Which trade instruments help least developed countries keep more value?

The question

Many least developed countries (LDCs) have done what trade policy asked of them. They gained access to large markets and raised their export volumes. Yet they keep only a small share of the value of what they sell.

My question is this: which trade instruments change that share, and under what conditions?

By trade instruments I mean the rules and incentives that shape what a country exports and on what terms. I am looking at four groups.

1. Rules of origin in preference schemes. These decide how much local processing a product needs before it can enter a market duty-free.
2. Graduation and transition rules. These decide what happens to a country's preferences when it leaves the LDC group.
3. Domestic export incentives. These include cash incentives and other support that governments pay to their own exporters.
4. Safeguards and thresholds. These can withdraw a preference once a country's exports of a product grow past a set share.

For each one I ask the same thing. Does it reward the quantity shipped, the value created at home, or neither?

Why it matters now

Bangladesh is scheduled to leave the LDC group on 24 November 2026. The government has asked for a three-year deferral, to 24 November 2029, and the UN's Committee for Development Policy has supported the request. Nepal has made a similar request. When I last updated this page, I had not seen a final decision from the UN General Assembly.

Either way, graduation is close. The rules that apply afterwards will shape whether these economies move into higher-value production or stay where they are with less protection. Most of those rules were written to manage the loss of access. Few were written to help a country keep more of what it earns.

What I mean by value retention

The term can mean three things, and I try to keep them apart.

• Net export earnings. Export receipts minus the cost of imported inputs. This is the easiest to measure. Bangladesh Bank reports it for garments: about 62 per cent in 2025-26, up from about 59 per cent the year before.
• Domestic value added in exports. A fuller measure that follows inputs through the whole economy, using input-output data.
• Who captures the value. How the retained share is split between workers, local firms and foreign buyers.

I am starting with the first two. The third matters most, but it needs firm-level data that I do not have yet.

The first case: Bangladesh garments

I start with Bangladesh's garment sector for three reasons. It is large: US$39.34 billion in exports in 2024-25, about 81 per cent of the country's total. It depends heavily on preferences: about 60 per cent of garment exports go to the EU and the UK. And its margins are thin: one study found median markups below 4 per cent for most products sold to Europe.

That mix makes the sector a clear test. If an instrument can raise value retention anywhere, the effect should show up here.

How I plan to study it

1. Map the instruments. For each preference scheme and domestic incentive, write down what it rewards and what it requires.
2. Assemble the data. Exports, imported inputs and, where published, the rate at which preferences are used.
3. Compare before and after. Look at what happened to value retention when a rule changed, for example when the EU relaxed its rules of origin for LDCs, and compare Bangladesh with other garment exporters.

This is a plan. I have not produced results yet, and I will say so on this page until I have.

Where the work stands

• Reading on rules of origin and LDC graduation: first pass done.
• Map of instruments: in progress.
• Data: being assembled.
• Analysis: not started.

What I do not know yet

• Whether the recent rise in Bangladesh's garment retention rate reflects more local inputs, or only cheaper imports.
• Whether value added can be measured simply enough to build a preference rule on it.
• Whether preference-giving countries would accept rules that reward value, given that current schemes already look generous.

I write about parts of this on the blog. If you work on trade preferences, value chains or LDC graduation and have comments, please write to me at imranul.ahsan@bracu.ac.bd.