Bangladesh: A Blueprint for South Asia

For a country that was once dubbed a “basket case” by Henry Kissinger following its independence, in the subsequent 48 years Bangladesh has had nothing short of an economic miracle. Once one of the poorest regions of Pakistan, Bangladesh is now qualified to graduate from the UN’s “Least Developed Countries” list and be reclassified as a “developing country.” 

Despite its humble origins as a young nation that faced mass starvation in 1974, Bangladesh now serves as a model for developing countries to follow if they hope to achieve strong economic growth and lift their population out of poverty. With a consistent average GDP growth rate of 6% in the first decade of the 21st century, Bangladesh has had sustained economic growth far exceeding most developing countries. Since 2006, Bangladesh’s annual GDP growth has exceeded Pakistan’s by about 2.5% per year, and combined with a low 1.1% yearly population growth (compared to Pakistan’s 2%), per capita income in Bangladesh is growing 3.3% faster than in Pakistan.

More notably, this growth has benefited even the poorest classes. According to the World Bank, from 2005 to 2010, average incomes from the poorest 40% of households had 0.5% faster growth than the rest of the country. In comparison, the poorest 40% of households in India fared worse than the national average in a similar time period. The result of this inclusive growth is an enormous decrease in the poverty rate, from over 40% living in extreme poverty in 1991 to less than 14% in 2017.

Much of this growth is attributable to the growth of Bangladesh’s agriculture industry. Following its independence, Bangladesh faced enormous poverty and food insecurity, suffering from one of the worst famines in recent history in 1974. In 1972, with a population of over 65 million people, Bangladesh only produced 9.8 million tons of food grain. As a result, achieving self-sufficient food production became a primary objective of agricultural policy. Today, with a population of over 160 million and substantially less cultivable land, food grain production has more than tripled. Recently, the government has introduced programs to mechanize irrigation and farming, diversify and disaster proof crops and emphasize sustainable farming methods. As a result of these kinds of investments, agricultural productivity has grown at a near unheard of rate of 2.7% per year since 1995.

Another unique component of Bangladesh’s economic transformation has been the empowerment of women. For the third consecutive year in a row, Bangladesh has been ranked first among South Asian nations for gender equality in the World Economic Forum’s 2018 Global Gender Gap Report. Out of the four gender equality subindexes WEF evaluates, Bangladesh is among several countries that tie for first in the categories of enrollment in primary and secondary education. This is indicative of Bangladesh’s heavy investment in education, with primary education being both compulsory and free, and girls receiving stipends and scholarships for school until 12th grade. As a result, the rate of female enrollment in secondary education now exceeds male enrollment, at 66.5% female to 56.8% male.

The Bangladeshi government has also had remarkable success in family planning, with its birth rate halving from a high of 6.3 children per women in the span of 33 years (1971-2004). This success has been achieved through a multipronged approach of door-door contraceptive delivery and education provided by married, educated village women. As a result, contraceptive use increased from 8% in 1975 to 61% in 2011.

In the area of human development, the presence of what has been dubbed a “parallel government” of “high performing NGOs” has played a significant role in reducing poverty, improving health, and providing education services.

Especially in rural areas, which have the highest density of impoverished women, Bangladeshi NGOs have pioneered a unique financial system of microcredit, which extends microloans to borrowers to start small businesses. For instance, Grameen Bank, the original microcredit bank, has provided over $8.4 billion, with $7.5 billion repaid and the remaining $0.9 billion mostly in recently disbursed loans. 98% of Grameen Bank’s 8 million borrowers are women. Providing microcredit has allowed poor rural women who were previously excluded from the financial system, and often the labor force, to obtain the startup capital necessary to access to an independent source of income separate from traditional wage-paying jobs. 

While wage-paying jobs were often less accessible to women, the rise of Bangladesh’s ready-made garment industry has enabled further female labor participation. As the second largest garment exporter in the world behind China, Bangladeshi garment manufacturers employ 4.5 million people, 80% of whom are women. 

The industry’s success is in part owed to South Korean garment manufacturers that built plants in Bangladesh in the 1970’s to get around US textile quotas. The Bangladeshi community eventually picked up manufacturing expertise and started its own companies. Additionally, the dominance of large manufacturers has allowed the industry to achieve economies of scale, in contrast to India, where small and medium sized companies dominate the market.

Finally, Bangladesh is experiencing a freelancing boom thanks to the rapid digitalization of urban areas. Combined with non-governmental programs to promote digital freelancing, according to the Oxford Internet Institute, Bangladesh is now the second-largest supplier of online labor, only behind India.

While Bangladesh continues to have meteoric economic growth, there are several potential impediments to its continued progress. Corruption, climate change, and religious fundamentalism are all threats that could derail its economic success. Climate change in particular poses a substantial threat to Bangladesh’s agricultural sector, and rural job diversification will be necessary to increase economic resiliency. The rise of religious fundamentalism has also empirically been correlated with economic downturn, through mechanisms like the suppression of female education and labor participation. Bangladesh is certainly not immune to this problem, with secular bloggers and intellectuals facing attacks from fundamentalists.

Nonetheless, the astounding success of Bangladesh’s economic transformation through investments in women’s empowerment, agricultural productivity, and new market creation should serve as a blueprint for other developing countries to follow if they aim to achieve similarly robust economic growth.

Photo Credit: Reuters