It is true that Bangladesh's graduation to the club of lower middle-income countries will add strength to the country's efforts to develop further. There is a feeling of satisfaction all around; the people have got a new-found confidence.
The World Bank recently classified Bangladesh as a lower middle-income country as the country crossed the Bank-defined threshold per capita annual income of $ 1,041. The World Bank's account was based on FY 2013-14 income. One year since then, the average per capita income of the Bangladeshis will possibly be higher - may be, not less than $ 1,100.
The country has been achieving consistently an average GDP (gross domestic product) growth rate of 6.0 per cent since last one and a half decade. The economy got connected with the world economy firmly though not at the level as some other countries did in terms of globalisation. Even without being a member of any functional free trade bloc, Bangladesh's export increased at an average rate of over 12 per cent per annum which led this country to have exports valued at more than $ 32 billion to the world market. Only a decade ago, export earnings up to this level were a dream. Now the country is thinking of increasing export earnings to $ 50 billion in the next few years.
Bangladesh did not get any free lunch in case of exports, especially to the US market. Of the few countries that still need to pay high duty when they seek to enter the US market, Bangladesh is one of them. This country, on an average, is paying between 15 per cent and 18 per cent duty on its exports to the US market. This is much higher than what is being paid by some members of the European Union. The US is now actively negotiating a regional trade and investment deal known as Trans-Pacific Partnership (TPP) with different countries including Vietnam, a competitor of Bangladesh in garment and apparel products.
Globalisation has been a boon for Bangladesh, so it did for many other countries. But the cost of exports and reaching the markets will remain high and difficult if Bangladesh fails to become an effective member of the global free trade blocs. We hope, the country's policymakers will understand the limits and problems of this country in the coming years in sending its exports abroad and having investment from there.
Capital and investment flow more freely to those economies which hold prospects for high economic growth. And high growth is now strongly linked with degree of globalisation an economy has. Bangladesh's entry to the global sphere of trade and investment may further be strengthened with a firm economic bondage with China and India. The Eastern door of Bangladesh should be knocked hard so that we can link up with the Chinese and the Asean (Association of Southeast Asian Nations) economies.
What has held back the country's economy to go up with its growth rate? The usual explanation is the absence of required investment in the economy.
The economy, which has achieved 6.0 per cent growth rate over a decade and a half, can achieve 7.0 per cent or more growth rate if we try a little harder. Once making electricity available seemed to be a daunting task for this economy, but the task has now been made easy by our private sector with an appropriate policy support from the government.
The Bangladesh economy is having under- investment in the sense that all of its savings are not invested. A large amount of money, by some estimate $ 2.0 billion per annum, is finding way abroad illegally. Net foreign investment in the economy cannot compensate this outflow. What does really prompt the Bangladeshi citizens to take money abroad? Finding the causes and mitigating those should be the main issues now. Vilification and castigation of the so-called money smugglers will not help the country anyway.
No country can keep all the money within its boundaries unless governance and security issues are in order. Bangladesh failed on both these counts. Corruption and hindrances are rampant. Unless the government addresses the issue of good governance, the cost of doing business will remain high and the rich people will feel insecure. The basic strength of the economy lies not in productivity level of its people, but in the abundant availability of cheap manpower.
Bangladesh's policymakers should not feel complacent by thinking they have achieved much. The fact is that the economy is performing less than its potential. Even after gaining its status as a lower middle-income country, the economy is not free from adverse effects that may strike it any time from within or without. The economy, in some cases, is still standing on the razor's edge of the dark hole which anytime can push it down into the hole.
The land-man ratio is increasingly going against us. How long can it go when this will become unsustainable? A quarter of ten million people are entering the job market every year. Can this economy provide them with work? With corruption and bickering at all levels, will society rest at peace? Social problems may turn out to be bigger in Bangladesh in the coming days.
Yes, advancing to a lower middle-income country, Bangladesh has crossed the psychological barrier and people from other countries will look at us with some respect. Creditors from around the world will possibly give us credit on easy terms. Bangladesh will no more ask for charity or concessionary loans. But the country should ask itself: what has kept it so long in the group of countries known as LDCs (least developed countries)?
