Analysis: Draw a Strategic Map for Bangladesh

Business Standard India recently published a news article stating that Bangladesh is about to take control of India in terms of per capita income, which is prompting conversations about our economy about cuts of coffee. From time to time we see such staggering statistics that seem too good to be true. Because even after doing so much, it does not seem enough. We look at our streets, at our education, at our administration, showing progress biased towards a particular class and therefore, not inclusive.

In recent years, we have found that our country's socio-economic indicators are moving more and more towards a positive direction. For example, in the three years to 2016, Bangladeshi gross domestic product (at current prices) in dollars grew at a compound annual compound rate (CAGR) of 12.9%, more than twice the Indian 5.6%!

These statistics lead us to wonder if, in a few years, Bangladesh could really exceed India's per capita income? Are we really going to open the paper one morning so that our hopes come true? Will that be enough? Well, probably not.

Per capita income is a mean statistic. Averages are excellent when dealing with numbers as they tend to minimize the effect of extreme values, outliers. But when it comes to per capita income, outliers are human beings who breathe. This means that we are actually reducing people to numbers and that is not good. Growth must be inclusive, otherwise it never looks like growth and per capita income is so low.

Where are we?

To put the context in the Bangladeshi scenario's growth, let's see how we compare ourselves with some of our peers in terms of socio-economic indicators. Since its inception, Bangladesh has shown the reduction of poverty and growth works in concert. It has shown that growth reduces poverty across a number of channels and creates employment opportunities for poor and unskilled workers. It generated resources for the government to deploy public services such as basic education, primary health care, rural infrastructure, etc., which benefited the poor.

Growth has also allowed the government to devote more resources to expanding the coverage of social protection programs to address the plight of the poor. Bangladesh's GDP has accelerated by about one percentage point per decade since the 1980s, which is no small feat given our beginnings.

However, we are upset by the growing income inequality in the country. To have a better understanding of the income level in the country, we should look at the Gini index, not just the per capita income. For a reminder, the Gini index is a measure of the distribution of a country's income. The score of the Gini index ranges from 0 to 100 with 0 reporting a perfectly distributed income while a high score of the Gini index means a high income inequality in the country

Bangladesh, in 2010, had a Gini index of 32.10. This figure was down from 2004 to 2010, but from the beginning of the decade, with economic growth picking up, Bangladesh's Gini score also began to rise. In 2016, Bangladesh's Gini score was 32.40. While this is not a significant increase, it is still worrisome because it signals growing income inequality – the rich become richer while the poor become poorer. Bangladesh needs to find ways to counter this trend if it wants to have inclusive economic growth.

The Economics of Our Economy

Bangladesh will soon be a developing country after graduation qualifications from the LDCs and this entails many challenges. Kissinger's so-called "basket" has risen to the fore as a role model around the world in reducing poverty and economic growth. Bangladesh has earned a commendable reputation for achieving outstanding results in reducing poverty in multiple dimensions. However, it is too early to rest on our laurels because it is a crucial moment.

When we compare the size of the economy to the export value of a country, we note the export dependence of this country. In 2017, Bangladesh exported $ 34.02 billion, or about 13.5 percent of its GDP. While Bangladesh's economy and exports are growing rapidly, it still has the lowest export value among its peers. Vietnam, the only country whose GDP is weaker than us, has an export value of $ 214.02 billion, or 96.8% of its economy. Yes, Vietnam exports much more than us, but the ratio is not necessarily desirable. The entire economy of the country depends on the export. If anything happens to the current global trading order (as America is currently imposing tariffs on trading partners under the first US policy) then the entire Vietnam economy could be right. collapse. India is leading in the size of GDP and the value of exports and has done a spectacular job balancing the two.

"The World in 2050", a report published by PricewaterhouseCoopers (PwC), predicts that in terms of growth, Bangladesh could be one of the fastest growing economies in the period up to a year. in 2030, with average growth of about 5% per year. Bangladesh will be the 23rd largest economy in the world by 2050. The expectations as you can see are phenomenal.

We can only hope that our impressive growth is likely to continue in the future because of the greater things going for our country – its people. What was considered a curse was turned into a blessing by Bangladesh, leading to new terms such as "demographic dividend" and "density dividend".

With the presence of a young, vibrant and growing population, the country's growth engine is raging with a growing consumer base for many years to come. It is estimated that the Bottom of the Pyramid (BOP) segment of the population that is currently growing to 84 million people will be reduced by nearly 44 million by 2025 and that the emerging middle class will grow from 17 million to 27 million in the coming decade.

The increase in purchasing power will not be limited to large cities like Dhaka and Chittagong, but will overflow to be even more impacted in cities like Khulna – an emerging industrial center, Gazipur – already an important RMG center, to other cities will see a similar growth of urban populations and consumer bases. It is estimated that in Bangladesh, by 2025, there will be 63 cities with at least 100,000 inhabitants (middle class and upper class), up from 36 today.

There are three main sectors of contribution to GDP in a country, agriculture, manufacturing and services. All jobs and production in an economy are attributed to one of these three. Their percentage contribution to GDP can say a lot about an economy. A country with a major contribution from the agricultural sector generally reports that the country is underdeveloped. A large part of the population is under-educated or uneducated. A manufacturing-oriented country will most likely be a developing country, with education focused on the secondary and few people going to university, which will result in a semi-skilled labor force. -qualifiée. Finally, a country with a very high proportion of GDP from the service sector usually means that the country is a developed economy with a skilled workforce.

The statistics allow us to ask ourselves, in a few years, it is really possible that Bangladesh could exceed the per capita income of India ? Syed Zakir Hossain / Dhaka Tribune

The contribution of GDP to Bangladesh can be broken down as follows: 14.2% of the agricultural sector (primary), 29.2 % of the manufacturing sector (secondary) and 56.5% of the service sector (tertiary). To put this in context, India's GDP is 17.32% of agriculture, 29.02% of manufacturing and 53.66% of service. To compare with a developed country, the United States has a distribution of 0.9%, 18.9% and 80.2% in its primary, secondary and tertiary sectors. The United States has a very small proportion of its GDP from the agricultural sector. This shows the level of skill of the workforce.

For Bangladesh, the GDP contribution sectors are progressively moving away from the agricultural sector because of a growing level of skill in the country. Statistics show that the GDP contribution sectors in Bangladesh and India are somewhat similar, contributing slightly more to the services sector. In comparison with the Philippines, Malaysia, Thailand and Vietnam, Bangladesh has a similar contribution of GDP in the services sector, but the manufacturing sector in these countries is more advanced. These countries average less than 10% in the agricultural sector, about 35% in the manufacturing sector and about 57% in the services sector.

Today's Labor Force

The rise of labor-intensive exports , especially the RMG industry has played a vital role in improving poverty. The clothing industry employs mostly women, most of whom come from relatively poor families. This industry has contributed to poverty reduction not only by creating income opportunities for the poor, but also by delaying marriages and reducing the size of the family of poor households. Remittances have helped reduce poverty by increasing the consumption and saving of poor households.

All of these factors contributed to the reduction of the "Passenger" population in our economy and led to the increase of the national capital. As a result, investments have increased, which has increased consumer spending and made way for more jobs.

As we can see, Bangladesh has the second lowest literacy rate among the countries compared. Bangladesh and India have similar literacy statistics. They are both much lower than some countries in South Asia. Bangladesh and India are more dependent on their agricultural sector than Malaysia, Thailand or the Philippines. In Bangladesh and India, the average contribution of the agricultural sector is about 16%, while the other three countries have an average of about 8.5%. While the tertiary sector is not strongly affected by this, the higher level of basic educated people in these countries results in a larger proportion of contribution from the manufacturing sector. On the other hand, the unemployment rate in Bangladesh is just above the average of these countries. The RMG sector in Bangladesh has contributed significantly to the creation of jobs, but most of the employment is in the primary or agricultural sector. Some critics argue that even though Bangladesh does not have a high unemployment rate, a large number of people are underemployed in the country, which distorts statistics.

Inadequate technology infrastructure is another barrier to inclusive growth. The expertise gained in the evolution of the ICT sector will be critical in breaking down the barriers to advanced technology in Bangladesh. To achieve this, Bangladesh needs to focus on providing a highly skilled workforce to the ICT sector.

We are now living in the era of automation, the Internet of Things, AI and the 4.0 industry. We hope that Bangladesh will take effective and sustainable measures to create an environment of adoption to introduce Industry 4.0. Industry 4.0 will enable a more productive and efficient production system by providing greater automation, improved communication that will lead to lower costs, increased revenues and innovation, but most importantly the creation of unique goods and services that best meet individual demands. A strong and well-controlled expansionary fiscal policy may be needed from the government to properly develop and prepare a well-structured infrastructure, encourage investment and subsidize industries to promote research and development.

It will depend on the urgency of our government to invest in its human capital, which will play a central role in the development of our country given our population of more than 166 million people. The rigorous implementation of supply policies such as vocational training, capacity building to improve the skill and quality of the general workforce are necessities of the day

We are pleased to see other impressive changes, 432 crore in the budget for 2017-18 fiscal education, accounting for 12.6% of the total budget size. Investments of this nature and scale will play a crucial role in developing a sustainable management capacity in the country and the skills of expatriates working abroad.

Level of income and standard of living [19659005] Bangladesh is also currently ahead of India in the human or social development indicators of infant mortality rate and mortality rate. ;Life expectancy at birth. A newborn in Bangladesh is more likely to see his fifth birthday than his Indian or Pakistani counterpart. She is also expected to live longer in Bangladesh (72.5 years) than in India (68.6 years) and Pakistan (66.5 years).

This comparison of life expectancy between these countries places Bangladesh squarely in the middle. While Bangladesh has the lowest per capita income adjusted for PPP among these countries, our life expectancy is a little better than that of other countries. In the context of income, the comparatively high life expectancy reflects the good work done by our administration in recent years. Indonesia, India and the Philippines have more income per person but do not have life expectancy like ours.

Infant mortality is a measure of infant deaths (less than one year) per 1,000 births. Infant mortality is a sign of the level and scope of health care in a country. We compared this indicator with the rate of GDP growth to situate the scope of the health system in these countries in the context of their increasing incomes. While one expects that an increase in money will lead to a better health system, the scenario is quite the reverse in the case of India. which, despite its highest growth rate, ranks first in infant mortality. Bangladesh comes second in the context of infant mortality behind India. Although Bangladesh has experienced rapid growth in recent years, we can see in the mapping that the increase in income does not necessarily translate into better health care; we must use our increased income more effectively to raise the standard of living in the country.

The Challenges of Tomorrow

In the coming days, Bangladesh's greatest challenge may be to deal with "the erosion of preferences "due to the renewal of the LDCs. Once graduated, Bangladesh will not be eligible for support measures provided to LDCs by multilateral institutions such as the WTO.

We are reluctant to learn from what is happening in the world. We must go beyond the cycles of development that the first world has gone through. For the future to come, project management will be the core competence if we want to get help and loans. Are we doing enough to develop this capacity?

We could set up a working group to develop an appraisal and monitoring manual for investment projects, including capacity building for timely and quality evaluation of these projects. We could invest in the development of effective project managers across government and the private sector.

Bangladesh must prepare to go beyond development cycles by adopting the technologies of the future. , Artificial intelligence and robotics to compete in the era of 4.0 industry. We need to create a start-up culture for the displaced workforce by encouraging venture capital financing and government support.

The remarkable methods used by Singapore to prepare its workforce for technological progress could be structured and applied in Bangladesh. They have specialized organizations, such as WorkForce Singapore, to train and educate their workers to work with technologically advanced machines and systems to make workers more productive with greater flexibility. Such an initiative could ensure a skilled workforce that will be prepared for automation and greater efficiency in the production process and the assembly line.

The size of Bangladesh's budget keeps increasing but the pressure on the ability to manage and implement budget. Yes, we have serious problems with the financial sector, such as poverty alleviation and the fight against extreme poverty in the north-west, the balance between the defense budgets, the budget and the financial crisis. education and health, quality education From corruption to corruption, whenever something goes wrong in our country, the people involved are blamed rather than the process. Thus, only the face of the authors changes from one incident to the next, while the underlying weak process is never scrutinized. This lack of systematic approach has led to the continuation of numerous incidents, including bank scandals, burglaries and infrastructure corruptions.

The uberisation of the future workers of tomorrow will only mean one thing: the skills. Billions of dollars are lost in neighboring countries these days because we do not have effective managers. Although Bangladesh has experienced impressive economic growth over the past decade, the gap that exists between the education system and the needs of the industry is alarming. This gap needs to be reduced to accelerate economic and technological growth.

We must continue our already impressive journey with the same vigor as our freedom fighters, because we can still do much more. Dylan Thomas's inspiring, do not let go of this sweet night because the dream of Bangladesh is just beginning!

Mamun Rashid is a partner and Jishan Rahman is a government reform consultant at PwC Bangladesh. The views expressed here are their own