Consolidating the gains
Photo: Valentin Casarsa
Bangladesh, according to the United Nations Conference on Trade and Development (Unctad) 2011 report on the Least Developed Countries (LDCs), is performing better, particularly in the economic vulnerability category.
The Economic Vulnerability Index (EVI) of a low income country was devised by the UN to show, given its structural characteristics, how it is able to respond when exposed to exogenous shocks. In the present context, external shocks refer mainly to the economic depressions in the highly industrialised nations of the West. That is because, excepting a major part of the wage earners' remittances, the lion's share of the foreign exchange income of our economy comes from the EU, the North American countries, Japan, and multilateral donor agencies like the World Bank, the Asian Development Bank (ADB), the International and the Monetary Fund (IMF). And the foreign exchange comes mostly from our exports to those countries and the development aid, grants and the loans they provide for carrying our development activities.
Additionally, a huge amount of foreign currency is also derived from the remittance money that the migrant workers send home. So any disturbance of economic or political nature in those countries is liable to create uncertainties in the inward flow of hard currency. What is our past experience about such external shocks? When Europe and the US had been going through a financial meltdown during 2007-08, fear gripped the LDC economies. Many in Bangladesh feared that our exports, foreign aid volume and homebound remittances would suffer as a result. But somehow Bangladesh could navigate rather well through those troubled times.
In recent times, we have again been exposed to another such shock from the West, as lingering economic depression in the US and the debt-crisis-ridden EU nations have been posing another threat to our foreign currency sources. But so far, at least until the disclosure of the Unctad/ CPD report, there is still no seriously depressing news about our export and remittance prospects.
About foreign aid scenario, there are certainly signs that the volume of external aid is shrinking. But that is not really of much concern to us at the moment, since we could so far use only a meagre portion of the aid dollars from the previous commitments made by the aid givers. So, it matters little, even if there are fewer dollars in aid in the pipeline. And the fear of dwindling remittance dollars flowing mainly from the political crisis-ridden Middle Eastern countries is also in most cases misplaced. But that is also no reason for complacency, either.
That is why, as advised by the Centre for Policy Dialogue (CPD), the local development policy think tank, who presented the report on the status and performance of our economy compared to other LDCs on behalf of Unctad, has suggested that now we should concentrate more on the developing trade relations with other developing as well as low income economies in the South and tap the potential of "South-South cooperation."
In fact, the fulcrum of the global economy has already started to shift to the South. So, from that point of view, it would be wiser on our part to cultivate enhanced trade relations, our export destinations, source of remittance money as well as other kinds of financial assistance from the economies of the South.
What damage can an external shock do to an economy? Shocks to an economy render output growth volatile, affecting average rate of growth, and slow down the rate of poverty reduction in a low income economy.
However, the capacity for responding to external economic shock is not also the only criterion for measuring the Economic Vulnerability Index (EVI). There are also other indicators of the EVI, for example, the per capita Gross National Income (GNI) and the Human Assets Index.
The Unctad/CPD report says that at present Bangladesh's per capita GDP stands at $640. Though that may sound rather comfortable as one of the LDCs, we are still well below the threshold level of $905 before we might graduate to the status of a middle income nation. So, from the standpoint of per capita GNP, Bangladesh will have to increase its GDP growth from its present level at over 6.3, so that it may cross the required threshold.
The Human Assets Index (HAI) generally involves the average per capita caloric consumption as a percentage of minimum requirement, health as measured by the under-five mortality rate, the level of education measured by the adult literacy rate and the gross secondary school enrolment rate. Bangladesh has in the meanwhile been praised by the international community for achieving commendable successes in the HAI sector.
The figures provided by the UN body do at least dangle a flicker of hope before the people, who otherwise find no reason for feeling elevated. The common man will hardly find any solace in these abstract numbers and analyses. That is especially so at a time when he is up against the wall. The essentials price index, the tariffs for urban utilities, the cost of fuel and other amenities for living a decent life have gone beyond their reach. So, it is the task of the experts and the government people to convince the man in the street of what good the economy holds out for them in the future. Moreover, he would also like to see that those in power are serious about consolidating the gains already achieved by the economy.
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