The Road to Prosperity

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In pursuit of higher growth, Bangladesh is all set to embark on a new journey. Amid a plethora of bottlenecks, reasons to hope for a brighter future are aplenty

By Asaduzzaman & Irad Mustafa
Photographs by Din M Shibly, Kazi Mukul, Ashraful Alam Opu (Dhaka) Samiul Wares Tamal & Ayshi Shaha Roy (Chittagong)

Pundits have successfully defined five phases or “waves” of economic development shaped by historical factors, economic climate during historical periods and leaders’ response to these forces. Over the time, these five factors have created five corresponding strategies that differ from their predecessors in various ways. These strategies are designed to accomplish the goal of supporting entrepreneurs and businesses for discovering and expanding markets for their services, which resultantly harvest into economic development.
Namely, the first-wave is characterized by a focus on industrial recruitment through financial incentives such as tax abatementand loans in order to lower costs associated with land, infrastructure and labor. The second-wave is however a culmination of development strategies rooted in the increase of worldwide competition where third-wave is marked by an increasing focus on strategies such as public-private partnerships, establishing regional networks, developing industrial clusters and increasing human capital. The fourth-wave of development, which is also called the Sustainable Local Economic Development (SLED), is based on local community, quality of life, fairness and equity, participation and partnership, environmental stewardship, concerns for our future and the precautionary principle. Last but not the least, the fifth-wave of economic development began in the 1990s with a two-fold interest in providing market solutions and regional strategies for development where idea of acomparative advantage has been integral part of it.
The five waves of economic developments being laid out, it would be relevant to think the positioning of Bangladesh in these waves. Considering that Bangladesh is an owned state earned through bloodshed and war, and not a successor’s state, the country always opts to create its own fortune. It happens to be true that the country with 160 million and very limited landmass is attracting global attention for its persistent growth and potentials for higher growth, although pundits almost always forgot to refer this fact. Naysayers and doom preachers are there, but that did not make any difference to our resilience and striving success. To some the country is a puzzle, or may be even paradox, the country is marching forward with a constant growth regardless.
Bangladesh’s journey from agricultural economy to an industrial one is a fascinating one. In the 70s, the economy was largely dependent on agriculture that contributed 48 % of GDP, which stands only at about 12.64 % now where crops contribute about 10 % and a growth in fishing and animal farming is noteworthy. With a big portion of population, about 85%, living on the rural areas, agriculture was an important determinant of the market for non-farm goods and services during the 70s. Agricultural exports raw jute, tea hides and skins fish accounted for two fifth of the merchandise exports. There are obvious changes that are visible after 44 years of independence. RMG(Ready Made Garments) and new entrants has occupied the export pie and there is a change in economy and its structure over the years. The Bangladesh growth model in private sector led growth and Japanese researchers believe that it is almost like a Maeji restoration. It is not facetious that since two and half decades Bangladesh is seeing a 5% growth rate in GDP and there is a basic transformation from agro based economy to manufacturing based export economy where the drivers are remittances earners, those who are involved with the RMG, banking, pharmaceuticals, light engineering like bicycles, agro based and FMCG, leather and shipbuilding, IT and similar sectors.

Employment In Major Industry(Million)

Graphs-01

Investment Registered At BOI At 2012

Graphs-02

With all these manufacturing industries growing in and contributing in GDP in a considerable amount, Bangladesh has been turned into a manufacturing hub essentially. Economists and social scientists have reasons to believe that when a country goes through a transformation from an agro-based economy to a manufacturing one, some pitfalls are created in terms of urbanization and its impacts. However, at the age of globalization and cutting edge competition, the country is left with fewer choices but being an industrial society that is empowered by education and skills.
If I must use jargons, manufacturing is the production of merchandise for use or sale using labor and machines, tools, chemical and biological processing or formulation. The term may refer to a range of human activities, from handicraft to high tech, but is most commonly applied to industrial production, in which raw materials are transformed into finished goods on a large scale. Such finished goods may be used for manufacturing other, more complex products, such as aircraft, household appliances or automobiles, or sold towholesalers, who in turn sell them to retailers, who then sell them to end users – the “consumers”. Modern manufacturing includes all intermediate processes required for the production and integration of a product’s components. Some industries, such as semiconductor and steel manufacturers use the term fabrication instead.
According to some economists, manufacturing is a wealth-producing sector of an economy, whereas a service sector tends to be wealth consuming. The mentioned theory seems to be played out really well in Bangladesh as we see the manufacturing and service industries are growing in hand and hand. Although most manufacturing involve significant social and environmental costs and require environment friendly growth model.
Bangladesh is struggling to go through the fourth-wave as the country thrives to be a developed one by 2050 and this phase of globalization is challenging which needs a full-proof plan and necessary preparations. Recently, the U.S. president Barack Obama addressed more than 150 CEOs at a business roundtable where he talked about competitiveness. The president emphasized on nurturing the industries for the future, which is a common sentiment for almost all developing countries along with the ones that are developed. The roundtable identified the following key points which are dominating factors in the world of manufacturing- intersection conductors, developers of best customer and supplier assets, leaders in supply chain effectiveness, sustainability and carbon challenge pioneers, masters of risk and resiliency, skillful private sector-public sector partners, drivers of dominant regional clusters, creators of value added jobs, winners of the talent and infrastructure wars.
With this trend, challenges and new windows of opportunities, Bangladesh needs to plan ahead and plan well to face the waves. Greater connectivity with India, Myanmar and China and friendly relationships with other growing economies of Asia will certainly help the country to grasp every opportunity available. With a clear roadmap and firm grip, we can take a leap of faith and achieve our goal that is hard to achieve, but not impossible.

 

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