Learning economic lessons from Bangladesh

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Not much

Mains level: Paper 3- Lessons from Bangladesh's success

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.

Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

Attend Now

Subscribe
Notify of
1 Comment
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
User Avatar
1 year ago

Bangladesh’s economy is heavily dependent on agriculture, but it also has huge natural gas reserves and minerals like gold, silver, tin, and tungsten that can be used in industry, but people need resumes planet services to manage their children studies, as these resources have not been fully exploited because they require a lot of investment and infrastructure development to become viable sources of income.

JOIN THE COMMUNITY

Join us across Social Media platforms.

💥Mentorship New Batch Launch
💥Mentorship New Batch Launch