risks and opportunities in bangladesh centre for policy dialogue (cpd) b a n g l a d e s h a c i v i...

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D) RISKS AND OPPORTUNITIES IN

BANGLADESH

CENTRE FOR POLICY DIALOGUE (CPD)B A N G L A D E S H

a c i v i l s o c i e t y t h i n k – t a n k

Debapriya Bhattacharya<[email protected]>

Bangladesh Frontier Forum

Telenor HQ, Fornebu, Norway 17 April 2012

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Bhattacharya: Risks and Opportunities in Bangladesh

2Bangladesh: Development was possible!

Bangladesh began her journey in 1971 being the “test case of development” as portrayed by Faaland and Parkinson (1976)

A number of pessimisms worked against any optimistic review – Large population and high

population growth High level of poverty Hit by a devastating war No strategic importance

Faaland and Parkinson (1976) concluded - “If development could be made successful in Bangladesh, there can

be little doubt that it could be made to succeed anywhere else. It is in this sense that Bangladesh is the test case for development”.

• “For more than four decades, Bangladesh belied the pessimistic prophecies of economists and displayed extraordinary resilience in the face of natural catastrophes and man-made calamities.” (Akbar Ali Khan 2011)

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Economy is Growing with the rest of the World

BD’s share in World GDP and World GNI has started to rise in

recent years.

Bangladesh remained steady as the 47th largest economy among

124 countries reported.

According to Goldman Sachs report (in 2005), by 2025,

Bangladesh may emerge as the 22nd largest economy in the world

and will be an important member of N-11.

Source: Calculated from WDI Database

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During 1980s Bangladesh’s average GDP growth was a little higher

than the world and middle income countries.

During the last two decades, it surpassed the global average and

remained close to average of middle income countries.


GDP Growth Remained Close to Middle Income Countries

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1981

1982

1983

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1986

1987

1988

1989

1990

1991

1992

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1994

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1996

1997

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2010

0

1

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3.7

4.8

5.7

3.2

3.8

6.2

3.3

2.8

2.6

Bangladesh Decade average (Bangladesh)Decade average Middle Income) Decade average (World)

GD

P G

row

th (%

)

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Share of modern sector is also increasing.

However, compared to the middle income countries,

Agriculture remains important source of GDP.


GDP Composition: Increasing Role of Modern Sectors5

Bangladesh Middle Income Countries

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Per Capita Purchasing Power Doubled in Three Decades

Bangladesh’s per capita purchasing power doubled between 1980

and 2010 (from $677 to $1,488)

Per capita purchasing power of middle income countries also

doubled (from $2675 to $5992) – the gap did not change.


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Bangladesh Middle Income Countries

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Large Share of Global Poor

Bangladesh & World Poverty 1990 (million)

Bangladesh & World Poverty 2005 (million)

In 1990, Bangladesh had 4.3% of the world’s poor population,

however, in 2005 this share increased to 5.5% (effect of China) Despite this, Bangladesh poverty rate has declined from 66.8%

in 1990 to 49.6% in 2005 Bangladesh has the 5th largest poor population in the world (in

2005 after India, China, Nigeria and Pakistan).

Poverty headcount ratio at $1.25 a day (PPP) (% of population) has been used as the indicator of poverty

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8Poverty Reduction Accelerated

Poverty declined to 31.5% in 2010 from 40.0% in 2005 Gini coefficient for income and expenditure declined from 0.47 in

2005 to 0.46 in 2010 However, consumption gini coefficient declined from 0.33 in 2005

to 0.32 in 2010 Poorest divisions (western parts) performed astonishingly better

than the capital and other moderately poor districts

Division-wise Poverty Rate

Source: HIES 2010

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Bangladesh had the 8th largest population in the world in 2010 among 210 reported countries (8th in 1980) though population growth rate decreased (from 2.9% in 1981 to 1.2% in 2010)

Bangladesh’s share in global labour force is now almost equal to her share in population.

The size of the potential labour force is increasing gradually which is projected to increase in the next two decades as well. Growth rate of labour force has been higher than the population.


9Growing Potential Labour Force

Potential Labour Force (Bangladesh)Bangladesh’s Share in Global population and

Labour Force

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Bangladesh is increasingly becoming a trade-led from an aid

dependent country.


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From an Aid Dependent to a Trade-led Country

Bangladesh’s Aid receipt as % of GNI

Bangladesh’s Trade Openness

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Leading Manufacturing Exporter among LDCs

Manufacturing products

(e.g. RMG) has become

dominant exportable

products.

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Bangladesh’s Manufactures exports (% of merchandise

exports) Bangladesh’s share in global

export is still very low but

gradually increasing.

As a exporting country,

Bangladesh ranked 66th in

2010 among 108 reported

countries (74th in 1980).

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Between 1980 and 2010,

remittances inflow increases

32 times.

Share of remittances inflow

also increases from 0.9% to

2.1%


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Major Destination of Global RemittancesBangladesh’s Share in Global

Workers' remittances

$10.9 billion in 2010

As a remittance receiving

country, Bangladesh ranked

7th in 2010 among 163

reported countries (25th in

1980).

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Bangladesh has achieved higher growth in foodgrain production compared to her population growth.

Foodgrain production has doubled in last two decades.

Per capita foodgrain availability is also increasing in Bangladesh, from 453 gm in FY92 to 605 gm in FY10

Source: Calculated from BBS and Bangladesh Bank data

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Moving towards Self-sufficient in Foodgrains ProductionBangladesh’s Population and

Foodgrain ProductionPer Capita Food Availability

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Successful to Navigate through GFC

Bangladesh was the only country in the BRICs and N-11 where

macro stability components improved.

GDP growth only suffered a relatively mild slowdown

Bangladesh’s macroeconomic performance has been stable

despite the global financial crisis;

Remittance flow has remained largely buoyant

Export growth has been resilient at double digit

Although revenue mobilization has been partially affected but

due to strong domestic collection it has been largely offset

Bangladesh has come under purview of two sovereign credit

rating agencies. Bangladesh was awarded 'BB-' for long term and

'B' for short term by Standard and Poor's and Ba3 by Moody's.

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Bangladesh in Economic and Political Alliances

Bangladesh is well situated in every sense to take advantage of

her strategic location – flanked by the two fastest growing

economies in the world (China and India).

Bangladesh integrate its economy into the global value chain, and

become a trade and transportation hub in South and South-East

Asia.

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"In many ways, there

lies an important asset

for Bangladesh. I

believe that Bangladesh

has the potential to

become Singapore in

South Asia.” – Pascal

(2011)

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Satisfactory Progress towards Attaining MDGs

Bangladesh’s progress towards achieving MDGs looks promising

in most areas:

Goal 1: Eradicate Extreme Poverty and Hunger—goal will

partially be met

• Proportion of population below poverty line

• Poverty gap ratio

Goal 2: Achieve Universal Primary Education—goal will

partially be met

• Net enrolment ratio in primary education

Goal 3: Promote gender equality and empower women—goal

will probably be met

• Ratios of girls to boys in primary education

• Ratios of girls to boys in secondary education

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in most areas:

Goal 4: Reduce Child Mortality—goal will be met

• Under-five mortality rate

• Infant mortality rate

• Proportion of 1 year-old children immunised against

Goal 5: Improve Maternal Health—goal will be met

• Maternal mortality ratio (Goal 5)

• Contraceptive prevalence rate (Goal 5)

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in most areas:

Goal 6: Combat HIV/AIDS, Malaria and other Diseases

• HIV prevalence among population aged 15- 24 years

• Deaths of Malaria per 100,000 population

• Proportion of children under 5 sleeping under insecticide-

treated bed nets (13 high risk malaria districts)

• Proportion of children under 5 with fever who are treated

with appropriate anti-malarial drugs

• Prevalence of TB per 100,000 population

• Deaths of TB per 100,000 population

• Detection rate of TB under DOTS

• Cure rate of TB under DOTS

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19Leader in UN Peacekeeping Mission

Bangladesh is the highest troops and police contributing country

in UN peace missions with engagement of 10,654 Bangladeshi

peacekeepers in troubled regions across the world (10% of total).

It was 1988 when Bangladesh's modest contribution began, with

31 officers as part of UNIMOG (UN Iraq-Iran Military Observer

Group) in Iraq. Till July 2011, 106 Bangladeshi

soldiers have lost their lives.

The first Bangladeshi women

police contingent has joined the

UN mission recently.

Bangladeshi peacekeepers so far

served in 12 out of 16 UN

peacekeeping missions.

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20Growing Trade Relations between Bangladesh and Norway

During the same period, Bangladesh’s import from Norway increased by 3.8 times

Electrical machinery, equipments and parts and Wood and articles of wood are the major imported products (89% of total imports)

In five years, between FY06 and FY11, Bangladesh’s export to Norway increased by 6.4 times Textile and Textile

articles were the major exported products (96% of total export)

Export and Import between Bangladesh and Norway ( mln

$)

Source: Calculated from Export Promotion Bureau and Bangladesh Bank data

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21More Scope for Cooperation in ODA and FDI

Flow of bilateral ODA is small in Bangladesh from Norway In last 12 years (FY99-FY10) total FDI inflow from was only

USD 420 million – mainly to telecommunication sector Total FDI stock as on end of June, 2011 was only USD 142

million

ODA inflow from Norway FY73-FY10 ( mln $)

Source: Economic Relations Division (ERD) and Bangladesh Bank data

FDI inflow from Norway FY99-FY10 ( mln $)

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22Challenges and Risks Remains

Breaking the ± 6 per cent threshold of Economic Growth

Providing Productive Employment to a Growing Young Labour Force

Promoting Economic Diversification (GDP, Export, Employment) for

Structural Change

Lack of Infrastructure (Communication and energy)

Maintaining Macroeconomic Stability

Improving Nature of Democracy

Ensuring Political Stability

Facing Growing Risks arising from Global Exposure

Implementing Structural Reforms

Adapting the Adverse Impacts of Climate Change

Tackle High level of Corruption

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23Bangladesh, Moving Forward

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24Bangladesh, Moving Forward

Bad governance "has not prevented Bangladesh from

adopting fairly reasonable economic policies and from

growing“

– Paul Collier (2007)

"Bangladesh shows us that even in circumstances that seem

the most hopeless there are ways forward if the right

strategies are applied, and if the right combination of

investments is made".

- Jeffrey D. Sachs (2005)

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THANK

YOU

risks and opportunities in bangladesh centre for policy dialogue (cpd) b a n g l a d e s h a c i v i...

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