As opposed to traditional economic thoughts that define development in terms of capacity of an economy to sustainably produce a certain level of Gross National Income (GNI), modern economic theories perceive development as a condition prevailing in a society, country or a community that involves favorable for the lives and livelihoods of the people changes and trends in the social structures, basic institutions, policies, attitudes, knowledge base of the society in question, progressive social changes, reduced inequality and poverty and sustained economic growth. On other words, development as such is not the development of assets or technology, or accumulation of wealth by whatever means possible, rather it is a matter of the capacity of the people to use in fruitful manner those assets or technology for ensuring their comfort and productivity. Such modern thought has enormously changed the whole definition of development. In a nutshell modern economics defines development combining together the economic and social indicators. Amartya Sen suggested that the capability of the people to function is crucial in measuring development.
Empirical evidences all over the world demonstrate that sustained development is achievable only via people’s participation in the developmental process. Development is an issue that encompasses not only economic growth indicators, rather materialization of people’s aspirations is crucial in measuring development. Opposed to the conventional theories of statistical benchmarks and economic models that suggest numerous numbers and methods of measuring different trends and indicators, modern theories of development suggest that those (statistical indicators) would remain useless unless indicators that focus on people’s comfort are considered as the vital developmental indicators.
Thus, economic growth is an essential but not sufficient pre-requisite for development. Socio-political factors that determine man’s position in the society and make a person more inclusive in the socio-economic and political life of the society are important ingredients in measuring that. An economy may not provide enough physical or material resources in a given period, but the society that relies on that economy may happen to be much more powerful than the others with more resources if the human capital of that society appears to be more knowledgeable, healthy and capable of using in a judicious manner the scarce resources that they have in their possession. This also suggests that the people of that society are capable of taking decision at the best of their interests and thus the matter of distribution and re-distribution of national wealth is resolved in a manner that facilitates economic, social and political emancipation of the people. Ultimate product of such exercise would lead to reduced inequality in the society, which is one of the best indicators for holistic development.
At the backdrop of the above discussion let us try to understand the current developmental scenario of Bangladesh. The country, undoubtedly has achieved remarkable progress during the last decade. Continued political power and comparatively peaceful environment that the ruling party has been able to ensure for the decade has changed the developmental scenario of this nation. In many cases the social indicators of Bangladesh have reached unprecedented levels both in qualitative and quantitative terms. The real economic indicators surpassed conservative World Bank, ADB and IMF prognoses. This is demonstrative of appropriate policy initiatives and improved implementation modality. Both are related to improved participation of the people in decision making, planning and comparatively less bureaucratic hassles that impede and had been impeding country’s development and people’s aspirations for long years. Does this in any manner suggest that Bangladesh has come out of the bottlenecks that the rent-seeking bureaucracy creates? Or does this imply that corruption has reduced to the level that would provide this nation with any hope that this developmental trend will sustain with prevailing bureaucracy or corruption? Unfortunately, the answers are negative. The bottlenecks have been removed to some extent due to proactive and positive intervention of the highest political leadership and initiation of appropriate policies aimed at institution and capacity building at different levels.
The humiliated and undermined for centuries, half of the population: the women, are in the process of inclusion in the mainstream economic activities. In many cases they are empowered in a manner that they are in a position to take decisions at different levels. Their participation in the political arena has also improved and increased both at the local and at the central levels. Contribution of this huge mass to the economy and society has prompted widening of the growth and development scenario. Social programs aimed at bringing the marginalized people in the mainstream socio-political activities have had their positives as well.
In one of the recent discussions I have mentioned that Bangladesh is capable of attaining 15 percent growth rate, which perhaps sounded too optimistic. But if we are ever in a position to get rid of corruption, bureaucratic hindrances and policies that would ensure continued peace and people’s participation in all relevant spheres, the GDP growth rate can easily gain a momentum that would bring in mentioned figure. China reached 15.4 percent growth rate in 1993. During 1989-2017 the country’s growth rate averaged 9.69 percent. May be we could experiment some of the methods applied by the Chinese. Bangladesh has entered the club of fastest growing economies in recent years. It is estimated that the country with current developmental trend will be among top three fastest growing economies by 2030 with 1.3 trillion USD national output. The main challenge lies in ensuring and sustaining pro-growth-pro development environment that warrant for peace stability and good governance at large.
One must be clear that in every society there are some groups that enjoy various extra benefits at the expense of the miseries of the people. Those ‘social parasites’ exist in different forms and operate in different manners on a continued basis. These groups create hindrances in the introduction of new developmental initiatives. In Bangladesh it took many years to introduce digital systems and automations in the public sector agencies. There is always a ‘legitimate’ tendency by the ‘privileged groups’ (rent-seekers and those who had been enjoying illegal benefits at the expense of people’s interests) to resist pro-people initiatives. For that reason, all new laws, regulations or policies are always being used as convenient tools by vested quarters for depriving the people of their rights and exploiting them to the extent that the people start believing that those policies are being formulated to create additional miseries in their lives and livelihoods. So, the matter should not only be to formulate laws, introduce new policies and so on, but to create a really efficient and sincere system that would ensure implementation of those at the interest of the people.
As mentioned earlier, growth is an essential but not sufficient pre-requisite for development. In analyzing level of development of a country, society or community, all economic and social indicators have to be taken into account. This combination of factors of superficially different dimensions and characters in fact supplement and facilitate each other and creates favorable environment for more educated, healthy and solvent nation building where the people would live and work with comfort and satisfaction.
Bangladesh’s achievements in both economic and social sectors are enormous. GDP growth rate has reached 7.28 percent in 2016-17 against 5.69 percent in 1994. The World Bank, IMF and ADB projections were much lower. This highest benchmark the country achieved despite numerous attempts to destabilize the socio-political and economic environment. Most importantly, over six percent growth rate is prevailing in his country for more than a decade despite global economic depressions that affected many large and apparently stable economies. The GDP size has increased to more than USD 250 billion compared with less than 100 billion in the recent past. The so called ‘Bottomless Basket’ is now capable of feeding its own 165 million people and support repressed and displaced over million people from the neighboring country.
Table 1: Bangladesh Economic Growth (%)
Year 1977 1987 1997 2007 2017
Growth Rate 2.67 3.77 4.49 7.06 7.28
Source: i) World Bank; ii) GOB
Another important indicator of economic growth is per capita income of the people of Bangladesh that has recorded a net increase of 108 percent over the decade and reached USD 1,610. More interestingly Bangladesh has surpassed Pakistan in this indicator long ago. The national annual budget has a rapidly increasing trend attaining more than Tk. 400,000 crores against 100,000 a decade ago, a four-fold increase in 10 years. We assume that the next budget will surpass the current one considerably. The budget implementation rate has not recorded considerable progress over the years. Average ADP implementation rate during July-October 2017 (4 months) was recorded at 14.51 percent. Similar implementation status prevailed in previous years as well. In 2016 the implementation was only 41 percent in 9 months. The implication is that in the last months of a fiscal year the ministries try to accelerate in whatever means the implementation rate which impacts negatively on the quality of delivery and facilitates wastage of tax-payers’ money.
On the other hand, this again is the failure of the existing bureaucratic mechanism that is not in a position to cope with the dynamism that the people and the political leadership demonstrate in the developmental process. Many of the developmental programs remain in the basket case of the bureaucrats for major part of the year due to incompetence and the ill motives. The tax payers continue to remain the ultimate victims of ill motivated rent seeking bureaucracy. Bureaucratic bottlenecks against developmental process also impacts adversely on the quality of delivery and at the end of the day, especially on service delivery for which the people have paid in tax in advance. The political leadership will need to be clear about the ways to make the bureaucracy more capable, efficient and people-oriented. It is well known that corruption eats up around 2 percent of Bangladesh’s GDP. Just one indicator will make this statement clear. In Bangladesh starting a business requires more time than any other country in South Asia, including Pakistan. The required time to start a business in Bangladesh is 60 times more than that in New Zealand. The foreign capital cannot be attracted with such impediments in place. That is why in Direct Foreign Investment Bangladesh lags behind most countries of the world. Global FDI ranking of Bangladesh is far below those of India and Pakistan.
For a rapidly growing economy ideal would be to have an inflation rate of around 4-5 percent. Bangladesh has been successful in reducing inflation rate from the record highest of around 11 percent in 2011-2012 to 5.4 percent in 2016-17. Understandably, this still remains a bit higher than the ideal benchmark. The current FY may experience even some elevation of this indicator owing to natural calamities and loss of agricultural production in some of the haor areas. Note that these so called natural calamities and loss of agricultural production that has impeded economic development is a result of corruption in construction and maintenance of the flood control infrastructure. The inflation rate may increase to around 6 percent depending on the level of ‘efficient’ measures undertaken by the government. Since increased inflation rate reduces income efficiency, it is an imperative that appropriate measures are undertaken in time to keep that rate at a tolerable limit. This is related to various fiscal measures and economic policies. As of now the plan is to confine inflation rate within 5.5 percent during 2017-18.
Inflation rate is an indicator that directly impacts people’s standards of life. The prices of essentials have increased to unbearable for the general mass extent. This is an impact of the natural calamities and damaged infrastructure as mentioned earlier. At the same time inflow of huge liquidity in the market following sudden enhancement of salaries of 1.5 million public servants and intrusion and operation of black money in the market, among others, act as the prime causes for ‘over activity’ of money in the market that has adverse impact on the inflation rate.
The government should be intelligent enough to rein in the inflation rate keeping in mind the forthcoming national parliamentary elections. Let the prices of essential do not elevate to the extent that would undermine huge achievements that the government has made over the years. As in all other low income countries, the Bangladesh reality also demonstrates that the price hike of essentials via whatever means that might happen ultimately makes governments unpopular. The peoples’ first priority in the ‘Third World’ countries is to see their kitchen in order.
If we analyze Bangladesh’s development scenario for last decade or so we must agree that the country is proceeding towards balanced developmental approach. Once overwhelmingly agrarian economy transformed into a mix of almost logical distribution of the three major sectors: agriculture, industry and service in GDP composition.
Table 2: Bangladesh: Sectoral Share of GDP (%)
Sector 2006 2011 2016
Agriculture 19.0 17.7 14.8
Industry 25.4 26.4 28.8
Service 55.6 55.9 56.5
The agriculture sector share in GDP has reduced from 19 percent in 2006 to 14.8 in 2016 due to increased contribution of other sectors. Corresponding figures for industry and service sectors are shown in the table. The absolute volume of production and the level of productivity in agriculture have reached unprecedented level. Intrusion of modern technology has dramatically changed the land use pattern in the country. Tripled cropped area has increased from 2.7 million acres to 4.4 million at the expense of single cropped area. The cropping intensity has increased enormously over the same period. Rapid mechanization in the agriculture sector has led to the emergence of Quadruple Cropped areas since 2010.Currently four crops are grown in a year in around 43,000 acres of land against 23,000 acres in 2010. The implication is that the farmers are in a position to use the same amount of land and get three to four times more production. However, the local MOA network (through DAE) needs to be more proactive in educating the farmers in judicious use of land to prevent deterioration of land quality due to its indiscriminate overuse.
The most significant achievement of agriculture sector is that it has converted traditionally food deficit Bangladesh into a food self-sufficient country. As a whole during last decade the food production in Bangladesh has increased by more than 30 percent. Traditionally food deficit North Bengal has emerged as the food basket of Bangladesh. Owing primarily to increased double cropped, triple cropped and quadruple cropped areas the total cropped area in Bangladesh has increased by 14 percent. Pro-poor and pro-farmer agricultural policies have impacted positively on the farmers’ lives and livelihoods. Once starving mass now have become owners of ‘micro capital’ through surplus production and savings. Very soft loans coupled with existing trend of capital accumulation at the grassroots level with assistance in terms of training, skill development and availability of relevant infrastructure and information can boost the rural economy. The government needs to ensure rural farmers’ and entrepreneurs’ easy access to credit facilities.
Remittances continue to remain as one of the important contributors to GDP. During 1976-2016 that averaged at 4.56 percent; lowest recorded in 1976 (0.19%) and highest in 2012 (10.59%). In absolute terms remittances recorded a steady growth (with some exceptions) during last five years. During 2012-2017 those averaged USD 1185.78 million. In absolute terms highest value was recorded in July 2014 (USD 1491.36 million). Current remittances inflow is around 1419 million USD. If we consider global remittances scenario, Bangladesh remains considerably below the major recipients. India and China have remittances inflow in the range of USD 63-65 billion a year.
Third World countries like Philippines, Mexico and Nigeria surpass Bangladesh considerably. The implication is that despite remittance being the second foreign currency income source after RMG, it has great potential to supersede any other sector, including RMG. The policies need to aim at facilitating easy inflow of those and at the same time ensure better quality manpower export. Currently more than 80 percent of the expatriates are unskilled laborers with poor wage structure. The manpower export procedures are also seldom conducive to career jobs abroad. Currently remittances account for around 44 percent of our export earnings. In 2010 the corresponding figure was as high as 68 percent. According to World Bank estimates Bangladesh’s current global ranking in Remittances inflow is 7, which may be increased considerably via appropriate policies that would encourage inflow of foreign income by the expatriates.
According to recent estimates currently Bangladesh has one of the largest oil and gas reserves in Asia-Pacific Region. Expansion of the maritime exclusive economic zone following resolution of disputes with Myanmar and India Bangladesh has become a potential contender of energy-resource country. But the most remarkable achievement of Bangladesh over the last decade in energy sector pertains to the rapid improvement of its electricity generation and distribution capacity. During last decade the electricity production has increased three-fold and exceeded 16000 MW in 2016-17. Despite rapid growth in the electricity sector, the coverage still remains low. Around 63 percent of the population has access to electricity with 321 kWh per capita availability per year. With the accomplishment of new power plants, including Ruppur nuclear plant, Rampal and Payra power plants the scenario will improve provided that high system loss and corruption in this sector are reduced or abolished. Notably, the Power Development Board incurs loss of over 10 billion Taka per year due to system loss, which is as high as 22 percent of the generated amount of electricity. Previously the ‘system loss’ was 30 percent. Corruption, obsolete distribution and production system and many other factors are primarily responsible for the system loss.
Despite remarkable successes in various sectors, the GDP-investment ratio in Bangladesh remains stagnated. Currently public investment has reached 30 percent of GDP due to proactive developmental programs and resource allocations to public initiatives. Corresponding ratio for the private sector remains as low as 20 percent, which is one of the most important adversities in development. Private sector ideally acts as the catalytic agent in developmental process in a market economy. Failure to attract private investment invites long-term adversities in the economy. In an ideal situation the government instead of getting involved in business needs to create favorable environment for the private sector at all levels (multinationals, SMEs, etc.) for business and ensure free and fair competition. Bureaucratic hindrances and corruption increase time and costs for private investment in Bangladesh. The Investment agencies should work in a more coordinated manner (in collaboration with other agencies,,ministries) to ensure basic requirements of the investors and potential investors. Although FDI has increased from 793 million USD in 2006 to 2003.53 million in 2016, the progress is one of the lowest in Asia. CIA World Fact Book reveals that of the 117 sample countries, Bangladesh’s ranking is 90 against 66 for Pakistan, 21 for India and 3 for Hong Kong. For sustained growth FDI inflow needs to be accelerated. International corporate agencies prefer to work in dynamic environment. That environment encompasses good policies, less paper works, transparency, easy information exchange facilities, responsiveness, and professionalism. We need to review, re-examine, modify or change our conventional approaches at the backdrop of a dynamic and professional global system to cope with the advanced globalization process. The initiative to create special economic zones all over the country is an intelligent initiative. However, unless modern concepts are digested and implemented those zones may not produce expected results. The bottom line should be to enhance GDP growth rate to double digit in near future for materializing ‘Vision 2041’.
The ICT sector has recorded considerable achievements during last decade owing to enabling policies to take some of the ICT facilities at the doorsteps of the common people. ICT sector’s achievements must be linked to the concept of ‘Digital Bangladesh’ which is an integral part of the government’s ‘Vision 2021’ that envisages eight broad goals, including democracy, decentralization, good governance, empowerment, economic development, etc. For attaining the above goals transparency, accountability, responsiveness and effectiveness are crucial. In the modern era those ingredients are achievable only through direct and indirect participation of people which a digitized and automated system can provide. Here lies the justification of the concept of ‘Digital Bangladesh’. As of now almost all public offices have been computerized, the information collection and dissemination system has improved. In the rural areas GOB conducted computer training programs are in operation.
In 2017 about 80 percent of country’s population used mobile phones, which is around 20 percent more than that in the previous year. The internet users account for around 50 percent of the population of Bangladesh. These instruments have made the economy more dynamic and have huge positive impact on production, transportation and marketing of products. Agricultural produce marketing has benefitted enormously due to widespread use of mobile phone and internet. The domestic market has direct communication with the international buyers and investors which has eased international trade and commerce. Bangladesh’s digitization program has created new services like telemedicine services, video treatments, automated accounting and video conferences for business purposes.
In almost all upazilas and unions thousands of Information centres have made people accessible to needed information. Around ten thousand village post offices have been converted into e-centres for providing training and other services to the rural people. The information cells at the district, upazila and union levels are revolutionary changes in the profile of rural Bangladesh. For making ‘Digital Bangladesh’ more people oriented and productive, regular maintenance of the created facilities need to be ensured. One of the most important achievements in this regard is that the private sector has taken the responsibility of a major part of digitization and availed the opportunity of digitization and automation of social and manufacturing activities. Government needs to ensure ethical business environment in the ICT sector.
Various socioeconomic indicators are indicative of improved life standards of the people of Bangladesh. The most important challenge for the people of Bangladesh had always been to come out of the vicious circle of poverty. The exit channels are multifarious, of which most important are food security and nutrition, household consumption, employment and income generation, health and education, empowerment and capacity building, gender equity, etc. During 1990-2000 Bangladesh recorded an annual poverty decline by 1 percent which accelerated to 1.5 percentage point following 2000. In 2016 poverty rate accounted for 24.3 percent in Bangladesh against 48.9 percent in 2000. During the same period the share of the people living in extreme poverty has decreased from 34.3 percent to 12.9 percent. This poverty decline rate is greater than most developing countries and almost all SAARC countries.
Over the same period child mortality rate has decreased from 72 percent to 42 percent. During last 25 years Bangladesh recorded 73 percent decline in infant mortality rate. In 1975 Bangladesh’s maternal mortality rate was one of the highest in the world: 600 per 100,000 live births, which has declined to 176 in 2015 (Index Mundi 2017). This ratio demonstrated a decrease of 5.5 percent per year for last couple of decades.
The food intake per capita per day has increased in 2016 compared to 1995-96, 975 gm against 913.8 gm. However, the indicator has declined compared to that in 2010. This decline may be explained by the changes in food habit or even by increased costs of living at the expense of food items. It is the duty of the policy makers to identify the causes of reduced food intake despite increased food production and rectify deficiencies, and let the people have the capacity to enjoy fruits of improved standards of life. According to FAO estimates the current per day calorie intake in Bangladesh is 2270 kcal. Corresponding figures for Srilanka, India, Nepal and Pakistan are 2570, 2360, 2340 and 2280 kcal. In terms of global ranking Bangladesh holds 137th rank in calorie intake in the world. Certainly Bangladesh has demonstrated a huge positive shift in food and energy intake over the years. The HIES 1983-84 revealed that the per capita daily calorie intake in the country was as low as 829 kcal in some areas and among some groups. According to BBS (1986) more than 70 percent of the people in Bangladesh did not have the capacity to consume bare minimum calorie per day in the 80s.
In 2016 the adult literacy rate has increased to 72.3 percent compared to 51.6 percent in 2004. The average annual literacy growth rate during 2004-2015 ranged between 0.2 and 3.3 percent which reached 7.7 percent in FY 2015-16. However Bangladesh still lags behind the world average literacy rate of 86 percent. In South Asia Bangladesh superseded Pakistan in this indicator long ago. Corresponding figure for Pakistan was 57.9 in 2015. Despite considerable progress in adult literacy Bangladesh’s global ranking still remains at 139 compared with India (124), Nepal (136) and Bhutan (133). Undoubtedly the pro-literacy programs of the government have impacted positively in attaining this progress. The other social actors, especially the NGOs played vital role as well by conducting their rural and slum area education programs. GOB and concerned actors need to narrow down the male-female literacy gap, especially that pertaining in the rural areas. The literacy and education programs need to be market oriented for the literate people to ensure their access to the job market according to the standards of their education and skill. A good standardization in the education sector needs to be done to prevent people’s predisposition to get their children and themselves admitted in ‘good’ educational institutions. This standardization process should primarily involve quality of teachers, teaching materials, logistics, and infrastructure.
As regards primary education the net enrollment rate has increased from 80 percent in 2000 to more than 98 percent in 2016. The secondary level enrollment lags behind considerably and accounted for 54 percent in 2015 against 45 percent in 2000. Currently the school completion rate at the primary level is 80 percent against 60 percent in 2009. Incentives provided by the government and the NGOs have impacted positively on the reduction of dropout rate. However, that indicator remains quite high at the secondary level (38.3%). The incentive packages may be extended gradually to the secondary and higher levels to prevent high dropout rates at those levels.
One of the most encouraging and unique initiatives by the government continues to remain distribution of school text books free of cost to the children on the first day of schooling. This year the government will distribute around 35.42 crores of books which exceed the previous year amount by two crores.
The incentive programs for primary school children such as food for education, female secondary school scholarship scheme, etc. are important ingredients that facilitate accelerated enrollment and reduced drop out at the primary and secondary levels of education.
Bangladesh is now recognized by the international community and development agencies as one of the next eleven emerging economies, a fact that was unimaginable at the inception of this country in 1971 or even during the 90s. The reserve in the central bank has reached over 32 billion USD. The country has entered the club of the Middle Income Country by the World Bank Standards and striving to enter the group of Upper Middle Income Country by 2021.
According to UN Human Development Report, the country has entered the group of ‘Medium Human Development Country’ even earlier owing to excellent performances in the social sectors: education and health, coupled with economic emancipation on a sustained basis during the last decade. Bangladesh ranked 139th out of 188 countries with an HDI value of 0.579 in 2015 against 0.468 in 2000 and 0.545 in 2010. In Human Development Index the country attained an average growth rate of 1.64 percent during 1990-2015, which is higher than all other South Asian countries.
(Prof. Dr. Zahurul Alam, President Governance and Rights Centre (GRC) E-mail: [email protected])
