Wall Street Journal praised Bangladesh’s development
Published: 12:11 PM, 4 March 2021 Updated: 05:28 PM, 4 March 2021
Photo: Wall Street Journal
A column in the United States daily Wall Street Journal praised Bangladesh’s economic success. The column was written on Wednesday by Mike Bird, a Hong Kong-based journalist who specializes in Asian financial markets.
The published column is given below —
Last week, Bangladesh achieved an economic milestone. The United Nations Committee for Development Policy (CDP) has recommended Bangladesh to move from a least developed country (LDC) to a developing country. The country has been the least developed country since Independence 50 years ago.
Bangladesh’s name is foremost in South Asia for being the closest proxy for the successful development models from the place where huge economic progress has seen at various stages in South Korea, China and Vietnam. Export-oriented development is most effective in modern times in moving from a low-income country to a middle-income country. Bangladesh has done this job well.
In dollar terms, Bangladesh’s exports have increased by about 80 percent in the last decade. This progress is mainly through the ready-made garment (RMG) sector.
At the same time, Bangladesh’s two neighbors, India and Pakistan, have lagged far behind - which has made Bangladesh stand out from other countries.
As of 2011, Bangladesh’s per capita GDP was 40 percent lower than India’s, however, the country was ahead of India in many ways last year. The collapse is due to the recession in the Indian economy caused by the coronavirus epidemic. According to the International Monetary Fund (IMF) forecast, “this gap will narrow further”.
There are other reasons why the country’s development model has progressed so far. The predominance of youth in the country’s population, the consistently competitive position in terms of wage levels, especially the strong and increasing rate of women’s participation in the labor market compared to other countries in South Asia.
However, there are some potential obstacles in the development of Bangladesh’s economy. The first is that Bangladesh’s export growth is much lower than Vietnam or Cambodia. Exports to these countries have tripled and more than doubled in the last ten years, respectively. India’s exports boomed in the early 2000s and then “stagnated”. So it is important to remember that there is no guarantee that there will be a continuous upward trend.
The next step for Bangladesh will now be to transform it into a high-value product and export. As Vietnam has done - Bangladesh’s export industry is still largely focused on the RMG sector. According to the Harvard University Growth Lab ranking, Bangladesh ranks 108th out of 133 countries measuring economic complexity. Even in 1995, Bangladesh’s position was even lower.
Bangladesh, like India, has built its own trade relations outside Asia’s major business alliances. Bangladesh is not a member of the Association of Southeast Asian Nations (ASEAN), the Regional Comprehensive Economic Partnership or the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. More involvement in the inter-Asian supply system and closer economic ties with neighboring countries in the East will require further diversification of the country's export-oriented manufacturing sectors.
However, despite these limitations, Bangladesh’s transition from the LDCs is probably indicative of the country’s further development, and it is also a tip to take a very different approach to the development of other South Asian neighbors.