Bangladesh would be a $3 trillion economy
Generally, four approaches have been used to prepare a long-term perspective plan found in development literature. These are: Making long tern projections of socio-economic indicators under specific and alternative assumptions; following a vision for the future by political leaders like Prime Minister Sheikh Hasina’s “Vision 2021” agenda for Bangladesh and “Malaysia 2020” by Mahthir Mohamad -- investigating the economy under alternative policy regimes (control, mixed or market) by World Bank “China 2020” and finally, OECD’s “The World in 2020-Towards a New Global Age.”
Let us look briefly at what was in the “the most powerful economies in the world by 2050”report which was constructed by PwC last December. In making this report, it was predicted that “there will be 32 most powerful economies in the world by 2050.” Bangladesh has been predicted to be in this 32 nation club as the 23rd largest economy of the world. In other words, Bangladesh would be a three trillion dollar economy by 2050, superseding Australia, Malaysia, Thailand, and a close second to Canada.
The readers may think this statement is the hoax of the century. Well, let me provide the GDP figures of some in 2050 as predicted in the report: Australia $2.564 trillion, South Africa $2.570tn, Spain $2.732tn, Thailand $2.782tn, Malaysia $2.815tn, Bangladesh $3.064tn, and Canada, $3.1tn.
Why would Bangladesh have such a meteoric rise by 2050? Let me provide some relevant information from several studies. I commenced a study in 2000 with the support of the University of Hull, Griffith University, and Dhaka University in a program called Sheikh Mujibur Rahman Professorial Fellowship.
The GDP per capita advanced almost nine-fold as a result of sustained growth in GDP, between 5% and 7.5% in recent decades, and per capita income rose to $1,751 in 2017/18 from only $378 in 2001/02. The difference of population growth and GDP growth in 2015 suggests that GDP has been growing by more than 4 times. Contrast this with 1983, when the population growth was more than 27 times that of the GDP rate.
The inflation rate has been brought down to single digit, whereas it was running at a double digit over a long period of time since 1976 after the carnage of 1975. The literacy rate has improved to over 75% at present, and life expectancy has crossed well above 72 years.
According to a recent report published by the Bangladesh Planning Commission, the national poverty level went down to less than one fourth of the population, compared to almost one half before 1996. More interestingly, the ultra-poor in 2016 make 10.6% out of the 24.3% total poor. Poverty has declined steadily, and other social indicators have improved too.
Bangladesh, with 83% access to shared and improved sanitation facilities, fared much better than India at 53% and Pakistan at 54% in 2010. Professor Amartya Sen himself was very impressed with Bangladesh’s achievements in sanitation, reported in The Guardian in 2014.
AHM Mahmood Ali, MP and current Foreign Minister in an election campaign a couple of days ago insisted on quoting the World Bank, and that with all achievements in the economic and social fronts, Bangladesh has shifted from being a “low-income to a middle-income” country. Most importantly, it needs to maintain present status on various measures until 2024, before this upward movement in the ladder as middle-income nation has been officially recognized.
Recently, the PM stated that the World Bank’s 2024 deadline would be achieved by 2021, the nation’s 50thanniversary of independence. In other words, one can safely say Sheikh Hasina’s “Vision 2021” is just three years from becoming a reality, indeed recognized as a middle-income nation.
Coming back to Bangladesh, the country’s prospects in becoming one of the 32 most powerful economies of the world by 2050 certainly seems to be on track, and the PM in recent years has been talking about her “Vision 2041” agenda, for the country catching up to the developed nations by 2041.
With the current momentum of growth and policies in place -- for example, establishing 100 economic zones for both public and private sectors -- there comes a point in mind – the steps to enrich skills by investing in technical education via ministry of education, and the infrastructure projects currently being implemented are indeed steps towards making the audacious hope into reality.
They say prosperity does not come cheaply. From the time of the Industrial Revolution, the prosperity of nations has come with a cost -- and in the process, our planet Earth has become a hot house. Global warming-induced climate change is now possibly the greatest threat to prosperity.
The list of the most powerful economies in the world by 2050, if materialized, suggests a decline of the West and rise of the large (population-wise) nations like China, India, Indonesia, Pakistan, Iran, and Bangladesh among others. Out of, say 9 billion people in 2050, almost 8bn would enjoy prosperity.
If the world does not address the issues of climate change, and inequality persists until 2050, the meaning of prosperity, or living a “better” life, will not be meaningful. Over a billion people remaining in poverty, coupled with persisting hot weather, one can see easily the type of life and livelihood that shall be enjoyed by these overpopulated so called prosperous nations.
The time has come to redefine the growth-led economic development, and restricting the use of fossil fuels as the engines of growth. The profession of economics over the last two centuries has shown the pathways to the growth of nations. Today, and until the end of time, this profession will keep making this contribution.
Economists are also addressing the issues of inequality, and to bring the world to a point of warming at a reasonable rate, so that the monster that is climate change can be brought under control.
In this respect, the 2018 Nobel for economics was offered to two economists who have both demonstrated how the world leaders (in political terms) can make the planet a place with prosperity, and how to sustain that prosperity without destroying the planet. For the readers, it is important to know what exactly these two scholars have been working with, in order to repair the damage in the two important areas: Increased inequality and global warming induced climate change.
The rest of this piece is based on a recent article by Sergey V Popov of Cardiff University. He states in one part that both the winners of the Nobel are in view that the basis of economic growth should not be solely based on producing goods in factories. William Nordhaus and Paul Romer won the 2018 Sveriges Riksbank Prize in Economic Sciences for their works in three areas: The reasons behind economic growth, why sustainable growth is important, and how to address the threat from climate change.
Let us first look at economic growth. According to Romer, “the rate of growth of GDP per person began to meaningfully depend upon the proportion of the labour force dedicated to developing new ideas … in the long run due to more ideas leading to better productivity.” In other words, research, education, and skills are behind the increased productivity which contributes to economic growth.
On the other hand, according to Nordhaus, nations “aimed mostly at obtaining a certain growth rate and ignoring the fact that many economic goods, such as natural resources and clean air, are hard to reproduce. Climate change and its effect in everyone’s well- being is not a part of national accounts, while profits and GDP are.”
Nordhaus has used in his models climate change explicitly when explaining the economic growth, taking for example, changes due to Kyoto protocol into consideration. The results provide the clue for analyzing the social cost of CO2 emissions, regionally and globally.
In summary, both Romer and Nordhaus have contributed to the economics profession in the same way. They recognized that economic growth should not be driven solely by putting more people into factories and getting more out of them. In other words, they pushed the ball to the court of political leaders and scientists in order to work out which way they should go, whether to achieve speed of growth, or grow sustainably. It is time for all nations in the club of 32 to take lessons from China, Korea, and India.
In Bangladesh’s case, our carbon footprint is too low to register on the world stage at this moment, but the nation needs to develop the ever-expanding energy sector by opting for renewable energy.
Recently, Professor Jomo Sundram of Malaysia has said, day by day, the cost of solar energy production is going down, and Bangladesh is in a better position than most to take this advantage now, connecting SMEs with solar power.
Moazzem Hossain is a freelance writer based in Brisbane.