Growth economists are happy. Development economists are a bit sceptical. This is all about Bangladesh economy. Bangladesh is among 17 economies in the world which are growing over 6.0 per cent plus over the last decade. Per capita income has reached US$ 1,314. Foreign currency reserves exceeded US$ 27 billion. Twenty-five million people graduated from poverty over the last 15 years. The size of gross domestic product (GDP) is now US$ 194 billion. In terms of size, Bangladesh economy has been ranked 34th in the world by a US-based think tank, Brooking Institutions. The forecast is that in the next 25 years Bangladesh economy will occupy 23rd position in the world. It may surpass many European countries and even Australia and Malaysia in terms of size. Last year, the country graduated from a low-income status to lower middle-income country. Against this backdrop, the people of Bangladesh can expect a bright future for themselves.

In order to have a bright future, one has to scan the economy to make a proper diagnosis to cure the on-going socio-economic diseases that Bangladesh economy is suffering from.

Domestically, there are many pertinent issues that draw the attention of development economists. The market is not behaving well. If one goes to fast-food shops and restaurants, one finds them packed up. If one goes to shopping malls, one finds dull market with low buying and selling. The transport fares and the charges for gas and electricity have gone up. The educational expenses have jumped up. Thousands of people are found in que everyday in the public hospitals seeking medical advice and subsequently paying high cost for diagnostic purposes. Public hospitals do not have necessary beds to accommodate the deserving patients and number of nurses to attend them. On the other hand, the affluent people go abroad for treatment, send their children abroad for mid- and higher-level studies and many of them allegedly have bought houses and flats abroad. This is associated with the transfer of money and capital.

In the agricultural sector, there is a dearth of agricultural labourers on the one hand and one-third of the working force remain idle, on the other. The lattger are uneducated or have little education. They are dependent on parents and brothers living abroad and work as political cadres in their localities. They are jobless. Agriculture, now-a-days can not provide good return to farmers. They can not cover the production costs of paddy and other cereals. It has a dampening effect in the sector. Even according to government statistics, growth in agriculture has decreased by 1.04 percentage points to 3.33 per cent. 

The real estate sector has been struggling for a long time with apartment prices coming down and large unsold inventories. A huge amount of loans given to this sector - about Tk. 350 billion (35,000 crore) in 2013-14 - could not warm up the real estate business.

The hope of Bangladesh revolves round the export of ready-made garments (RMG) and foreign remittance. Export of RMG and knitwear accounts for about US$ 22 billion and foreign remittance is about US$ 15 billion. But there are many challenges in these two sectors. Compliance of many international standards in the garment sector may increase production costs. Depreciation of Euros and inability to attract foreign investment may further affect this sector. However, improving relationship with Middle Eastern countries, Malaysia, South Korea and some eastern European countries may boost up exports of manpower. Of late, there has arisen reasons for anxieties regarding safety of migrant workers. There are allegations of cruelty to women workers going abroad. It is the responsibility of the government to ensure low migration cost and ensure decent, safe and secure workplaces for migrant workers.

Environment is also important for economic development. In Bangladesh, we have air pollution, water pollution and industrial pollution. Aforestation and deforestation are simultaneously going on. Rivers, canals, ponds, haors and bills are being continuously grabbed. 

Investment in any economy is very important. Both domestic and foreign investments are necessary. The banking sector in Bangladesh has now idle money to the tune of Tk. 700 billion (seventy thousand crore). Very recently loans have become available at a single-digit interest rate. But letters of credit with the banks do not show bulk orders of industrial machineries. Moreover, the capital market could not establish a good image. The people do not have confidence in the share markets.

There are several other factors like democracy, rule of law, cost of doing business and good governance. Every year in international ranking, Bangladesh does not fare well against these criteria. Two such international rankings of very recent times can be mentioned. The first one is "Economic Freedom Index" and the second one is "good governance".

Against the economic freedom score, Bangladesh occupies 137th position among 186 countries in the world. It implies that Bangladesh is mostly an un-free economy making very low scores in the areas of corruption, business investment and labour. Interestingly enough, the ranking has gone down from 132nd position in 2013 and 130th in 2014. In South Asia, Bangladesh is only ahead of Nepal and falls behind every other country. Even Bhutan secures 97th position. 

The World Economic Forum (WEF) published its World Risk Report 2016 covering 140 countries. It interviewed thirteen thousand executives. The executives in Bangladesh have opined that the highest risk of business in Bangladesh at the moment is lack of good governance. By this they have meant political instability, clashes, uncertainty and rampant corruption. The issue of dearth of energy also surfaced side by side with good governance.

All this suggests that GDP (gross domestic product) growth or per capita income can not alone explain economic or social development. Policy makers should take into account all the perspectives of development. 

The writer, a former planning  secretary, is an economist. 

chowdhuryjafar@ymail.com

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Source: The Financial Express