Charting Bangladesh’s economic growth

The recently published book Bangladesh's Road to Long-term Economic Prosperity, written by Professor MG Quibria, is a precise, concise and fairly down-to-earth presentation of the story of Bangladesh's development from its birth to the present. 

The book begins with a sketch of the state of economic development in Bangladesh during its founding in 1971. The nation inherited a devastated economy—there was no growth of per-capita income for two decades pre-1971, and 55,000 square miles of Bangladesh had 75 million people. In 1971, the vast majority lived in poverty, with a large proportion of them living in abject poverty.

Agriculture was the main source of income for the people contributing 56 percent of the GDP. The country had a relatively small manufacturing sector. Manufacturing and jute processing were largely synonymous.

Then the book takes a "fast-forward" and describes the situation in 2018, when Bangladesh emerged as one of the fastest growing economies in the world. It has made great strides in social and economic transformation. Since 2005, Bangladesh has grown at an average rate of 6-plus percent annually. Bangladesh is no longer the "test-case" of development; it has already "managed to place its foot on the first rung of the ladder of development." In 2015, the country graduated from the World Bank-defined low-income group to the lower-middle-income group.

The major factor for such a development is Bangladesh's remarkable progress in poverty reduction. In 2000, almost half of the population lived in poverty. In 2016, the percentage declined to about 25. Bangladesh has also made significant strides in health and education. The improvements exceeded those of its South Asian neighbours India and Pakistan.

The author discusses the political development of Bangladesh since its independence. It is followed by an overview of the economic progress of the country in terms of growth and structural change, and finally the author provides a brief comparison of the economic performances of Bangladesh and Vietnam through an international perspective. The chapter is enriched by the use and analysis of data and presentations in graphs on foreign aid inflow to Bangladesh (1971-2016), GDP of Bangladesh and Vietnam (1990-2015), export earnings of Bangladesh and Vietnam (1990-2016), FDI in Bangladesh and Vietnam (1990-2017), etc. These were extremely relevant and valuable.

It was interesting to read the analysis of the book on the "four drivers of development in Bangladesh." The author has rightly mentioned these as the "serendipitous" things that happened in the 1970s. The drivers were mostly unforeseen by the economists, and disconnected from the political processes of the time. The four elements that laid the foundation of the present Bangladesh economy were: (i) emergence of the ready-made garments industry; (ii) international labour exports to the Middle East; (iii) surge in agricultural growth; and (iv) emergence of non-government organisations (NGOs).

Notwithstanding various challenges, these four drivers of development are present till this day and have contributed to the country's economic and social progress. Subsequently in this chapter, the author delves into the details of the evolution and contribution of these four drivers, and how they have facilitated the growth of the economy till the present day.

Then the author talks about the risks and challenges for the economy of Bangladesh in the future. He says much of the recent growth and development in Bangladesh have been narrowly based, and primarily propelled by the four drivers of development. These drivers have served the economy of the country very well. However, their robustness may be challenged in the future. The book identifies the "trifacta" of major risks, which are exogenous to the government and largely beyond its ability to manipulate. These are rooted, first, in the rapidly changing technology in robotics and artificial intelligence; second, in the evolving global political and economic environment; and third, in climate change and natural disaster. Going forward with sustained growth, the country needs to diversify further which will require addressing various social and political policies, and institutional challenges facing the economy, including poor governance, inadequate physical infrastructure, skill and educational bottlenecks, demographic burden, dwindling social capital and lack of transformational challenges.

In the paragraphs that follow, the author identifies the number of risks for each of the four drivers and goes into the details of the implications of those impacting the future course of the economy. The author further clarifies the challenges that are "intractable", i.e. poor governance, infrastructural bottlenecks, dwindling social capital and myopic leadership. The challenges are further exemplified by the tables: (i) Indicators of Governance: Bangladesh and India, 2016; (ii) State of Infrastructure in South Asia (2017-2018); (iii) Human Capital Scores and Indexes of Selected Countries (2018), e.g., Bangladesh, India, Nepal, Pakistan, Cambodia and Vietnam; and (iv) Growth of Per Capita Income of Singapore and Zimbabwe (1960-2016).

Finally, the book strings together the major conclusions of the study. It also provides some observations on political, social and institutional challenges for the country going forward. These relate to such factors as governance, political institutions, economic openness, industrial policy, labour market and human development policy, investments in physical infrastructure and the role of leadership. The chapter concludes with some meaningful suggestions and recommendations on these factors.

This book is written in a lucid manner and understandable English. It is a useful resource for not only economists and specialists but also for common readers as it will help them understand the essence of Bangladesh's economy—the "what, why and how" of the country.

The contents of the book will be very useful in taking strategic decisions on how the country could go forward. Therefore, policymakers, researchers, journalists, teachers and students will immensely benefit in understanding the messages of the book.

Moreover, the author has done a commendable job of historically analysing the economic, social and political status of the country, and suggested some pragmatic ways to go forward. It would be worthwhile for universities and colleges to use the contents of the book for educational purposes.

The book has done justice to the readers by writing precisely, concisely, without beating around the bush, and keeping it focused on the major issues, risks, challenges and future policy implications.

The author deserves congratulations for skillfully presenting his research-based thoughts and analyses in the book.

Salehuddin Ahmed is a former managing editor of The Daily Star.

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