The UNGA has adopted a resolution on Bangladesh’s graduation from the list of LDCs in 2026. The decision coincides with the celebration of 50 years of the country’s independence. The journey towards becoming a developing country was not smooth. The obstacles came in many forms, from corruption to political instability to violence to natural calamities- the list is long. Despite all the obstacles, Bangladesh has fared pretty well, thanks to the robust and sustained growth of the last decade. Bangladesh was once considered the ‘basket case’ but is now a paragon of economic development. The development story here has been forged by a dynamic partnership between the state, private sector, and non-governmental organizations.
The citizens’ standard of living has massively improved, coupled with improvement in social indicators like life expectancy, female employment, infant and maternal mortality rate, school enrolment rate, and fertility rate. Bangladesh’s sustained economic growth is attributable to the export earnings from the RMG sector and remittance inflow from the wage earners living abroad. The steady flow of remittance earnings has been helpful in poverty reduction throughout the country. Moreover, the RMG sector has proven to be a vital source of employment, especially for women, improving the female empowerment scenario of the country.
Bangladesh’s progress can also be attributed to the vast strides made by several governments throughout history to improve maternal and infant health and provide quality primary healthcare. These interventions have helped to reduce the infant mortality rate and widespread malnutrition in the country. Besides, the role of the private sector and non-government organizations has also been very impactful. Non-government organizations have played a significant role in the country’s progress by contributing to healthcare, education, skills development as well reduction in poverty and hunger.
But are we ready for the next big leap? Bangladesh aspires to become a developed country by 2041 and it has a well laid-out documented plan, but structural barriers stand in its way of implementing those plans. Bangladesh is urbanizing fast, and by 2040 almost 48% of the population will be living in towns and cities. However, the country’s urban infrastructures are weak and struggling to serve the existing population. The urban poor has a substandard quality of life as they do not have adequate access to the basic amenities required for city life. It tells us that our growth has not been very inclusive and has achieved only partial modernization.
While our economic growth has reduced the rate of extreme poverty, it has not been very successful in reducing the rate of inequality. Besides, weak institutions, poor governance, unskilled labor force, vulnerable environment, inadequate investment, and administrative barriers stand in Bangladesh’s way towards continued economic growth and development. Moreover, the impact of covid-19 threatens to undo much of the successes and sidetrack the country from its growth path.
To prepare us for the big leap forward, significant policy changes and implementation activities need to happen. Bangladesh has identified four pillars to drive its growth and transformation. These are democratization, decentralization, governance, and capacity building. Bangladesh must strongly emphasize the reduction of the wealth gap between the rich and the poor. One way to achieve this could be pursuing effective decentralization. Although the key government policy papers identify decentralization as an important step going forward, the country still remains largely centralized.
The decentralization of power, funds, and functions will result in stronger local governments. Stronger local government means better infrastructures and better policy adoption for the local people. Once the economic activity is decentralized, it will have an inducing effect on the rate of inequality. The country also needs to emphasize on ensuring good governance to make the public service institutions more effective and accountable. We need increased investment in education, healthcare, and housing to reduce inequality, more so now than ever as the covid-19 has exacerbated the situation of the urban poor. But with weak institutions and fragile bureaucracy, the increased investment won’t be effective, and inequality will further increase.
Moreover, Bangladesh has one of the lowest tax to GDP ratios due to widespread evasion of taxes. Much of the wealth of the richer population is not taxed and neither comes under the purview of government scrutiny due to weak public institutions. The power which has been amassed by an influential richer section of the society owing to weak democratic structure threatens to impede the development process. Going forward, we need structural reforms in our taxation policies and public institutions to increase tax revenues and reduce tax evasion.
We must diversify our export sector for more resilient, inclusive, and sustainable growth. Depending alone on the RMG sector for export earnings and job creation is very risky. So we need a robust private sector that will invest in new sectors like transport and logistics, light engineering, healthcare, agribusiness, pharmaceuticals, etc. The role of the private sector in creating new sources of job and growth is extremely crucial right now as we recover from covid-19. But new investments from the private sector can be attracted only when structural impediments and barriers are removed. Without a favorable trade and business environment, investors won’t be willing to explore new sectors in the economy.
Looking forward, creating new sources of jobs is essential for Bangladesh as a large number of people are entering the job market owing to the country’s young demographics. But to realize this demographic dividend, we need to focus strongly on education and skills development programs. What we have right now is a highly unskilled labor force, which is unable to cope with this technology-driven world. So the next big leap will be fruitful only when we have a better-skilled workforce to drive forward the country’s growth.
While we prepare for the next big leap, we must take into account the issue of environmental degradation and put in combined efforts to protect our natural resources. It should be remembered that the destruction of the environment never yields positive results and will only make it difficult for Bangladesh to achieve its goal of becoming a developed country by 2041.
