What can we visualise about our economy in the next decade or so?
We will definitely graduate from our Least Developed Country status and also become a lower middle-income country. But then what?
The question places many "buts" and "ifs" in its response. A lot of possibilities and promises – and then a lot of grueling challenges too.
Bangladesh significantly stands out regarding many of its indicators. It is one of the most populous countries – eighth in the world in terms of population size. Its economy is 15th in size and now one of the fastest growing globally.
When such a huge population represents that economy, consumption growth should fuel further growth and vice versa. The growth engine should rev on.
On the human development index, Bangladesh fares fairly well in the region – ahead of its neighbours like India and Pakistan. It has better invested in its mothers and children so they do not die young, plus it has made efforts to send girls to school.
With such achievements, Bangladesh should sail smoothly along its path to further graduation. The upward mobility in society should continue and it should be easy to reach the higher middle-class group. The cornerstone for development has been laid and the rest should only be a matter of proper management.
That block-building remains a challenge.
For example, whether the huge population will help grow the economy will crucially depend on how we invest in human development – in education and health. However, the sheer size of investment alone would not be enough to reap the demographic dividend. The people need to be better educated.
Sadly, all current reports highlight that the quality of education is seriously deficient. A third-grader cannot read or write in his or her mother language. This newspaper had once advertised for a researcher, and out of 250 applicants, only one was graded a C minus by an expert. This also explains why foreign nationals working in Bangladesh take $5 billion out every year. Even the biggest and the most successful sector – readymade garments – suffers from a shortage of middle and top management manpower.
An economy cannot graduate further with people pulling rickshaws or moving sacks on their bare backs. An economy cannot be productive with lots of people working in such jobs. Bangladesh will have to replace many rickshaw pullers and people peddling cheap labour on the street with highly-skilled workers. A graduating economy must be mechanized and automated.
More of these toiling people have to be put into export-oriented industries. The government's effort to set up 100 specialized economic zones will open up the economy's labour absorption capacity. Once a power-starved nation, we now have plenty of surplus electricity and many more projects are in the pipeline to keep the future projects humming.
When this happens, they will earn more and spend more, resulting in better growth. This is an undeniable cycle.
Having such highly skilled manpower is the biggest challenge for Bangladesh's future. The Indian economy grew so fast – though we may ignore its inflated growth figures – and had a hard landing, in part, because of its poorly educated workforce.
For Bangladesh to sustain itself on a path of high growth, one thing it badly needs is to manage its projects well. What we have been witnessing in our mega project fetish is a wholesale orgy of waste. Projects become increasingly bloated year after year. Further, when costs escalate astronomically –sometimes three or four times the budgeted amount – economic returns go awry. We are getting the same project at a much higher cost. It is obvious that if you buy the same thing for twice the price you lose out on other necessary spending. An efficient economy has its projects properly assessed and planned, and only then completed – with little deviation from the initial plan.
However, growth must come with justice. Wealth must not accumulate with the top rich individuals but must spread out. This will require a conscious political decision to put such a social architecture in place.
Right now, the situation is less than ideal for Bangladesh as inequality is increasing. This is one area where a social safety net programme, already a good initiative of the Awami League government, needs to be more efficient.
Above all else, Bangladesh will need a sound financial sector and capital market to support the growth demand. And it will need to improve the ease of doing business. Competitiveness will require hassle free transactions and faster decision-making in this digital age. These decisions are par with the outside world – detached from bureaucratic inefficiencies and occasionally-meaningless conservatism.