Vol. 5 Num 1115 Fri. July 20, 2007  

FDI in limited sectors does a little for Bangladesh economy
UNCTAD LDC Report 2007 says

A UN report on least developed countries has pointed out that maximum foreign direct investments in Bangladesh now concentrates on some sectors like telecommunications, banking service or oil and gas exploration, which contribute a little to its economy.

Debapriya Bhattacharya, executive director, Centre for Policy Dialogue (CPD), released the report titled UNCTAD LDC Report 2007 : Knowledge, Technological Learning and Innovation for Development at the CPD office in Dhaka yesterday.

The report said FDI received in Bangladesh like other LDCs neither contributes to any major technology transfer nor generates significant employment, rather it makes separate enclaves into the host country.

"The limited contribution is due to the type of integration of trade negotiation capacity into host countries' economies, the sectoral composition of FDI, the priorities of policies enacted by LDCs and the low absorptive capacity of those countries," it said.

Bangladesh ranked 5th in attracting FDI among the 50 LDCs in value term but in term of per capita income Bangladesh ranked 34.

The United Nations Conference on Trade and Development suggested that Bangladesh and other LDCs should adopt new policies to narrow the technology gap between LDCs and the rest of the world to escape the current trap of poverty, underdevelopment and marginalisation.

The report said rapid technological advances in the developed countries and the relatively slow advancement in most of the least developed countries have caused such a huge technological gap.

On intellectual property rights (IPRs), the report said an LDC like Bangladesh is lagging behind in IPRs as patenting tendency has decreased remarkably in the lest developed countries.

Due to the negative trend in patent Bangladesh will be bound to import technology from developed countries in a long term, it said, pointing to the fact that IPRs, particularly patents, promotes innovation only where profitable markets exist and firms posses the required capital, human resources and managerial capabilities.

Similarly licensing is out of reach for firms without a certain level of absorptive capacity, particularly in the countries with low GDP, the UNCTAD report said.

It said Bangladesh lags behind in all three indicators: Per Capita Income, Human Resource Development and Economical Strength.

Bangladesh's per capita income is still at US$ 400 level where the average income to determine a country as LDC is $750, according to the report.

It further said Bangladesh's investment in primary and secondary education is still very poor and its export market is dependent largely on readymade garments (RMG), which proves the country's poor strength in economy.

The report, however, noted that the country had made progress in FDI inflow in value term, garment export and in value of remittance.

At the report launching ceremony, the CPD executive director hailed the caretaker government for enhanced allocation in information technology and research sector, but expressed caution about implementation.

Pointing to Bangladesh's good potential in developing human resources and applying information technology, the CPD hoped that the country would be able to fulfil the Millennium Development Goals (MDGs), if the resources could be used properly for human resource development.

Professor Mustafizur Rahman, research director, Dr Uttam Kumar Deb, senior research fellow, Anisatul Fatema Yousuf, additional director (Dialogue & Communications), and Khondaker Golam Moazzem, research fellow, also attended the function.

Debapriya Bhattacharya, executive director of Centre for Policy Dialogue (CPD), gestures as he speaks while releasing 'UNCTAD's Least Developed Countries Report 2007' in Dhaka yesterday. Mustafizur Rahman (R), research director of CPD, is also seen. PHOTO: STAR