How and Why is Bangladesh’s Economy Booming So Rapidly? An Analysis

Bangladesh, on its way to growth and development, requires further comprehensive initiatives to be able to maintain a healthy rise amongst other countries.

Introduction and History of Bangladesh:

As per the World Bank, Bangladesh, as a South Asian country, has achieved tremendous development in reducing poverty and growth in socio-economic notion. It has become one of the fastest-growing economies in the world since its independence and was able to overcome several difficulties surrounding the country. Subsequently, the country is on its way to shift from the list known as the ‘Least Developed Countries‘ coined by the United Nations by 2026.[1]

When the nation gained independence in 1971, the average Bangladeshi life expectancy was only 46.5 years.[2] The newly born nation was ravaged by poverty, political instability, and faced famine and periodic floods.[3] However, from the 1990s onwards, the nation saw rapid economic progress and a steady change in social conditions due to its strategic capitalization of land and labor force. The life expectancy of an average person from Bangladesh currently remains at 72 years as per the 2018 World Bank data. Hence, it can no longer be stated as a “bottomless basket,” a remark once made by Henry Kissinger due to the nation’s ill conditions in the 1970s.[4]

Reasons Behind the Rise:

As per few scholars, the nation has done well in the macroeconomic settings, such as the accomplishments in the export and the remittance front, as well as the performance of the private sector in the national economy.[5]

It is stated that since 2009, Prime Minister Sheikh Hasina, daughter of Sheikh Mujibur Rahman, and her administration has continued to exhibit their commitment to eradicate terrorism, ensure amity and stability, as well as maintain economic sufficiency through “feasible fiscal and international debt supervision, an extension of the social security to its people, and implementation of various infrastructural projects”. The nation has succeeded in maintaining beneficial and cordial relationships with other neighboring nations such as India and China and other developed nations such as the United States, Russia, and Japan. These advantageous associations have guaranteed Bangladesh to protect its own interests at the same time.[6]

The clothing and garment industry since the 1970s has made a huge impact in contributing to economic growth. At the same time, the service sector also has continued to excel, especially in microfinance. The IT industry has become one of the leading platforms for the digital transformation of Bangladesh as well. It only exports IT products but also has an employment base for freelancers.[7]

Various social transformations have also initiated the development of the nation and its people. As per the World Bank data, the women’s labor-force participation rate lies at 36%, higher than that of India, which is 21% in 2020. This estimate was only at 24% during 1990 for Bangladesh [8]

The country has also seen women empowerment, especially in the rural areas, due to its various Grameen (rural) schemes, one of them being the microfinance initiative called ‘Grameen Bank’ for community development in 1983 [9]

Additionally, the country has seen a growth in school enrolment, especially for girls, and has also seen a decline in the fertility rate from 6.3 births per woman in the mid-1970s to about 2.04 in 2018.[10] Therefore, we can state that the government’s will and contributions towards budgetary allocations to social spending have been a contributing factor as well.

Present Standing during COVID-19

As COVID-19 hit every nation on the globe in 2020, Bangladesh too had to face the pandemic and the consequences it brought in. As per the report by the World Bank called ‘Bangladesh Development Update- Moving Forward: Connectivity and Logistics to Strengthen Competitiveness,’ the first upsurge of positive cases began in April 2020 with an early peak in early July of 2020. Nevertheless, these new cases successively started to decline, and a nationwide vaccination campaign took place in the early months of 2021 to safeguard the population from the infection.

Like most nations, Bangladesh went into lockdown from March to May 2020 to manage the contamination. However, the economic growth declined rapidly, and signs of shortages on various fronts could be seen.  The nation suffered from food shortages, employment losses and highlighted the need for quality healthcare.

Nonetheless, as the lockdown restrictions were consequently removed to allow movement, the economy saw an initial recovery in the first few months of 2021. Major economic hubs such as Chittagong and Dhaka saw a steady revival than the rest of the places.

The Bangladesh Government actively made major decisions to control the circumstances erupting due to the pandemic. Firstly, it initiated a response package of US$ 14.6 billion to sustain the economy and the population. Secondly, monetary policies were introduced to relieve loaning and other financing amenities.

As a result of these multifaceted factors and moves by the government, the economy is expected to recover at a steady pace. Consequently, movement is back to what it was before the pandemic, workplaces and industrial factories are now functioning, and exports are underway.

Although the economy of Bangladesh is expected to slowly recover, it must be noted that the pandemic has brought various existing concerns to the surface. Experts have suggested that risks related to various fronts require management, introduce reforms to guarantee continuity of the trade, and protect the economy from such shocks ahead must be met.[11]

Furthermore, government expenditure on public health and education in Bangladesh has remained low when compared to other countries. Challenges towards the labor market in terms of sustainability and towards human development continue to be a roadblock to the nation as well.

Hence, Bangladesh ought to sustain this growth by analyzing and meeting these concerns with major policy initiatives. The government should also allow external players and institutions after proper examination for further progress that reaches every individual of the nation.[12]  Experts have also suggested that the government ought to initiate better responses to vaccination policies in the future.[13] Hence, Bangladesh, on its way to growth and development, requires further comprehensive initiatives to be able to maintain a healthy rise amongst other countries.

REFERENCES


[1] The World Bank, The World Bank in Bangladesh, 2021

[2] Ashikur Rahman, An Expert Explains: How Bangladesh has reduced gap — and is now projected to overtake India. [online] The Indian Express, 2021

[3] Katherine Rooney, Bangladesh’s economy is soaring – here’s why. [online] World Economic Forum, 2021.

[4] Mohammed Helal and Md. Amzad Hossain, FOUR DECADES OF ECONOMIC DEVELOPMENT OF BANGLADESH: AN ASSESSMENT, Journal of the Asiatic Society of Bangladesh (Hum.), [online] 58(2), pp.335-362, 2013

[5] Govindraj Ethiraj, Why is Bangladesh’s GDP growing despite Covid-19, while other economies are contracting?. [online] Scroll.in, 2021.

[6] Ashikur Rahman, An Expert Explains: How Bangladesh has reduced gap — and is now projected to overtake India. [online] The Indian Express, 2021

[7] Katherine Rooney, Bangladesh’s economy is soaring – here’s why. [online] World Economic Forum, 2021.

[8] Data.worldbank.org. Labor force participation rate, female (% of female population ages 15+) (modeled ILO estimate) – Bangladesh | Data. [online], 2021.

[9] NobelPrize.org, The Nobel Peace Prize 2006. [online], 2006

[10] Data.worldbank.org. Fertility rate, total (births per woman) – Bangladesh Data. [online], 2019.

[11] The World Bank Group, Bangladesh Development Update- Moving Forward: Connectivity and Logistics to Strengthen Competitiveness. [online] The World Bank Group, 2021.

[12] Mohammed Helal and Md. Amzad Hossain, FOUR DECADES OF ECONOMIC DEVELOPMENT OF BANGLADESH: AN ASSESSMENT, Journal of the Asiatic Society of Bangladesh (Hum.), [online] 58(2), pp.335-362, 2013

[13] Govindraj Ethiraj, Why is Bangladesh’s GDP growing despite Covid-19, while other economies are contracting?. [online] Scroll.in, 2021.

Moumita Barman is currently pursuing her Master's degree from TISS, Hyderabad in the field of Public Policy and Governance. Her research interests lie in Gender, Social Conflict, Caste in India, and Education.

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