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Bangladesh at Fifty Moving Beyond Development Traps 1St Ed Edition Mustafa K Mujeri Full Chapter PDF
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PALGRAVE STUDIES IN ECONOMIC HISTORY
Bangladesh at Fifty
Moving beyond
Development Traps
Mustafa K. Mujeri · Neaz Mujeri
Palgrave Studies in Economic History
Series Editor
Kent Deng
London School of Economics
London, UK
Palgrave Studies in Economic History is designed to illuminate and enrich
our understanding of economies and economic phenomena of the past.
The series covers a vast range of topics including financial history, labour
history, development economics, commercialisation, urbanisation, indus-
trialisation, modernisation, globalisation, and changes in world eco-
nomic orders.
Bangladesh at Fifty
Moving beyond Development Traps
Mustafa K. Mujeri Neaz Mujeri
Institute for Inclusive Finance & Centre for Research Initiatives (CRI)
Development (InM) Dhaka, Bangladesh
Dhaka, Bangladesh
© The Editor(s) (if applicable) and The Author(s), under exclusive licence to Springer
Nature Switzerland AG 2020
This work is subject to copyright. All rights are solely and exclusively licensed by the
Publisher, whether the whole or part of the material is concerned, specifically the rights of
translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on
microfilms or in any other physical way, and transmission or information storage and retrieval,
electronic adaptation, computer software, or by similar or dissimilar methodology now
known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this
publication does not imply, even in the absence of a specific statement, that such names are
exempt from the relevant protective laws and regulations and therefore free for general use.
The publisher, the authors and the editors are safe to assume that the advice and information
in this book are believed to be true and accurate at the date of publication. Neither the
publisher nor the authors or the editors give a warranty, expressed or implied, with respect to
the material contained herein or for any errors or omissions that may have been made. The
publisher remains neutral with regard to jurisdictional claims in published maps and
institutional affiliations.
This Palgrave Macmillan imprint is published by the registered company Springer Nature
Switzerland AG.
The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland
For Zinnatoon Nadira and Hasib, Moonzeba, Aliyah and Rayhan who
have always been our source of inspiration and joy
Preface
vii
viii PREFACE
role in increasing the status of women and their bargaining power in the
family as most micro-loans are given to women. The overall picture in
Bangladesh society is more positive, where many women have been
empowered and became successful microentrepreneurs through using
microcredit as their stepping stone.
Bangladesh’s agricultural modernisation model characterises the
sequencing of chemicalisation and mechanisation. The successful case of
land-saving technological change occurred after independence with the
Green Revolution through an intensifying of input-based production
characterised by the use of high-yielding and fertiliser-efficient new variet-
ies of seed (rice and wheat). The policymakers in Bangladesh initiated this
variety of agricultural transformation to increase food production and
reduce poverty since the 1970s. Mechanisation has come with higher capi-
tal intensity later on, as chemicalisation has enabled the farmers to adopt
practices that increased both the application and efficiency in the use of
chemical fertilisers and other modern inputs required to produce higher
levels of output per unit of land. The pattern of industrialisation, on the
other hand, has been closely linked with urbanisation resulting from a host
of factors. Bangladesh’s urban growth dynamics was thus profoundly
influenced by the key or strategic industry sectors (including the ready-
made garments). The developments have been more akin to the ‘produc-
tion cities’ paradigm in contrast with the ‘consumption cities’ approach.
We would like to express our deep gratitude to many of our teachers,
friends and relatives from whom we have benefited through discussions
and exchanges over the years. In particular, we would like to remember
Professor Mosharraf Hossain, the eminent economist, professor, scholar
who always inspired us whenever we met him; and Professor Sanat Kumar
Saha who is a role model for us and always guides our thinking process.
We are grateful to Dr Qazi Kholiquzzaman Ahmed, Chairman of the
Institute for Inclusive Finance and Development (InM) and the Palli-
Karma Sahayak Foundation (PKSF) for his encouragement and support to
complete the study. We also express our gratitude to Sifat-E-Azam,
Farhana Nargis, Ifrat Jahan, Sadia Afreen Proma, and J. Joha for providing
valuable assistance with research and graphics. Finally, we would like to
thank Ruth Jenner and Lavanya Devgun of Palgrave Macmillan for com-
missioning the manuscript and for their help and encouragement through-
out the process of finalising the book. We would also like to acknowledge
the very helpful editorial and other comments and excellent support given
by Palgrave Macmillan.
x PREFACE
Finally, the largest part of the credit for writing this book goes to our
parents, brothers and sisters, and other family members; especially to
Zinnatoon Nadira; without her valuable encouragement and support,
especially through shouldering all responsibilities of the family in the
absence of which we could not have written the book. We should also
mention the encouragement and support provided by Hasib and
Moonzeba as well as Aliyah and Rayhan who, despite their busy activities
and different professions, helped us in numerous ways to nurture many of
our thoughts and ideas.
1 Introduction 1
5 Creating Opportunities243
6 Creating Jobs297
10 Future Perspectives535
Index563
xi
Abbreviations
xiii
xiv ABBREVIATIONS
UNESCAP United Nations Economic and Social Commission for Asia and
the Pacific
UNICEF United Nations Children Fund
UNRO United Nations Relief Operation
UP Upazila Parishad
WDI World Development Indicators
WEF World Economic Forum
WGI Worldwide Governance Indicator
WHO World Health Organisation
WIPO World Intellectual Property Organisation
List of Figures
Fig. 2.1 GDP growth rate. GDP growth has accelerated over the long run 36
Fig. 2.2 GDP per capita growth rate. Per capita GDP growth has
accelerated as well 37
Fig. 2.3 10-year moving average of real GDP growth 37
Fig. 3.1 Population age structure in Bangladesh, 1911–2011. (Source:
BBS, Population and Housing Census 2011, National Report,
Vol. 1, Analytical Report, Bangladesh Bureau of Statistics,
Statistics and Informatics Division, Ministry of Planning,
Government of the People’s Republic of Bangladesh, Dhaka) 116
Fig. 3.2 Poverty and extreme poverty in the 2000s. (Source: HIES,
various years) 122
Fig. 3.3 International poverty headcount, Bangladesh (2011 1.90 PPP).
(Source: World Bank (2019)) 124
Fig. 3.4 Income poverty in South Asian countries, 2013. (Source: Based
on World Bank, PavcalNet) 126
Fig. 3.5 Multidimensional poverty in South Asia. (Source: Based on data
from OPHI) 127
Fig. 3.6 Gini coefficient of income distribution in Bangladesh,
1963–2016. (Source: HIES, different years) 131
Fig. 3.7 Palma ratio in Bangladesh, 1963–2016. (Source: Authors’
calculation using HIES data. Note: Due to data limitations, the
Palma ratio has been constructed using total household income
rather than gross national income (GNI)) 133
Fig. 3.8 Annualised per capita consumption growth. (Source: World
Bank (2019)) 136
xvii
xviii List of Figures
xix
xx List of Tables
Introduction
“The structure of the economy as it was in 1968–69, together with the trends of
1959 to 1969 and the growing inability to feed herself, would lead Bangladesh
into widening balance of payments deficits, ever-increasing need for inflow of
1 INTRODUCTION 3
Despite the dire predictions and pessimistic prophecies during the initial
years, Bangladesh achieved an inflection point within a short time. Rising
from the ashes, the country has now emerged as one of Asia’s most remark-
able phoenixes and has become one of Asia’s most amazing and unex-
pected success stories of recent years.
Sustained rapid growth has enabled Bangladesh to reach the lower
middle-income country status in 2015. No doubt, the upgradation of
Bangladesh’s development status to a ‘lower middle-income country’ is a
remarkable milestone in the country’s economic achievement.1 In 2018,
Bangladesh also fulfilled all three eligibility criteria for graduation from the
UN’s least developed countries (LDC) list for the first time and is on track
for graduation in 2024. To achieve its growth aspiration of becoming an
upper-middle income country by 2030 and a high income country by
2041, Bangladesh has adopted the ‘Vision 2041’ along with longer term
development plans.
Thus, from a broader perspective, Bangladesh’s development may be
considered as a unique success story on many counts. Poverty incidence
has fallen rapidly; gender parity has been achieved in primary and second-
ary school enrolment; the total fertility rate has fallen dramatically; infant
and maternal mortality rates have declined sharply; and life expectancy has
risen to nearly 73 years (more than four years higher than in India).
Bangladesh is one of the few developing countries that achieved most of
the millennium development goals (MDGs), and is now on track towards
achieving the sustainable development goals (SDGs).
1
The World Bank divides the world’s economies into four income groups: high, upper-
middle, lower-middle, and low. The income classification is based on a measure of national
income per person, or GNI per capita. For the 2020 fiscal year, low-income economies are
defined as those with a GNI per capita, calculated using the World Bank Atlas method, of
$1025 or less in 2018; lower middle-income economies are those with a GNI per capita
between $1026 and $3995; upper middle-income economies are those with a GNI per
capita between $3996 and $12,375; high-income economies are those with a GNI per capita
of $12,376 or more. See, World Bank 2019.
1 INTRODUCTION 5
2
While explaining development with micro-foundations, it is important to recognise that
aggregate development is something more than mere sum of its components. Always, there
exist some emergent properties at the aggregate level. In this context, King’s metaphor of
‘bridge’ may be more appropriate to characterise the relationship between two sub-compo-
nents. See, King 2012. Bidirectional causality between the two may be clearly visible. Micro-
level decision making needs macro concepts as inputs. In addition, individual preferences are
influenced by macroeconomic phenomena such as recessions and financial crises. Also, a
large part of individual preferences are socially constructed. Therefore, not every element of
development needs to have micro-foundations; and hence seeking across-the-board micro-
foundation or every elements of development may be a futile exercise.
12 M. K. MUJERI AND N. MUJERI
industry; (ii) ensure both efficiency gains and changes in the economic
structure; (iii) adopt manufacturing as the engine of productivity growth,
while the services sector will act as the main source of employment; (iv)
use productivity gains in agriculture to sustain economic growth, struc-
tural transformation, and poverty reduction; and (v) pursue economic
growth with structural and productive transformation instead of economic
growth alone, indicating that productivity enhancements within sectors
should not come at the expense of employment. Such an approach will
maximise the impact of structural transformation on decent employment
generation, human development and poverty reduction in Bangladesh.
Table 1.2 Long-term trend of key development indicators in major South Asian countries
Bangladesh India Nepal Pakistan Sri Lanka
1961– 2010– 1961– 2010– 1961– 2010– 1961– 2010– 1961– 2010–
1965 2015 1965 2015 1965 2015 1965 2015 1965 2015
M. K. MUJERI AND N. MUJERI
GDP per capita, 2010 US$ 392 882 322 1529 274 649 344 1088 594 3368
Population, million 52.6 157.6 477.8 1272.3 10.6 28.0 48.4 181.7 10.7 20.6
Population growth, % per year 2.9 1.2 2.0 1.3 1.6 1.2 2.5 2.1 2.4 0.8
Fertility rate, births per woman 6.9 2.2 5.9 2.4 6.0 2.3 6.6 3.7 5.1 2.1
Population density, person/sq. 404 1167 145 387 74 188 63 246 170 328
km.
Life expectancy at birth, years 47 70 44 68 36 68 48 65 59 71
Gross enrolment at primary 63.6 117.7 80.8 109.1 39.0 139.4 50.8 91.9 94.8 100.7
level, %
Share of manufacturing in 5.4 18.6 17.1 15.8 3.3 5.9 14.1 13.5 16.5 17.9
GDP, %
the region, with the exception of Pakistan, where population growth still
remains above 2 per cent. There has been an unusually early demographic
transition that is still ongoing in most of the region. With the exception of
Pakistan, where the fertility rate is still high at 3.7; all the countries of the
region are fast approaching the replacement fertility level of 2.0.
Both the slowdown of population growth and reasonable economic
growth have ensured that, despite more than a trebling of the region’s
population size, South Asia has experienced an improvement in living
standards that was impossible to imagine fifty years ago. The per capita
income has almost trebled in the region as a whole, life expectancy at birth
has gone up from less than fifty years (except in Sri Lanka) to nearly sev-
enty years, and enrolment at the primary level has become almost universal
in several countries.
Although the South Asian countries shared several similar initial condi-
tions—from their common historical legacy and nearly 200 years of British
colonial rule—there were important differences in the initial conditions as
well as those that arose from cultural, geographical and other differences.
Among the countries, Bangladesh has its own specific characteristics. The
country composes of plain riverine land, with its soil fertility regularly
replenished by the rich alluvial deposits that come with the annual flood-
ing of several mighty rivers (the Jamuna–Padma–Meghna) and their
numerous tributaries criss-crossing the entire landscape. The geography of
Bangladesh also favours the traditional rice-based agriculture; but this ease
of subsistence agriculture comes with a price as well. Since the past, the
subsistence agriculture-based livelihood induced high human fertility,
which—once mortality began to reduce with the introduction of modern
medical technology and family planning methods—resulted in high popu-
lation growth and associated disadvantages in a low income economy. The
riverine topography also made the development of physical infrastructure
especially costly, in addition to making the country susceptible to excessive
flooding and devastating tidal surges, which occurred almost regularly,
causing immense loss of life, crops, physical assets and infrastructure.
With varying initial conditions, the countries witnessed significant
structural changes over time along with economic growth. Table 1.3
shows how growth performance itself changed over the period from 1965
to 2015. Growth accelerated over the two periods in four countries—
Bangladesh, India, Nepal and Sri Lanka—but the acceleration has been
the sharpest in Bangladesh; the growth rate doubled from 2.7 per cent per
year in the first half to 5.4 per cent in the second.
24 M. K. MUJERI AND N. MUJERI