Expansion of BD economy
BANGLADESH became an independent country 50 years before, with negligible funds for economic development. It started progress with negative GDP growth rate minus 5.5% in 1971 and now it has achieved 8.17% in 2019.
Thus, the country has become destined and also becoming the reference in the future economy of Asia. Dr Henry Kissinger, National Security Advisor of the US at that time, derisively referred to the country as a basket case which is a term used to describe a country or an organization whose economic situation is very worse. Also, many scholars and analysts feared that the country would remain a ward of the global community acutely dependent on foreign aid.
Despite the dire expectations, Bangladesh has in fact made significant progress in reducing poverty and in promoting economic growth among South Asian economies. Thus, emerged as a rising star. The country has made strong trade relations with the US, European Union, India, Australia, China, Japan and ASEAN.
From 1971 to 1976, Bangladesh had followed socialist policies. Onto the regime of the later governments, the private sector of the country was remarkably promoted; also, the free markets were restored.
In 1991, Bangladesh adopted policies related to economic liberalization to which as a result many corporate sectors took charge of the economy and the private sector expanded rapidly.
Bangladesh is probably the country that comes to mind when we talk about economic progress of a developing state.
According to International Monetary Fund (IMF), its per capita income was $1969 in 2020 compared to $134 in 1971 and out of 166 million people, only 15 million live below the poverty line which is 1.90$ a day.
But compared to Bangladesh a decade ago, the country is already on the upswing. Since 2009, Bangladesh’s economy has grown by more than 6% per year and its GDP per capita has almost tripled. In addition, the rate of extreme poverty in the country has dwindled from roughly 20% to just under 9%.
The country’s Human Development Index (HDI) value had also climbed from 0.478 in 2000 to 0.632 in 2019.
Among the country’s achievements, is a dramatic improvement in its citizen’s average standard of living.
Even more noteworthy, is the improvement in social indicators such as life expectancy, infant & maternal mortality, fertility and female labour force participation.
Bangladesh has also managed to sustain a modicum of democratic stability keeping the Army in the barracks.
The impressive growth of the garment sector has brought about a structural transformation in the economy of Bangladesh.
At present, the country has 4,000+ exporting garment industries compared to just 9 at the time of independence. The garments industry accounts for 84% of the country’s total exports.
Dependence on export and decline in foreign aid, emphasizing on producing manufactured goods rather than primary goods, providing employment to female workers making them empowered especially among the poor and the uneducated are the factors that have contributed significantly to the growth of Bangladesh.
The flow of remittances into the country shows an upward trend as the government has taken measures including 2% cash incentives to streamline the legal channel for encouraging the non-resident Bangladeshis to send money to their country.
The major factors contributing to higher remittances through the banking channels include depreciation of Taka against the US Dollar and higher rates offered by their local banks.
The agricultural sector, being the backbone of the country, contributed tremendously to its economy in terms of food security, employment generation and poverty alleviation. It had employed about 39.7% of the entire workforce.
Furthermore, growth in small medium and micro enterprises has also contributed to the economic development of the country.
Bangladesh has prioritized and strengthened its education sector over the past years as 17 million students are taught by around 400,000 teachers, in almost 79,000 schools.
According to UNICEF, the adult literacy rate of Bangladesh was recorded at 73.91% in 2018 in which male literacy rate was 76.67% and female was 71.18%. This shows that an almost equal gender parity has been achieved in primary education. Thus, an approximately equal number of boys and girls receive the same quality of primary education.
This has led to more women entering the workforce in the manufacturing sector and as result, 80% of the organized textile jobs are held by women.
The consistency in the policies and stability in the government has proven a vital element for Bangladesh in their phenomenal growth over the past 20 to 30 years and with this, one can predict that in the near future Bangladesh will rise to be South Asia’s standout start as India and Pakistan will fall behind.
Parallel to this, Pakistan needs to concentrate on its economic development exploiting all the resources at its disposal including blue economy which is almost a neglected sector. Further, the economic progress is also linked with the good governance which needs to be improved.
—The author is associated with the National Institute of Maritime Affairs. The views expressed are his own.
