For a country on the road to development, economic growth is not meant to be the one and only target. Growth is essential for Bangladesh. Considering its current growth rate of 6.51 per cent, as of 2014, it is safe to predict that higher growth in coming years is not unattainable. More so because the GDP growth defied the widespread political unrest in the fiscal year 2015. What can be easily questioned is the proposal of a 7.4 per cent average growth target in the next five years. Following the several assumptions of the current fiscal and monetary policies, it is possible for growth to accelerate. However it is not as simple to accurately predict that there will be better income distribution. The budget this year attempts to emphasize the lowering of income inequality, which in itself will lead to development, as the standard of living should thus improve.
Nevertheless, the national income statistics can reflect the current situation of a country only up to a certain extent. After taking into account the size of the population and rate of inflation, the real per capita GDP only provides a primitive idea of the current standard of living. One of the cardinal drawbacks of GDP statistics is that it ignores externalities. Although the rapid growth in industrial society is recorded in GDP statistics, GDP fails to record the environmental side effects of growth: air, water and land pollution, the ozone depletion and the problem of global warming. The net benefits of industrial production may be much lower if these negative externalities are taken into calculation.
The statement that economic growth can in fact threaten the standard of living in a country is evident when China is taken as an example. China is the world's fastest growing economy with growth rates averaging 10.0 per cent over the past 30 years and is the world's largest economy in terms of purchasing power parity and the second largest by nominal GDP according to the IMF statistics. However, this has little to do with the standard of living of the common people in China.
Despite its remarkable progress in economic and social development and poverty reduction, China still faces challenges to reduce residual poverty. China was reportedly ignorant of environmental damage and as a result children in Shanghai are forced to stay indoors and wear masks when they go outdoors due to high carbon emission in the air because of industrialisation.
This situation is somewhat similar in Bangladesh. The state of the water bodies, especially the Buriganga river, is no better. Rapid industrialisation in Bangladesh is certainly pushing up the rate of economic growth, but it is threatening economic development.
This raises the question of what exactly is economic development. Unlike growth, development is a more qualitative and holistic measure. It not only considers how much money an individual has in his wallet, but goes on to include the freedom an individual has to spend the money. As derived from the description by celebrated economist Amartya Sen, economic development is the freedom to choose the kind of life one wishes to live. That in itself will be a boost to the standard of living as it is entirely subjective and differs from one rational individual to another.
Assuming that a high rate of economic growth is possible in Bangladesh, can it also be determined that economic development is just as probable? Only the method by which this growth is being achieved can answer to that. Surely, rapid industrialisation at the cost of pollution cannot be in favour of development. It is only sustainable growth that can be the first step to development and the former can only be achieved through the introduction and improvement of capital -- both human capital and technology. Development requires better education and healthcare, demanding empowerment of people.
It is not to say that economic growth should be forgone to achieve development, because that is not possible. For economic development to prosper, an economy has to grow financially. On purely socio-economic grounds, it is simply for the welfare of the people that growth should be targeted in such a way that development does not become a mere theory.
khan saima28@yahoo.com
