Achieving middle-income status

With the onset of globalisation, the international environment for trade, business and investment has become far more competitive than any time in the past and there is but no other option for Bangladesh to be transformed into a knowledge-driven economy to survive in this fiercely competitive environment, writes Shahabuddin Rajon and Harunur Rashid

THE ruling Awami League’s political manifesto, ‘Vision 2021’, aims at developing Bangladesh into a resourceful and modern economy through an  efficient use of information and communications technology. This goal has eloquently been described by the prime minister as ‘Digital Bangladesh’. It is believed that through the successful implementation of information and communications technology policy, and its principles, it would be possible to modernise Bangladesh by 2021 as promised by the government.
Much of the impetus to higher growth will come from additional private and public investments, particularly in areas of agriculture, manufacturing, infrastructure and human development. Yet, the experience of Bangladesh shows that it has not benefited much from productivity improvements. A key strategy and policy focus of the perspective plan is to enhance productivity in all sectors of the economy. Among other factors, productivity improvements depend on research and technology. The world has moved forward with new knowledge and technology — Bangladesh has a lot of catching up to do. An emphasis on a knowledge-based economy is a key development priority for Bangladesh to move forward.
With the onset of globalisation, the international environment for trade, business and investment has become far more competitive than any time in the past and there is but no other option for Bangladesh to be transformed into a knowledge-driven economy to survive in this fiercely competitive environment. Natural physical endowment and history will play a marginal role. Human ingenuity, ideas and skills will play the principal role in the creation of future wealth. ICT has greatly reduced the cost and increased the capacity of organisations to codify knowledge, process and communicate information.
The perspective plan target of reaching 10 per cent annual gross domestic product growth by 2021 is premised on a prolific and competitive manufacturing sector growing at or near double digits over this decade. Consequently, the broad industrial sector will continue to account for a much larger share of the GDP, approaching 37 per cent by 2021, compensating for the decline in the share of agricultural sector, which falls to 15 per cent. This trend is consistent with the stylised facts of structural change in the process of development. For Bangladesh to reach middle income threshold by 2021, industrial expansion must accompany hand-in-hand with highly productive farm and non-farm agriculture. Furthermore, a strong and competitive manufacturing sector is especially important for generating productive high income jobs.
Manufacturing is the predominant and leading sector within broad industry which also includes activities such as power generation, water and sewerage systems, and mining and quarrying. Manufacturing is and will remain the driver of industrial growth and employment for years to come. Vision 2021 stipulates a middle-income country status for Bangladesh by 2021, reaching annual GDP growth rate of 10 per cent by that year and averaging 9.2 per cent for the period 2011–21. The fulfilment of this vision requires superior double digit performance for manufacturing, taking its share in GDP to 27 per cent by 2021, and that of industry to 37 per cent.

Urban challenge
CURRENTLY estimated at 40 million people, it is projected that by the year 2021 nearly a third, or 33 per cent, of the population of Bangladesh will be living in urban areas. One of the significant features of urbanisation in Bangladesh is the predominance of a few metropolitan centres, resulting in an uneven distribution of urban population in the country. A large proportion of the urban population is concentrated in Dhaka, Chittagong and Khulna metropolitan areas. These three metropolitan areas account for about 54 per cent of the total urban population of the country. Dhaka is expected to become a megacity by 2015.
The tremendous challenge of absorbing such a massive number of people in urban areas and providing them with food, shelter, employment, healthcare, education, municipal services and recreation facilities is made more difficult given shortage of existing urban facilities and resources, scarcity of skilled manpower and good governance. The urbanisation challenge unless managed well, could become a binding constraint choking off future growth acceleration envisaged in the perspective plan. The government is cognisant of this challenge and is well aware of the fact that the backlog of unmet demand and new demand for basic urban services require huge resources, sound planning, and strong implementation capacity. Ambitious urban development programmes, therefore, will be taken up during the perspective plan period based on the policies and strategies that will cover spatial, economic, social, cultural, aesthetic and environmental aspects of urban life. It is expected that implementation of these programmes will be instrumental in achieving an urban reality that can enhance capacity to live a healthy life –– ensure access to education, shelter, and basic services, and lead to a secure and liveable environment both at home and at workplace.

Human development
PROMOTING human development entails attaining three broad objectives of ensuring education, promoting and sustaining health and nutrition, and planning population growth. In this context, in light of government’s vision 2021, the country aims at fulfilling the targets of: (i) removing deficiency in food and ensuring nutritional requirements of 85 per cent of the population, (ii) ensuring minimum daily intake of 2,122 kilo calories of food, (iii) eliminating contagious diseases and ensuring primary health care and sanitation, (iv) increasing average longevity to 70 years, (v) reducing under five mortality to 45 per 1,000 live births and maternal mortality into 100 in 1,00,000, (vi) increasing net enrolment at the primary level to 100 per cent by year 2010, (vii) removing illiteracy by year 2014, and (viii) improving quality of education with emphasis on science and technology.
With a view to attaining these targets, the perspective plan attempts to encourage population planning through providing financial incentives to those with single child and discriminate against parents with more than two children. It also entails to take necessary action to increase the coverage of all types of health care, to strengthen health administration and to increase the number of skilled professionals in the health sector. In the context of the goal of improving nutritional status of the population, the perspective plan aims at ensuring pure drinking water, improving knowledge of balanced diets and nutrition and diversifying dietary pattern of the population through diversification of agriculture. In order to strengthen the human capital of the country, the plan emphasises on upgrading curricula and improving teaching-learning methods at all levels of education and to encourage education of mathematics, science and information technology, decentralising administration and management of primary education to ensure better supervision and monitoring, ensuring inclusiveness and access to primary education and finally to ensure and sustain gender parity at primary and secondary levels.

Poverty reduction
WHILE the perspective plan stipulates acceleration of economic growth, the underlying policies stress the inclusiveness and pro-poor approach to growth so that in the process of reaching the Vision 2021 goal of reaching middle income status, there is substantial eradication of poverty through a comprehensive scheme of social inclusion.
Bangladesh has been successful in achieving significant reduction in poverty since the 1990s. National poverty headcount declined from 58.8 per cent in 1991–92 to 31.5 per cent in 2010, while extreme poverty rate declined from 41 to 17.6 per cent over the same period. The perspective plan puts in place strategies for inclusive growth, such that, the past trends in poverty reduction will be maintained and even accentuated so that by 2021, headcount poverty is reduced to barely 13.5 per cent.

Sustainable development
ECONOMIC advancement, accompanied with rapid urbanisation and industrialisation, has had its toll on Bangladesh’s ecosystem. This was evident from natural calamities, loss of biodiversity, deforestation, destruction of wetlands and inland fisheries, arsenic contamination in the ground water in the southern part of the country, soil nutrient depletion and inland salinity intrusion in the South West region, and creeping desertification in the northern region. Bangladesh is also one of the most natural disaster-prone areas that suffer face flooding, cyclones, storm surges and drought. In urban areas, air pollution, sound pollution and waste load from industries, hospitals, and municipalities are a matter of great concern.
Understandably, the adverse interactions of environmental degradation and climate change could have severe consequences for citizen’s welfare, especially for the poorer segment that may not have adequate access to coping mechanisms. Indeed degradation of land, water pollution and arsenic in water, floods and cyclones, rising levels of sea water can easily threaten the sustainability of poverty reduction strategies unless appropriate measures are taken to protect the environment.

Shahabuddin Rajon and Harunur Rashid are assistant deputy secretaries at BKMEA.