Course Name: Bangladesh Studies

Course Code: GED 1103

. Term paper

Submitted to:
Asst. prof. Md. Sahidul Islam.
Faculty,
Bangladesh University of Professionals.
Submitted by:
Team name: Numinous
Members name:
Farhan Israq Haque (Roll :2023011012)
Fareia Khan mim (Roll :2023011018)
Refah Tasfia shairy (Roll :2023011076)
Rashedul Hasan (Roll :2023011014)
Sazzad Khan Nour (Roll :2023011042)

Term paper topic: Bangladesh as a middle-income country problems & prospect.

Abstract: This paper explores the problems and prospects of Bangladesh as a middle-income
country. It also shows what will be the upcoming challenges for Bangladesh to continue its
economic prosperity. There is a growing tension between citizens and economists of Bangladesh,
whether the economic growth would prove as a blessing or curse. Bangladesh has yet to
overcome many stumbling blocks to become one of the engines of global economy.
Introduction: The middle-income trap is a theoretical economic development situation in which
a country that attains a certain income gets stuck at that level. The World Bank defines as the
'middle-income range' countries with gross national product per capita that has remained
between $1,000 to $12,000 at constant prices. As a middle-income country, Bangladesh is facing
some problems which can lead the country to middle income trap. On the contrary, Bangladesh
has some prospects to rise as upper middle-income country from the lower one.
Literature Review:
Problems:
Lackluster banking sector: The banking sector is perceived as the biggest risk to the
tremendous growth of Bangladesh’s economy. High & increasing default loans is one of the
main reasons behind this. Weak governance in banking sector, especially in state owned banks,
is the key problem which has seen bad loans increasing up.
High youth unemployment: Youth unemployment rate in Bangladesh is 10.6% which is more
than two and a half times higher than the national average. (Source: The Daily Star) Ironically,
unemployment rate among seems to be high among the youth with higher education. This
indicates that educations offered by our institutions cannot empower our youth with income and
decent living, as one would have expected. Another aspect of youth unemployment is the higher
number of youths who are not in either education, employment or training.
Lack of export diversification: Bangladesh is one of the leading countries of the world which
has dominating phase of industrialization through garments sector. It has highly affected the
economy and employment rate of the country which enables Bangladesh to be one of the middle-
income countries. Finding it profitable and domineering government can’t think of
diversification in export arena of economy and thus many other possibilities are being ignored
beforehand
Gradual deterioration in agricultural economy: Agriculture is an important sector of
Bangladesh economy because it has a positive role in food security, employment and livelihoods.
But in the recent years the shares of agriculture in GDP are steadily declining. Climatic causes
make the agriculture vulnerable. Other actor behind the declining of agriculture in economy are
population growth, urbanization, loss of arable land etc.
Over Reliance on the labor intensive RMG Industry: Recently Bangladeshi RMG industries
are facing difficulties, a key factor been increasing wages of the worker. Add to that the
substantial capital expenditures due to increased complicated requirements, increased
global competition and the jeopardy of fast fashion on manufacturing. On the other hand,
other export industries are declining day by day because they are being neglected by
government policy.
Losing Preferential Duty: Bangladesh, mostly dependent on export business, was duty free and
quota free country in the countries of European Union as a least developed country. But as a
middle-income country it may lose such benefits of trade preferences, certain forms of technical
and financial support.
Social infrastructure to achieve economic growth: Our traditional social infrastructure
mainly emphasizes on mega tasks, e.g. reducing poverty, climate vulnerability of people,
gender inequality etc. To perform with these major issues, unfortunately, our social institutions
have not yet been established considering the widely accepted practices of our emotional
intelligences, e.g. accountability, responsibility, honesty and participation. There is no doubt
about that a very few people of our various institutions have these qualities in delivering their
services to the citizens.
Income inequality: Amidst many problems, an important area of concern for Bangladesh
economy is the rise of inequality in income distribution. A small section of the society enjoys
most of the country's wealth depriving the larger sections.
Prospects:
Bangladesh has some economical prospects in the recent years. Tremendous GDP growth is the
key factor behind it. The GDP growth drivers are agricultural growth, industry growth,
manufacturing growth, services growth. Literacy rate is rising & government’s expenditure on
education is increasing. Government is working on poverty reduction & the number of poor
people is declining. Health system is becoming better as the government’s expenditure on health
become higher. Robust export growth & drop of import growth is also happening. Remittance is
helping the economy to strengthen. Population growth rate is decreasing every year than the
previous year.

Findings:

Challenges:

Vulnerability to economic & financial openness: Economic openness is the degree to measure
nondomestic transactions of a country which includes the measurement of total export and
import. In recent years, Bangladesh faced a faster growth of GDP but had a lesser rate of import
and export growth which eventually imbalanced the rate of economic openness. So, to adjust it
we’ve to reduce average higher tariff rats as well as bring export diversification.

Challenges in Industrialization: Bangladesh is still industrially backward. Lack of

technological know-how, lack of resources and infrastructural backwardness are
main obstacles to industrialization in our country.
Establishing suitable institutions for industrial policy: Bangladesh for being the middle-
income country needs to focus on its industrial policy to accelerate development in all sectors. It
has to come up with suitable strategies to ensure protection and alleviate poverty as well as to set
up administrative, institutional and infrastructure facilities to ensure efficiency and overall
productivity in country’s industrialization.

Increasing innovation: The global innovation index 2019 ranked Bangladesh 116th, worst in
Asia. The result was based on several parameters & Bangladesh performance in some of the
parameters like education, institutions, political stability & government effectiveness is a matter
of concern.

Unequal social protection: Social protection is anchored in the universal right of everyone to
social security and to a standard of living adequate for the health and wellbeing of themselves
and families. But looking at the rapid growth of GDP, questions arise about the precautions taken
to avoid inequality. The concern of inequality has been growing due to the disconnection of:
1.Job creation 2. Wage growth 3. Economic growth

Emergence of new middle class: In recent years, there has been a phenomenal rise of the
middle-class in Bangladesh, resulting largely from poverty reduction. This has economic &
social consequences. The middle-class expectations are rising and expanding as the country’s
economic situation improves. People are no longer satisfied with simply having access to public
services; they are increasingly concerned with their quality.

Environmental concerns and Green Growth: Our country is a land of nature enriched with
history and heritage on which a great part of our economy depends and we sometimes don’t even
think how we’re affecting our nature and environment by our daily activities. Many of our
income sources are dependent on environment which must be taken under concern and should be
taken enough care of to ensure rise of our economic condition.

Recommendations: To achieve its growth aspiration, Bangladesh need to create more and more
job market. Industrial Revolution 4.0 comes in hand in hand with innovation and create
opportunities. Bangladesh also need to sustain its export and remittance growth. Through more
strengthened cooperation among the private and public sector can the country hope to avoid the
imminent problems such as ‘Middle income trap’.

Conclusion: In last 49 years the economy of Bangladesh has evolved to such extend that there
is no stopping now. We have our brands in international market and every day we are walking
toward development. It is a matter of fact that as a middle-income country Bangladesh would
face many challenges. It would be interesting to watch what new policies and strategy the
Government would adapt to tackle the predicted problems.