Experts: Dhaka-based population overload causes 6% GDP drop

Over-concentrated development and population overflow in the capital has cast a grave impact on Bangladesh's gross domestic product (GDP), even decreasing its growth by 6% or more, experts said during a conference recently.

The findings were revealed during a paper presentation at an annual conference organized by the Bangladesh Institute of Development Studies (BIDS) last week.

Ahmad Ahsan of Policy Research Institute of Bangladesh (PRI) made the remark during his presentation, adding that the overload was also impacting overall urban development, while also causing congestion and pollution.

The cost of traffic jams amounted to 2-3% of the GDP as direct effects. The city's growth creates overgrowth of primates, concentrating population and development within the centre of the city, he also said.

Ahsan, also a former lead economist at the World Bank, said that overgrowth of primates (the largest city) can undermine the other cities' growth and the cities can overgrow because of market failures arising from lumpy investment-fixed costs and externalities, network effects and circular cumulative causation.

He also said that migration, which is highly welfare-enhancing, also has limits even in advanced economies.

He shared data of World Development Index that show urban population share of primate city in Bangladesh is 31.9%, which is 3% in China, 6% in India, 7.4% in Indonesia, 22.6% in Pakistan and 23.2% in Vietnam

He cited another paper by Mohammad Yunus, senior research fellow of BIDS, which shows a gap between east and west part of the country in per-capita consumption by estimating income, poverty and inequality in the two regions.

The economist said the disparities could not narrow the gap between cities, adding that poverty is much more acute in the west districts than in east districts.

He cited a household income and expenditure survey in which west districts appear to experience more convergence of poverty measures than east districts by one percent whether it is poverty-headcount rate, poverty gap or squared poverty gap.

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