Tuesday, June 18, 2024


Dhaka Tribune

Despite all odds

How Bangladesh played its cards right to become a thriving economy in the past decade

Update : 11 Apr 2023, 02:05 PM

Harvard University professor Joseph Noe popularized the concept of soft power. Soft power refers to a nation's power derived from economic, political, and cultural influence other than military power. 

Recently, the UK-based accounting firm Brand Finance released the “Global Soft Power Index 2023” report. This is a non-military index-based assessment. 

According to the report, the brand value of Bangladesh increased by 37% from $371 billion in 2022 to $508bn in 2023. Bangladesh has become the fastest growing brand nation in the world. That is, the brand value of Bangladesh increased the most last year. 

Bangladesh is followed by Uzbekistan (32%), Azerbaijan (30%), United Arab Emirates (24%), and Georgia (23%). Bangladesh has the highest brand value in South Asia after India which is more than twice that of Pakistan and 10 times that of Sri Lanka. 

The report specifically states that Bangladesh is an example of unprecedented economic development and an inspiring model of poverty eradication as declared by the World Bank.

A few days ago, Boston Consulting Group, one of America's largest management consulting firms, published a special report on Bangladesh under the title, “The Trillion Dollar Prize.” 

During 2016-21, Bangladesh's average GDP growth was 6.4%, which is much better than its comparable countries, such as Vietnam, India, Thailand, Indonesia, and the Philippines, which are lower-middle income countries. This growth rate is twice the average of lower-middle income countries and much higher than the world average (2.9%). 

The key drivers for economic growth have been consumer optimism, rising consumption spending, emerging young workforce, high economic resilience, high digital momentum, rising government spending, rapid private sector investment growth, and a fast growing gig economy. 

After independence, government expenditure accounted for 85% of total investments, while private sector investment accounted for only 15%. When the Eighth Five Year Plan was drafted, private sector investment was 87% and public investment was 17%. 

Based on the analysis of international think tanks or research institutes, we forecast that if the current growth rate continues to increase, the country will become a trillion-dollar economy before 2040 (2035). 

One thing has been seen; the economy of Bangladesh is one of the most tolerant economies in the world. During the global financial crisis of 2007-09, Bangladesh's annual growth rate was 5.5%, which was higher than the average growth rate of India, Indonesia, Philippines, Thailand, and the world average. Even during the Corona period, the growth rate of Bangladesh was 3.4% for the financial year 2019-20, whereas this rate was negative in most other countries including the major economies of the world. 

Another research institute based in London, Center for Economics and Business Research (CEBR) projects the economies of different countries of the world every year, which is known as “World Economic League Table.” According to the 2023 report, Bangladesh's GDP in 2037 at current prices will be $1628bn (more than one and a half trillion), which means Bangladesh will be the 20th largest economy in 2037, 14 spots ahead of the 34th position currently held in 2022.

Even just a decade ago, Bangladesh's success was considered “accidental.” Despite being a country prone to natural disasters, unfavourable conditions, corruption at almost all levels, the economic and social progress of Bangladesh over the past decade, compared to countries with homogeneous income, has become known as a “Development Miracle” or “Development Labyrinth” to many. 

A similar opinion is found outside the academicians that despite being a poor country, Bangladesh has been able to achieve better progress in social indicators compared to other similar countries. Bangladesh has no natural resources, frequent natural disasters, low tax-GDP ratio, yet the real sense of how Bangladesh can move forward is very encouraging.

Since 2010, qualitative changes in planning have played a major role in poverty alleviation and the employment of people in Bangladesh. The national five-year plan was established, taking into account the vision and development of all sectors, from the agriculture-based economy to the industrial and service sectors.

After independence more than half of the country's GDP came from agriculture, now agriculture contributes about 12%. On the other hand, the contribution of industry has increased from 8% to 35%. However, the contribution of agriculture (40%) is still undeniable in terms of employment. 

In the last decade and a half, the government has consistently given top priority to agriculture. As a result, Bangladesh is now self-sufficient in food grains. Rice production has almost quadrupled in 50 years despite the decline in cultivable land. Not only food grains, wheat, fish, meat, eggs, milk, and fruit production have all increased to a large extent.

As a result of the government's agriculture-friendly policies, the government of Bangladesh has made outstanding contributions in the fields of agricultural mechanization, agricultural research, and innovation. Moreover, the entrepreneurial spirit of the grassroots people and the ability to adapt to the adverse environment has greatly accelerated the socio-economic development of Bangladesh. In the last decade, Bangladesh has experienced unprecedented economic growth due to the adoption and implementation of well-planned schemes by the government.

The last decade can be called the “Golden Age” of Bangladesh's development. Bangladesh managed to achieve most of the Millennium Development Goals. As a result, Bangladesh has been awarded more than a dozen international prestigious awards. 

Bangladesh was promoted to a lower-middle income country and fulfilled the criteria for becoming a developing country twice (2018 and 2021) from Least Developed Country status. All the milestones and achievements for the development of Bangladesh have been completed in the past decade and a half. The factors behind the development of Bangladesh since the first part of the last decade should be considered in detail.

Economic Stability 

The government's macroeconomic policies have played a key role in Bangladesh's transformation and investment continues to grow as the economy remains stable in the long term. 

Bangladesh had the highest average gross domestic product or GDP in the last decade after China due to its stable economy. Moreover, the government has taken up important infrastructure-based mega projects to improve the business environment. 

Bangladesh at this time entered the era of flyovers with the spectacular Hatirjheel. Along with that, due to the provision of road connections and electricity facilities in almost every upazila, the growth centres and markets have been connected, and the economic activities have been dynamic. 

Recently, the world-famous Bloomberg news agency praised prime minister Sheikh Hasina for her timely reform measures to counter the negative impact of the global economic crisis and maintaining economic stability. 

Digital Dividend

Digital transformation is now underway in the country and there are 177 million mobile users. Internet user rate has increased by 70% in the last 10 years. The size of the digital economy grew from $1.7bn in 2019 to $3.5bn in 2022. 

The government is also creating an enabling environment for the economy. Government spending has tripled in the last decade. Bangladesh is now the ninth largest mobile market in the world. Bikash is now the world's leading mobile financial service provider. The country is now self-sufficient in its own electronics products. 

With more than 650,000 freelancers, Bangladesh is now the world's second largest provider of online labour (15% of the world's total freelancers). There are now more than 50 thousand entrepreneurs on Facebook in the country. The government is determined to provide services at the doorstep of the people by utilizing information and communication technology. 

Around six and a half lakh youth across the country are now involved in providing digital outsourcing services. They earn about 65 thousand-crore rupees annually.

Political leadership

The prime minister's political wisdom and foresight have been featured in various reputed media outlets around the world. Her economic prudence can be seen through the formulation of Vision 2021. She wants to take Bangladesh step by step to the final summit of development. 

Through Vision 2021, she wants to turn Bangladesh into a middle-income country. As a result, a kind of public desire has been created among government institutions and people to move forward with this first long-term goal. By realizing this desire, it has given us the motivation to move forward. 

Under her guidance, the unprecedented Centenary Delta Plan 2100 was formulated to deal with climate change, manage agriculture, and water resources. The National Social Security Strategy was formulated in the middle of the second decade of the 21st century, with a sincere desire to make the social security system more effective and dynamic. 

After Vision 2021, she is determined to take the country forward with the goal of becoming a prosperous country in Vision 2041. The government is working to increase investment, create employment and alleviate poverty with the aim of making the country a developed and smart Bangladesh.

Entrepreneurial spirit

According to the Labour Force Survey 2016-17, 85% of our total employment is in the informal sector. In the case of women, this rate is about 92%. 

Entrepreneurship is now being inculcated in villages and rural areas, where small and medium industries are developing. The expansion of the banking sector as well as microcredit has led to greater participation of people in economic activities. 

The latest Household Income and Expenditure Survey revealed that the participation of women in the workplace has increased from 36.3% to 42.68% during the year (2022-23). Unemployment has come down from 4.2% to 3.6%. 

People are now risk tolerant and investment oriented due to the expansion of growth centres in rural areas, and the modernization of agriculture and infrastructure facilities. Multipurpose agricultural activities have expanded. 

Along with economic progress, increasing social mobility plays a critical role in the development of Bangladesh. If there is no major social unrest this development will continue at an incredible pace.

Indrajit Kumar is an educator, international affairs analyst and freelance researcher.

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