Foreign Policy

Bangladesh is everybody's financial darling. It may not final.

Shortly after Bangladesh gained independence in 1971, Henry Kissinger, the US national security advisor at the time, mockingly referred to the country as a "basket case". Associated with poverty, Bangladesh was for decades considered an economic laggard in South Asia, making sad strides in tackling mass poverty or promoting sustainable economic growth. Many scholars and analysts feared that the country would remain a community of the world community acutely dependent on foreign aid. Some went so far as to predict a Malthusian nightmare in the country, whose population was growing beyond food availability.

Despite the urgent expectations, the military coups in 1975, 1982 and 2007 and a string of natural disasters, Bangladesh has indeed made significant strides in reducing poverty and promoting economic growth. Last month, the International Monetary Fund forecast that Bangladesh's per capita gross domestic product would exceed India's in 2020.

The details of the IMF's forecast are pretty stark. This suggests that India's GDP per capita is expected to shrink 10.3 percent, mainly as a result of the impact of the coronavirus pandemic. In contrast, GDP per capita in Bangladesh is expected to grow by up to 4 percent.

How has a country widely viewed as on the brink of economic disaster managed to improve its prospects so dramatically, and even threaten to outperform India's economic standing, at least per capita? The immediate answer lies in how Bangladesh has seen rapid economic growth over the past five years while India's performance has lagged significantly over the same period. However, Dhaka's success in promoting rapid growth (and therefore poverty reduction) begs the question: How exactly did it accomplish such an economic miracle?

The answers are complex. On one level, Bangladesh's success has come from a significant inflow of funds from overseas Bangladeshi workers, most of whom live in the Gulf States. More than 10 million Bangladeshis send $ 15 billion annually. Aside from their significant financial contributions, these overseas workers have also helped reduce unemployment at home, where more than 160 million people live in a country the size of Illinois. In addition, this mostly steady injection of funds has made a major contribution to alleviating poverty across the country.

However, international transfers alone do not explain Bangladesh's success story. Another important contributor to the country's recent boom towards prosperity is due to the extraordinary success of its apparel industry, which employs nearly 4 million people and generates more than 80 percent of the country's export income. This industry, which Bangladesh carefully nurtured when China and Vietnam focused on other areas, has proven to be both a major source of employment for Bangladeshi women and a major source of income for the country. Employment in this sector has been an important source of empowerment for women in terms of both social and economic status.

Beyond these two factors, the country's economic success can be traced back to another source. In contrast to India, which has largely intervened piecemeal in its social sector, several Bangladeshi governments, regardless of their ideological bases, have made great strides in improving maternal health and providing rudimentary health care. These measures have helped reduce child mortality, alleviate widespread malnutrition, and ward off a range of diseases.

Despite Dhaka's smart economic planning, political trends in the country remain a matter of great concern. The unbridled political power concentrated in the hands of the ruling party could over time contribute to cronyism and corruption – a development that would affect the country's economic progress.

As in several other countries, Bangladesh is increasingly lurching towards authoritarianism. Prime Minister Sheikh Hasina, the daughter of the country's founder Sheikh Mujibur Rahman, is in her fourth term in office with her party, the Awami League, whose coalition controls 288 of 300 directly elected seats in parliament. The 2018 elections, in which she was re-elected, were marked by allegations of widespread electoral irregularities. Earlier this year, the leader of the main opposition party, the Bangladesh Nationalist Party, was sentenced to 17 years in prison for corruption. Unsurprisingly, the opposition has claimed that these allegations are unfounded and politically motivated.

Hasina has shown no interest in tolerating a legitimate challenge to her government. Your government has used existing and new laws to harass, intimidate and silence dissidents and critics. One of the most striking examples of these practices was the imprisonment of a well-known photographer and activist, Shahidul Alam, in 2018 for his support for school children protesting against the poor quality of road safety in Dhaka. Alam, who was eventually released after an international outcry, was detained for more than 100 days. During this time he was tortured. Aside from the dubious reasons for its restriction, the government has also used a draconian law, the Digital Security Act of 2018, to quell dissent. With its comprehensive online speech provisions, Dhaka can now impose up to 10 years imprisonment on its critics.

This suppression of disagreement is inherently undesirable because it corrodes democratic norms. Worse still, there may be scope for corruption and cronyism as electronic news agencies will be cautious in investigating dubious practices. In the end, those willing to get used to the government but willing to compromise could count on their protection. Others could easily run into conflict under the broad provisions of the law.

Bangladesh's economic progress is certainly worth celebrating. However, there are some limitations. Dependence on a single sector – the clothing industry – is not a good sign for the economic future. For example, an economic downturn in one of the countries that import its garments can create significant costs for that industry. You can also not count on the receipt of transfers for an indefinite period of time. As the coronavirus pandemic has shown, migrant workers can be fired at any time.

If at least some of the gains came from empowering the poorest in the country, those advances could easily be reversed by a turn to authoritarianism, resulting in policies designed for an elite class focused on maintaining their political and economic capital. For Bangladesh's economic success to continue, it must revert to one of its core tenets when it was Kissinger's basket: democracy.

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