Transcript Deb Bhattarcharaya Presents Opportunities and Risks

Bangladesh Frontier Forum
RISKS AND OPPORTUNITIES IN
BANGLADESH
Debapriya Bhattacharya
<[email protected]>
Telenor HQ, Fornebu, Norway
17 April 2012
CENTRE FOR POLICY DIALOGUE (CPD)
B A N G L A D
E S H
a c i v i l s o c i e t y think – t a n k
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Bangladesh: Development was possible!
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Bangladesh began her journey in
1971 being the “test case of
development” as portrayed by
Faaland and Parkinson (1976)
A number of pessimisms worked
against any optimistic review –
 Large population and high
population growth
 High level of poverty
 Hit by a devastating war
 No strategic importance
Faaland and Parkinson (1976) concluded “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”.
“For more than four decades, Bangladesh belied the pessimistic prophecies
of economists and displayed extraordinary resilience in the face of natural
catastrophes and man-made calamities.” (Akbar Ali Khan 2011)
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Economy is Growing with the rest of the World
Source: Calculated from WDI Database
 BD’s share in World GDP and World GNI has started to rise in recent years.
 Bangladesh remained steady as the 47th largest economy among 124
countries reported.
 According to Goldman Sachs report (in 2005), by 2025, Bangladesh may
emerge as the 22nd largest economy in the world and will be an important
member of N-11.
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GDP Growth Remained Close to Middle Income Countries
Source: Calculated from WDI Database
 During 1980s Bangladesh’s average GDP growth was a little higher than the
world and middle income countries.
 During the last two decades, it surpassed the global average and remained close
to average of middle income countries.
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GDP Composition: Increasing Role of Modern Sectors
Bangladesh
Middle Income Countries
Source: Calculated from WDI Database
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Share of modern sector is also increasing.
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However, compared to the middle income countries, Agriculture
remains important source of GDP.
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Per Capita Purchasing Power Doubled in Three Decades
Bangladesh
Middle Income Countries
Source: Calculated from WDI Database
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Bangladesh’s per capita purchasing power doubled between 1980 and 2010
(from $677 to $1,488)
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Per capita purchasing power of middle income countries also doubled (from
$2675 to $5992) – the gap did not change.
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Large Share of Global Poor
Bangladesh & World Poverty 1990 (million)
Bangladesh & World Poverty 2005 (million)
Poverty headcount ratio at $1.25 a day (PPP) (% of population) has been used as the indicator of poverty
Source: Calculated from WDI Database
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In 1990, Bangladesh had 4.3% of the world’s poor population, however, in
2005 this share increased to 5.5% (effect of China)
Despite this, Bangladesh poverty rate has declined from 66.8% in 1990 to
49.6% in 2005
Bangladesh has the 5th largest poor population in the world (in 2005 after
India, China, Nigeria and Pakistan).
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Poverty Reduction Accelerated
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Poverty declined to 31.5% in 2010 from 40.0% in 2005
Gini coefficient for income and expenditure declined from 0.47 in 2005 to
0.46 in 2010
However, consumption gini coefficient declined from 0.33 in 2005 to 0.32 in
2010
Poorest divisions (western parts) performed astonishingly better than the
capital and other moderately poor districts
Division-wise Poverty Rate
Source: HIES 2010
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Growing Potential Labour Force
Potential Labour Force (Bangladesh)
Bangladesh’s Share in Global
population and Labour Force
Source: Calculated from WDI Database
 Bangladesh had the 8th largest population in the world in 2010 among 210
reported countries (8th in 1980) though population growth rate decreased
(from 2.9% in 1981 to 1.2% in 2010)
 Bangladesh’s share in global labour force is now almost equal to her share in
population.
 The size of the potential labour force is increasing gradually which is
projected to increase in the next two decades as well. Growth rate of labour
force has been higher than the population.
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From an Aid Dependent to a Trade-led Country
Bangladesh’s Trade Openness
Bangladesh’s Aid receipt as % of GNI
Source: Calculated from WDI Database
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Bangladesh is increasingly becoming a trade-led from an aid dependent
country.
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Leading Manufacturing Exporter among LDCs
Bangladesh’s Manufactures exports
(% of merchandise exports)
Source: Calculated from WDI Database
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Manufacturing products (e.g.
RMG) has become dominant
exportable products.
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Bangladesh’s share in global
export is still very low but
gradually increasing.
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As a exporting country,
Bangladesh ranked 66th in 2010
among 108 reported countries
(74th in 1980).
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Major Destination of Global Remittances
Bangladesh’s Share in Global
Workers' remittances
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Between 1980 and 2010,
remittances inflow increases 32
$10.9 billion in 2010
times.
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Share of remittances inflow also
increases from 0.9% to 2.1%
Source: Calculated from WDI Database
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As a remittance receiving country,
Bangladesh ranked 7th in 2010
among 163 reported countries
(25th in 1980).
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Moving towards Self-sufficient in Foodgrains Production
Per Capita Food Availability
Bangladesh’s Population and Foodgrain
Production
Source: Calculated from BBS and Bangladesh Bank data
 Bangladesh has achieved higher growth
in foodgrain production compared to
her population growth.
 Foodgrain production has doubled in
last two decades.
 Per capita foodgrain availability is also
increasing in Bangladesh, from 453 gm
in FY92 to 605 gm in FY10
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Successful to Navigate through GFC
 Bangladesh was the only country in the BRICs and N-11 where macro
stability components improved.
 GDP growth only suffered a relatively mild slowdown
 Bangladesh’s macroeconomic performance has been stable despite the global
financial crisis;
 Remittance flow has remained largely buoyant
 Export growth has been resilient at double digit
 Although revenue mobilization has been partially affected but due to
strong domestic collection it has been largely offset
 Bangladesh has come under purview of two sovereign credit rating
agencies. Bangladesh was awarded 'BB-' for long term and 'B' for short term
by Standard and Poor's and Ba3 by Moody's.
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Bangladesh in Economic and Political Alliances
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Bangladesh is well situated in every sense to take advantage of her strategic
location – flanked by the two fastest growing economies in the world (China
and India).
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Bangladesh integrate its economy into the global value chain, and become a
trade and transportation hub in South and South-East Asia.
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"In many ways, there lies an
important asset for
Bangladesh. I believe that
Bangladesh has the potential
to become Singapore in South
Asia.” – Pascal (2011)
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Satisfactory Progress towards Attaining MDGs
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Bangladesh’s progress towards achieving MDGs looks promising in most
areas:
 Goal 1: Eradicate Extreme Poverty and Hunger—goal will partially be
met
• Proportion of population below poverty line
• Poverty gap ratio
 Goal 2: Achieve Universal Primary Education—goal will partially be
met
• Net enrolment ratio in primary education
 Goal 3: Promote gender equality and empower women—goal will
probably be met
• Ratios of girls to boys in primary education
• Ratios of girls to boys in secondary education
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Satisfactory Progress towards Attaining MDGs
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Bangladesh’s progress towards achieving MDGs looks promising in most
areas:
 Goal 4: Reduce Child Mortality—goal will be met
• Under-five mortality rate
• Infant mortality rate
• Proportion of 1 year-old children immunised against
 Goal 5: Improve Maternal Health—goal will be met
• Maternal mortality ratio (Goal 5)
• Contraceptive prevalence rate (Goal 5)
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Satisfactory Progress towards Attaining MDGs
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Bangladesh’s progress towards achieving MDGs looks promising in most
areas:
 Goal 6: Combat HIV/AIDS, Malaria and other Diseases
• HIV prevalence among population aged 15- 24 years
• Deaths of Malaria per 100,000 population
• Proportion of children under 5 sleeping under insecticide-treated
bed nets (13 high risk malaria districts)
• Proportion of children under 5 with fever who are treated with
appropriate anti-malarial drugs
• Prevalence of TB per 100,000 population
• Deaths of TB per 100,000 population
• Detection rate of TB under DOTS
• Cure rate of TB under DOTS
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Leader in UN Peacekeeping Mission
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Bangladesh is the highest troops and police contributing country in UN
peace missions with engagement of 10,654 Bangladeshi peacekeepers in
troubled regions across the world (10% of total).
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It was 1988 when Bangladesh's modest contribution began, with 31 officers
as part of UNIMOG (UN Iraq-Iran Military Observer Group) in Iraq.
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Till July 2011, 106 Bangladeshi soldiers
have lost their lives.
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The first Bangladeshi women police
contingent has joined the UN mission
recently.
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Bangladeshi peacekeepers so far
served in 12 out of 16 UN
peacekeeping missions.
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Growing Trade Relations between Bangladesh and Norway
Export and Import between
Bangladesh and Norway ( mln $)
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In five years, between FY06
and FY11, Bangladesh’s
export to Norway increased
by 6.4 times
 Textile and Textile articles
were the major exported
products (96% of total
export)
Source: Calculated from Export Promotion Bureau and Bangladesh Bank data
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During the same period, Bangladesh’s import from Norway increased by
3.8 times
Electrical machinery, equipments and parts and Wood and articles of
wood are the major imported products (89% of total imports)
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More Scope for Cooperation in ODA and FDI
ODA inflow from Norway
FY73-FY10 ( mln $)
FDI inflow from Norway
FY99-FY10 ( mln $)
Source: Economic Relations Division (ERD) and Bangladesh Bank data
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Flow of bilateral ODA is small in Bangladesh from Norway
In last 12 years (FY99-FY10) total FDI inflow from was only USD 420
million – mainly to telecommunication sector
Total FDI stock as on end of June, 2011 was only USD 142 million
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Challenges and Risks Remains
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Breaking the ± 6 per cent threshold of Economic Growth
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Providing Productive Employment to a Growing Young Labour Force
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Promoting Economic Diversification (GDP, Export, Employment) for
Structural Change
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Lack of Infrastructure (Communication and energy)
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Maintaining Macroeconomic Stability
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Improving Nature of Democracy
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Ensuring Political Stability
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Facing Growing Risks arising from Global Exposure
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Implementing Structural Reforms
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Adapting the Adverse Impacts of Climate Change
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Tackle High level of Corruption
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Bangladesh, Moving Forward
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Bangladesh, Moving Forward
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Bad governance "has not prevented Bangladesh from adopting fairly
reasonable economic policies and from growing“
– Paul Collier (2007)
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"Bangladesh shows us that even in circumstances that seem the most
hopeless there are ways forward if the right strategies are applied, and if the
right combination of investments is made".
- Jeffrey D. Sachs (2005)
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Bhattacharya: Risks and Opportunities in Bangladesh