The Financial Express

Bangladesh in 2071: Drawing a picture of the centennial economy

| Updated: March 26, 2021 09:52:30

Bangladesh in 2071: Drawing a picture of the centennial economy

What will our lives as citizens look like in 2071 when the nation celebrates the country’s birth centennial? The answer lies in what we strive to become in the next 50 years, in terms of the economy and society, banking on how far we have come in the first 50 years of independence.

LDC graduation and we march on

The country has gone through major social and economic reforms since its birth in 1971. The result is visible. The latest achievement is the recommendation by the United Nations Committee for Development Policy (UN CDP) for the graduation of Bangladesh from the list of least developed countries to that one of middle-income nations.

“The exit of a country from the LDC group essentially means acquiring a seal of global approval regarding its development achievements. It has also been observed that, after leaving the LDC group, countries have experienced enhanced domestic tax collection and higher flow of foreign direct investment (FDI),” Debapriya Bhattacharya, a member of the UN CDP and a distinguished fellow of the Centre for Policy Dialogue (CPD), reportedly said.

A common technique to forecast is to look at the present situation. It is used by policymakers and economists alike. If we look at the manufacturing and other industrial decisions made by the investors today, we can try to analyse how these decisions would look in the future. 

Diversifying the economy

Currently, the country is heavily dependent on a single manufacturing sector for foreign income – the readymade garments (RMG) industry. It brings in 84 per cent of the foreign income in terms of exports. The sector employs 4.0 million people and almost 60 per cent of them are women.

However, such sectoral dependence cannot be a positive thing. We can take a lesson from the financial crisis of Venezuela, an oil-rich Latin American country that depends on its sole natural resource – oil. When the global oil prices came crashing down, so did its economy, which to this date hasn’t been able to recover.

“In 2071, Bangladesh should be a developed nation, producing new goods and materials under the fourth industrial revolution. With these goals in mind, the country should move gradually from low-skill-intensive manufacturing to skill-intensive manufacturing and technology-intensive manufacturing,” said Selim Raihan, executive director for South Asian Network for Economists (SANEM). “The country should take appropriate policies and actions to integrate more with the global value chains of skill- and technology-intensive manufacturing.”

Identical to China progress?

Heavy industries are one such labour-intensive sector that Bangladesh has started adopting slowly. The country is already assembling motorcycles locally and aspires to make sophisticated cars and buses shortly. It has a burgeoning shipbuilding industry that has higher global potential. More skill-intensive industries such as computer hardware and software industries are on the rise.

But we expect to see another phenomenon in 2071. “In 50 years from now, Bangladesh's economy will be a developed one and the country's GDP will be dominated by skill- and technology-intensive services sectors. The share of manufacturing will decline,” Selim Raihan added.

Bangladesh is now following the path of China and the Asian tigers, the countries which started with labour-intensive industries like textiles and leather, then moved on to heavy industries like car manufacturing, military, and machine tool building. They were able to attract a large amount of foreign investment and capitalised on newly built infrastructures that paved the way for development. It matches the current stage of Bangladesh’s development.

Cautious use of maritime resources

To reach the cherished goals of development, the country will need to dedicate resources to the creation of more resources and quality manpower. Having been constrained in terms of land-based natural resources, it is hoped, Bangladesh would focus on the unexplored sea basin in the Bay of Bengal. After delimitation of maritime boundary through the settlement of disputes with India and Myanmar, the country may start utilising the exclusive economic zone in the Bay of Bengal, the potential of which is widely called the blue economy.

“In 2071, due to scarcity of land-based resources, Bangladesh will have to explore the possibilities in the sea. There will be commercial initiatives to explore and extract resources from the Bay of Bengal. It will greatly contribute to the national economy and increase national income,” said Professor Sayema Haque Bidisha, from the Department of Economics, the University of Dhaka. 

She also expressed her concern about environmental sustainability regarding the projects for exploiting maritime resources. “As this is an unexplored area for Bangladesh, if we start this in an unplanned manner, we might end up hurting the natural balance at the sea. In the long run, the environment may be seriously affected and the development we pursue may be sustainable.” Examples include oil spills in the Gulf of Mexico and another oil spill near the coast of the US state of Mississippi.

“Bangladesh needs to approach this in a planned manner, after doing adequate research on the matter. Involving scientists, and environmental specialists during the policy implementation of such projects would be critical to ensure sustainability of such projects,” added Professor Bidisha.

Manpower will remain the key

Although there’s uncertainty regarding findings of natural resources, one resource of Bangladesh has never let it down. It’s its manpower. In the competitive global market, human resources are the only thing that has given us our competitive edge.

With the abundance of cheap and unskilled labour, Bangladesh was able to produce products like readymade garments at a much lower price than other competitors. At the same time, migrant workers from Bangladesh bring in remittances. All these contributed to the growth Bangladesh has today.

But in 2071, the scenario would be different.

According to a Bangladesh Bureau of Statistics forecast, Bangladesh’s working-age population will peak in 2041 and after that period, it will be declining. That means, the country will start losing its competitive edge as a labour-intensive product supplier. At the same time, the percentage of the aging and dependent population will increase.

Making peace with automation

Another threat, every economy in the world now faces, in terms of employment, is the phenomenon of automation. In 2071, Bangladesh will be a technology-dependent country.

A study by the government's a2i project and International Labor Organization has found that by 2030, almost 60 per cent of the jobs in the RMG sector will be replaced by automation. To avoid a grim future like that, experts have emphasised skill development.

“Bangladesh has to invest in the current generation, training them with future-proof skills. This will achieve two goals for us. Firstly, the aging population will not remain a burden anymore as skilled workers can work longer in their jobs. Secondly, this will improve the training capability and may ensure that every working-age person is skilled. As we cannot stop their quantity from declining, we can make sure to increase their quality,” insists Professor Bidisha. 

“Such future-proofing means the workers will be ready for automation. Those sectors with increasing opportunities will entail skill-intensive jobs. So, this training will prepare our human resources for the threat of automation.”

Shall we be a welfare state?

All these discussions about resources and industries are more or less tied to one thing – the welfare of people, which broadly refers to the state of health and happiness of a person in a country. In governance theories, welfare is everything that a government does to achieve the best state of those attributes for its people. Every human development and economic policy is taken by a government to maximise the welfare of its people.

Unfortunately, welfare has taken a backseat in our context, as more focus is made on economic growth. While it is expected to happen to some extent, in a developing country, it’s still a concern for the country. It’s anticipated that, when the country reaches the zenith of the developed nations, presumably by 2071, the welfare situation will be much improved.

To reach this goal, Bangladesh has a long way to go. First, it will have to ensure inclusive growth. The country has a massive inequality problem. While a quarter of the country is poor, it also has one of the fastest-growing rich populations in the world.

While our current policies are concerned with curtailing poverty, not much is being done to prevent inequality. Nobel laureate economist Amartya Sen said: “There are some people who say that they're concerned only with poverty but not inequality. But I don't think that is a sustainable thought. A lot of poverty is, in fact, inequality because of the connection between income and capability of having adequate resources to take part in the life of the community.”

Secondly, Bangladesh requires some more institutional capacity development, in areas such as education, health, utility, and safety net. This is an area where Bangladesh has had incredible growth over the years. For instance, school enrollment, life expectancy, utility availability, and stipend-based safety net programmes are on the rise. Still, the country has a general lack of such capabilities.

To address inequality, Professor Bidisha suggests, Bangladesh needs an efficient taxation system with a primary focus on income taxes. “This will ensure a more equal distribution of wealth through taxing private income.”

In terms of institutional capacity, Bangladesh needs to invest more in public education and health. Such investments will decrease out-of-pocket expenditure and increase the overall productivity of the people.

The country should also invest in social safety net programmes that specifically target skill development and employment. These safety net programmes should put emphasis on the urban poor, as they are a neglected group when it comes to such safety net programmes.

Basic utilities such as electricity, water, the internet should be more affordable for everyone.

In Bangladesh, most of the jobs are informal, meaning they do not enjoy the benefits of formal jobs such as appropriate wages, pension, healthcare, and other minimum facilities. This is a massive problem that Bangladesh has to overcome, for ensuring proper welfare for everyone.

“The government could incentivise those in the informal economy to join the formal one. The fear of taxation is one of the main reasons for staying in the informal sector. In the long run, such initiatives will ensure better inclusion for everyone,” Professor Bidisha explained.

As we expect Bangladesh to achieve the goal of becoming a developed nation at the birth centennial, we have to ensure inclusive growth before that, by creating equal opportunities for everyone in society through incorporating modern technology and resources.

Sheikh Tausif Ahmed is a 3rd-year BSS student at the Department of Economics, the University of Dhaka.

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