Bangladesh at the Least Developed Country Graduation Crossroads: Lessons from the East

Md Sayful Islam () and Guanie Lim ()
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Md Sayful Islam: National Graduate Institute for Policy Studies, Tokyo, Japan
Guanie Lim: National Graduate Institute for Policy Studies, Tokyo, Japan

No 26-6, GRIPS Discussion Papers from National Graduate Institute for Policy Studies

Abstract: Bangladesh's graduation from least developed country (LDC) status in November 2026 marks a critical juncture in its development trajectory, diminishing preferential market access while increasing pressure to raise productivity, diversify exports, and address institutional and financial weaknesses. This paper revisits the relevance of East Asia's development experience for Bangladesh through a comparative reading of Dwight Perkins, Jan Nederveen Pieterse, and Joe Studwell. Perkins explains why similar state interventions produce different outcomes, emphasising institutional capability and historical variation; Pieterse questions how far earlier development strategies can be replicated given today's global value chains, automation, and environmental and social pressures; and Studwell specifies a sequence of rural reform, export-oriented manufacturing, and disciplined finance. Read together with Mushtaq Khan's political settlements framework, these readings suggest that Bangladesh has internalized part of the East Asian lesson. Its ready-made garment sector has achieved a fair degree of export discipline, largely because international buyers enforce it. The country has far less experience disciplining its own financial system, however, a gap this paper traces to the politics of a competitive clientelist settlement rather than to any simple lack of policy knowledge. Evidence from public sources on export concentration, small and medium enterprises credit access, and banking sector performance supports this diagnosis. The paper argues that productive, disciplined finance is the single most consequential and difficult lesson for Bangladesh to absorb, ahead of other challenges. Sustaining growth after LDC graduation will require adapting these lessons to the country's own conditions, not imitating them mechanically.

Keywords: Bangladesh; East Asia; Development; Global Value Chains; Export Diversification; Financial System (search for similar items in EconPapers)
Pages: 13 pages
Date: 2026-08
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