Though macroeconomic and social indicators show that Bangladesh has been better off in some segments as an independent nation, it is far behind when it comes to achieving its primary goal of alleviating economic and political inequality. Macroeconomic growth has contributed to higher national income, but growing income inequality needs to be addressed.
Geographically centralized industrialization has contributed to a higher flow of domestic migration, and export of goods and services have been helping the national economy gain self-sufficiency, but it is essential to safeguard the rights of workers and the everyday Bangladeshi. This is even more so for the marginal poor.
The economy cannot gain independence and self satisfying victory with the growing income inequality or sufferings -- of the industrial worker, the farmer who does not get a good price for his produce, and the petitioners who are denied dignity.
Lest we forget, Bangabandhu Sheikh Mujibor Rahman concluded his historic March 7 speech by pronouncing the word “freedom” twice because he knew that achieving economic emancipation is equally important to freeing the country from the then Pakistani administration.
At independence, over 90% of Bangladeshis were villagers, a share that has now come down to nearly 70%. The new state of Bangladesh was the product of a “Bengali nationalism” that arose to challenge West Pakistan's economic exploitation of its Eastern wing. In the 1950s and 1960s, a group of Bengali economists carefully documented the process of economic disparity and demonstrated how a “two-economy” system was increasing the economic inequality in East and West Pakistan.
The economic and political demands, as stipulated and enumerated under the Six Point program, were the frontal assault on the foundation of Pakistan's exploitation and authoritarian modes of governance. Hence the general election of 1970 was fought on the basis of economic and political autonomy and inclusiveness, which reflected the legitimate demands of the people of East Pakistan.
With the acceleration in the growth of per capita income, Bangladesh has made considerable progress in poverty reduction. The economic progress has translated into a steady decline in poverty rates. Bangladesh has achieved robust and sustained growth of export earnings and exports have become an ever more important part of the economy. While exports accounted for around 5% of the economy in the post-war years, now it accounts for over 20%.
More recently, remittances from migrant workers have emerged as a major factor, amounting to over 10% of the economy in recent years. During the same period, Bangladesh also moved from aid dependency to self-sufficiency. However, to what extent has such growth in national earnings added to human welfare?
Historical experience suggests that if our economy grows faster, more and more people will flock to the cities. Dhaka in particular has gone from being home to 2% of Bangladeshis to 10% in the past four decades. Lack of decentralization is causing a growing spatial inequality in income earning, where residents of Dhaka and Chittagong are earning way more than the residents living elsewhere.
Our economic emancipation agenda definitely goes beyond the middle class in urban areas. If we are to adequately address the triple challenge of poverty, unemployment, and inequality, we have to generate meaningful economic activity in townships, rural villages, and rural towns. Boosting small business in these areas is the most logical way of achieving this goal.
All successful economies have, as amongst the ingredients of success, invested strongly in the development of small business as well as cooperatives. Bangladesh should strive to focus on growth-oriented enterprises as well as enterprises in priority sectors such as tourism, construction, agriculture, and cultural industries in addition to information and communications technology.
The target is needed to support primarily the enterprises that are owned by medium and small scale entrepreneurs , disabled persons, women, as well as the youth. We have been encouraged by the increasing involvement of the corporate sector, organized business, labour, private financing institutions, non-governmental organizations, universities, as well as our international partners. They all spread the same message of the need to grow small business, which is the engine of growth and development.
There are three key pillars of our small business strategy. These are financial and business development support services, procurement support, and thirdly, an improved regulatory environment. A key factor is no doubt, access to finance. There remains an urge for creation of an enabling environment; there is need for improved services to small businesses, a one-stop shop for funding. More needs to be done to strengthen technical skills and promote market access. They will support small businesses and establish a business hub to provide technical assistance to small and medium enterprises.
Regrettably, in Bangladesh, there has been an increase in the degree of inequality in income distribution from the mid-1980s. The pattern of distribution of income can be perceived from the percentage share of income of households by docile groups. The gap between the poorest of the poor (bottom 5%) and the richest of the rich (top 5%) is extremely high.
Amidst all achievements, an important area of concern for Bangladesh is the rise in inequality in the distribution of income. After all, the dream of economic emancipation through the alleviation of economic inequality was one of the driving forces of our independence.
Dr Muhammad Abdul Mazid, retired Secretary and former Chairman, NBR. Currently Adviser, International Business Forum of Bangladesh.
