Upon reaching the low-middle-income country status, Bangladesh has set a vision for being a high-income country by 2041. To the development planners, how a country that has 165 million people on just 148,000 square kilometers become an advanced economy is a daunting challenge indeed. Despite having consistent growth over the last two decades, Bangladesh's per capita income has just reached over $2,500. To achieve the goal, per capita GDP should grow to above $12,500. So far, this growth result has been the outcome of labour-centric manufacturing and remittances earned from expatriates. Apparently, it's an impossible target for a natural resource-starved country. Furthermore, scaling up labour-based manufacturing for export and import substitution does not offer much legroom. Besides, at the dawn of the fourth industrial revolution, technology progression has been lowering the demand for labour in manufacturing outputs. Hence, scaling up the current labour and natural resource-based growth model does not offer a path to being a developed country. On the other hand, due to high amenability to automation, a knowledge-based economy does not offer much growth promise either. Such reality demands significant phase shifting in growth strategy.
STRATEGY FOR ATTAINING VISION 2041: To attain a seemingly impossible target for becoming an advanced economy, Bangladesh envisioned the strategy to ride over the technology, innovation, and information technology (IT) opportunities. This is about moving from a factor-driven stage to an innovation-based economy. In the perspective plan 2041, Bangladesh has set a target of changing production priorities from replication and imitation of simple products to innovation and manufacturing of complex products. The importance is on the driving process and product sophistication and increasing TFP (total factor productivity) contribution to economic growth-from exiting 0.3 per cent to reaching 4.5 per cent by 2041. In addition to producing economic value from labour and natural resources, vision 2041 demands the production of ideas and trading them as product and process features in the globally competitive market. It's the journey of graduating from idea-import-driven value creation out of labor and natural resources to idea-producer, consumer, and exporter.
The primary focus of Vision 2041 is to empower Bangladesh to add value out of ideas by leveraging ICT possibilities. For example, Bangladesh's ICT device-making industry now focuses on adding value out of labour by assembling imported components. The challenge is to roll out how Bangladesh can add value from ideas of redesign, re-innovation, and re-invention of ICT devices. Similarly, in ICT usages in different sectors, Vision 2041 would like to see migration from technology import to globally competitive innovation by adding value out of ideas so that local demand creates innovation and exporting capability. Such up-gradation of value addition from usages of imported technology to producing and trading ideas out of ICT possibilities in domestic and global markets is the key to increasing per capita income over US$ 12,000 by 2041.
In chapter 09 of the perspective plan, the vision has been set to attain competitive advantage from the innovation of both products and processes. It demands the upgrading of science, technology, and engineering education using imported technologies, and assembling technology products to transform the competence into technology invention, reinvention, and innovation for increasing economic value creation. The focus has been on (i) technology fusion and development, and (ii) product and process innovation for opening new economic areas.
RATIONALE IN FAVOUR OF IDEAS: The economic value creation depends on four significant inputs: i. natural resources, ii. labour, iii. knowledge, and iv. ideas. Per capita income due to revenue generation from natural resources depends on the stock of resources, unit price, and the number of citizens. Due to having a large population and relatively small amount of natural resources, per capita income growth from the exploitation of natural resources does not offer much room to Bangladesh. Yes, Bangladesh has a large labour pool. Out of labour exploitation, per capita income grows linearly. The slope of this linearity depends on the per-unit price of labour, and the peak is determined by the ratio between working people and the total population. Creating economic value out of knowledge also shows linear behaviour. Due to technology, the market value of natural resources is volatile, and the per-unit price of labour is showing a diminishing trend due to the advancement of robotics and automation.
On the other hand, knowledge-based service production is highly amenable to automation. In fact, roles of labour and knowledge in production have been diminishing due to technology. Hence, the correlation between the number of graduates and economic prosperity in less developed countries has been weakening.
Fortunately, the role of ideas in creating economic value has been increasing. Ideas are emerging in the form of new products, advancement of existing ones, and improvement of production processes. Besides, ideas are not conflicting in nature-showing nonlinearity. It does not depend on how many people are working for how many hours. Instead, it depends on how many units of products containing ideas are sold and how much value is captured from each idea. Hence, it has a tendency to show exponential growth in per capita income. For example, on average, Bangladesh produces roughly $5000 per person in ready-made garments production out of labour. India earns about $18,000 per person from knowledge trading in the form of IT services.
On the other hand, a single idea created by three people has developed more than half a trillion dollar worth semiconductor industry. Similarly, a single idea of Carl Benz has seeded the growth of the three trillion dollar automobile industry. In fact, the exploitation of this great idea out of a flow of ideas has made a significant contribution to Germany's prosperity. Due to the role of the idea, both South Korea and Taiwan have been enjoying steady income growth, reaching an advanced economic state, while Malaysia is caught in a middle-income trap. South Korea's per capita income was lower than that of Malaysia in the 1970s.
In addition to pursuing a few great ideas, there is an opportunity to produce millions of them and convert them into economic value. It's an opportunity for Bangladesh to engage a growing number of university graduates to create economic value out of ideas. To begin with, Bangladeshis should target redesigning all the products they have been producing now and processes to produce them with ideas of quality improvement and cost reduction. Upon making some headway, the focus should be on incremental innovation and reinvention of products that Bangladesh has been importing--for expanding economic footprint out of ideas.
M Rokonuzzaman, Ph.D is academic and researcher on technology, innovation, and policy.