How Bangladesh became Standout Star in South Asia | Daily News

How Bangladesh became Standout Star in South Asia

Bangladesh’s booming garment industry
Bangladesh’s booming garment industry

Bangladesh’s economic growth leans-on three pillars: export competitiveness, social progress and fiscal prudence. Between 2011 and 2019, Bangladesh’s exports grew at 8.6 per cent every year, compared to the world average of 0.4 per cent. This godsend is substantially due to the country’s hard-hearted focus on products, such as apparel, in which it possesses a comparative advantage.

Bangladesh, the shining model of development in South Asia, becomes everyone’s economic darling amidst COVID-19. The per capita income of Bangladesh in the fiscal year 2020-21 is higher than that of many neighbouring countries including India and Pakistan. Recently, Bangladesh has agreed to lend US$ 200 million to debt-ridden Sri Lanka to bail out through a currency swap. Bangladesh, once one of the most vulnerable economies, has now substantiated itself as the most successful economy of South Asia. How did Bangladesh successfully manage COVID-19 and become the top performing economy of South Asia?

In March 1971, founder Sheikh Mujibur Rahman declared their independence from richer and more powerful Pakistan. The country was born through war and famine. Shortly after the independence of Bangladesh, Henry Kissinger, then the U.S. national security advisor, derisively referred to the country as a “Basket Case of Misery.” But after just 50 years, recently, Bangladesh’s Cabinet Secretary reported that Per Capita Income has risen to US$ 2,227. Pakistan’s Per Capita Income, meanwhile, is US$ 1,543. In 1971, Pakistan was 70 per cent richer than Bangladesh; today, Bangladesh is 45 per cent richer than Pakistan.

Pakistani economist Abid Hasan, former World Bank Adviser, stated that “If Pakistan continues its dismal performance, it is in the realm of possibility that we could be seeking aid from Bangladesh in 2030”. On the other hand, India, the economic superpower of South Asia, is also lagging behind Bangladesh in terms of Per Capita Income worth of US$ 1,947. This also elucidates that the economic decisions of Bangladesh are better than that of any other South Asian countries.

Economic growth

Bangladesh’s economic growth leans-on three pillars: export competitiveness, social progress and fiscal prudence. Between 2011 and 2019, Bangladesh’s exports grew at 8.6 per cent every year, compared to the world average of 0.4 per cent. This godsend is substantially due to the country’s hard-hearted focus on products, such as apparel, in which it possesses a comparative advantage.

The variegated investment plans pursued by the Bangladesh Government contribute to the escalation of the country’s Per Capita Income. The Bangladeshi Government has attracted investments in education, health, connectivity and infrastructure both from home and abroad. As a long-term implication, investing in these sectors helped Bangladesh to facilitate space for businesses and created skilled manpower to run them swiftly. Meanwhile, the share of Bangladeshi women in the labour force has consistently grown, unlike in India and Pakistan, where it has actually decreased. And Bangladesh has maintained a public debt-to-Gross Domestic Product (GDP) ratio between 30 per cent and 40 per cent. India and Pakistan will both emerge from the pandemic with public debt close to 90 per cent of their GDP.

Bangladesh’s economy and industry management strategy during COVID-19 is also worth mentioning here since the country till now has successfully protected its economy from the impact of the COVID pandemic. At the outset of the pandemic, lockdowns and restrictions hampered the country’s overall productivity for a while. To tackle the pandemic effect, Bangladesh introduced improvised monetary policies and fiscal stimuli to bring them under the safety net which lifted the situation from worsening.

The Government introduced a stimulus package which is equivalent to 4.3 per cent of the total GDP and covers all necessary sectors such as industry, SMEs and agriculture. These packages are not only a one-time deal, new packages are also being announced in the course of time. For instance, in January 2021, the Government announced two new packages for Small and Medium Entrepreneurs (SMEs) and grassroots populations. Apart from economic interventions, the Government also chose the path of targeted interventions.

Socio-economic activities

The Government, after the first wave, abandoned the widespread lockdown and adopted a policy of targeted intervention which is found to be effective as it allows socio-economic activities to carry on under certain protocols and helps the industries to fight back against the pandemic effect.

Another pivotal key to success was the management of the migrant labour force and keeping domestic production active amidst the pandemic. According to the KNOMAD report, amidst the COVID-19, Bangladesh’s remittances grew by 18.4 per cent crossing US$ 21 billion per annum inflow whereas many remittance dependent countries experienced a negative growth rate. Because of the massive inflow of remittances, the Forex reserve of Bangladesh has reached US$ 45.1 billion.

Bangladesh’s success in managing COVID-19 and its economy has been reflected in a recent report “Bangladesh Development Update- Moving Forward: Connectivity and Logistics to strengthen Competitiveness,” published by the World Bank. Bangladesh’s economy is showing nascent signs of recovery backed by a rebound in exports, strong remittance inflows, and the ongoing vaccination programme. Through financial assistance to Sri Lanka and COVID relief aid to India, Bangladesh is showcasing its rise as an emerging superpower in South Asia.

That is why Mihir Sharma, Director of the Centre for Economy and Growth Programme at the Observer Research Foundation (ORF), wrote in an article for Bloomberg that, “today, the country’s 160 million-plus people, packed into a fertile delta that’s more densely populated than the Vatican City, seem destined to be South Asia’s standout success”. Back in 2017, a PwC (PricewaterhouseCoopers) report also predicted that Bangladesh will become the largest economy by 2030 and an economic powerhouse in South Asia. And this is how Bangladesh, a development paragon, offers lessons for the other struggling countries of the world after 50 years of Independence.

- Modern Diplomacy


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