Bangladesh is becoming a economic \`bull case\` of South Asia

Bangladesh_ the country of South Asia_ achieved an economic landmark last week_ when the United Nations Committee for Development Policy recommended that the country graduate from the least-developed-country categorization that it has held for most of the 50 years since it became independent.

Bangladesh is notable in the South Asian region for being the closest proxy for the successful development models seen at various stages in South Korea_ China and Vietnam. Export-led development has the best modern track record of moving countries from very low income levels into middle-income status.

Bangladesh s exports have risen by around 80% in dollar terms in the past decade_ driven by the booming garment industry_ while India and Pakistan s exports have actually declined marginally.

As recently as 2011_ Bangladesh s GDP per capita in U.S. dollar terms was 40% below India s. It caught up last year in large part due to India s pandemic-related slump_ but the International Monetary Fund (IMF) expects the gap to stay more or less closed.

There are other factors in the country s favor as far as its development model goes: a very young demographic structure_ a continued competitive edge in terms of wage levels_ strong and rising female labor-force participation especially relative to the rest of South Asia.

Nevertheless_ there are some significant obstacles. One is that Bangladeshi export growth is lower than Vietnam or Cambodia. Exports from Vietnam and Cambodia have more than tripled and doubled resepectively in the last 10 years. India's exports flourished in the 2000s. Then it came to a standstill. As a result_ the upward trend in the Indian economy has not been confirmed.

Bangladesh's next step will be to move to higher value manufacturing and exports_ as Vietnam is doing. Bangladesh's export industry is still largely based on the garment industry. Harvard University's Growth Lab ranks Bangladesh 106th out of 133 countries in terms of economic complexity. This position is actually below the position that Bangladesh was in 1995.

Bangladesh sees itself as India outside the big trade blocs of Asia. The country is not a member of the Association of Southeast Asian Nations (ASEAN). Nor is it a member of the Regional Comprehensive Economic Partnership. Nor is it a member of the Comprehensive and Progressive Trans-Pacific Partnership. Bangladesh needs greater participation with inter-Asian supply chains to expand its production and exports. At the same time_ to do so_ it must forge closer economic ties with its eastern neighbors.

Keeping the warning aside_ Bangladesh's exit from the low-income country means there are signs that it will make further progress. At the same time_ Bangladesh will be ahead of its other South Asian neighbors by taking many different development initiatives in near future.