|A publication of the Asian Development Bank||No. 1 June 2008|
Cover stories •
new publications •
in focus •
from the field •
Bangladesh celebrated the 37th anniversary of its founding in March this year, basking in the pride of having produced a Nobel Peace Laureate (microfinance genius Muhammad Yunus), a long list of globally acclaimed authors, and an internationally recognized record for women's empowerment.
But the reality of the nation's widespread poverty, amid frequent and often disastrous flooding, continues to pervade the international consciousness. Despite this, many economists forecast that the country—the 7th most populous nation in the world—will soon play a larger role on the global economic stage.
Economic Status and Outlook
As the birthplace of microfinance, Bangladesh has been an engine-room for an innovative and pioneering poverty reduction strategy that has been successfully exported around the world.
Nobel Peace Laureate Muhammad Yunus, the author of Creating a World without Poverty, founded Grameen Bank in Bangladesh 3 decades ago. Yunus developed microfinancing or microcredit as a unique banking system for the poor, providing small loans, mainly to poor women, to start their own small businesses. According to Grameen Bank, that pioneering approach to banking for the poor has now spread to 100 million families on every continent. Yunus and Grameen Bank jointly shared the 2006 Nobel Peace Prize for “their efforts to create economic and social development from below.”
The 31st largest economy in the world (in terms of purchasing power parity), Bangladesh is practically self-sufficient in pharmaceuticals and is a major exporter of garments, leather, ceramics, and silk. But the key to Bangladesh’s economic growth for the moment is the record $6 billion in annual remittances sent home by the nation's millions of overseas foreign workers.
In 2005, Goldman Sachs introduced a new national economic category called the Next Eleven (N-11) to identify a new set of populous countries with the potential to have an impact on the global economy, as the so-called BRICs or economies of Brazil, Russian Federation, India, and the People's Republic of China did before them. Bangladesh is on that list of 11 nations to watch, along with Egypt, Indonesia, Iran, Republic of Korea, Pakistan, Philippines, Mexico, Nigeria, Turkey, and Viet Nam.
According to a recent report from Investor’s Chronicle, a UK-based research firm, Bangladesh is one of the “seven hottest emerging markets” in the world owing to its relatively stable currency with solid foreign reserves and “record foreign worker remittances” as well as a 7% growth rate that appears set to continue. And all this despite the fact that “like Pakistan, Bangladesh initially tends to get a rough deal when it comes to global perceptions—military rule prompted by rampant political corruption, made increasingly worse by climate change which is inflicting huge natural damage on the deltas of the Bay of Bengal.”
“The scale and potential for Bangladesh is obvious,” says the Chronicle, citing the large population, strong demographics, hardworking people, and the early signs of an emerging middle class.
However, economic experts suggest the economy needs to diversify beyond farming and textiles while embarking on large-scale investments in infrastructure. •
More than 30% of Bangladesh’s 138.9 million people live on less than $1 a day, packed into one of the most densely populated countries on earth.
Paradoxes abound in Bangladesh. Despite its reputation for deep religious and social conservatism, as well as well-founded concerns about women's very low workforce participation and poor reproductive health, Bangladesh has better records for women’s emancipation and political participation than both India and Pakistan.
According to a World Bank/Australian Agency for International Development report released in March 2008, Bangladesh had made “impressive gains” for women, including cutting its fertility rate in half between 1971 and 2004. The gender gap for infant mortality has been bridged and young girls in secondary high schools now outnumber boys across much of the nation, the report said.
On the other hand, women still suffer from little access to decision making outside the home. Women doing paid work are still very few in number, about 4% of working age females. Meanwhile, education for both genders is limited, with only 20% of poor children remaining in school after Grade 9. Consequently, adult literacy is only a little over 40%.
Unfortunately, Bangladesh’s strong potential to develop as a desirable tourism destination is hampered by a lack of infrastructure. For example, the country has one of the longest white beaches in the world, but no substantial infrastructure to allow local visitors and international tourists to get there.
Geographically well-positioned on the Bay of Bengal, Bangladesh is again stymied by inadequate transport infrastructure.
The low-lying nation is also highly prone to the effects of climate change in the form of cyclones, floods, and rising sea levels. •
Bangladesh, with its religious influences of Buddhism (and later Hinduism and Islam), has a richly layered cultural heritage with a strong emphasis on storytelling. Almost two centuries of British colonization (Bangladesh won independence in 1947, when it was part of Pakistan) left behind a legacy of English speakers. Large-scale migration to Britain since independence has resulted in a flowering of fiction by Bangladeshi-born writers in English.
This fine literary tradition has attracted worldwide attention. Whether living in Bangladesh or writing as expatriates, usually from Britain, Bangladeshi writers are frequent recipients of writing and cultural prizes. But Bangladesh’s finest cultural exports are placed under some pressure to act as “ambassadors to the world” for their populous, poor, and recently politically troubled nation. Novelist Tahmima Anam was awarded the Commonwealth Writer’s Prize for 2008 for Best First Book for the Europe and South Asia region, for her novel A Golden Age.
“When I speak in public about Bangladesh, I find myself reflexively taking on the role of ambassador,” Anam wrote in March in The New Statesman magazine. “Perhaps this is because people are always asking me whether my country is about to be run over by radical Islamists, or if women are forced to wear the veil, or if everyone will drown in the rising sea. I feel rather protective of Bangladesh, and try to refocus the conversation on all that is going right—the resilience of our people, our thriving women’s movement, our heroes such as the Nobel laureate Muhammad Yunus, or Irene Khan, secretary general of Amnesty
Poor educational attainment for the impoverished, however, prevents tens of millions of Bangladesh’s population from exploring their potential as artists. There is also plenty of cultural controversy, much of it political and religious. British immigrant writer Monica Ali, whose book Brick Lane—the tale of a young Bangladeshi bride's struggle to adapt to her new London home—won the prestigious Booker Prize, was not universally embraced by other Bangladeshis living in Britain. When the book was turned into a critically applauded film, some Bangladeshis in London turned out to protest the representation of their immigrant neighborhood and supposedly false depiction of their cultural and religious mores. •
Business Prospect for Foreign Investors
In 2007, JP Morgan listed Bangladesh next to Viet Nam, Nigeria, Kazakhstan, and Kenya as a Frontier Five country with impressive economic and investment potential.
Foreign direct investment (FDI) in Bangladesh is still low at $850 million. But economic analysts say that if the state encourages FDI in energy, it could immediately double or triple the foreign cash flowing into Bangladesh for investment purposes.
To keep the economy humming along until 2025, and to keep firing power plants and fertilizer factories, massive investments in finding and developing gas reserves are required. Gas shortages are a looming reality, owing to the sharp rise in gas consumption—about 8% per year since 1998.
According to the Ministry of Power, Energy and Mineral Resources, to keep its 7% economic growth rate and meet the growing energy demand up to 2025, Bangladesh will need investments in the energy sector totaling about $8 billion. •
|© 2013 Asian Development Bank|