The Financial Express

Bangladesh in a changing world order

| Updated: December 22, 2021 20:25:30

Bangladesh in a changing world order

World order is changing no doubt, but not always in an orderly fashion. Rather changes are occurring more as a result of spontaneous processes. Often the world is changing more because of the failure to put an order - climate change being an important example. Often, it is a catch-up game, and by the time some progress is made in proposing an order, the on-the-ground situation changes to undercut the proposed order. It may be recalled that there was a conscious and collective effort at changing the world order in 1974, resulting in the adoption by the UN General Assembly of the Resolution and Programme of Action on the New International Economic Order (NIEO). At the United Nations (UN) secretariat, we still prepare biennial report on the progress on implementation of this resolution. However, it is clear that on the ground situation has changed vastly from the one that had led to that initiative. In any case, whether through conscious and concerted efforts or not, there is no doubt that the world order is changing. In considering the future of Bangladesh we need to pay attention to these changes.

TWO TYPES OF CHANGES: It is possible to distinguish two types of changes in the world order; one is, what may be called the "global and long-term" changes and other may be called "short- or medium changes that are of particular nature." The UN Economists' Network (UNEN, 2020) recently prepared a report marking the 75th anniversary of the United Nations. This report, titled Shaping the trends of our time, identified the following five, what it called megatrends. These are:

- Climate change, Natural capital, and Pollution

- Demographic trends: aging

- Urbanisation

- Emerging and frontier technologies

- Inequalities

Meanwhile, the short- or medium-term changes and are particular for Bangladesh include:

- Graduation from Least Developed Country (LDC) status (2016)

- Graduation from Low-Income Country (LIC) status

4TH INDUSTRIAL REVOLUTION (4IR): The most important change at the global level that is occurring currently is probably in the arena of technologies. Some observers have put forward the view that the world is now going through what is called the 4th Industrial Revolution (4IR). The term was coined and promoted most strongly by Klaus Schwab, the founder and Chairman of the World Economic Forum (WEF), who has already written two books on the subject (Schwab 2004, 2006). The term 4IR has been embraced by the UN Secretary General too. On several occasions, Mr. Gutteres has used this term. There is some controversy regarding this characterisation. In view of some observers, the new technologies that we are seeing represent a continuation of the 3rd Industrial Revolution, also known as the Digital Revolution, which began with the invention of computers. The proponents of 4IR, however, think that the new technologies, in particular the emergence and application of Artificial Intelligence (AI) mark the beginning of an entirely new stage that deserves to be called another new Industrial Revolution. According to this view, the emergence of AI can be regarded as a watershed moment in human history.

The 1st Industrial Revolution heralded the substitution of muscle power by the power of machines. What AI is doing is substituting many forms of mental labour by smart machines, which can "think." They also point out that an incipient revolution often goes unnoticed by the contemporaries, and it is only with time that the significance of small, initial changes become clearer. For example, when the first factories of the 1st Industrial Revolution arose, those were not perceived as the harbingers of a revolution. In fact, often these were not even noticed, because until steam engines started to be used in factories in the nineteenth century, most of the early factories were located near the streams, to be run by the force of the water current, far away from the cities. It is only with time that the significance of the momentous change brought about by those rudimentary initial factories became clear.

Whether you call it a new 4th Industrial Revolution or an extension of the previous Digital Revolution, the point remains that the technologies are advancing at breathtaking speed and the world is changing right in front of our eyes. As the 2021 World Social Report produced by DESA and titled Reconsidering Rural Development (United Nations 2021) showed, the possibility of remote working has undercut the very technological rationale behind the rural-urban divide. The necessity of physical congregation that led to the emergence of cities is thus disappearing. The dream of ending the rural-urban divide that progressive thinkers put forward in the nineteenth century can now finally become a reality. Similarly, the emergence of 3D printing technology is emerging with the potential of converting manufacturing into boutique operations that can be dispersed across the country, so that the world, following a process of "negation of negation" may return to a situation of dispersed manufacturing, as was the case during pre-industrial societies, except of course that it will be based on entirely new level of technology. All this may seem somewhat futuristic. However, as I already mentioned, beginnings of great changes are sometimes not well perceived by the contemporaries.

4IR AND BANGLADESH: The 4IR, for valid reasons, is causing some anxiety too, particularly in developing countries that were and still are banking on the offshoring opportunities to carry out industrialisation based on export-oriented labour-intensive manufacturing. Application of robots was always a threat to employment. With drastic reduction of the cost of robots and invention of robots equipped with AI, the employment threat is spreading not only to blue-collar workers performing repetitive manual operations but also to white-collar workers performing repetitive mental tasks. This may affect developing countries in two ways. First, it may lead to some reversal of offshoring or reshoring of manufacturing in developed countries, thus curbing the scope for export-oriented labour-intensive manufacturing. Second, it may lead to application of more robots even in the offshored plants located in developing countries, thus reducing the expansion of employment for the same amount of capital investment. Bangladesh may be affected by both these processes. These processes will obviously have significant impact on the situation regarding inequality. Let me now turn to the second type of changes in the world.

DUAL TRANSITION OF BANGLADESH: Of the changes of particular nature and of short- to medium character, the two most important ones that concern Bangladesh are the transitions it is going through from the UN category of LDCs, and from the World Bank's category of Low-Income Countries (LIC) to the category of Lower Middle-Income Countries (LMIC). Both these are encouraging events for Bangladesh. However, both of them are fraught with challenges. These challenges are manifold, pertaining to trade, finance, intellectual property rights etc. Thus, Bangladesh will no longer enjoy the preferential trade and financing status that it did as an LDC or LIC. Similarly, the TRIPS will become binding for Bangladesh, including those regarding the pharmaceutical industry. However, the challenges posed by the 4IT go beyond the challenges emerging from the dual transition noted above, and Bangladesh needs to gear up for those broader challenges. The question is what the best route is for Bangladesh to do so.

DEVELOPMENT OF HUMAN CAPITAL: Though it may sound a bit of a cliché, the broader challenges of the 4IR and the challenges of the dual transition has further increased the importance of development of human capital. High level of human capital is a precondition for participation in the 4IR and benefitting from it. High level of human capital is also a precondition for rising up along the quality ladder of products that can be efficiently produced in Bangladesh for the export market. Analysis of the Middle-Income Trap shows the inability to graduate from low labour cost to innovation as the source of comparative advantage to be the main reason for leading the countries into this trap (Islam 2014). Again, development of human capital is the key to making the above switch. Thus, more emphasis on development of human capital is necessary for Bangladesh to come out successful in the dual transition, and move ahead towards the goal of becoming a developed country, and not be trapped in a Lower Middle-Income status.

STATE OF DEVELOPMENT OF HUMAN CAPITAL IN BANGLADESH: Unfortunately, the state of development of human capital in Bangladesh is far from what is necessary for confronting the global and dual transition challenges that the country now faces. Worries pertain to both ends of the spectrum of the education scene. At the lower end, the spread of madrassahs focused only on religious teaching leaves the young generation unprepared for the challenges of the 4IR. At the higher end, Bangladesh has witnessed mushrooming of private and also public universities. However, there has not been commensurate progress in the quality of education, as evidenced by the fact that the private sector is hiring large number of foreign nationals for the managerial posts, eschewing the BBA and MBA graduates produced by the domestic universities - a process that is also causing a large amount of income to be transferred abroad in the form of remittances. If this is the case with BBAs and MBAs, on which most of the private universities are focusing, then it leaves less scope to be sanguine about the situation in other disciplines. Thus, to go forward, Bangladesh needs to reinvigorate efforts at planning the population growth and make a huge effort at overhauling the education system of the country towards creation of a unified education system, where no one is left behind, where even children of low-income families can get adequate opportunities for quality education, including mastery over both Bangla and English. Pursuing such a course will help Bangladesh not only to cope with the challenges of the 4IR and of the dual transition but also to move forward towards a more equitable society, which is another pre-condition for avoiding the middle-income trap.

Nazrul Islam is Chief of Development Research, United Nations Department of Economic and Social Affairs. The views expressed here are author's personal and are not to be ascribed to the United Nations. The article is based on the writer's speech at the virtual international conference on Fifty Years of Bangladesh: Retrospect and Prospect, jointly organsied by Centre for Policy Dialogue (CPD) and South Asia Programme, Cornell University in the last week 

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