Bridge the gap
Bangladesh rose on the ‘flying geese’ paradigm. Like the flight pattern of the geese where the leader becomes tired and the followers take its position, Bangladesh also eventually advanced, riding on its low wage advantage
Poor countries that lag behind technology progress can witness growth spurt driven by rapid productivity catch-up, Harvard University development economist Lant Pritchett had pointed out in 1997 in his epic article "Divergence, Big Time" in the journal of the American Economic Association.
From there what path they will take depends on their institutions. They can become South Korea and Singapore. Or turn into Thailand and the Philippines. The growth spurt can fizzle out to great torpor.
Much of the world now shows this divergence rather than convergence of income.
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For Bangladesh, that time has arrived now to pick a path after it has been on that growth trajectory. It can choose any direction and become anything, depending on whether it can bridge the gaps that are still widely gaping, as the Planning Commission aptly conceptualised two years ago when it prepared the concept paper for the Eighth Five-year Plan.
The ambition is however tantalisingly remunerative – to become an upper-middle-income country in the next ten years.
There is nothing that can stop Bangladesh from reaching that goal if these gaps can be bridged. Otherwise, the outcome can be another Seventh Five-Year Plan.
The path to that goal is easy to spell out – industrialise rapidly and grab the export market taking advantage of the global market and become part of the global supply chain in a convergence model. China is the bright example of such success to become the second largest economy so fast.
But that convergence is not a guaranteed outcome; Latin America and Africa are stark examples.
Bangladesh rose on the "flying geese" paradigm. Like the flight pattern of the geese where the leader becomes tired and the followers take its position, Bangladesh also eventually advanced, riding on its low wage advantage.
But like the geese on a flight, the position is not permanent unless the gaps are filled in. Or even worse, a country gets stuck in the dregs of industrial work just like Ethiopia where wages are much lower than even those in Bangladesh.
If we go back to the Eighth Five-Year Plan concept paper, we know where the risks lurk for Bangladesh. Top on the list is weakness in revenue collection that is too inadequate to support the huge infrastructure needs of the country.
There is hardly any need to explain how infrastructure can be the game changer. The Bangabandhu Bridge over the Jamuna is an example. In a study by Prof Abdul Bayes in 2007 – about a decade after the bridge was opened, it has been shown that per capita income in the villages benefited by the bridge rose by 3% per annum against less than 1% for those falling outside the realm of the bridge.
A study of the Asian Development Bank on the Padma bridge has said this infrastructure will "result in remarkable improvement of accessibility to/from other important cities and core facilities on the opposite side of the Padma river". The bridge will boost both domestic and international trade.
But such mega projects drag on with resulting cost escalation, and the economic return naturally tapers off.
Bangladesh needs more of such infrastructure but "limited government resources may not be adequate to meet the growing demand for expenditures in infrastructure, agriculture, water resources, health, education and social safety," the Planning Commission had observed. As a result, the ambition of becoming an upper-middle-income country by 2031 may remain a dream, the government organ felt.
But the crucial needs for Bangladesh are to improve its education and health systems.
Cheap labour is no more a guarantee for industrialisation, otherwise rising wages in emerging Asia would have turned global industries to Africa. In most African countries, wages are still between one-third and half of those in emerging countries. And yet money is not flowing into that continent.
For Bangladesh, the future will lie in better skilled people, people whose productivity is more per capita in terms of value. A Swedish worker is ten times more productive than his Bangladeshi counterpart.
But in both education and health, the gap here is wide. Consider the fact that 32% of our labour force has no education with only 26% having primary level and 19% having secondary level education.
Such poorly educated manpower is simply not compatible with the dream of becoming an upper-middle-income country. The Global Knowledge Index last year that placed Bangladesh at number 112 (Thailand was 54, Malaysia 33, Indonesia 81 and China 31) showed how wide the gap is.
Talking about ranks, Bangladesh needs to go over great lengths to close the gaps on other indexes too, such as Ease of Doing Business (ranked 168), Global Competitiveness Index (ranked 105), Human Capital Index (ranked 123) and so on.
The gaps may be wide but with a stable government and right institutions they can be filled.
