Wahiduddin Mahmud, an eminent economist and former adviser to caretaker government, takes on the transformation of Bangladesh economy during the last decades. It is good news that Bangladesh could break the shackles of primary commodity-based conundrums. For example and as the author reckons, while most low-income countries depend largely on the export of primary or resource-based products, Bangladesh has made the transition from being primarily a jute-exporting country to a garment-exporting one. A country's transformation is dictated by many factors of which resource endowment is important and Bangladesh is exception to that.
The transition of Bangladesh economy has been dictated by the country's resource endowment which is a regime of extreme land scarcity and a very high population density. This has made economic growth dependent on the export of labour-intensive manufactures. Manufactured exports currently account for more than 90 per cent of the country's export earnings, thus displaying a unique feature among countries at a similar stage of development. But the most pertinent question is: can a least-developed country like Bangladesh sustain rapid export growth by relying on manufactured exports? Mahmud has a forecast that paraphrased runs as
follows.
Having low wage, costs can hardly compensate for its relative disadvantage in marketing skills and infrastructure (including transport, ports, product standards, and certification facilities). Thus, Bangladesh's export base remains narrow as the impressive success in garment export has yet to be replicated in other industries. Indeed, Bangladesh's experience with the garment industry has demonstrated the limitation of relying on enclave-type arrangements to facilitate export growth in a specific activity, while postponing the development of export-related infrastructure and institutional reforms for improving the investment climate generally. Lack of a favourable investment climate is also reflected by the fact that, in spite of very liberal policies, Bangladesh has yet to become a favourite destination for foreign direct investment.
The most striking aspect of Bangladesh's "development surprise" is in respect of improvements in some of its social development indicators, particularly since the early 1990s. From being a laggard, Bangladesh now outperforms most Indian states and South Asia as a whole in such indicators as female school enrolment, child mortality, child immunisation rates, and contraceptive adoption rates. Cross-country comparisons show that the current levels of these indicators in Bangladesh are significantly superior to what one would expect at a similar level of per capita income. These achievements are remarkable given the country's desperate initial conditions and allegedly poor quality of public service delivery
What is happening? Much of the progress has been due to the adoption of low-cost affordable solutions like the use of oral saline for diarrhoea treatment, leading to decrease in child mortality and due to increased awareness created by effective social mobilisation campaigns such as for child immunization or contraceptive adoption or female school enrolment. The scaling up of programmes through the spread of new ideas is helped in Bangladesh by a strong presence of development NGOs and also by the density of settlements and their lack of remoteness. The government's commitment supported by innovative programmes has also helped. Further progress, however, may become increasingly difficult as the gains from low-cost easy solutions are reaped and the amount of public spending, quality of services and the synergies with overall living standards all become important determining factors.
The extreme conditions of land scarcity and population density also make Bangladesh a test case of development, since there is no historical precedence of economic development taking place under such conditions. It is, therefore, not easy to make projections about how its economy and the landscape will look like, say, 20 to 30 years from now. Where will the increasing population and the labour force be accommodated in terms of economic livelihoods and physical habitation? How much land will remain available for agricultural production with the growth of urbanisation and the increase in the numbers of rural dwellings? Which level of population can be accommodated in the existing cities before the urban infrastructure crumbles down? And, what patterns of economic growth and technological developments will allow higher standards of living in an environmentally sustainable way? And the future uncertainty is compounded by the fact that Bangladesh faces the grim prospect of having to cope with the likely adverse effects of global warming and the associated rise in the seal level.
Adverse environment and ecological vulnerability can easily create poverty pockets, of which the Rangpur region is the most notable example . The region is well-known in the famine literature; it was among the worst-hit districts in the Great Bengal Famine of 1942-44 and was literally the epicentre of the 1974 famine in Bangladesh. The region is both economically depressed and ecologically vulnerable, it is prone to river erosion and frequent floods, crop yields are low because of the low soil quality caused by sand deposits, infrastructure is poor, wages are low, and there is very little employment opportunities outside agriculture. The ecologically vulnerable areas like Rangpur are also doubly disadvantaged because of being neglected by the public infrastructure investments and other development programmes.
Recent initiatives in combating poverty and seasonal hunger (known locally as monga) in Rangpur undertaken by the government and NGOs have produced some positive results. These initiatives have been prompted by widespread public awareness, which in turn has been largely created by media reports and civic activism. It has been argued by Amartya Sen and others that the incentives in democracy are more effective in averting major economic disasters like famines than in addressing the problem of endemic hunger and poverty; but the recent public action against monga is a testimony that political incentives in a democracy can be created for combating severe incidence of seasonal hunger as well, once the phenomenon catches public attention. However, lack of similar awareness may have resulted in neglect of other regions in Bangladesh that remain ecologically vulnerable poverty pockets, such as the areas on the eastern bank of the Jamuna in the Jamalpur district and in the western bank of Jamuna south of Rangpur, and the haor (depressed land) areas in the other northern districts.
More worrying is the fact that the southern coastal regions are increasingly facing threat to livelihoods because of environmental degradation and climate change. Although reliable poverty estimates are lacking, some districts in the southern and south-western coastal regions of Bangladesh have already emerged as new ecologically vulnerable poverty pockets. Widespread damage to livelihoods in these areas are resulting from a combination of factors: increasing intrusion of saline water due to reduced water flows of rivers, thus adversely affecting agricultural productivity; water-logging of vast land areas due to siltation of river beds; more frequent cyclones including the two devastating recent ones named Sidr and Aila; and the adverse geography reflected in poor infrastructure and remoteness to metropolitan centers. Thus, while the recent gains in mitigating monga in Rangpur are commendable, policies will need to increasingly incorporate ways of addressing the environmental degradation and adapting to climate change.
Coming back to the issue of governance, Bangladesh provides a case study of a low-income country striving to achieve sustainable democracy that is also conducive to economic development. Among the low-income countries - there are about 80 of them according to the World Bank's definition - there is hardly any record of continuous uninterrupted democracy, let alone good democracy. India is an exception in this respect. Bangladesh has had a transition to multi-party parliamentary democracy in 1991. However, after three elected governments having completed their tenures and the fourth one nearing the completion of its own, the country still remains a test case of whether economic development and democracy promotion can proceed hand in hand in such a low-income country.
Abdul Bayes is a Professor of Economics at Jahangirnagar Universiyty.
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