development Policy (CDP) and its Secretariat, the UN Conference on Trade and Development (UNCTAD), and the UN Industrial Development Organisation (UNIDO). More information on the PTPR tool is available online. The initial framework of reference is OECD (2017). The PTPRs are carried out in the framework of the OECD Initiative for Policy Dialogue on Global Value Chains (GVCs), Production Transformation, and Development.
LDCs are at a critical juncture of the development journey now and facing unprecedented global challenges. Many LDCs, including Bangladesh outperformed in socio-economic development in the last decade. However, progress is threatened by multiple overlapping global crises. First, the damage caused by the COVID-19 pandemic in education, health, trade, and financial market and delayed recovery compounded damages to these countries.
Second, the geopolitical tensions amplified the challenges of the already disrupted supply chain due to the COVID pandemic and growing trade protection. Third, the rapid global growth over the last few decades achieved by the developed world was the outcome of environmental compromise- for which these weak LDCs became innocent victims of frequent natural disasters causing countless damages.
Finally, these exogenous challenges and high inflationary pressure due to exorbitant energy prices occurring in these countries are heightening their debt stock and leaving them to stumble on debt sustainability position. The commitment and financing for achieving SDGs of the LDCs and the other developing nations were not on track even before the pandemic hit; the ongoing pandemic has further worsened the situation. On the top, many uncertainties are likely waiting ahead for the recovery from the pandemic and return to new normalcy in the post COVID era, both on the domestic and global front.
The erosion of International Support Measures (ISMs) with the effectiveness of graduation will add additional challenges at a time when these LDCs need more global support. Doha Program of Action (DPOA), a decadal flagship support program for LDCs adopted in March 2022, welcomes wider global cooperation for sustainable and equitable development that leaves no one behind.
Under the broad umbrella of six focus areas of DPOA, LDC Member States will require greater support from the international community, including debt cancellation, large innovative financing and investment, assistance for graduation preparations and transitions, and greater transparency and accountability from international partners. Developed countries need to strongly support the efforts on SDGs implementation, building productive capacities in LDCs, mobilizing greater domestic resources, reiterating LDC commitments within domestic policies, and diversifying markets to accelerate structural transformation, COVID-19 recovery, climate change, and the LDC graduation transition.
The Government of Bangladesh, as a graduating nation, in association with UNESCAP would like to host a strategic dialogue on the sidelines of the 78th Session of UNESCAP for the LDC Sustainable Graduation in the Challenging Situation: Perspectives from Bangladesh and the Region I Page 2 group on how the much-needed support measures for their sustainability in the post-graduation phases could be made more effective. The event expects active participation and thoughtful deliberations of High-Level representatives and officials from different countries, development partners, senior officials from the UN system, major institutional stakeholders, and other international organizations, private sector, and civil society organizations.
The outcome of the dialogues may also be useful to upcoming the LDC-V Conference scheduled to be held in Doha in March 2022. This side event is an important opportunity for the LDC group to campaign and draw attention to the international community and development partners on their legitimate support for sustainable and inclusive COVID recovery and addressing challenges of high inflation, debt management, food security concern, and trade shrinkage due to ongoing global crises.
The event may also explore the means and strategies for the much-needed continuation of trade-related international support measures beyond graduation and provide increasing assistance for the transition strategies of the graduating nations. It is vital in this challenging time to avoid any abrupt reductions or withdrawal of financial and technical assistance due to graduation.
The writer is CEO of BUILD a Public Private Dialogue Platform. She can be contacted at [email protected]
