The winds of significant national ambition and change came with independence in 1971. Subsequently, with the right policies implemented by the democratically elected governments, Bangladesh now stands poised to become a rapidly developing middle-income country and achieve sustainable development goals, empowered by the strength of a young population which, if educated and trained well, can benefit from a demographic dividend.
Bangladesh belongs to a select group of countries that fought its way to freedom by winning a nine-month long war of independence. “Wars are the locomotives of history,” as V. I. Lenin famously said, which turned out to be true for Bangladesh. Although insufficiently appreciated at that time, the victory in the liberation war propelled Bangladesh’s development in the next 50 years.
But, at the time of independence in 1971, in the wake of devastation after nine months of war and destruction, the odds were stacked against Bangladesh’s economy. In real terms, national income declined by nearly 20 percent over 1971 and 1972. The war had destroyed thousands of roads, bridges, and culverts while Chittagong port – the lifeline to the world – lay blocked by mines and sunken ships. Ten million displaced persons were returning from India, often to destroyed homes. Millions had been killed, injured, assaulted, and raped during the war. In that bleak landscape, expectations about the future were mostly gloomy, and Bangladesh was appropriately declared “as the test case for development.”
Bangladesh has faced that test with vigor, defying all the gloomy prognoses. On the 50th anniversary of independence, Bangladesh stands in many ways as an inspiring example of development under democracy. Extreme poverty declined by two-thirds from 44 percent of the population in 1991, when democracy was restored, to 14 percent in 2016, the last year survey data was available. On the way to achieving this poverty reduction, Bangladesh has reached complete primary school enrollment and gender parity at primary and secondary education. In critical indicators such as life expectancy (now 73), maternal and infant mortality, Bangladesh performs better than not only neighboring India and Pakistan but also much more affluent Indonesia and the Philippines.
Economic growth has accelerated every decade, especially after the restoration of democracy in 1991. In the five years preceding Covid-19’s emergence, GDP growth exceeded 7 percent on average, placing Bangladesh among the five fastest-growing countries globally. Real per capita income has quadrupled since independence, while it has increased by more than twenty times in current US dollars to $2,554 and to PPP$ 5,733 in the more accurate measure of international dollars. National income is estimated to be PPP$ 953 billion, making it the 31st largest economy globally or about the same size as the Malaysian, South African, or UAE economies. Bangladesh’s growth has also been resilient. While growth decelerated in the Covid years of 2020 and 2021 to 3.5 and 5.2 percent, respectively, it remained positive in Bangladesh while it declined in 160 other countries in 2020.
Because Bangladesh invested significantly in agriculture and rural development and adopted employment-intensive, export-oriented manufacturing, growth has been comparatively inclusive. Jobs grew at a rapid rate of about 2.6 percent annually in the last two decades, and more than two-thirds of job growth in the past decade has been in higher productivity manufacturing, construction, trade, and services. While there was an initial increase in inequality after growth accelerated in the early 1990s, the Gini coefficient of consumption, a widely used measure of economic inequality, has been steady around 0.33. By that measure, there is greater economic equality in Bangladesh than in India, China, Indonesia, and Vietnam.
What made these quite remarkable achievements possible? As noted in the beginning, the winds of significant national ambition and change came with independence. The war tremendously mobilized the people’s energy and ambition to create a just, equitable society. Victory over a highly trained, well-equipped Pakistani army provided the courage to dream. The pent-up energy built up during nine months of war had their release in development efforts after the war. Bangladesh’s now world-famous non-governmental development organizations, including BRAC and Grameen Bank whose leaders were activists during the war, emerged from the energy and idealism of liberation.
Bangladesh’s victory in the Liberation war in 1971 (Picture Courtesy: Raghu Rai)
Victory liberated Bangladeshis from the yoke of Pakistan’s feudal, oligarchic, and military-bureaucratic rule, creating a flatter and socially mobile society with no feudal lords, no oligarchs, or a powerful military-bureaucratic clique. Into this space, there rose a dynamic private sector, Bangladesh’s non-governmental organizations, an experimental and development-minded state less shackled by bureaucratic inertia, and a highly productive partnership among these three elements.
One outcome of this partnership is Bangladesh has become the birthplace of some of the most innovative development practices. These include the microfinance revolution that has spread across the world; oral saline to reduce diarrhea-related deaths; the brilliant success of integrated preventive health care through better water and sanitation facilities, non-formal health workers, and the energetic implementation of the vertical immunization programs; the generic drug policy introduced in the 1980s. In education, the family stipend program to promote secondary school attendance by girls has also become a model. Back-to-back letters of credit that allowed new entry into the ready-made garments industry, the community-based rural electrification programs, inclusive and mobile banking, and the more recent household solar panel dissemination program have been other notable innovations.
Women’s empowerment has been a major force behind development. Women became more educated as enrollment rose quickly, achieving gender parity in primary and secondary education by 2010, aided by the rapid recruitment of female teachers who make up 60 percent of primary school teachers. Women’s greater reproductive rights under a proactive family planning program led to a marked rise of female contraceptive use from eight percent at independence to over 62 percent recently and a decline in the annual population growth to about 1.1 percent. Micro-finance programs of Grameen Bank, BRAC, and the Government focused on helping women to become entrepreneurs, whose numbers quadrupled to nearly half a million women now leading non-agricultural enterprises. The rapidly growing export-orient garments industry employed millions of female workers. The female labor force participation rate now stands at 35 percent, significantly higher than in India or Pakistan.
Independence gave birth to both a small farmer-based green revolution and to a dynamic modern, private sector that was virtually non-existent at independence. Economic growth proceeded in three prongs. First, farmers quadrupled cereal production since independence laying the economy’s foundation. Second, ready-made garments manufacturing and exports transformed the economy. Their exports grew from a mere $ 32 million or 4 percent of Bangladesh’s exports in 1983 to an estimated $ 31 billion in the last fiscal year, dominating all exports and producing almost half of the manufacturing GDP. Bangladesh today is a ready-made garments-exporting powerhouse that was until recently second only to China. Third, remittances by Bangladeshi workers that reached $ 20 billion last year further boosted national income and production by creating demand for goods and services. Construction boomed.
The economy diversified. Private-sector industries such as food processing, pharmaceuticals, leather and jute textiles, light engineering, construction, finance, and information technology-based services have also flourished. Bangladesh’s 300 pharmaceutical companies meet nearly all domestic demand. Although incipient, Bangladesh now exports more than 1400 non-garment items, even ships exported to Europe, Asia, and Africa. The ICT sector has been undergoing explosive growth, with the number of mobile phone subscribers now at 176 million, i.e., more than the population. About 101 million access the internet using mobile phones, internet services providers, or landlines. About 2500 e-commerce websites and more than 100,000 Facebook-based entrepreneurs have created a fast-growing e-commerce sector. Fintech firms process close to $4 billion of monthly transactions.
Bangladesh’s democratically elected governments and a more curious and less elitist civil service were other legacies of independence. The volatile economic recovery in the first few years soon gave way to sound economic management that kept deficits and inflation rates low and real exchange rates competitive. A program to build rural roads and provide electricity supported the rural economy making growth inclusive. Relatively liberal market friendly policies supported a generation of energetic entrepreneurs to emerge. Governments invested effectively in human development, rural infrastructure, and, over the last decade, in large-scale infrastructure. The annual public investment program has quintupled to over $ 28 billion since the current government took office, enabling the tripling of electricity capacity to more than 25 Gigawatts.
With the right policies and implementation, Bangladesh stands poised to become a rapidly developing middle-income country and achieve SDG goals. Bangladesh has vital strengths. Our population is young and, if educated and trained well, we can benefit from a demographic dividend. The facilities for education from elementary to higher education are now available widely. The economy rests on a sound agricultural sector with considerable scope to diversify and grow. Power supply is abundant, and improvements in the grid should attract domestic and foreign investment. The mega infrastructure projects nearing completion will provide much-needed transport networks and boost domestic trade, investment, and employment. There is a spirit of entrepreneurship in the country, an experienced investor class and workforce, and the confidence of a history of growth and human development.
It is also true that Bangladesh is still in the early days of its development journey and faces significant challenges. The overarching one is the task of diversifying the economy and exports and accelerating structural change. Attracting higher private investment, especially foreign investment with technological know-how and linkages to supply chains and markets will be particularly important. Through that path, the economy will also provide millions of better, more productive jobs that the young population will want. It will also help to raise productivity and income growth in a sustained, inclusive way to arrest the rise of inequality in recent years.
Some urgent issues will need addressing such as fragility in parts of the financial system and the significant anti-export bias of its trade tariffs. Governments will need to maintain their record of macroeconomic stability, raise much more revenues for increasing expenditures in public services and infrastructure in an effective way. Better planned urban development and decentralizing the economy away from its excessive and costly concentration in Dhaka will be necessary to sustain growth. Devolution of authority, public service responsibilities and fiscal resources to strong elected district and other local Governments will have to be on the agenda along with ensuring accountability of all public bodies. Also important will be an environment of free press and thought so that national issues can be resolved transparently through well-informed discussions.
Providing health and high-quality education will be essential to sustain growth and development in future decades. As in many other developing countries including India, improving the quality of education has become a high priority because national student assessments suggest actual education outcomes are poor. Improving access and the quality of education will not only enable a well-trained people to work with advanced technologies and boost productivity, but it will also allow them to realise, in Amartya Sen’s words, development as freedom. Bangladesh will then have lived up to the ideals of independence of building a just and equitable society.
Opinions expressed in this article are of the author’s and do not represent the policy of The Edition. The writers are solely responsible for any claim arising out of the contents of their articles.
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