Bangladesh illustrates a most intriguing and delightful puzzle in international development. After its independence in 1971, it was dismissed as the "international basket case", a bottomless pit of foreign aid and external dependence—disaster prone, resource scarce, war traumatised, poverty stricken, burdened with a huge and illiterate population, and lacking the basic "fundamentals" of economic growth. But, the country has defied that characterisation, overcome many of its challenges, and demonstrated a liveliness in its economic performance that has been as totally unanticipated as it has been genuinely impressive. This essay will briefly explore that paradox.
But first, some empirical substantiation of its economic progress may be relevant. According to the World Bank, the GDP of Bangladesh, in USD current prices, increased from USD 31.6b in 1990, to USD 115.3b in 2010, and USD 302.6b in 2019. In per capita terms, it went up from USD 306 in 1990, to USD 781 in 2010 and USD 1,855 in 2019, demonstrating a rate of economic growth over the last 20 years, that is better than its neighbours, and higher than most developing countries. Taking into account the variable pressures and dislocations caused by the corona pandemic, the IMF has estimated that Bangladesh GDP per capita in nominal terms could overtake that of India by 2021 (though in Purchasing Power Parity measures, India would still be higher).
From the "sick man" of South Asia, Bangladesh has emerged with a more muscular image. It met the World Bank threshold to graduate from Low Income Country to Low Middle Income Country by 2015, satisfied all the initial UN established criteria to move out of the Least Developed Country status by 2018, and was well on its way to completing the periodic review process and achieving both by 2024.
Admittedly, GDP measures are aggregated and may be misleading. However, in various social indicators Bangladesh has not performed too shabbily. World Bank estimates indicate that poverty rates have declined from about 48.9 percent in 2000 to 24.5 percent in 2016 with further reductions clearly in evidence later. Life expectancy increased from 48.31 years in 1975 to 72.3 in 2018. Literacy rates went up from 29.23 percent in 1981 to 74.61 percent in 2019, with almost 95 percent of children currently enrolled in primary schools, 62 percent in secondary schools, with more girls than boys in both. How did all this come about?
Both external and internal factors contributed to this unprecedented growth spurt. Some "international" developments were fortuitous and transformational for Bangladesh. First, the steady increase of oil prices left many oil-rich countries in the Middle East with huge amounts of surplus capital and ambitious development projects that dramatically opened up their labour markets to foreign participation. Moreover, the loosening of stringent immigration policies in several countries such as US, UK, Italy, Malaysia, and elsewhere also allowed small but increasing settlements. Currently, there are almost 10m Bangladeshis abroad (mostly temporary workers in the Middle East), and total remittances from all countries have increased from USD 1.8b in 2000-01 to USD 10.9 b in 2009-10, to USD 18.2b in 2019-20.
Second, the ready-made garment (RMG) industries, which are the main drivers of the Bangladesh economic engine, also benefitted from external circumstances. Previously this was the domain of Taiwan, Korea, Hong Kong, Singapore and so on. But in the 1970s and 80s, labour prices increased in these countries because both work-places and product lines changed radically. Thus, the relatively "primitive" (labour intensive) garment production was relocated to locales with very low overhead costs and an abundantly cheap workforce. Moreover, trade liberalisation regimes in the western countries, and easier communication and transportation facilities, made those markets increasingly accessible to Bangladeshi products.
Beginning with just 10,000 shirts exported to a French company in 1978, Bangladesh exported garments worth USD 869m in 1990-91, and USD 34.1b in 2018-19, comprising about 84 percent of its export earnings, contributing 11.1 percent to its GDP, and employing more than 4m workers, mostly women. The forward and backward linkages provided by this remarkable increase led to other various multiplier and ripple effects in the economy.
Internally, much of its success is derived from the incredible industry, imagination and the entrepreneurial spirit of the Bangladeshi agriculturists. They introduced new techniques of production, planted new varieties of rice, maximised the available land, developed fish and poultry farms, and deftly used new resources and technologies, to treble agricultural production between 1972-73 and 2014-15, with food grains increasing from 9.8m tons to 36.3m in 2020-21. Agriculture has grown at almost 2.7 percent annually over the last 34 years, second only to that of China.
Non-Government Organisations also played a critical role in this dynamic. Bangladesh was the birthplace of internationally respected institutions such as Brac and Grameen Bank, as well as a host of other voluntary actors and change agents, which have transformed the economic and social landscape of the country through micro-credit programmes (which impacted the lives of millions of women), educational and health initiatives, and human rights-oriented organisation and advocacy.
And finally, the government, regardless of its political or ideological orientations, also contributed to this uplifting story. For example, government efforts, aided by many NGOs, reduced population growth rates from 2.8 percent in 1980 to about 1 percent in 2019. Similarly, though inadequate and somewhat inefficient, it has developed some social safety net programmes (cash/in-kind transfers, public works, income security, etc.) for vulnerable groups, and allocated almost 13.8 percent of its annual budget to this purpose in 2017-18. Since 2010, it has also provided free textbooks to all primary and secondary school students and, even in 2021, in the shadow of the pandemic, it distributed more than 343m books to almost 42m students throughout the country.
The government also created some enabling conditions for agricultural and manufacturing growth—the first through the relevant inputs it helped to introduce (fertilisers, insecticides, new varieties of seeds, irrigation, farm machinery, storage facilities and so on), and the second through the support it provided in opening up markets, providing credit lines, developing energy and communication facilities, and aiding the small and medium enterprises in various ways.
However, while there is much to be proud of, some concerns remain. In economic terms, more than 22m people still languish in poverty, inequality has increased in obvious and cruel ways, job creation sluggish, international investments shy, revenue generation weak (Tax/GDP ratio is low and declining), and trade imbalances persistent.
Politically, the democracy deficits are worrisome—elections may be mired in controversy, the rule of law could be shaky, executive dominance has jeopardised the principle of the separation of powers, and an aggressive impatience with any criticism, dissent or organised opposition has shrunk the space for public discourse and problematised human rights issues.
Other factors such as endemic corruption, stifling pollution and the growth of social pathologies such as drugs, pornography, violence (particularly against women), gang activity, and pockets of misguided fanaticism, have all affected the quality of life of the citizens in frustrating ways.
Thus, Bangladesh's journey has been heroic, and its accomplishments laudable. But, the way forward remains challenging and will clearly demand concerted action, wise leadership, and a fuller embrace of democratic ideals emphasising tolerance and justice.
Dr Ahrar Ahmad, Professor Emeritus, Black Hills State University, SD, US and Director General, Gyantapas Abdur Razzaq Foundation.
This article was first published in SOUTHASIA, a journal from Karachi, Pakistan.