Bangladesh’s Economy - A Journey From A “Basket Case” To A
“Development Surprise”
In 1971, almost immediately after Bangladesh became Independent, Henry Kissinger, former US Secretary of State, said the country was in its worst shape and quoted it as a "perpetual economic basket case". But Bangladesh proved Kissinger wrong and became Asia’s most remarkable success story in recent years.
How Did Bangladesh Become An Economic Success story
Bangladesh- the new leader in South Asian GDP Growth Rate
Source - ADB
Going by economic indicators, a least developed country,
Bangladesh, is graduating into a developing country by 2024 and it’s annual GDP
growth is set to exceed Pakistan’s (which left Bangladesh in complete tatters),
by roughly 2.5 percent per year.
To what does Bangladesh owe its transformation?
Bangladesh's economy is growing faster thanks to its much
higher Gross Domestic Savings Rate & bank account activity as compared to
India & Pakistan. Only 10.4% of Bangladeshi bank accounts are
“dormant", compared to 48% of Indian bank accounts.
Since Independence the country has made significant strides
in many economic sectors including garments, textiles, pharmaceutical, ceramic,
cement and many more. However, there is no doubt that the fast-growing garment
manufacturing industry is the major driving force of the country’s economy.
Bangladesh is the world’s second largest Readymade Garment (RMG) exporter, just
behind China. 81% of the country’s exports come from the RMG sector, and the
textile and Apparel sector contributes around 20% to Bangladesh’s GDP. It
employs around 20 million people in the country.
Also, thanks to relatively easy “Exit” mechanisms for industry & flexibility in the labour market, entrepreneurship is flourishing in Bangladesh.
Also, thanks to relatively easy “Exit” mechanisms for industry & flexibility in the labour market, entrepreneurship is flourishing in Bangladesh.
Besides garments; agriculture, leather and leather goods,
fisheries and livestock, jute (the Golden Fibre) & jute products, have also
played an important role in BD's economy.
“Friendship towards all, malice towards none” has
been adopted by Bangladesh as it's foreign policy's core dictum. Bangladesh’s
friendly relations with everyone are its main asset.
It has comparably low debts and Bangladesh’s Foreign Exchange Reserve is much higher than that of Pakistan’s. Pakistan’s foreign investment is also extremely low due to the threat of terrorism and it’s debt that offers a huge chunk of the GDP of Pakistan.
Bangladesh’s foreign exchange reserves rose to $32.93 billion at the end of August, 2018, owing to the growth in apparel exports. The Bangladeshi diaspora is huge, thanks to the liberal H1B & green card policies hitherto followed by the US towards countries like BD that were given preferential treatment. Remittances from Bangladeshis working overseas have also helped foreign exchange reserves grow steadily in recent years.
The revenues earned and sent by migrant workers make up a large portion of BD’s Forex Reserves.
It has comparably low debts and Bangladesh’s Foreign Exchange Reserve is much higher than that of Pakistan’s. Pakistan’s foreign investment is also extremely low due to the threat of terrorism and it’s debt that offers a huge chunk of the GDP of Pakistan.
Bangladesh’s foreign exchange reserves rose to $32.93 billion at the end of August, 2018, owing to the growth in apparel exports. The Bangladeshi diaspora is huge, thanks to the liberal H1B & green card policies hitherto followed by the US towards countries like BD that were given preferential treatment. Remittances from Bangladeshis working overseas have also helped foreign exchange reserves grow steadily in recent years.
The revenues earned and sent by migrant workers make up a large portion of BD’s Forex Reserves.
Another factor to note is Bangladesh’s sophisticated &
reliable real estate sector that is growing steadily and is also finding takers
in South & South East Asia. The industry delivers roughly 10,000-12,000
units a year. Construction quality and durability of Bangladeshi real estate
has come to be widely known.
Last but not the least, Pakistan's Defence budget (US$ 11.4
billion) is almost 3 times that of Bangladesh's (380 crores USD). The focus on
defence has meant that all other sectors got neglected in Pakistan from
education and health care to infrastructure like railroads, ports, airports,
roads, civic facilities, irrigation and all. Unlike Pakistan which has been
wasting its resources on defence spending, far beyond any imaginable need,
Bangladesh is investing it in the productivity and genius of its people.
Bangladesh has also moved towards achieving the Millennium
Development Goals (MDGs), relating to eradicating extreme poverty and hunger,
promoting gender equality and empowering women, ensuring universal primary
education and reducing child mortality.
These are a few snapshots of the many successes that have
contributed to converting Bangladesh from the 'basket case' to a ‘case study’
in success.
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