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CWA # 4, 18 May 2018
Bangladesh
Bangladesh's Economy: Decoding a Success Story
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Apoorva Sudhakar
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By not having a strict labour law, Bangladesh offers a better environment for manufacturing firms to establish themselves and enjoy greater economies of scale. In fact, the absence of stringent labour laws has assisted the growth of the garment manufacturing industry.
From one of the poorest countries in South Asia to achieving a consistent growth rate of six per cent since 2011, the success story of Bangladesh is notable. As Bangladesh entered the final quarter of the financial year, the Government forecasted a growth rate of 7.4%. The Global Economic Prospects projected a 6.7 per cent for the years 2018-2020. What factors led to this transformation? Will the transformation help Bangladesh to do away with the stereotype of being poverty-stricken?
Least Developed Country to Developing Country
Bangladesh met the criteria for being categorized as a developing country from an LDC. The three criteria used to judge this transformation include per capita GNP, human asset index which is an indicator of literacy and health, and economic vulnerability index which measures the country’s ability to withstand economic shocks. The official tag of being a developing country will, however, be attained by Bangladesh in 2024, which gives the country a substantial time to uphold the current standards.
The Transformation
Since 2011, there has been a consistent growth rate of more than six per cent in Bangladesh. What are the factors that led to this transformation? One of the major influencers of the transformation is the stability in governance, which is focused on improvement of domestic industries.
Financial inclusion along with sustained poverty reduction schemes at grassroots level has been the objective of the Bangladeshi government. This might be the reason why there are only 10.4 per cent dormant bank accounts. Digital transactions account up to 31.4 per cent of total transactions.
Due to the endeavors by nongovernmental financial associations like the Grameen Bank and the BRAC Bank, alongside reformative work by the government, Bangladesh has taken remarkable steps towards progress. These banks mostly focus on a sustained growth of small and medium enterprises.
A major element of change is education. Various estimates indicate that the net enrollment rate at the primary school level went from 88 per cent to 99 per cent. Secondary school enrollment rate went up to 54 per cent from 45 per cent. The adult literacy rate hit a 12-year high of 72.3 per cent in 2017.
Human Development factors
Besides education, employment of women has been a priority under the governance of PM Sheikh Hasina. Other than being breadwinners for the family through micro and small businesses, women have also established themselves in government offices and large business enterprises. Teaching young ladies and giving them a significant voice, both in the family unit and the general population circle has been another aspect of the economic growth. These initiatives have influenced the wellbeing and training of the youth, which constitutes nearly 40 per cent of the total population.
By not having a strict labour law, Bangladesh offers a better environment for manufacturing firms to establish themselves and enjoy greater economies of scale. In fact, the absence of stringent labour laws has assisted the growth of the garment manufacturing industry. A lot of international fashion brands outsource the manufacturing of their products to Bangladeshi labourers, and thus, create a large number of jobs.
Thus, Bangladesh demonstrates the remarkable evolution of an economy. However it is not a cakewalk to achieve the aforementioned growth rate. Poverty still is an inevitable in the country. Coupled with other problems like fundamentalism, the growth may take a hit. To counter such hitches, the remittances from the Middle East, which dipped during the year 2017, have to be revived. Structural reforms have to be planned and implemented effectively. If the government stays committed to resolve these issues, the Bangladesh economy’s success can be a sustained reality.
Apoorva Sudhakar is currently pursuing Masters in International Studies in Stella Maris College, Chennai.
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