Economic Development of Bangladesh

Economic Development of Bangladesh

Bangladesh on World map

The poverty rate of Bangladesh fell from 38.8 per cent to 14.3 per cent over a span of forty years. And Bangladesh has been performing better than India and Pakistan recently in various social indicators like fertility rate and infant mortality rate. This has been possible with consistent efforts towards development.

Since the year 1975 Bangladesh has been classified as a ‘Least Developed’ country by the United Nations and it will likely graduate from this classification by the year 2024. But it was least expected at the time of Bangladesh’s independence. U. Alexis Johnson, Under Secretary of State of United Nations said Bangladesh was an “international basket case” while New York Times reported the country as a ‘Failure’. On the contrary Bangladesh outperformed many expectations.

Bangladesh gained independence in the year 1971 with the help of Mukti Bahini and support from India. Since the country was established in prevailing conditions of violence, even the basic needs of the citizens could be barely met by the government of Bangladesh. In addition, the country the country faced a severe drought in 1975 which killed approximately 1500000 people. Political instability also contributed to make situations worse. Around 10000000 Bangladeshis immigrated to India because of the violent situations there. Due to several such reasons the country depended majorly on foreign aids.

But the situations improved due to these reasons:

  1. Manufacturing(textile industry): Bangladesh is world’s second largest exporter of textiles. According to garment associations of Bangladesh, the textile industry constitutes almost 10 per cent of the their national GDP. Textile industries of the country employ around 4 million people directly and 10 million indirectly.
  2. Women empowerment: Around 80 per cent of employees of the textile industries of Bangladesh are women. This hasn’t just helped women of the typical conservative society to get financial independence and better lives but has actually changed the future of the nation. An economic research paper showed that in the families where women were employed at garment factories witnessed a decline in fertility rate, the age of marriage increased and there was a rapid increase in girls’ educational attainment. The possible reason behind the improvements may be to take advantage of jobs and due to increased family income. The garment industry helped improve the lives of all women of the nation as World Bank showed a decrease in female-male wage gap due to increased employment of women in garment factories.
  3. NGO’s: Many NGO’s like ‘brac’ played a significant role in national development. These NGO’s fulfilled people’s financial and medical requirements, constructed schools and also conducted several public health campaigns. Arvind Subramanian, India’s ex-Chief Economic advisor says the development of Bangladesh in collaboration with NGO’s is no less than a miracle. As in democratic countries the governments tend to avoid much dependence on non-governmental organizations for public works as this leads to defamation of the governments and the chances of corruption are also lowered. But Bangladesh overcame this to which he explains reasons like the low tax to GDP ratio of the country and the poverty and violence at the time of establishment of democracy. Due to all such reasons NGO’s voluntarily took the responsibilities and have done well.
  4. Foreign relations: Pre-independence of Bangladesh, the geopolitical conditions were complex but still in the challenging situations Bangladesh has managed to have a good foreign policy. For example USA provided Bangladesh a good amount as foreign aid even though it was against Bangladesh’s independence. The second major factor is remittances. These remittances, or the earnings sent home by those working abroad constitute around 6 per cent of the national GDP. And the foreign policies of Bangladesh helped them export garments easily to several developed countries through which they avoided ‘aid curse’, or a situation where a country’s individual economic development is crippled due to excessive dependence on foreign aids.

Challenges ahead:

  1. End of duty free access: As Bangladesh is classified as ‘Least developed country’ by the UN, it enjoys duty free access to exports in several developed countries but as it will graduate from the classification in the coming years export duties would be imposed and specifically garments exports would get badly affected.
  2. Automation: The country’s GDP is largely depended on the textile industry but automation in the textile industry in the years ahead may replace a chunk of the employees leaving a worse impact on the economy as a whole. Thus the industries must be diversified making the economy less depended on the garment industry.
  3. Lack of political freedom: There have been several cases of threatening and even murders of journalists, political activists and media workers. This kind of governmental control and censorship might allow short term development but the long term impacts and overall developments get endangered.
  4. Climate change: This is probably the biggest challenge in the face of Bangladesh. It was the seventh on the list of countries under long term climate change risks. Floods and cyclones are common in the country now and the poor rural people are amongst the worst affected.

But besides everything Bangladesh’s development is worth learning while it outperformed all the expectations.