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‘The happiest economic story in the world right now’

  • Published at 10:52 pm June 4th, 2017
  • Last updated at 09:59 pm June 5th, 2017
‘The happiest economic story in the world right now’
Quartz India recently published an article which claims that Bangladesh is one of the happiest economic stories, and statistically happier than India. Bangladesh’s population of 160 million is as big as France, Germany, and the Netherlands combined. The country is also easily the poorest of the world’s 10 most populous, the Quartz article states. It also states that, according to the Asian Development Bank, Bangladesh’s economy grew by 7.1% in 2016, which is the fastest expansion in 30 years. For the sixth year in a row, GDP growth was greater than 6%. Most analysts expect the run to continue. For instance, the ratings firm Moody’s says the country’s growth is likely to remain “robust.” Bangladesh-GDP-Growth_Quartz According to Quartz India, Bangladesh’s rapid growth would not be so exciting if it did not reach the poor. A recent World Bank report found that between 2005 and 2010, average incomes for the poorest 40% of households grew 0.5% faster than for the country as a whole. By comparison, in India the poorest 40% of households did worse than the national average over a similar period. As a result of this inclusive growth, poverty rates have plummeted. In 1991, well over 40% of the population lived in extreme poverty. Today, the World Bank says that less than 14% still does. That is, about 50 million fewer Bangladeshis are in extreme poverty as a result of the improving economy. Given its size and the depth of its poverty, the country’s recent economic boom must rank as one of the world’s happiest economic stories right now, the Quartz article claims. It cites Yale economist Ahmed Mushfiq as saying that Bangladesh’s recent success can be attributed to two major factors: the flourishing ready-made garments industry and the country’s robust NGO sector. Poverty-decline-Bangladesh_Quartz In 2015, Bangladesh exported over $26 billion in clothing, second only to China. Clothing exports make up nearly 14% of the GDP and 80% of all exports. Estimates suggest the garment sector grew by more than 10% in 2016. In the article, Ahmed explains that the industry thrives in spite of Bangladesh’s poor infrastructure and difficult regulatory conditions due to an accident of history. Bangladesh was the beneficiary of a textile quota system imposed by the US in the 1970s to protect local companies against competition from the growing South Korean garment industry. To get around the quota, Korean manufacturers set up shop in Bangladesh. The Bangladeshi business community picked up technical expertise from this setup and has since started its own companies. Mushfiq credits Bangladesh’s success in poverty reduction and health to the country’s high-performing NGOs. Historically, the country has had a powerful civil society running much of its education and health services. Mushfiq says the sector acts like a parallel government. Bangladesh-Garments-Trade-Partner_Quartz Brac, the world’s largest NGO, started in Bangladesh, and claims to have provided over 60 million Bangladeshis with access to toilets. The country’s NGOs are also likely the reason it outperforms India on human development indicators such as gender equality and life expectancy. Of course, not all is well, the Quartz article claims, adding that democracy is under threat as the ruling Awami League party tilts in an increasingly authoritarian direction. A lack of public infrastructure investment holds down growth, and has made Dhaka, the crowded capital of 15 million people, a perennial contender for the title of the world’s least liveable city, the article states. It cites Mushfiq’s biggest concern as a repeat of the Rana Plaza disaster, in which a garment factory outside of Dhaka collapsed in 2013 and killed over 1,100 workers. Worker safety must be a top priority of the government, he says in the article, not just for the sake of saving lives but also to make sure that the industry avoids international boycotts over working conditions, which would devastate the economy.