Inclusive Growth in Bangladesh: Proofs and Problems

Name: Juhana Islam

ID: 21105027

Section: 23

EMB 101: Emergence of Bangladesh

Syeda Fatima Zamila

Abstract: Bangladesh has made significant success in terms of long-term economic
development, poverty reduction, and a variety of other social indices. Even though these are not
insignificant achievements, the extent of inclusiveness of the attained growth still requires closer
inspection. Inclusiveness should involve more than just monetary achievements; it should also
include opportunities, quality work, and service access. To that purpose, this paper seeks to
evaluate Bangladesh's progress toward inclusive growth across time using a set of metrics
structured around three major indicators: social mobility, inclusion of women, and income
inequality. This exercise would help to assess and underscore the sources and foundations of
inclusive growth, and to identify the binding constraints to future growth and its equitable
sharing. This paper shows that the loopholes in the GDP growth of Bangladesh are only causing
monetary increment, rather than enhancing the economic development, and people should be
empowered by the inclusive growth approach by generating job opportunities and promoting
higher labor force participation with fair remuneration for all sectors of people.

Thesis Statement: Although Bangladesh has gone through significant economic growth, it has
only accentuated the monetary increment of GDP, as still there exists low social mobility, lack of
inclusion of women, and income inequality which is hindering the economy to be inclusive.

Introduction: Bangladesh is celebrating its 50th birthday this year. Bangladesh has progressed
from a war-affected weak economy with low income and a large population to a leading position.
Not only has the economy grown in size, resulting in more per capita income and decreased
poverty, but we have also made significant social progress. Furthermore, the country's literacy,
life expectancy, and per capita food output have all increased dramatically. However, the
influence of growth on Bangladeshis' inclusive growth has not been well examined. The country
must now create a new narrative of upward socioeconomic mobility, the inclusion of women, and
income equality. Bangladesh's economic narrative has been much-touted (WEF, 2019). GDP
growth averaged roughly 6% from 2000 to 2019. It was only a matter of time before "GDP
growth" became a buzzword in the country (Islam, 2021). This is partly due to officials'
enthusiastic portrayal of this statistic as a critical indicator of development, as though it reflected
both economic and human advancement. Therefore, although Bangladesh has gone through
significant economic growth, it has only accentuated the monetary increment of GDP, as still
there exists low social mobility, lack of inclusion of women, and income inequality which is
hindering the economy to be inclusive.

Prevailed low social mobility: The negative correlation between expanding economy and
reducing satisfaction rating indicates that there is another side to the GDP growth narrative,
which is prevailing low social mobility. The upward or downward shift in a person's
socioeconomic standing in comparison to their parents is known as social mobility (Boundless
Sociology, 2013). The first determinant of low social mobility is a decreasing happiness index.
Finance Minister AHM Mustafa Kamal claimed that the country's GDP growth will be greater
than both the government's estimate and the World Bank's forecast (Star Business Report, 2021).
But, will make Bangladeshis considerably happier? It’s to be emphasized that Bangladesh's
happiness rating has never been as eye-catching as its GDP growth rates throughout the years.
One of the main reasons is that, economic progress is rarely distributed fairly among society's
members unless robust and equitable redistributive policies are in place (Islam, 2021). As a
result, economic disparities widen. Globally, increased socioeconomic discontent is due to an
increasingly uneven distribution of the economic pie. The national budget includes social
security allocations, although the amount is modest in comparison to the number of prospective
recipients (Islam, 2021).

The second determinant of low social mobility is an unequal distribution of social protection.
The amount of money allocated to social security has been increased both as a proportion of
GDP and in terms of its size, as well as certain new programs. However, when compared to the
number of impoverished individuals in the country, the sum is little (Islam, 2021). Many of the
allocations in the social security sector, in reality, do not help the poorest of the poor. Pensions
for government personnel, as well as savings certificates and interest, should not be included in
social security. It should be universal, only then those who live below the extreme poverty level
will not be thrown into a major crisis if a calamity strikes if there is universal social insurance
(Khatun, 2021). The second wave of the epidemic has increased the number of new
impoverished. The epidemic resulted in the creation of around 2.5 crore additional impoverished
people, but no assistance was provided for them in the fiscal budget for 2021-2022 (TBS Report,
2021). However, there is no money set up in the budget for the new poor. The people who should
be on the list aren't. Those who do not require aid, on the other hand, are adding their names to
the list with the support of powerful individuals (TBS Report, 2021). Our social security
programs are mostly focused on the village. However, we are seeing an upsurge in urban poverty.
City inhabitants became so destitute as a result of the epidemic that they relocated to the
countryside. Those experiencing urban poverty should have been included in the urban poor list
(Khatun, 2021). To conclude, the social security list should be as inclusive as possible.

Lack of inclusion of women: Failure of optimum participation of women in the national

economy is prevailing due to violence against women and lack of female labor force
participation. If women's participation rates were equal to men's, Bangladesh's labor force would
grow by 43 percent, resulting in a 27 percent gain in GDP, even without any increase in capital
stock (Javellana & Asian Development Bank, 2015). Firstly, the inclusion of women in the
economy is stifled by violence against women. According to the Bangladesh Bureau of Statistics
Labour Force Survey, women's labor force participation grew to 36.3 percent in 2017 from 23.9
percent in 2000 (Khatun, 2021). However, violence against women continues to be widespread
and unabated. All forms of violence, from verbal to physical to sexual, can be found anywhere.
Women and girls of all ages are vulnerable to abuse, harassment, and assault in their homes,
schools, workplaces, and public spaces. Also, traditional gender norms and patriarchal ideals
frequently limit women's mobility and activity in the labor market. As a consequence of both
demand and supply-side concerns, women's employment in the country has been lower than that
of males (Khatun, 2021). Women's involvement in the work sector is further hampered by a
shortage of accessible public transportation, according to a survey of disadvantaged women in
Dhaka (Rahman, 2010).

Secondly, the lack of female labor force participation is hindering the economic growth of the
country. Substantial lower participation of women beyond the secondary level is mirrored in the
sort of work that women do. They are underrepresented in administrative, management,
technical, and professional positions. The majority of women work in low-wage jobs.
Approximately, 91 percent of women labor in the unorganized sector (ILO, 2018). For many
women, labor force participation may be a restricted option, making strategies to enhance it, or to
expand it beyond a certain threshold, more complex to design (ILO, 2016). Entrepreneurs lack
the necessary funds, training, marketing opportunities, and information to grow their businesses
and endure catastrophes such as the current epidemic (ILO, 2018). To summarize, safeguarding
women's safety at home and abroad, as well as eliminating violence against them, is vital not
only for their individual growth but also for the development of their families and the country as
a whole.

Income inequality: Despite the remarkable reduction in poverty in the previous three decades,
income inequality has been growing due to the centralization of the capital city and sluggish job
and wage growth. The revenue generated by its outstanding development and economic success
is not distributed fairly. If both per capita GDP growth and income distribution disparity rise, the
poor will be denied their fair share of growth (Islam, 2020). The first reasoning for income
inequality in Bangladesh is the centralization of the capital city. In 1971, approximately 90% of
Bangladeshis lived in villages; today, only about 70% do. The population of the capital city has
increased from 2% in 1980 to 10% now. The rising geographical inequality in income wages is
due to a lack of decentralization. Dhaka and Chattagram residents earn more than those who live
elsewhere (Almin, 2018). Domestic migration has increased as a result of geographically
concentrated industry. Monthly earnings in other areas were around 30% lower than in Dhaka,
according to specialists from the Policy Research Institute of Bangladesh, Dhaka provides
around 40% of overall GDP, whereas Chittagong contributes about 20%, only two cities
accounting for 60% of the country's total GDP (Almin, 2018).

The second reasoning for income inequality in Bangladesh is sluggish job and wage growth.
Even though GDP growth has increased in recent years, employment growth has slowed and real
pay growth has been moderate since rapid growth has not been able to create enough jobs. With
the lack of income-generating activity, the country is experiencing what is known as jobless
growth (Mujeri, 2018). As a result, progress in reducing poverty has been modest, despite
growing inequities. In recent years, government spending on education and health has decreased
as a percentage of GDP. Low expenditure does not help employees become more productive, and
it is incompatible with efforts to eliminate poverty and inequities (Mujeri, 2018). Inequality of
opportunity is also growing, notably in access to healthcare, education, financial services, and
social protection.

Significant growths of Bangladesh: Bangladesh, once labeled by US Secretary of State Henry

Kissinger as a "bottomless basket," is now transforming into a "beacon," a fast-emerging
economy. The country's GDP has grown at a faster rate than many of its contemporaries,
increasing per capita income and lowering poverty rates. Bangladesh was able to qualify for
graduation from the LDC category in 2018 after meeting all three of the UN's requirements
(Khatun, 2020). Bangladesh is ahead of both India and Pakistan in terms of inclusive growth,
according to an ESCAP research titled 'Economic and Social Survey of Asia and the Pacific
2015' (The Daily Star 2015). Among many others, four significant indicators of growth of
Bangladesh are, the success in the RMG sector, rise in Human Development Indicator (HDI),
lessening gender disparity, and increasing impact of expatriate workers.

To begin with, Bangladesh's prosperity is mostly due to its success as a garment exporter, which
accounts for 84 percent of the country's overall exports (Yusuf, 2021). The garment sector, whose
women workers provided Bangladesh with an advantage in cornering global export markets from
which China withdrew, is a crucial engine of growth (Misra and Iqbal, 2020). Over the last few
years, it has also achieved and made significant progress, including improved worker health,
workplace safety and compliance, sustainable manufacturing, and the green revolution, as well
as increased its contribution to the country's economy by increasing export revenues year after
year (Islam, 2021). Secondly, Bangladesh has acquired the Medium Human Development
category, according to UNDP Asia Pacific Senior Economic Advisor Balazs Hovarth, and has
climbed up eight levels since 2014. In actual terms, life expectancy at birth increased by 14.4
years, anticipated years of schooling doubled, and GNI per capita increased more than thrice
(Hasan, 2020). Thirdly, in the most recent gender parity rankings, Bangladesh is also far ahead of
India. This index compares males' and women's political and economic prospects, as well as
educational achievement and health. Bangladesh is among the top 50 of the 154 nations mapped
for it, whereas India is ranked 112th (Misra and Iqbal, 2020). Lastly, Bangladesh's economic
prosperity is due to a large infusion of income from expatriate Bangladeshi workers. Apart from
their financial contributions, they have also assisted in reducing unemployment at home, and this
mostly consistent injection of money has gone a long way toward alleviating poverty throughout
the country (Ganguly, 2020).

Identifications of growths being miracles or mirages: Although the aforementioned four

significant indicators are causing the economy to grow in a miracle amount of dimensions, they
may prove to be a mirage in the long term due to lack of optimum implementation and
inclusiveness. Firstly, the severe reliance on a single type of export and the low export
percentage of GDP is resisting the impact of the RMG sector to be unsustainable. The lack of
private investment in new industries, which has been aggravated by financing limitations,
particularly for small and medium businesses, has impeded needed diversification. The World
Economic Forum's Global Competitiveness Index rated Bangladesh 105th in 2019, down two
places from 2018 (Yusuf, 2021). Its poorly regulated clothing sector is infamous for skimping on
labor safety, and the onerous working conditions are starting to have negative health
consequences (Misra and Iqbal, 2020). Secondly, Sudipto Mukerjee, UNDP Bangladesh's
Resident Representative, feels Bangladesh has achieved significant progress in human
development and is on course to achieve its goals. However, he predicted that the country will
face a catastrophe as a result of multidimensional poverty (Hasan, 2020). The growth in
multidimensional poverty is stated to be due to an increase in prejudice and inequality among
individuals, according to the UNDP leader in Bangladesh. Thirdly, in comparison to their male
counterparts, Bangladesh has the lowest performance in the field of "economic involvement and
opportunity" for women. It tracks women's involvement in the labor force, salary equality for
comparable jobs, income, and the proportion of women in senior management positions
(Bhuiyan, 2021). Lastly, a country can’t rely on the receipt of remittances indefinitely. Migrant
workers can be thrown out at any time, as the coronavirus outbreak revealed.

Conclusion: Though Bangladesh has had tremendous economic growth, it has only served to
highlight the monetary increase in GDP, as inadequate social mobility, lack of women's
inclusion, and income inequality continue to obstruct the economy's ability to be inclusive.
Therefore, it is high time that we take effective initiatives to address the impediments to our
path of being an inclusive economy. To illustrate, women's jobs may be disrupted by new
industries. Because of traditional gender segregation, it may be beneficial to concentrate on a
subset of Bangladesh's rising industries that are suitable for women's employment (ILO, 2018).
An inclusive growth strategy should empower people by creating employment opportunities,
facilitating greater labor market participation with equal pay, especially for women, and
supporting skills to meet the needs of workers at home and abroad. (Mazumder, 2016). Capital
diversification programs should focus on the online and digital sectors, especially in rural areas.
This is a great opportunity to digitize services and boost employment and income in the sector.
(UNB, 2020). To conclude, for a better and equitable future, our economy must yield optimum
potential from every sector. This inclusiveness is only possible when people from every sector
will be able to take part and contribute to the growth, playing the role of being a present for the
economy, rather than being a peasant.

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