Bangladesh is Booming
Bangladesh is one of Asia’s unexpected success stories in recent years. Once one of the poorest regions of Pakistan, Bangladesh experienced an inflection point in 2006, according to an article penned by Kaushik Basu, a Brookings Nonresident senior fellow in global economy and development.
Since then, Bangladesh’s GDP growth has exceeded Pakistan’s by 2.5 percent points per year. This year, its growth rate is likely to surpass India’s
Bangladesh’s population growth is well below Pakistan’s, meaning that its per capita income is growing faster than Pakistan’s by 3.3 percent per year. At that rate, Bangladesh will overtake Pakistan in per capita GDP in 2020.
According to Basu, “Bangladesh’s economic transformation was driven in large part by social changes, starting with the empowerment of women.”
Bangladesh has put more into educating girls and empowering women. These efforts have improved children’s health and education.
Bangladesh has also offered a better environment for manufacturing firms than Pakistan to achieve economies of scale and create a large number of jobs, thanks to the absence of a law that curtails labor-market flexibility in Pakistan.
Can Bangladesh’s strong economic performance be sustained? “As matters stand, the country’s prospects are excellent,” Basu wrote, “but there are risks that policymakers will need to take into account.”
For one, corruption, cronyism, and inequality are on the rise and these can “stall the growth process if left unchecked.”
Another threat is posed by religious fundamentalists who opposed Bangladesh’s investments in social reforms. “A reversal of those investments,” Basu concluded, “would cause a severe and prolonged economic setback.”
Bangladesh’s prime minister is committed to addressing these risks, providing “reason to hope for success.” “In that case,” Basu added, “Bangladesh will be on a path that would have been unimaginable just two decades ago: toward becoming an Asian success story.”