Bangladesh at Fifty

Moving beyond Development Traps

Mustafa K. Mujeri, Neaz Mujeri

• Publisher: Palgrave Macmillan
• Year: 2020
• Print ISBN:
  9783030567903
• eBook ISBN:
  9783030567910
• Topic: Economics
• Subtopic: Development Economics
• Index: Economics

This book explores the diverse experience of Bangladesh's development over the last fifty years and provides systematic explanations of its success in socioeconomic development.  It also assesses future trends on the basis of past experiences. It is widely acknowledged that Bangladesh provides one of the most striking examples in the study of present day development along with rapid growth and catching up. The analysis highlights the development traps that Bangladesh faced during its journey and the ones that may have to be faced in the coming decades in order to move towards prosperity. The book asserts that explaining Bangladesh's development is not for the simpleminded; any single mono-causal explanation for Bangladesh's development is bound to fall down in the face of reality.  This book will be of interest to academics, students, policy makers and development practitioners especially in developing countries—in particular in South Asia and Bangladesh.

© The Author(s) 2020

M. K. Mujeri, N. MujeriBangladesh at FiftyPalgrave Studies in Economic Historyhttps://doi.org/10.1007/978-3-030-56791-0_1

Begin Abstract

1. Introduction

Mustafa K. Mujeri¹ and Neaz Mujeri²

(1)

Institute for Inclusive Finance & Development (InM), Dhaka, Bangladesh

(2)

Centre for Research Initiatives (CRI), Dhaka, Bangladesh

End Abstract

1.1 The Beginning: A War Ravaged Economy

Bangladesh comprises of the huge delta at the confluence of the Ganges and Brahmaputra River systems in South Asia. The region was a loosely incorporated outpost of various empires centred on the Gangetic plain for much of the first millennium A.D. Muslim conversions and settlement in the region began in the tenth century, primarily from Arab and Persian traders and preachers. The Europeans established trading posts in the area in the sixteenth century. Eventually, the area known as Bengal became part of British India. The partition in 1947 resulted in the formation of East Pakistan (Bangladesh after independence in 1971) in the Muslim-majority area of East Bengal (Schendel 2009).

Historically, Bangladesh was a prosperous part of the Indian sub-continent. Its mild and tropical climate, fertile soil, and ample water favoured the development of a rich agrarian economy. Since the Mughal and the British colonial period, East Bengal emerged as an important primary producer—mostly of rice and jute (see, Sinha 1962; Sen 1973; Islam 2012).

The partition of British India and the emergence of India and Pakistan in 1947 severely disrupted the economic system of East Bengal (known as East Pakistan at that time) with compulsions to create new industrial base and modernise agriculture. Between 1947 and 1971, the people of East Pakistan generally became poorer as Pakistan adopted a discriminatory development strategy based on industrialisation favouring West Pakistan, and resources were diverted from East Pakistan to West Pakistan (present day Pakistan).

With the dominance of West Pakistan and economic, social, cultural, political, and other exploitation of the eastern province, perpetual antagonism flourished between East and West Pakistan highlighting several factors, such as geographical absurdity, constitutional confusion and military takeover, economic disparity, language issues, political factionalism, and military dynamics (see Jahan 1972; Ahmed 1980; Ahmed 1981; Stern 2001). The ever-increasing escalation of the East–West divide led to Pakistan’s disintegration and the emergence of Bangladesh as an independent state in 1971. The liberation war of Bangladesh began after the Pakistani military junta attacked the people of East Pakistan on the night of 25 March 1971; and the war continued until 16 December 1971 when the West Pakistani army surrendered to the Liberation Forces.

During the war, there was extensive destruction and damage to all types of establishments and infrastructures in both rural and urban areas across Bangladesh. An estimated 10 million Bengali refugees fled to neighbouring India, while 30 million were internally displaced. The atrocities committed by the Pakistani military constituted genocide and an estimated 3 million martyrs laid down their lives during the war.

The economy of Bangladesh suffered extensive losses, both direct and indirect, during the war. There is no reliable estimate of the economic costs of the war; some estimates put the direct costs at $9.53 billion and indirect costs at $14.08 billion even under the most modest assumptions (Choudhry and Basher, 2002). The war was not a minor event either by absolute or relative measures; and as Bangladesh emerged from the independence war in 1971, it had a devastated economy with little productive capacity; there were pervasive poverty and chronic malnutrition for the majority of the population; a high population growth rate between 2.5 and 3 per cent per year, and the dislocation of about 10 million people who had fled to India and returned to independent Bangladesh by 1972. Further, Bangladesh was still recovering from a severe cyclone that hit the coastal areas in 1970 and caused more than 250,000 deaths. In 1973, Cambridge Professor Austin Robinson wrote:

“The structure of the economy as it was in 1968–69, together with the trends of 1959 to 1969 and the growing inability to feed herself, would lead Bangladesh into widening balance of payments deficits, ever-increasing need for inflow of foreign capital if it was to be kept going, and ever-increasing debt obligations, which would sooner or later exceed the inflow. That structure cannot survive and needs to be changed….. Even before the massive upheavals of 1971 and 1972 flood , war, crop failure the eastern wing of Pakistan was one of the poorest countries in the world. Income per head was only about $70: with gross national product rising at about 4~5-% a year and population at almost 3%, even this low level was hardly improving. Imports of food were increasing, while earnings from the major export -jute were stagnant. In 1971 and 1972 flood and war caused tremendous damage to the transport system and seriously disrupted agriculture, on which 80% of the population depends for a livelihood. The establishment of political independence meant that the whole machinery of a separate state had to be created. The question now is whether Bangladesh can ever escape its grinding poverty ….At present Bangladesh is the text-book example of Malthusian stagnation.” (Robinson 1973: i and 46).

Overall, the economic viability of Bangladesh as a nation was in question. In 1972, the World Bank assessed the situation in Bangladesh as: ‘Even under the best of circumstances, Bangladesh constitutes a critical and complex development problem. The population is poor (per capita income of $50 to $70—a figure which has not risen over the past 20 years), overcrowding (population density is nearly 1,400 per square mile) and becoming more so (population is growing at 3 per cent per annum) and largely illiterate (under 20 per cent literacy rate)’ (World Bank 1972). In 1976, Faaland and Parkinson termed Bangladesh as the ‘test case for development’ and stated: ‘If development could be made successful in Bangladesh, there can be little doubt that it could be made to succeed anywhere else. It is in this sense that Bangladesh is the test case for development’ (Faaland and Parkinson 1976).

In sharp contrast to the initial pessimism, Bangladesh has achieved much in development over the last fifty years. Further, the acceleration in development over the last three decades has generated significant optimism about Bangladesh’s growth potential. The country is much ahead today, relative to the rest of the world, than it was during its independence in 1971. In fact, the country stands at a new threshold, with greater triumphs and achievements in many aspects of economic life.

It is, in this background, that development economists and others are keenly observing the unfolding of Bangladesh’s development drama over the past fifty years. The drama is full of development surprises and extraordinary resilience of the people in the face of frequent natural disasters and man-made calamities. In reality, the country has moved beyond the multiple development traps that it faced during its fifty-year journey to create one of the world’s happiest development stories.

1.2 Pathway to Development: Exceptions and Innovations

Despite the dire predictions and pessimistic prophecies during the initial years, Bangladesh achieved an inflection point within a short time. Rising from the ashes, the country has now emerged as one of Asia’s most remarkable phoenixes and has become one of Asia’s most amazing and unexpected success stories of recent years.

Sustained rapid growth has enabled Bangladesh to reach the lower middle-income country status in 2015. No doubt, the upgradation of Bangladesh’s development status to a ‘lower middle-income country’ is a remarkable milestone in the country’s economic achievement.¹ In 2018, Bangladesh also fulfilled all three eligibility criteria for graduation from the UN’s least developed countries (LDC) list for the first time and is on track for graduation in 2024. To achieve its growth aspiration of becoming an upper-middle income country by 2030 and a high income country by 2041, Bangladesh has adopted the ‘Vision 2041’ along with longer term develo...

Table of contents

• Cover
• Front Matter
• 1. Introduction
• 2. General Growth Performance
• 3. Poverty and Inequality
• 4. Human and Social Development
• 5. Creating Opportunities
• 6. Creating Jobs
• 7. Social and Climate Change Vulnerability
• 8. Institutions for Development
• 9. Financial-Real Sector Nexus
• 10. Future Perspectives
• Back Matter