With an economic history of averaging 5%–6% annual gross domestic product growth since the 1980s, the Bangladesh has developed consistently, spreading the economic benefits across society.
This growth has been used strategically to enhance the country as a whole: poverty has decline, employment has increased, people have increased access to health care and education together while enjoying the benefits of improved basic infrastructure. As a result, the once poor country is now considered middle income.
The government has set its sights on reaching upper-middle-income country status by 2021. We take a look at the issues which need to be addressed and opportunities which need to be maximized in order to realise this ambitious goal which requires annual GDP growth of 7.5%–8%. Currently, Bangladesh is on track to reach this goal with GDP growth in fiscal 2017-18 is likely to be 7.65 percent, up from 7.28 percent a year earlier, as per the estimate of the Bangladesh Bureau of Statistics.
Harnessing inclusive and sustainable growth
According to the Asian Development Bank the following key issues need to be addressed in order to facilitate inclusion and sustainable growth:
(i) insufficient reliable energy supply, (ii) policies that indirectly stunt development of economic activities unrelated to ready-made garment (RMG) exports, and (iii) insufficient security about property and land rights due in part to inadequate registry systems.
Strategies such as focusing on higher education, technical and vocational skills training need to be developed to overcome these issues and provide diversification away from the economy’s reliance on low-cost exports, such as garments. Technology needs to be brought to the forefront, providing internet access, cell phone banking and creating a digital infrastructure such as digital property registries.
Maximising workforce skills
Employee skills need to be developed and maximized. This entails investment in human capital and the participation of women in the workplace as a solution to countering the problem of underemployment. The focus here is not on just job creation, it is to grow skills so that workers move from low- to higher productivity sectors. The proportion of workers employed in the informal sector—where high underemployment, low earnings, and poor working conditions are common—rose to 87% in 2013. Women continue to get paid less for the same work and have fewer labor opportunities.
According to the latest figures Bangladesh ranks177 among 190 economies in terms of ease of doing business. Improving infrastructure as well as the business climate will facilitate productivity, investment and generate more job opportunities.
Beyond the garment industry
Industrialisation needs to be actively implemented which will also mean moving people away from the labour intensive garment industry, into more formal jobs with greater social protection and benefits.
According to Asian Development Bank, manufacturing needs to grow faster as that sector has the potential to be the engine of growth and a major source of productive employment.
Role of remittances
About 500 000 people in Bangladesh find employment abroad each year. Despite the country’s strong economy and increasing employment opportunities, there are still people looking outside the country.
Remittances flowing into Bangladesh from overseas employment rose to over $15 billion in 2015 or about 8% of gross domestic product, up from less than $2 billion in 2000. This has become a major driver of the economy, comparable to the importance of the dominant garment industry.
But the economic impact of working overseas is not being spread evenly. High costs of migration due to recruitment fees and charges by intermediaries make opportunities highly skewed in favour of people in higher-income groups. Continued government overseeing of the overseas recruitment process is needed, according to the publication.
Structural reforms need to be implemented in order to supply the increased demand for energy, transport and urbanisation needed to sustain Bangladesh as an upper-middle income country. Plans need to be put into place to counteract insufficient planning and investment which have cause severe infrastructure bottlenecks.
The World Bank has identified job creation as the country’s top development priority, allowing Bangladesh to reap the rewards of the demographic dividend, provided that people of working age can be converted to human capital and utilised in a productive manner.
By increasing the amount and quality of jobs, Bangladesh can accommodate 2 million youths entering the job market every year, upskilling the population which will in turn grow the economy.
One of the key areas to address as a solution to this is to increase the access to digital, energy and transportation infrastructure. In this way Bangladesh can support the growing needs of an increasingly urbanised population and increase the likelihood of realising the goal as a upper-middle class income country by 2121.