The article examines the key driving factors of Bangladesh’s stellar economic progress and draws lessons for India.
Overview of Bangladesh’s economic achievements
- Bangladesh’s GDP growth in 2019 was an enviable 8.4 per cent — twice that of India’s during that year.
- It is one of the few countries to have maintained a positive growth rate during the COVID-19 pandemic.
- Its GDP per capita is just under $2,000 — almost the same as India’s.
- In five years, by 2026, Bangladesh will drop its least developed country tag, and move into the league of developing countries — on a par with India.
Parallels between Vietnam and Bangladesh’s progress
- Vietnam instituted market and economic reforms in 1986, which enabled it to achieve rapid economic growth and industrialisation.
- It began with the manufacturing of textiles and garments and moved into making mobiles and electronics.
- As supply chains diversify from China, Vietnam is a beneficiary.
- It is now the “+1” in the “China +1” strategy of multinationals.
- Vietnam has signed trade agreements and inserting itself into global supply chains.
- Bangladesh has followed a similar strategy.
- Its rise is directly connected with the textiles and garments industry, which accounts for 80 per cent of the country’s exports.
- Bangladesh also enjoys preferential trade treatments with the European Union, Canada, Australia, and Japan with negligible or zero tax.
- With India too, Dhaka has a zero-export duty on key products like readymade garments.
- Like Vietnam, its foreign investment regime is investor-friendly.
- For instance, Bangladesh’s liberal FDI policy allows 100 per cent equity in local companies and no limits on repatriation of profits in most sectors.
- Indian companies are increasingly present in Bangladesh, and Indian products are popular — an outcome of a strong cultural affinity.
Women in workforce and microfinance
- The world’s most successful and pioneering microfinance organisations like Grameen and BRAC have aided small businesses in the country, and regionally.
- Many of these schemes, over the years, were directed at women.
- This has paid dividends not just in financial independence, but also in encouraging them to work outside the home.
- Consequently, Bangladesh’s workforce in its textiles sector is almost all women — 95 per cent women in an industry which is 80 per cent of Bangladesh’s exports.
Role of government schemes
- This, along with government schemes like Pushti Apas (Nutrition Sisters) and community health clinics has helped Bangladesh in the development indices.
- Bangladesh fares better on infant mortality, sanitation, hunger and gender equality than many countries including India.
Key lessons for India
- Increasing women in the workforce, liberalising internal and external trade, and making micro lending accessible, are some of the lessons.
- But so is the goal of being a global hub for the sub region, building special economic zones which requires infrastructure, connectivity and a welcoming environment for investors both domestic and foreign.
- both countries have suffered since 1947, without connectivity, at huge cost.
- It is time to integrate our power systems, think about free trade, liberalise the visa regime.
Conclusion
India need not always carry the burden of South Asia’s development alone. It now has a partner with whom to collaborate effectively towards achieving that goal.
