Many people can't reap benefits of Bangladesh's dev: WB economist

Bangladesh has made remarkable development in the last half-century but a large number of people remain excluded from getting the development benefits, said Hans Timmer, the chief economist for South Asia of the World Bank.

The fruits of development remained concentrated among a few people, due to the lack of inclusion in the production and predominance of informality in the economy, he said while presenting a keynote at a seminar titled "Bangladesh Development Story: Role of Service and Manufacturing Sectors in Driving Diversification and Inclusive Growth" arranged by the Bangladesh Institute of Development Studies (BIDS) at a hotel in Dhaka on Monday.

The chief economist of the World Bank said the lack of a level playing field hinders the forward movement of a productive economy and it is a major problem in Bangladesh. 

The development with the presence of inequality of opportunity fails to guarantee future growth. The inequality in education, jobs and production will make uncertain the diversification of future growth, he added.

Noted economists from home and abroad took part in the open floor discussion at the hybrid mode seminar, chaired by Dr Binayak Sen, the director general of the BIDS.

Dr Binayak Sen said, "Bangladesh performed very well in reducing poverty and the rate of extreme poverty is below 5% here. The country also ensured gender parity in primary and secondary education, but children of the poor are still underrepresented in higher education."

"Hans Timmer expressed concern over the export market concentrated only on ready-made garment (RMG) products. But we have a chance to boost our exports even by increasing our share of RMG exports in the global market," he said.

The BIDS DG said the share of China in the global export of garments is around 33% while the share of Bangladesh is only 6%. Entrepreneurs of Bangladesh have a huge opportunity of boosting exports even from the RMG sector. 

It must be admitted that the domestic industry of Bangladesh has developed greatly in the last couple of decades. But domestic industry-driven progress is not sustainable as such development reduces technology transfer, Binayak Sen said. 

Hans Timmer identified the informal sector as the main problem of Bangladesh and said that around 98% of micro-enterprises in Bangladesh are operating at informality. A significant portion of the economy avoids them or excludes them outright. Around 97% of factories rate them as outliers.

These small organisations of the informal sector are coming into focus through digital platforms, Hans said, adding that they are getting an opportunity to sell their products through e-commerce.

The chief economist of the World Bank said informal institutions want to stay small due to fear of legal complications and taxes, due to lower efficiency.

Highlighting the inequality of opportunities in Bangladesh, he said, from gender discrimination to religion and place of birth discrimination is also rampant here. The people of South Asia have been struggling with poverty for the past three centuries. Inequality of opportunity fails to guarantee future economic growth.

Bangladesh has progressed a lot in education but there is a lack of efficiency and strong inequality in higher education, Hans Timmer said.

The birth rate of women has decreased with economic development in the region. Moreover, the participation of women in labour is also very low. The labour force participation in Bangladesh is only 36%, far below the 57% in East Asian countries, the economist said.

"The economy of Bangladesh is facing challenges in the field of macroeconomic stability, the balance of payment and forex reserve devolvement in the global market," Hans Timmer said to journalists following the event.

He said the change in interest rates in the United States and the members of the EU created an inflow of capital to high-income countries from lower-income countries. Bangladesh is also facing the same problem.

The central bank of Bangladesh has taken several initiatives including the depreciation of the currency, and tightening imports. But the central bank has huge limitations, Hans said, stressing the need for preventing under-invoicing, over-invoicing and capital outflows to overcome the current challenges facing Bangladesh.

Dr Kazi Iqbal, a senior research fellow of the BIDS, said, "There has been a big change in the garment sector of Bangladesh. Export diversification is playing a major role in Bangladesh and work regarding the informal sector is also going on."

He identified the lack of jobs in the rural areas as a problem and said that girls are worried about where they will get a job after completing 12 years of education. Opportunities for work in South Asian countries are already very few.