Historical and Present Economic: Context and Trends

Despite facing various limitations and hostile politics, Bangladesh has achieved remarkable progress in both the economic and social spheres in recent times. It is truly astonishing. During the Liberation War, the economy launched by Bangladesh was disrupted and endangered by political pressure. The pro-poor, agriculture-friendly, small and medium entrepreneur-friendly economy that started under the leadership of Father of the Nation Bangabandhu was interrupted in the post-1975 era. Initially, the per capita income was only 93 USD, but under Bangabandhu's guidance, it grew to around 260 USD in just three and a half years. However, after his brutal assassination, the country regressed and the economy started to decline. The average national income per capita fell to US$138 in the following year (1976) and further decreased to USD 128 the year after that. It took 13 long years to regain the previous stage. Despite this setback, Bangladesh's growth continued at a slow pace.

Since the initiation of the democratic process in 1990, Bangladesh's economy has gradually awakened, although it cannot be considered fully revitalized. Despite implementing several reforms, the economy still lacks inclusivity. However, in 1996, when the pro-liberation forces assumed power, the country embarked on an inclusive economic development programme, inspired by the spirit of the Liberation War. Over the past 15 years, Bangladesh has achieved remarkable progress in this regard. By 2008, the average national income per capita stood at approximately US$700. Presently, the average per capita national income has surged to around 2,800 US dollars. Notably, the average national income per capita in Bangladesh is now nearly double that of Pakistan. Interestingly, in 1972, Pakistan's per capita average national income was 60 percent higher than ours. However, in 2015, we surpassed Pakistan in terms of average national income per capita. Furthermore, for the past four years, the average national income of the people of Bangladesh has exceeded that of India.

This remarkable accomplishment is primarily attributed to two factors. Firstly, the strength of our economy lies in the agriculture, exports, and manpower export sectors. Secondly, we have successfully implemented population control measures, with Bangabandhu being the pioneer in this endeavor. In 1972, the total fertility rate was exceptionally high, with an average family having six to seven children. However, now the birth rate per family has reduced to 2. This significant decline in population growth has played a crucial role in the increasing average national income per capita. Nevertheless, we are both pleased and concerned about the decreasing population. Similar to Japan and other countries that experienced the early stages of the demographic dividend, their average national income per capita started to decline when their population began to decrease. However, we anticipate that within the next two decades, we will be able to maintain the current average national income per capita. By enhancing the skills and efficiency of our existing workforce through technology-based training, we can undoubtedly reap the benefits of the demographic dividend. To achieve this, it is imperative to make our current education system more action-oriented.

We have serious concerns regarding the effectiveness of our traditional education system in producing competent individuals. In today's competitive world, it is simply not feasible to thrive with an unskilled workforce. Moreover, the current training process cannot accommodate a large number of people. According to a recent poll, a significant 42 percent of young individuals expressed their desire to leave the country. Their reasoning lies in the lack of job opportunities resulting from subpar education provided by unqualified teachers. Consequently, a considerable portion of educated youth remains unemployed. Our existing education system can be likened to a factory that fails to generate employment opportunities. It is imperative, therefore, to prioritize the elevation of our education system to international standards. This entails placing emphasis on enhancing the quality and status of teachers. Only through the improvement and effectiveness of our education system can we achieve sustainable development.

Over the past five decades, our nation has made significant strides in not only achieving an average national income per capita, but also in expanding the size and scope of our economy. In the fiscal year 1972-1973, the total size of Bangladesh's economy stood at 6.23 (alternatively 8) billion US dollars. Since then, our economy has grown exponentially, reaching a staggering 465 billion US dollars today. This remarkable growth is undeniably encouraging. Recently, the CEBR research institute predicted that Bangladesh will become the 20th largest economy in the world within the next fifteen years. However, I cannot help but feel that we could have achieved even greater success had we not faced significant political challenges that consumed valuable time. In order to sustain our current growth trajectory, it is imperative that we enhance the efficiency of our workforce. The full potential of our development can only be realized if we prioritize the development of skilled and trained manpower. It is crucial for policymakers to acknowledge that our manpower is our most valuable asset and to nurture it accordingly.

Furthermore, it is imperative that we prioritize the establishment of entrepreneurship. A conducive environment must be fostered to provide entrepreneurs with the necessary resources such as courage, capital, and market opportunities. Instead of seeking employment after attaining higher education, individuals should consider building their careers as entrepreneurs. The prime minister has repeatedly emphasized this point, questioning the need for job-seeking and encouraging individuals to become entrepreneurs, thereby enabling them to create employment opportunities for others. In a densely populated country like Bangladesh, the issue of unemployment cannot be resolved solely by providing jobs in public and private institutions. To address this, it is crucial to cultivate a significant number of entrepreneurs. The youth of Bangladesh possess inherent entrepreneurial qualities, and it is essential to awaken their inner potential and establish a conducive environment for their growth. India has successfully witnessed the growth of nearly 100,000 startups in the past three to four years, while we have struggled to create thousands. Therefore, it has become increasingly important for us to foster the development of environmentally-friendly entrepreneurs.

If we are able to foster the development of entrepreneurs, these children will subsequently create new employment opportunities for us. It is imperative that we contemplate on how to cultivate entrepreneurship and promote the establishment of startups. Relying solely on the government for startups is not sustainable. The private sector and society as a whole must step forward to initiate startups, with a particular emphasis on the role of families. If parents do not actively support and encourage their children to become entrepreneurs, they will continue to seek traditional employment. Society also has a responsibility to nurture and empower the younger generation as entrepreneurs. There is a significant amount of capital within society, commonly referred to as angel capital, which is specifically intended for societal benefit. This type of capital exists within our country as well, but we have yet to effectively mobilize it. While we have made some progress in organizing capital, such as venture capital, it is still insufficient. It is crucial to provide further encouragement and support to firms that solely focus on angel capital. In our city of Dhaka, there are numerous individuals whose children reside abroad and may never return home. Consequently, they are unable to sell their houses.

Despite facing legal obstacles, he is unable to transfer the proceeds abroad through official channels. By selling these properties and allocating a portion of the funds towards startup capital, they can enjoy long-term advantages. It is necessary for them to raise this capital for their entrepreneurial endeavors. Furthermore, they can attain financial benefits in the long run, including potential tax advantages. This presents an opportunity for innovative thinking. We anticipate that similar initiatives will be undertaken following the national elections. We have high expectations for the new government to implement concrete measures for economic development. Our country has witnessed significant advancements in the infrastructure sector in recent years, which cannot be denied. However, it is crucial to utilize this infrastructural progress in the best interest of our nation's economy. Electricity has reached every household in Bangladesh, but we must also explore sustainable options such as green electricity to ensure the longevity of our power system. Simultaneously, we must focus on the responsible utilization of the electricity we generate.

Approximately 15 to 20 percent of the power plant's capacity may go unused, which is a significant amount. However, if the unutilized production capacity reaches 50 to 60 percent, the power plant will never be able to achieve sustainability. It is not feasible to install a power plant and continuously operate it at full capacity. Therefore, it is crucial to establish a sustainable power and energy system. We are already reaping the benefits of the major infrastructures that have been constructed, such as the Padma Bridge, Metro Rail, and tunnels. The availability of expressways has also contributed to these advantages. However, it is essential to ensure that these infrastructures are utilized effectively. Before embarking on new projects, we must carefully consider the extent to which our social economy can support them. The decision to undertake new projects should be based on the amount of revenue we can generate and the extent to which we can borrow from foreign sources. Projects should not be undertaken without careful consideration and exceptions. In 2022, our social economy faced some pressure due to a significant increase in fuel oil prices and currency devaluation. Although we have made progress, it cannot be claimed that we have fully recovered from this pressure yet.

It is crucial for us to exercise caution in our spending to ensure a harmonious balance between revenue generation and consumption. We will only undertake projects that align with the fiscal and macroeconomic capacity. Additionally, our focus should be on sustainable development. The growth in our economy is substantial, and it is projected that the global economy will expand by 3 percent in 2023. The Asian Development Bank has forecasted a growth rate of 6.5 percent for Bangladesh. Moreover, we are confident that Bangladesh's GDP growth will not fall below 7 percent this year. Discrepancies in growth rates with international organizations are normal, and it is important to note that certain sectors, such as the informal sector and rural areas, may not be fully accounted for. Consequently, our GDP may not provide a comprehensive overview, but it is undeniable that we have made significant strides in poverty alleviation. Since gaining independence, our country's poverty rate has decreased from 80 percent to 18 percent, which is a remarkable achievement. Such accomplishments hold great significance for our nation.

We have made significant progress across all sectors of the economy, but we cannot afford to become complacent. It is important to remember that there are still many people living in poverty. The number of poor individuals is still around 3 crore, and it is crucial that we include them in our development efforts. However, we can take solace in the fact that our success in social development indicators, such as lifetime average income, infant and maternal mortality rates, and nutritional standards, is noteworthy. The participation of women in formal work (approximately 43%) and their involvement in society and administration continue to contribute to their empowerment. Despite these achievements, we are currently facing a significant challenge in the form of high inflation. In October, the overall price inflation stood at 9.93 percent, with food inflation at 12.50 percent. However, there has been a slight easing of headline inflation in November, and it is expected to decrease further in December. Nevertheless, there is still much work to be done in addressing this issue. It is worth noting that Bangladesh remains the third largest food importer globally, even though we are self-sufficient in rice production. We still need to import wheat, edible oil, and baby food.

Onion-garlic imports are necessary for our manufacturing processes. It is crucial for us to explore ways to reduce our dependency on these imported products. One potential solution is to invest in the development of new technologies that allow us to cultivate crops along the sea coast. The high cost of imported food products in Bangladesh calls for the establishment of local production facilities to meet our needs. Additionally, we can consider implementing a medium-term 'quota' system for importing these products from neighboring countries, thereby leveraging regional trade opportunities. With the right political leadership already in place, the sustainability of our development trend is within reach if we can also secure proper economic leadership. Approximately 20 percent of our budget is allocated to social security, and while we have a strategy in place, its full implementation is still pending. It is imperative that we execute this strategy, making effective use of digital technology to combat corruption and minimize wastage. Strengthening digital and social monitoring systems at all levels of service delivery is essential.

Author: Emeritus Professor, University of Dhaka and former Governor, Bangladesh Bank
Transcribe: M A Khaleque