This story covers one country which was once termed as a bottomless basket and has lower ratings in terms of Political Stability and Control of Corruption than in countries with the same income level. But today, it stumped the world by its unmatched growth.
Bangladesh is the country in the discussion.
With average GDP growth higher than the world’s average GDP growth over the last three decades, Bangladesh’s average economic growth has steadily increased in each decade since 1980. Bangladesh came out as one of the fastest-growing economies in the world in 2018. At an astounding compound annual growth rate of 9.1% per capita GDP in the last five years, Bangladesh overtook India, which was at 3.2%. Exports have seen a 44% increase since 2015.
Was everything in Bangladesh’s favour? Not at all. The public spending as a proportion of GDP in health and education is significantly lower than expected levels of per capita income in the case of Bangladesh.
What was the driving force then?
Since 2009, the government of Prime Minister Sheikh Hasina have taking multiple steps towards a sustained policy commitment to macroeconomic stability through prudent fiscal and international debt management, expansion of the social security net, and execution of mega infrastructure projects. One of the Prime Minister’s most significant achievements has been to successfully balance the competing interests of India, China, Japan, Russia and the US, which has allowed Bangladesh to protect its national interest and develop a win-win political and economic rapport with major global powers.
An intra-sectoral re-orientation occurred since 1990 towards education and primary health, leading to exceptional human development outcomes.
Evidence strongly suggests that this progress results from a more ‘marginal’ approach facilitated by a dynamic NGO sector, rather than a ‘transformational’ approach using large-scale foreign aid flow or public expenditure led development.
Let us look at some of the fundamental driving forces.
A variety of NGOs were allowed to operate with support from overseas aid agencies, providing a range of services such as relief and rehabilitation, poverty alleviation, education, health, environmental and social protection (World Bank, 2007).
The pros of such a system were that it allowed the NGOs to reach out to all parts of the societies and, the rural sectors were able to prosper. By the 1990s, approximately 80% of Bangladeshi villages were covered by some NGO program or project.
FOREIGN DIRECT INVESTMENTS
The net foreign direct investment increased by 42.9 per cent since 2018. Significant focus sectors were the production of electricity, food, and textiles. China, the United Kingdom, the Netherlands, and South Korea constitute top investors. ACWA Power, Saudi Arabia’s energy behemoth, has agreed to set up a gas-powered, 3,600-megawatt plant in Bangladesh.
HEALTH & EDUCATION
One of the breakthroughs was bridging the gender gap through a list of initiatives. The decline in fertility began during the 1980s when income and schooling levels were relatively low. This fostered later progress in education and health indicators. Introduction of demand-side incentive schemes was a compelling factor for triggering gender parity in schools.
The ‘food for education’ programme has helped to bring children from poor rural households to the formal school system since the early 1990s.
Female school enrolment has gained massive momentum by the introduction of a universal stipend programme for female students attending secondary schools. The female stipend programme has been described as the world’s vanguard programme of this type having a profound impact on parental attitudes and social norms regarding sending adolescent girls to schools.
Adoption of low-cost solutions to healthcare problems is responsible for much of the progress. NGOs have aided in scaling up programmes.
An example of a low-cost solution is Oral Therapy Extension Programme (OTEP) which provided oral rehydration solution using an incomplete but simple substitute). OTEP also offered a platform to scale up child-targeted health programs, thereby assisting the government in achieving the target of 80% infant immunization by 1990.
Dense transport links have helped in making services more accessible to the rural communities, especially to women, and in scaling up social development campaigns. A broad-based pattern of economic growth has also helped by creating employment opportunities for the poor, such as in the rapidly-growing ready-made garment industry that employs mostly women.
Bangladesh is focussing on the youth force. Bangladesh’s educational system produces more than 500,000 university graduates every year, and more than 65,000 of the graduates receive training in Information Technology Enabled Services. Bangladesh was long a mostly rural and agricultural country. Today, young professionals are increasingly urban and digitally savvy.
In terms of digital enhancement, Bangladesh has left no stone unturned to help provide various digital services to its citizens and developed more than 8,000 digital centres across the country. It has also expanded internet and mobile coverage. More than 110 million Bangladeshis, or two-thirds of the population, have access to the internet.
Microfinance refers to formalized financial services to low-income and otherwise disadvantaged households that are not served by the conventional banking sector. Some of the commonly availed services are formalized saving in banks, NGOs, and SCOs. This is especially significant in the case of Bangladesh, where only socioeconomically advantaged households have bank deposit accounts. This is an important finding as effectively 1 per 11 households are covered through this system.
Banks and NGOs regulated by the government, community-initiated and managed semi-formal institutions (SCOs), which are not regulated by the government, and some privately owned banks, NGOs and SCOs are the major financial institutions.
The reason for its success is owed to easy access, flexibility, and low cost. Preference for MFI loans can be owed to ease of accessibility, convenience, and trusted procedures.
Rapidly expanding microcredit programmes helped in promoting social interactions and mobility for rural women.
Factors such as history, demography, cultural heritage, and geography are likely to have shaped Bangladesh’s development context. Policy consistency has been successful because of political commitments to social development.
Thus, community-based approaches executed on a large basis with extensive NGO support and rapid adoption of innovative solutions has extensively crafted the admirable economic indicators of Bangladesh.