Pakistan was born with a strange geographical isolation; according to many, as a ‘defective baby’. West Pakistan on one side and East Pakistan on the other, separated by one thousand miles of Indian land in the middle. If two of a person’s lungs are separated by a distance of one thousand miles, that person cannot survive. That was what happened. A new country was born by breaking free from the trap of plutocracy. That country was Bangladesh. Where does Bangladesh stand after fifty years of independence? It is broken down into three sections in this article. The first section examines Bangladesh’s improvement in several socioeconomic indices during the course of its five decades of independence. The focus has been on the discrimination of policies between the two regions in undivided Pakistan to understand the background of this progress. The second section assesses Bangladesh’s position in South Asia, while the third section shows Bangladesh’s worldwide position in key areas.
Socio-economic progress in five decades
It was clear from the start of the partition of India and Pakistan that the central West Pakistan government’s resource distribution and economic policies would be discriminatory towards East Pakistan. As a result, economic disparities between Pakistan’s two regions emerged within two decades. Professor Rehman Sobhan highlighted discriminations in four areas of government policy in his book “Evolution of Bangladesh: An eyewitness commentary”: trade policy, exchange rate policy, foreign exchange rate fixation, federal finance, and foreign policy. Government expenditure allocation policy, foreign aid allocation policy, foreign exchange allocation policy, exchange rate and import policy have always been biased towards West Pakistan. As a result, Bangladesh lags behind West Pakistan in terms of GDP, per capita income and standard of living.
In the 50th year of independence, the economy of Bangladesh is growing rapidly. It is moving forward at breakneck speed. The capital market is booming. Agriculture is stable. More crops can now be harvested with less cultivation work. This is thanks to the magic of Ufshi breeding and mechanisation. Four crore tons of food grains are being harvested every year.
The development of industries has been in tandem with agriculture. Factories are being constructed everywhere. People are getting jobs. As a result, the young people who are part of the workforce are less depressed. The development of capital is making the growth of the economy look very promising.
Bangladesh’s success in every important indicator of health, education, gender equality, nutrition and human development is enviable. In fact, in many cases Bangladesh is ahead of its neighbours. Plenty of work regarding infrastructure development is going on across the country. Building the Padma Bridge with our own finances is no longer a dream. Construction work for metrorail is going on in Dhaka. The construction work of deep seaport has also started. There is a touch of change everywhere. With the help of information technology, digital Bangladesh has also become a reality.
8% GDP Growth
In 1971, during the year of the war, Bangladesh’s growth became negative 5.48%. However, in the 2018-19 fiscal year, the growth of the economy of Bangladesh crossed the 8% mark for the first time and reached 8.15%. Even in the year of the pandemic, the growth of Bangladesh did not fall below 5%. According to the International Monetary Fund’s (IMF) 2020 calendar year, Bangladesh achieved 3.55% growth in 2020. Only Guyana and South Sudan have seen higher growth than Bangladesh this year.
However, this growth is not magical. Many steps had to be conquered to reach the peak of growth.
Per capita income which was USD 120 is now USD 2064
As a result of rapid economic development and diversification in West Pakistan compared to East Pakistan, there was a huge disparity in per capita income between the two regions. In 1949-50, the per capita income inequality between West Pakistan and East Pakistan was 32.5%. In 1969-70 this increased to 61%.
Following this path of inequality, Bangladesh became an independent country with an income of only USD 120 per capita. The only thing left to do then was to move forward. In 2020, the per capita income of Bangladesh reached USD 2064.
Extreme poverty rate is 10%
Due to severe economic inequality, a large portion of the population of East Pakistan fell below the poverty line before independence. In 1970, more than 80% of the total population of East Pakistan was below the poverty line. Bangladesh has gradually come out of that situation due to inclusive growth and financial management strategies as well as increased employment in the local and international labour markets. Large sections of the poor have emerged from extreme poverty by relying on comprehensive social security programmes. In 2019, the poverty rate in the country has come down to 20%. And extreme poverty rate is now 10%.
Exports increased from USD 630 million to USD 40 billion
According to the World Bank, the financial value of East Pakistan’s exports in 1960 was USD 656,651,572. In 1970, the year before the liberation war, this amount increased to USD 877,564,827. However, during 1971, Bangladesh was able to earn only USD 635,198,087 from the export. From the 80’s onwards, export earnings started to become the mainstay of Bangladesh’s economy through the garments industry. Over the next decade, export earnings increased by 80%. In the 2018-19 fiscal year, Bangladesh’s export income exceeded USD 40 billion and reached USD 40.53 billion. Due to unfavourable global conditions, exports have declined significantly in the 2019-20 fiscal year, but they are still above USD 33 billion. Apart from garment products, pharmaceuticals, steel, cement, and ceramics have emerged as new export sectors.
Acceleration in foreign direct investment
The government has undertaken major reforms to attract more foreign direct investment. Under the reform programme, which started in the 90’s, facilities such as tax exemption on investment for several years, import of capital equipment with duty-free facility, 100% foreign ownership in the company, reinvestment of profits, multiple visas, work permits for foreign executives and Export Processing Zones (EPZ) are given. Besides, the government has paid special attention to the development of the business environment. As a result, in 2018, Bangladesh was able to attract USD 3.61 billion in foreign direct investment. However, foreign direct investment has declined worldwide in 2019. Global foreign direct investment fell by 42% during the year. Bangladesh was no exception. According to UNCTAD statistics, foreign direct investment in Bangladesh in 2019 stood at USD 1.6 billion.
Share of manufacturing sector in GDP
Until a long time after independence, Bangladesh’s economy was import-dependent. The manufacturing sector accounted for a small share of the GDP. According to the World Bank, in 1972, the year after independence, the manufacturing sector accounted for only 4% of GDP. Later, the government adopted the strategy of import-alternative industrialisation to protect the infantile industries. These reforms in the industrial sectors in the 80’s and 90’s helped to increase the share of industry in GDP. In 2019, the share of industry in the GDP of Bangladesh stood at 18%. Similarly, the share of unproductive sector in GDP has increased from 2% in 1972 to 11% in 2019. To speed up the industrialisation process more, the government is setting up 100 special economic zones across the country.
Rapid infrastructure development
In 1947-48, in terms of miles West Pakistan had more roads, and railways and automobiles in terms of number than East Pakistan. In the following years, however, this inequality became more widespread.
According to the Pakistan Economic Survey 1969-70, the roads in East Pakistan increased six-fold to 2,588 miles in 1967-68 compared to 1951-52. However, it is negligible compared to 22,508 miles of roads in West Pakistan. Similarly, the railway line in East Pakistan was 1,712 miles as against 5,334 miles in West Pakistan in 1967-68.
During the war of liberation in 1971, the army of West Pakistan practically destroyed the communication infrastructures in East Pakistan. After independence, the new government started investing in communication infrastructure. Following this, the length of railways and roads has increased. At present, there are 55,000 kilometres of paved roads in the country. Of these, the length of highways under the Department of Roads and Highways is 22,096 km. The length of the 99 national highways in the country is 3,906 kilometres. According to the Ministry of Railways, meter-gauge, broad-gauge and dual-gauge railways in Bangladesh have been upgraded to 2,885 kilometres. Of this, 2,656 kilometres are in operation. However, despite being an important means of transportation, inland waterways have declined in the five decades since independence. The length of waterways that are navigable all year round is now 3,800 km, which is increased to 6,000 km during the monsoon season. However, work is underway to increase the length of the waterway to 10,000 kilometres.
After Bangabandhu Bridge, Padma Bridge has also become a reality now. A tunnel is also being constructed at the bottom of Karnaphuli river. Besides, river excavation work is going on for the development of waterways. In addition to increasing the capacity of Chattogram and Mongla ports, Payra and Matarbari deep sea ports are being constructed. Bangladesh has also joined space communication through the launch of Bangabandhu Satellite-1.
Goods handling increased 17 times
In the immediate years after independence, imports were conducted more through seaports. The amount of export was also small as the export products outside jute were limited. According to the data of the first five-year plan, the volume of import and export goods through Chattogram and Chalna (now Mongla) ports in the fiscal year 1973-74 was 57 lac 80 thousand tons. Of this, 35 lac 87 thousand tons were transported through Chattogram port. In the five decades of independence, cargo transportation through seaports has increased to about 100 million tons. In the 2018-19 financial year, 98 million 240 thousand tons of cargo has been transported through the seaports. At the same time, container handling has been 2.9 million TEUs.
Food production has risen 354%
The amount of food grains produced in 1972, the year after independence, was less than one crore metric tons. Only 99 lac metric tons of food grains were produced in the country that year. In 2020, the production of food grains had reached 454 lac metric tons. Bangladesh is now self-sufficient in the other sectors of agriculture such as fish, poultry and meat production. This has been made possible by the mechanisation of agriculture, innovation of new varieties of crops and an increase in crop density.
99% of people within the reach of electricity
The most urgent need in economic development is the availability of electricity and fuel. Even in 1991, only 14% of the people had access to electricity. In 2021, it has increased to 99%. This has been possible due to the formulation of the master plan of the present government around the power sector and its implementation accordingly. In 2009, there were 27 power plants in the country. In 2020, this number has increased to 147. The capacity to generate power from captive and renewable sources stands at 25,171 MW. In contrast to the capacity, the maximum production has reached 13,377 MW. The number of electricity subscribers has increased from 108 lac in 2009 to 396 lac at present time.
Literacy rate has almost tripled
In the last five decades, Bangladesh has achieved unexpected success in almost all indicators of human development. Education is the main one among them. Even in 1974, three years after independence, the literacy rate in Bangladesh was only 26.8%. It took until 2011 to bring the rate close to 50%. As a result of well-thought-out planning and smooth implementation, the literacy rate has been increasing rapidly ever since. According to the World Bank, in 2019, the literacy rate in Bangladesh reached 74.7%. At this time, the enrollment of students in primary schools has increased to almost 100%. At the primary level, the dropout rate has dropped to 18%, which is acting as a regulator to increase the literacy rate.
Average life expectancy has increased by 26 years in five decades
The average lifespan of a person depends on several variables. Quality of life, access to health care, nutrition and economic status play a special role in this regard. None of these were readily available in the years following independence. Even in 1972, the average life expectancy of the people of Bangladesh was only 46.6 years. With the economic development of the people as well as the ease of access to nutrition and health care, the average life expectancy of the people of Bangladesh in 2020 was 72.6 years.
Unimaginable success in reducing maternal and child mortality rate
Despite this region’s large population after the creation of Pakistan, access to health care was much lower than in West Pakistan. According to the Pakistan Statistical Yearbook, there were 26,200 beds in West Pakistan hospitals in 1966. But in East Pakistan there were a total of 6,984 beds. There was also a clear disparity in the number of doctors. In 1969, there were only 88,100 doctors in East Pakistan compared to 131,000 in West Pakistan. Naturally, the availability of healthcare was not at the desired level. As might be expected, most of the child births were non-institutional. At the same time, maternal and child mortality rates were high due to lack of nutrition. According to the World Bank, even in 1975, for every 1 lac births, 800 mothers died. In 1990 this number was 574. For the same reason, in 1973, 167 out of a thousand children died. However, maternal mortality has declined by 75% in five decades due to improved health services, especially maternal and child health services and nutrition. In 2017, the maternal mortality rate came down to 173 per 1 lac newborns. In addition, in 2020, the child mortality rate came down to 21 per thousand.
Enviable achievement in gender equality
As a result of the wide participation of women in various socio-economic sectors, Bangladesh has achieved unexpected success in gender equality. For the second year in a row Bangladesh has topped the list of South Asian countries in the Gender Equality Index 2020. According to the Global Gender Gap Index 2020, overall, Bangladesh has reduced gender inequality by 73%. From 1996 to 2017, the participation of women in the workforce has increased from 15.8% to more than 36%, whereas South Asia averages 35%.
The position of Bangladesh in South Asia in socio-economic indicators
The story of independent Bangladesh and subsequent success is completely different. In the 50 years of independence, Bangladesh has surpassed Pakistan in many socio-economic indicators. Some indicators have surpassed India. Bangladesh’s position in South Asia is now at another height in many economic and social indicators.
Bangladesh is ahead of India and Pakistan in GDP per capita
After independence, the economy of Bangladesh was devastated. In 1972, the per capita GDP of the newly independent country was only USD 94.38 (at current prices). Even then, Pakistan’s per capita GDP was above USD 153. Due to the new initiative in the economic restructuring of the country, the per capita GDP of Bangladesh reached USD 257.57 in 1975. But Pakistan’s GDP per capita came down to USD 168. Although the GDP growth rate of Bangladesh came to a standstill in the aftermath of Bangabandhu’s assassination, the opening up of the economy to the private sector in the 90’s made the GDP flourished. In 2019, at the current price Bangladesh’s per capita GDP rose to USD 1,855.74. At the same time, Pakistan’s per capita GDP is USD 1,284.7.
Bangladesh’s per capita GDP is expected to reach USD 1,888 in 2020, according to a forecast by the International Monetary Fund (IMF). India’s per capita GDP is expected to be USD 1,877. In other words, Bangladesh’s per capita GDP is now higher than India’s. Nepal’s per capita GDP was USD 1,071 in 2019 according to the World Bank, while Afghanistan’s was USD 507. Sri Lanka, on the other hand, had a per capita GDP of USD 3,853, while the Maldives had a per capita GDP of USD 10,625 and Bhutan had a per capita GDP of USD 3,316.
Contribution of trade to GDP has also surpassed the target
Due to biased economic and trade policies, trade in the region did not flourish in erstwhile East Pakistan until independence. According to the World Bank, trade contributed more than 20% to GDP from 1960 to 1967, but fell to 17% in 1971. Immediately after independence in 1972, the share of trade in GDP increased slightly to 19.4%. However, the policy of economic liberalisation in the 90’s brought a new momentum to trade. In 1995, it reached 28.2%. The contribution of trade to the GDP increased to 48.1% in 2012 on the basis of various trade-oriented reform programmes and increase in the purchasing power of the people. Although it could not be sustained for the next few years, the contribution of trade to GDP in 2019 was still above 36% (36.76%).
On the other hand, in the last 50 years, the contribution of trade to Pakistan’s GDP has been reached close to 40%. In 1993, the share of trade in the country’s GDP rose to 38.5%, the highest ever. According to the World Bank, the latest contribution of trade to Pakistan’s GDP in 2019 was 30.44% less than that of Bangladesh. Trade contributed for 40% of India’s GDP in 2019, while it accounted for 55% of Nepal’s GDP, 52% of Sri Lanka’s GDP, and 84% of Bhutan’s GDP.
Success in attracting FDI
Due to high economic growth, Bangladesh has maintained stability in the macro-economy for a long time. Government debt is also at a satisfactory level. But the biggest strength of this multifaceted open economy is the adequacy of affordable labour. In terms of geography, Bangladesh is likewise in a strong position. At the same time, as a result of various business reforms, foreign investors are becoming interested in Bangladesh. As a result, Bangladesh has surpassed Pakistan in Foreign Direct Investment (FDI) in the last decade.
In 2018, Bangladesh was able to attract more investment than Pakistan. In that year, the inflow of foreign direct investment in Pakistan was USD 1,737,000,000 but in Bangladesh it was USD 3,613,000,000. The following year, however, Pakistan made some progress.
According to UNCTAD’s Global Investment Report 2020, FDI inflows to Bangladesh in 2019 were USD 1.6 billion, compared to USD 2.21 billion in Pakistan. According to Bangladesh Bank, FDI inflows were USD 2.87 billion in 2019. In that same year, FDI inflows to India totalled USD 50.55 billion. FDI inflows were lower in all other South Asian nations than in Bangladesh. Sri Lanka received USD 0.758 billion in FDI in 2019, Nepal received USD 0.185 billion, the Maldives received USD 0.565 billion, and Afghanistan received USD 80 million.
Although Bangladesh ranks second among South Asian countries in attracting FDI, the amount is still much less than expected. To get out of this, we need policy support and improvement in the business environment. That effort is going on through various reforms.
Foreign currency reserves are now three times higher
Bangladesh has been able to create a strong foreign exchange reserve by depending on a combination of active investment, high exports, and expatriate income. For several years, Bangladesh Bank has kept more dollars in foreign currency than it requires to meet its six-month import expenses.
According to the World Bank, at the end of 2019, Bangladesh’s foreign exchange reserves stood at USD 32.7 billion. The amount is almost double that of Pakistan. At the end of 2019, Pakistan’s foreign exchange reserves were only USD16.59 billion. In June 2020, Pakistan’s foreign exchange reserves plummeted to USD 10 billion. Although the foreign exchange reserves were somewhat stronger due to the International Monetary Fund (IMF) loans, they did not exceed USD 13.4 billion at the end of December 2020. But at the same time, Bangladesh’s foreign exchange reserves stood at 43 billion dollars, with which it is possible to pay 10 months’ import obligations.
In South Asia, only India has bigger foreign exchange reserves than Bangladesh. The country’s foreign exchange reserves were USD 589.35 billion in December-June 2020. Nepal’s foreign exchange reserves were USD 11.65 billion in August of that year. It was USD 5.55 billion for Sri Lanka, USD 1.49 billion for Bhutan, and USD 0.98 billion for the Maldives.
National per capita income is 27% higher than Pakistan
According to the World Bank, in 1972 the per capita national income of Bangladesh was USD 120 but the per capita national income of Pakistan was USD 170. Since then, per capita national income has been steadily rising. Along with high growth, per capita national income rose to USD 1,940 in 2019, 27% higher than that of Pakistan. In 2019, Pakistan’s per capita national income was USD 1,410. In addition, Bangladesh reached the milestone of USD 1,036 per capita income being a middle-income country in 2015. And Bangladesh’s per capita national income in the fiscal year 2019-20 was USD 2,064.
India’s per capita national income in 2019 was USD 2,120, Bhutan’s was USD 3,140, Maldives’ was USD 9,680, Nepal’s was USD 1,090, Sri Lanka’s was USD 4,020, and Afghanistan’s was USD 530, according to the World Bank.
Ahead in other social indicators as well
In the 50 years of independence, the young workforce has made a significant contribution to the economic development of Bangladesh. At the same time, women’s participation in the labour force is increasing at a significant rate, especially in the export-oriented garment industry. According to the World Bank, 36% of women aged 15 and over in Bangladesh are actively involved in economic activities. In Pakistan, only 22% of women of this age are actively involved in economic activities. According to the World Bank, the rate in India is 21.5%. In other words, Bangladesh is ahead of Pakistan and even India in terms of the participation of women over 15 years old in the labour force.
Bangladesh is also in a better position than Pakistan in the index of economic freedom in 2020. Although Pakistan is in 152nd position in this index, Bangladesh is in 120th position. Bangladesh is even ahead of India in the index. India ranks 121st in the Economic Freedom Index, one step behind Bangladesh.
Bangladesh is also one step ahead of Pakistan in the Business to Consumer E-commerce rankings.
Milestone recognition
Bangladesh has received recognition from the United Nations Committee for Development for its transition from a least developed country to a middle-income country. In February 2021, for the second time after 2018, the United Nations has recommended Bangladesh for fulfilling all the three conditions of transition to a developing country. The honourable Prime Minister Sheikh Hasina has credited the people of the country for this great and glorious achievement. “We have achieved this milestone through the combined efforts of all,” she said.
Earlier in 2015, Bangladesh was upgraded from a low income country to a low-middle income country in terms of per capita income of the World Bank. In terms of per capita income, Bangladesh is on the way to becoming an upper-middle income country by the end of 2021. Besides, Bangladesh has been recognised as one of the role models in achieving the Millennium Development Goals (MDGs). Bangladesh has shown remarkable success in poverty alleviation, food security, primary education, mortality reduction, vaccination and prevention of infectious diseases. Special plans have also been made to achieve the Sustainable Development Goals (SDGs). The government has also included the issue in the Eighth Five Year Plan, Delta Plan 2100 and Perspective Plan 2041.
Final words
In the eyes of international economists, Bangladesh’s economic progress is astonishing. The poorest part of undivided Pakistan is now the emerging economy, disproving the basket case theory. According to the UK’s Centre for Economics and Business Research, Bangladesh will be the 25th largest economy in the world by 2035. According to Kaushik Basu, former chief economist at the World Bank, Bangladesh is now Asia’s success story. Even two decades ago, that was beyond imagination. However, like all economies, there are risks such as corruption and income inequality. Will Bangladesh be able to sustain its economic progress by tackling these risks? However, Kaushik Basu is finding ample reason for optimism in the Prime Minister’s commitment to address these risks. All other economists are also optimistic. And in the words of honourable Prime Minister Sheikh Hasina, ‘Bangladesh ten years ago and Bangladesh today are not the same. Today’s Bangladesh is a transformed Bangladesh.’
