Lodged inconspicuously under India’s eastern borders, this small country, in the recent past, has quietly achieved what none of the Asian nations could – an average growth rate of 8 percent.
Yes, you heard that right! Outstripping major economies of China and India – neighboring nations seeing declining growth because of a combination of reasons – and other south Asian tigers, Bangladesh has made its way to the top spot.
And the scorching growth pace, well above the Asian average, is what the nation seems poised to maintain in the next couple of years to escape the tag of a least developed country and graduate to a middle-income country.
To find out how Bangladesh, once dubbed a basket case because of subsequent military or military-backed regimes that perpetuated poverty, religious fundamentalism and corruption, has done so well for itself in the past one decade and become a development model, read on…
Contribution of the textile industry
At the center of the growth story is the nation’s textile industry. Despite two major accidents in its crammed and poorly constructed garment factories killing thousands in 2013 and leading to shutting down of over 1250 units, the sector managed to rebound spectacularly and contribute nearly a quarter to Bangladesh’s GDP.
With 4,560 operational garment factories involved in exports today, the nation has surged ahead of India vis-à-vis market share and become second only to China.
Factors giving it an edge over it competitors are dirt cheap labor (it is said that Bangladesh has the lowest labor cost in Asia at $101 per month) and zero import duties on its garments by the European Union and other developed nations (this preferential duty is enjoyed by many underdeveloped nations to enable their economies grow while developing nations like India attract 9-10 percent import duty).
Such advantages alongside recent geopolitical tensions such as the trade war between China and the US has held the nation’s garment industry in good stead and has also helped attract record foreign direct investment (FDI).
Contribution of other industries
While the garment sector, which accounts for 80 percent of Bangladesh’s exports, forms the backbone of the country’s economy, the story does not end here. The government has wisely diversified into other industries as well to reduce overreliance on the $30 billion garment industry.
As a result, services sector of microfinance and computing have boomed. Together, the two now make up a substantial proportion of the nation’s GDP.
Bangladesh also exports technology products worth nearly $1 billion every year – a figure the government wishes to take to $5 billion by 2021.
An advanced pharmaceutical industry worth almost $3 billion is another feather in its cap. Mostly homegrown, the Bangladeshi pharmaceutical companies produce high quality anti-cancer drugs that are exported to 151 countries.
Sustained agricultural growth
From being famine stricken and food deficit right after its independence in 1971 to becoming food surplus, Bangladesh has come a long way thanks to the government’s strong focus on the agricultural sector alongside manufacturing. Today, agriculture contributes 19.6 percent to its GDP and employs close to 63 percent of the population. To elaborate a little more, globally Bangladesh is now the fourth largest rice producer, fifth largest vegetable producer, eighth largest potato producer and the fifth biggest freshwater fish producer. The feat becomes even more commendable if one factors in the lowest per capita agricultural land due to high population density and fast depleting arable land in the face of rapid urbanization and industrialization.
Political stability and human development
With Sheikh Hasina in her fourth term, the political stability has borne results. The prime minister has managed to keep radical religious forces under control and bring about important reforms such as opening up of the power, health, banking, and education sectors to the private players. Big ticket infrastructure projects have received have a massive boost and the nation has become a surplus power-generating country.
But the most noteworthy achievements under Sheikh Hasina so far has been in the domain of healthcare and education. Thrust on primary education, especially of girls, has made Bangladesh attain gender parity in primary education. This, in turn, has led to more women entering the workforce – it is said that a lion’s share of the organized textile jobs are held by women. As a result, women are postponing marriage and childbirth leading to a decline in population growth. This again has translated into greater per capita income and lower poverty rates.
Focus on healthcare, on the other hand, has led to lower infant mortality rates and greater life expectancy thus bettering the quality of life. All these have successfully created a virtuous cycle that are expected to have far reaching effects on the nation’s development story in the near future.