How inclusive has economic growth been in Bangladesh?

In March 2011, Bangladesh celebrated the fortieth anniversary of its independence. As this significant year comes to an end, it may be a good occasion to take stock of how the economy is doing now and what have been its achievements during the past four decades. While the health of the economy is important from the point of view of the living conditions of the people that comprise the nation, it is important to look at it due to another reason. It may be recalled that alongside political and cultural subjugation of Bangladesh (the then East Pakistan) by the western wing of the country of which it was part at that time, growing economic disparity between the two provinces provided a powerful motivation behind the movement for independence. When Pakistan was created, Bangladesh not only started as the poorer of the two provinces but was also deprived of the means for narrowing the gap. After gaining independence, the country became a full member of the community of nations and was able to pursue its policies independently. Hence it may not be unreasonable to look at how the Bangladesh economy has been doing not only in absolute terms but also in relation to that of others, especially of its neighbours in South Asia. This is especially so because when the country gained independence, suspicion was expressed in various quarters about its economic viability, and it was even dubbed as an international basket case. It is against this backdrop that this analysis looks at the country's performance on the economic front in a comparative South Asian perspective. While economic growth is extremely important from the point of view of raising the levels of living of the people of a country, it is not a sufficient condition for attaining the desired social goals like reduction of poverty and inequality and improvements in the capabilities of the people to participate in and benefit from the process of economic growth. The economy of Bangladesh has witnessed acceleration in economic growth since the 1990s. The annual rate of gross domestic product (GDP) growth crossed the six per cent mark since 2003-04. Although there was a deceleration in growth during 2008-10, there seems to have been a turnaround in 2010-11. The acceleration in economic growth has generated optimism about the potentials of the economy, and there is a good deal of discussion about the prospects of the country's attaining the "middle-income status". However, given the critical question of how widely the benefits of growth are being shared, a debate focused exclusively on attaining middle income status seems to be rather misplaced. The concept of inclusive growth becomes relevant in that context. The basic premise of this analysis is that while the level and growth of per capita income is important, they should not be regarded as a goal. Instead, they should be regarded as means towards achieving the desired outcomes in terms of inclusive and shared growth. In fact, the critical question for an economy like that of Bangladesh is how inclusive economic growth is and how broadly the benefits of growth are shared. The basic purpose here should be to address this question and thereby steer the debate on the performance of the economy of Bangladesh in terms of inclusive growth rather than GDP growth and per capita income per se. The growth performance of Bangladesh needs to be examined from this perspective. Since the term inclusive growth is of relatively recent usage and it appears to have multiple definitions and interpretations, a brief critical overview of the various definitions and uses of the term is of relevance to provide an outline of the sense in which the concept of inclusive growth is used. There going into the basic picture with respect to economic growth becomes contextually relevant to understanding the situation with clarity being followed by an analysis of various aspects of inclusive growth, viz. reduction of poverty and inequality, achieving employment-intensive growth, improving performance with regard to education, health and other social indicators, and providing social protection. Dr. Rizwanul Islam is a retired Director of International Labour Organisation. This is an abridged version of an article by the writer, to be published in the forthcoming book, 'Bangladesh at 40:Changes and Challenges', to be edited by Prof. Abdul Bayes, Dean of the Faculty of Business Studies, Jahangirnagar University, Savar, Dhaka