A. R. Chowdhury

If only our leaders could realise Bangladesh’s potential!

December 23, 2012

BANGLADESH-ECONOMY-TELECOM-FARMERAccording to a published report in the Guardian newspaper, Bangladesh’s economy might overtake the western countries by 2050. This prediction is based on the assumption that Bangladesh, like a number of other emerging markets, would be able to import new technologies from the west thus making up for the lack of physical infrastructure and boosted productivity. A young and growing population would also add to its high economic growth rate.

Despite the recent spate of negative publicity in the international press relating to the Ashulia garments factory fire, skype hacking, Padma bridge corruption, etc. sporadic positive coverage do get international attention.

The favourable attention that Bangladesh has received in the international media could be summed up by an article in The Wall Street Journal which, referring to the Bangladesh trip by Secretary of State Hillary Clinton earlier this year, concluded that “this weekend, a country once dismissed by former US Secretary of State Henry Kissinger as a basket case, gets to show one of his successors how wrong it has proven him.”

This positive publicity for Bangladesh is not confined only to the political arena. Goldman Sachs lists Bangladesh among its “Next 11” (N-11), countries that have the potential to become major economies.

Today, I would like to comment on how the international investors view the emerging markets in general, and several groupings, in particular. It would be interesting to see how Bangladesh fares in their thinking.

immigrant workers-kuwait-demonstration-torture-return (10)As the Guardian reports, a decade ago, Jim O’Neill, former head of Goldman Sachs Economic Research, had coined the term BRICs — Brazil, Russia, India and China — to explain how the rise of these countries might shape the world economy. It was expected that the higher growth in these economies could offset the impact of greying populations and slower growth in the advanced economies.

Over the last 10 years, the rise of the BRICs and the emerging world has been one of the defining stories of the era. From contributing just one-fifth of global growth or less until the 1990s, the BRICs have contributed nearly half of overall global growth in the past decade.

This contribution is likely to hold at high levels for the BRICs. But in terms of the role of the BRICs in driving global growth, the most dramatic change is behind us. The bigger changes may now occur elsewhere.

There is more potential for other emerging market economies — the N-11 and beyond — to increase their role. So who are these N-11 countries? This grouping includes Bangladesh, Egypt, Indonesia, Iran, Korea, Mexico, Nigeria, Pakistan, Philippines, Turkey and Vietnam.

While the N-11 countries share certain characteristics, they are not at the same level of economic development. I would categorise them in two sub-groups: countries in the first group have greater industrial capacity and are typically beginning to export heavy manufactured or refined products, while the second group is still largely reliant on primary exports, with some industrial capacity.

Of the N-11 countries, Bangladesh, Iran, Nigeria, Pakistan and Vietnam can be categorised in the second group, while all the others except South Korea can be categorised in the first group. South Korea is the only N-11 economy that could be categorised as a developed economy, owing to its high level of industrialisation and relatively stable macroeconomic fundamentals.

As the N-11 countries grow larger and their weight in the global economy increases, they would also become more important contributors to global growth. Of course, this depends on the continued ability of these economies to maintain the kind of growth conditions that would allow that shift. But the important story here is that there may be more room for non-BRIC emerging market economies to increase their global growth contributions than for the BRICs themselves.

garments_workersGoldman Sachs and J.P. Morgan project that average growth rates in the N-11 could increase from 4% in the recent decade to 5% in the next decade, although this coming decade represents their peak potential too. Beyond that, as both the BRICs and N-11 economies move up the development curve, undergo their demographic transition and continue to converge to advanced economy levels, average growth rates are likely to decline steadily.

Why may that be the case? To understand this, consider decomposing the projected growth rates for the BRIC economies into their constituent factors — capital deepening, growth in the labour force and productivity improvement. All these factors have pushed GDP growth rates higher in these economies.

In coming years, as labour force growth first slows and then in coming decades actually starts to shrink and detract from growth, the overall BRIC GDP growth rates would decline. And, increasingly, the BRICs growth story is likely to be dominated by continued capital deepening and productivity growth.

The same process plays out in the N-11 countries also, as shifts in the demographic structure of their population lower the contribution to growth from labour force expansion. But with the BRICs further ahead in this process, the N-11 may record faster average growth rates than the BRICs economies.

The recent interest in the N-11 countries among international policymakers and investors speaks to the imperative for these countries to sustain their recent better growth experience. Turning the dream of the N-11 into reality will not be automatic. Bangladesh, as part of the N-11, will find that translating that potential into actual growth is hard.

Over the years, factors have been identified that sustain growth — including good educational outcomes, credible and stable institutions, rule of law, accountability and transparency, sound macro and microeconomic policies, openness, etc. The policymakers in Bangladesh will have to take that extra step to formulate policies to install the necessary factors in place that would help to utilise the economy’s potential and take the country to the next step.

Forty-one years after gaining independence, the country is still mired in a vicious cycle of political bickering, violence and corruption. The earlier our political leaders realise the potential that this country has and how they are acting as the stumbling block in achieving this potential, the better off we will be as a nation. Lets’ usher the new year with hopes that our leaders will finally mend their ways.

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A. R. Chowdhury is the Chairman of the Department of Economics at Marquette University. He also serves as the Chief Economist for the Capital Market Consultants and was recently appointed to the Academic Advisory Council of the Chicago Federal Reserve Bank.

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19 Responses to “ If only our leaders could realise Bangladesh’s potential! ”

  1. saleh on January 15, 2013 at 2:19 pm

    very nice

    • nayem chowdhury on March 4, 2013 at 2:12 pm

      Bangladesh is a wonderful country.

  2. Pandu on December 30, 2012 at 7:53 pm

    I know that we as a nation have immense potential but who is going to utilize those and turn those into positive outcomes? We don’t have a single leader to look up to.

  3. Ekram Alam on December 30, 2012 at 7:51 pm

    An excellent positive write-up. We don’t get to read that many positive pieces.

  4. abdallah habib on December 27, 2012 at 10:46 pm

    The only “original” by-line of the author is…Forty-one years after gaining independence, the country is still mired in a vicious cycle of political bickering, violence and corruption. The earlier our political leaders realise the potential that this country has and how they are acting as the stumbling block in achieving this potential, the better off we will be as a nation. Lets’ usher the new year with hopes that our leaders will finally mend their ways….while rest are quotes from here and there.
    Please come-up with reasonable suggestions that are doable under the context of our mind-set , frameworks and what we intend to achieve as an individual, a family and a nation.

  5. Bithi Azam on December 26, 2012 at 9:52 pm

    Thank you for a positive piece. We are in dire need of articles and news like this.

  6. Tahir on December 25, 2012 at 9:49 pm

    This is such a good and positive piece. We really are in need of more articles like this.

  7. Anwar Azim on December 25, 2012 at 9:48 pm

    Thank you Mr Chowdhury for a positive article on Bangladesh. This is indeed something rare. Amidst all the political bickering and dipping law and order situation, this article indeed uplifted our spirit a bit.

    Thank you.

  8. delwar hossain on December 25, 2012 at 8:50 pm

    I have followed Dr. Chowdhury’s writings very closely. His understanding of the problems that we face is great. I wish people like him would serve in the government. He could contribute a lot.

  9. Muhammad Jahangir on December 25, 2012 at 7:07 am

    “Your comment is awaiting moderation.” stop censoring readers’ comments.

  10. Muhammad Jahangir on December 25, 2012 at 7:06 am

    If only our leaders could refrain from corruption, we would see double digit growth – easy.

    • Alam on December 26, 2012 at 7:23 pm

      Except for very few, IMPOSED/POCKET LEADERS remain as ordinary tool in the crook hands of the bureaucrats meant to rule public as LORD, not public servants… they are unaccountable but efficient in whipping public visibly and invisibly unless extra coins are delivered…the country needs people-oriented leaders to contain corruption.

  11. Rashid on December 24, 2012 at 6:16 pm

    The so-called ‘our leaders’ do not represent us thus they are not our leaders, in fact they are nothing but the slaves of the empire which is the main stumbling block for our economic and political sovereignty. In order to reclaim our freedom we must not rely on our leaders anymore rather we must bring about an authentic Bangladeshi leadership through entrepreneurship and education. Direct selling is the best available path that the disenfranchised people of Bangladesh can go for.

  12. Alam on December 24, 2012 at 5:59 pm

    Thanks for a mind-blowing rich article but may not find many readers to accomplish its very purpose while people like me habitually remain engaged in making quick bucks through backdoor even sometime in an organized brutal manner leaving humanity behind. As a priority card on the table after liberation of Bangladesh, it was all the more necessary to invest money in education largely at least up to Secondary Level to build quality Human Resources for a sustainable economic development geared up by strong political institutions and netted by social bondage to transpire equality and justice in all spheres of life, but the country had to embrace ‘Force’ instead of ‘Brain’ to administer the country under the wheel of civil-military bureaucracy. This has resulted in epidemic growth of both intellectual and financial corruptions in almost all fields in the absence of effective accountability and justice. Proactive and valued people virtually have been sidelined and forced to march backward — money and power brought under the knee of muscle man, leaders nowadays, not needed to evolve from root level rather promote under the canopy of civil-military bureaucracy, visibly elected by people. This is what we are experiencing over the years.

    Peoples’ leader gradually turned shrinking, educated youths and intellectually rich people like you are leaving the country probably considering insecurity and long term unbearable social/political conflicts.

    As I feel, investment in education to a great extent may benefit to improve quality of life and curtail population growth, continuity/practice of democratic process may in the long run place the country to have more and more mass-oriented leaders and pro-people/proactive bureaucracy for a sustainable development what you have referred to. Existing Home Remittance amount can also be increased notably with the export of educated working people.

    Despite all those limitations, our agro-based economy with the eye-catching development of private sector in the absence of adequate electricity and infrastructure development, have contributed largely in our GDP growth while the developed economies of the world, are in many cases showing lull.

    However, the government should act as a support centre for development of private sector, use taxpayers money judiciously. Other than classified areas, people should enjoy the right to question in utility of taxpayers money…this may benefit in increasing existing tax-net/revenue collection with peoples’ confidence and participation. Here media can play a vital role.

  13. russel on December 24, 2012 at 12:41 pm

    Mr. chowdhury is right .we are developing day by day . it’s clean and clear as well. we are now a prolific country that is getting response from outside. It is a positive sign for our country.Well and promising write-up Mr. Chowdhury.Thanks!

  14. delwar hossain on December 24, 2012 at 3:38 am

    Superb article. A must read for our political leaders. Hope this raises enough questions in their political consciousness that they mend their ways. Could someone make the leaders of the two political parties read this article?

  15. Golam Arshad on December 23, 2012 at 10:21 pm

    Chondon:

    Great write up! As a Non Economist, it is being surmised and in my opinion, a growing population in Bangladesh is a boon and and a bliss. All economic activities will galvanize the spirit of prosperity into reality. Call it N-11 or by any name, growth and prosperity will usher in these countries, because of potentials in human resources. Bangladesh demonstrated its growth performance in PRIVATE SECTOR. All economic strides are being initiated by Private Sector here or anywhere. Heartiest Congratulations in your credence in penmanship in the qualified prism of a worthy professional. Thank you!

  16. nayan shaha on December 23, 2012 at 10:08 pm

    Excellent article with a very positive outlook. Bangladesh has potential. Only if our leaders could avoid bickering and concentrate on nation building. Chowdhury writes very well. I like his writing. I hope he will continue to write regularly for bdnews24.com

  17. Tushar Mohammad Zainuddin on December 23, 2012 at 9:53 pm

    Nice article…a very informative one. Yes, translating the potential into actual growth will be a difficult task for Bangladesh. And the task will be hardest if we continue revolving around the same vicious circle that you uttered. I hope that our political leaders will learn from the past and will act jointly in the interest of the nation, and they will realize that the time has come to make a change in their ways of doing things.

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