Home ›› 16 Dec 2021 ›› Front
Bangladesh has much to celebrate in the Golden Jubilee of victory. The empty state coffer of 1971 is now full of wonders. There is no shortage of prominent figures to narrate the greatest economic growth story attained since independence.
Once a basket case, the country is now the second largest apparel exporter with $31.45 billion earnings in FY21. Bangladesh has been ranked 41st among the world’s largest economies and the second biggest economy in South Asia in 2019.
HSBC forecasts that Bangladesh would be the 26th largest economy in the world by 2030.
Henry Kissinger’s description of Bangladesh in 1972 as an “international basket case” is proven wrong. Bangladesh’s per capita income was $134 when it became independent and in 2021 it reached $2,554.
Once concerned about survival, people now think about safe and nutritious meals to lead a better life. Bangladesh is no longer associated with poverty, hunger and poor management of natural disasters.
Todays’ Bangladesh is a role model for development, women empowerment, birth control, agricultural production, poverty alleviation and social development.
Coupled with policy support, modernisation of agriculture and a pool of resilient young entrepreneurial class that grew from the early 1980s paved the way to economic development.
Food shortage to sufficiency
Though population has turned into a big asset for Bangladesh now, it was a burden in 1971. Birth rate was a threat to food security as Bangladesh had to feed over 7.5 crore with a traditional agro based economy.
The country’s birth rate is now below 1 per cent, compared to 3 per cent recorded post-independence. From food shortages, Bangladesh is self-sufficient in food production, feeding the population that has more than doubled.
Bangladesh is now a food-surplus country, with rice production rising by around four times to 38.7 million metric tons in FY21 from 10.8 million metric tons in 1971.
“From the beginning of 1980s, modernisation in agriculture started to boost production. The government put emphasis on research, the use of high-yield seeds and fertilisers rose massively among the farmers,” Zahid Hussain, former lead economist of World Bank Dhaka Office said.
After the success in rice production, farmers moved towards non-rice agriculture, fruits and vegetables, which in turn reduced the country’s import dependency.
With mechanisation in agriculture and use of high-yield varieties of seeds, Bangladesh is now almost self-reliant in meeting domestic demand, the economist pointed out.
Transition from agriculture to industry
With consistent policy support and resilient entrepreneurs, Bangladesh’s economy transformed from agricultural dependence to industry and service sector-based growth.
In FY73, the agricultural sector contributed 49.57 per cent to the GDP while industry and service sector 12.56 per cent and 37.86 per cent respectively. In FY21, agricultural contribution came down to 12.15 per cent, while industry and service sectors rose to 35.11 per cent and 52.74 per cent respectively.
How exports cemented economic development
Bangladesh economy started its export journey with $348.42 million in the fiscal year 1972-73. The country exported goods worth $38.75 billion in FY21, of which, $31.45 billion came from the apparel sector. All exports contribute about 10 per cent to Bangladesh’s GDP.
“After 1978, the then government gave importance on the private sector through policy reforms, which helped Bangladesh emerge as a market based economy, significantly contributing to today’s development trend,” AB Mirza Azizul Islam, former advisor to care taker government told the Business Post.
Policy incentives encouraged investors to pour funds in different sectors. As a result, Bangladesh turned into manufacturing mostly for export goods, he added.
“Over the years, the RMG industry has contributed immensely to our economic growth. Bangladesh has emerged as the second largest garment exporting country in the world. Starting from almost nothing, RMG exports stood at $34 billion in FY19,” BGMEA president Faruque Hassan told the Business Post. “With 11 per cent contribution to the national GDP, it turned Bangladesh from an aid dependent economy into a trade oriented one.”
In particular, the RMG sector has brought a silent revolution in our society by allowing women into the mainstream economy, helping our nation to significantly reduce early marriage, and infant and maternal mortality, Hassan added.
Major economic indicators
In FY1973, the size of Bangladesh’s GDP was Tk26,455 crore, which reached Tk2,793,867 crore in FY21. The same year, Bangladesh achieved 5.43 per cent GDP growth, the highest in the South Asian nations even amid the pandemic.
In FY19, Bangladesh recorded 8.15 per cent GDP.
Exports earnings stood at $38.75 billion in FY21, which was only $348.42 million in the fiscal year 1972-73. In FY21, Bangladesh exported 751 products to 203 countries, which was 25 and 68 respectively.
In 1976, Bangladesh earned only $23.71 million in remittances, which rose to a staggering $21.75 billion 2020.
When Bangladesh achieved liberation from Pakistan, it had only $270 million in reserve. Now, Bangladesh’s foreign exchange reserves stands at $45 billion as of December 8, 2021. Reserves reached its highest peak of $48 billion in August 2021.
Pakistan’s foreign exchange reserves were measured at about $16 billion as of November, 2021.
In 1972, Bangladesh had received $90,000 in foreign direct investment (FDI), in 2020 the country received $2.56 billion foreign investment.
“Bangladesh’s foreign exchange reserve is healthy because of migrant workers and a great contribution of exports, as well for our freelancers who are earning a lot sitting at home,” Ahsan H Mansur, executive director of Policy Research Institute (PRI) told The Business Post.
Agriculture sector contributed a significant amount to the national economy even amid the pandemic, which helped it to remain afloat, while our South Asian peers posted negative GDP growths, said the economist.
From aid to loan dependent
Within 50 years, Bangladesh managed to turn into a loan dependent country from an aid-dependent one.
In FY73, donor’s commitment was $878 million, of which $484 was in grants and $ 395 million was in the form of loans. Conversely, in FY21, Bangladesh received $7.10 billion as foreign aid from development partners. Of which, $6.77 billion was in loans and $334 million in grants.
We are no longer an aid dependent country. Our aid/GDP ratio is now around 2% whereas Pakistan has required periodic bailouts from the international community, said Rehman.
Planning Minister MA Mannan said the major international donor agencies such as the World Bank and the Asian Development Bank now consider Bangladesh as a miracle due to its massive socio-economic progress over the last ten years.
“The picture of foreign aid for the country has been changing over the last two decades,” he pointed out.
Bangladesh dares to be poverty free by 2031
With an inherited 82 per cent poverty, Bangladesh started its journey in 1971. The country’s poverty has now declined to 20.5 per cent in 2020. This has been achieved because of our significant growth in the manufacturing industry, as well as the services sector.
“Bangladesh dreams to be free from extreme poverty by 2031. The Vision for poverty outcome is that by 2031, extreme poverty will be eliminated and by 2041, the incidence of poverty will be a minimal 3 per cent or less,” Planning Minister Muhammad Abdul Mannan told the Business Post citing the Vision 2041.
“Bangladesh’s levels of multi-dimensional poverty, which was once higher than that of Pakistan, is now well below it. Perhaps the most dramatic advances have been registered by the women of Bangladesh whose gender development index has not only moved well ahead of Pakistan but is also ahead of India,” said Rehman Sobhan.
Micro credit provided by the non-government organizations (NGOs) played an important role in alleviating poverty, he added.
However, the poverty rate increased a little bit due to the ongoing Covid-19 pandemic.
Social indicators
Bangladesh has attained great achievements in major social indicators, surpassing its Asian peers.
Bangladesh topped among its South Asian neighbors in bringing down the gender gap. Bangladesh closed 72.6 per cent of its overall gender gap and ranked 50th among 153 countries globally.
The country’s literacy rate has risen to 74.7 per cent in 2019 from 26.8 per cent in 1974. Bangladesh’s life expectancy was 46.6 years in 1971, which stood at 72.6 years in 2020.
Besides, maternal mortality has declined by almost four times and child mortality by about five times now since the 80s. The country’s literacy rate has risen to 74.7 per cent in 2019 from 26.8 per cent in 1974.
Graduation to developing nation by 2026
In March 2018, the UN Committee for Development Policy (CDP) announced Bangladesh’s eligibility to graduate from the LDCs. The country has fulfilled three criteria such as gross national income per capita, human assets index, and economic vulnerability index to graduate into a developing country.
In the second review held in February 2021, Bangladesh fulfilled the three criteria and secured recommendation to graduate by 2026.
Next fight is for equity, justice
Despite having steady progress in the social and economic indicators, the spirit of liberation war – of an equitable and just society – has remained unfulfilled. It is high time to move for equitable development.
“Bangladesh’s economy has registered impressive growth and poverty has been reduced, but income inequalities and social disparities have widened,” said Rehman Sobhan, founder chairman of Centre for Policy Dialogue (CPD).
This represents an unjust distribution of the gains from our development, and an inadequate recognition – in terms of policies and public support – of the larger constituency of social forces which have also driven our progress, said the economist.
Economic and social injustices, originating in state actions, are compounded by the depreciation in the quality of our democracy.
It has manifested in the weakening credibility of our electoral process, the erosion in the media’s freedom, unfair access to public services and inequitable protection under the rule of law, as well as from law enforcement, he added.
Much can be done towards bringing greater justice to the governance process if the ruling regime remains committed to realising Bangabandhu’s vision of a just society.
Ensuring the rule of law for all, implementing policies and enforcing regulations, remain within the domain of a well-intentioned government and do not require revolutionary upheavals, he added.
“Bangladesh has been impressively successful in reducing its absolute poverty, but the same is not true for inequality. Sustained economic growth in Bangladesh has not been associated with declining income inequality,” said Professor MM Akash, chairman of the Department of Economics, University of Dhaka.
Inequalities in opportunities and outcomes have become a serious development challenge for Bangladesh, having adverse effects on human development, he added.
