Understanding the reasons for Bangladesh’s rise
Dhaka, June 19: Fourteen years in power is quite an achievement for the leader of any country and Prime Minister Sheikh Hasina has to her credit the fact of taking Bangladesh to new heights of development. This is no mean achievement, given Bangladesh’s historic battle with underdevelopment. What changed the fortunes of the people of the country was the focus on poverty reduction and development by the Awami League government. Due to this policy track, Bangladesh is on track to graduate from the UN’s Least Developed Countries (LDC) list by 2026 to a middle-income country. The defining moment in Bangladesh’s existence as a nation came in 2022, when its per capita GDP overtook India. The per capita income of Bangladesh in 1987 was half that of Pakistan, and in 2007 it was two-thirds that of India. There is no doubt that Bangladesh has emerged as the Asian Tiger and the World Bank recognised this remarkable story of poverty reduction and development in Bangladesh during Bangladesh's golden jubilee in 2021!
What changed the fortunes of the people of the country was the focus on poverty reduction and development by the Awami League government. Due to this policy track, Bangladesh is on track to graduate from the UN’s Least Developed Countries (LDC) list by 2026 to a middle-income country. The defining moment in Bangladesh’s existence as a nation came in 2022, when its per capita GDP overtook India. The per capita income of Bangladesh in 1987 was half that of Pakistan, and in 2007 it was two-thirds that of India. There is no doubt that Bangladesh has emerged as the Asian Tiger and the World Bank recognised this remarkable story of poverty reduction and development in Bangladesh during Bangladesh's golden jubilee in 2021!
Incorporating her own vision for the development of Bangladesh and the dream of the father of the nation, Sheikh Hasina proposed an outline called “Vision 2021” in 2001. The main goal was to make Bangladesh a middle-income nation by 2021, three years ahead of the World Bank's deadline. Remarkably, this was achieved and in October 2018, the government launched “Making Vision 2041 a Reality: Perspective Plan of Bangladesh 2021-2041” containing strategies, short and long-term plans, policies, challenges, programmes, and development plans to achieve some specific goals by 2041. The goals include eliminating extreme poverty and reaching Upper Middle-Income Country (UMIC) status by 2031, and High-Income Country (HIC) status by 2041.
It is a consequence of the development-oriented economic strategy adopted by the incumbent government that has seen the country’s GDP grow from US$ 71.82 billion in 2006 to US$ 416.26 billion in 2021. Further, FDI inflows into Bangladesh also saw a sharp increase rising from US$ 466.40 million in 2006 to US$ 2.17 billion in 2021-22. The 8th five-year plan for Bangladesh, approved by the National Economic Council (NEC) in December 2020, had the goal of achieving 8.51% GDP growth and lowering the poverty rate to 15.6% by the end of this period. Bangladesh, which was earlier considered an ‘international basket case’ because of its dependence on foreign aid and donations to survive, has witnessed unprecedented growth under the Sheikh Hasina-led Awami League government.
When the BNP-Jamaat alliance left the government in 2006, the per capita Gross National Income (GNI) of Bangladesh was a mere US$ 570. According to the World Bank in 2021 Bangladesh’s GNI per capita stood at US$ 2,570. This reflects an exponential growth of GNI per capita with a 351 per cent increase in a relatively short period of time. With a 6.6 per cent average economic growth rate, Bangladesh has been able to pull millions of poor people out of poverty. According to the International Monetary Fund, Bangladesh is now the 43rd largest economy in the world in terms of nominal GDP, while it stands at the 32nd position in terms of purchasing power parity (PPP). Moreover, it is amongst the 10 fastest-growing economies globally!
While the economy is on track, the power sector still faces challenges. Bangladesh, the world's second-largest garments exporter behind China supplying global retailers including Walmart, H&M and Zara, has been forced to cut power for 114 days in the first five months of 2023. That compares with 113 days in all of 2022. The overall supply deficit widened to an average of 15% in the first week of June, an analysis of the data showed, nearly three times the average 5.2% shortfall in May. This crisis will blow over in a couple of weeks, but Bangladesh is facing the impact of the Ukraine conflict and therefore, finds overall economic conditions challenging. However, power generation capacity increased from 4,942 MW in 2009-10 to 22,066 MW of installed electricity generation capacity in FY 2021-22.
Notably, the Government’s focus on implementation of several mega projects in the infrastructure sector, such as the Padma Bridge, Padma Rail Link Bridge, Karnaphuli tunnel, Dohazari-Cox's Bazar Railway construction, the Rampal power plant, Rooppur Nuclear Power Plant, Payra Sea Port, the Matarbari Power Plant in Moheshkhali, and Dhaka Metrorail, etc., have lent the necessary impetus for economic growth. The construction of the Padma Bridge is a watershed moment for Bangladesh. It is the fifth largest bridge in the world and has been constructed without the support of international donors. Another factor contributing to economic growth has been the high level of remittances from non-resident Bangladeshis. This has played a major role in the reduction of poverty. With a contribution of around 8-10% to GDP, remittances compose a major pillar of the Bangladesh economy. Bangladesh ranks seventh on the list of the world’s top remittance receiving countries. Each year more than half a million Bangladeshis join the 9 million already working abroad, mainly in the Middle East and South-East Asia.
In the health and nutrition sector, the government has made key policy and strategic interventions that has helped increase the life expectancy in Bangladesh, reaching 73.57 years in 2023 and being higher than in other countries in the region. The World Health Organisation case studies corroborate the success of developmental measures taken by Bangladesh. From a drastic reduction in maternal mortality rate (MMR), children under five years of age mortality rate (U-5MR) and the infant mortality rate (IMR), to ensuring sanitation facilities for all, the government has been registering transformational development success stories. For instance, the MMR has come down to 173 per 100,000 live births. This narrative speaks volumes of what Bangladesh has achieved.
The Bangladesh success story is also the story of the opening of many sectors traditionally reserved for the public sector to the private sector, including health, banking, higher education, TV and even export processing and economic zones. At the same time, the Sheikh Hasina government has substantially widened and expanded welfare programmes to lift the poorest and most neglected section of the population and increased subsidies for other crucial elements of the economy such as agriculture. Her development philosophy is a blend of capitalistic and socialistic virtues. The rise of Bangladesh is a reminder of what determined leadership and clever development strategies can achieve. This is the key takeaway from the fourteen years of the Awami League in power. Whether this trend will continue will be seen in the general elections likely to be held next year.