There has been a lot of speculation and debates in Bangladesh and India in the last few days, following the release of the International Monetary Fund's projection stating that Bangladesh's per capita GDP in nominal term would surpass India by the end of 2020.
This is apparently due to the contraction of India's GDP by around 10 percent triggered by Covid-19 in its economy, and conversely Bangladesh's 3.8 percent GDP growth due to a less severe onslaught of the virus in the country.
Some people have lauded Bangladesh's progress while others were critical on the quality of its progress. It is not a fluke, some better policies over the years have contributed to attaining this level.
In 2015, Bangladesh's per capita GDP was around 40 per cent lower than that of India. This gap has narrowed down because of persistent economic growth over the years largely driven by garment exports and remittance flows.
However, Bangladesh's competitive advantages rest on low productivity products based on cheap labour and exports of unskilled labour. Although the garments industry in Bangladesh is around 40 years old, it is manufacturing products by cheap labour.
Even though the production of RMG needs some high-end products in terms of quality of apparels, design, machinery, dyes, chemicals, etc., we are still largely dependent on China, South Korea, India etc for sourcing these materials.
Needless to say that Bangladesh has made considerable progress in these areas over the years as well. Similarly, the country has been exporting unskilled labour to many countries across the world for so many years; its exports of skilled manpower have also been small.
However, to remain competitive in the world market especially in the manufacturing sector, Bangladesh also needs to develop far better human capital and make considerable enhancement in research, innovation and technology adoption.
It needs to diversify its export baskets as well. However, progress in these areas over the years have been dismal.
Besides, allocations for education, research and innovation have also been very low.
There have been numerous allegations that resources are misused because of corruption. Sometimes teachers are recruited and promoted based on connections, nepotism and political affiliations rather than based onacademic qualification.
A large section of the students at higher level institutions is engaged for maintaining political control leaving their regular education aside.
The same scenario is true in more or less in similar ways for other organizations that are responsible for developing better human capital. These are very damaging elements for the country to develop better human capital and remain competitive in the world market.
Here lies the importance of better social and political institutions and leaderships that would promote policies to allocate increased resources, prevent corruption, enhance impartiality and bring competitiveness, increase transparency, accountability and checks and balance in the management of institutions.
And, policymakers, politicians and people at large should be in unison for common good and be judicious and vigilant to promote all of them to consolidate its economy and bring it to the next stage.
Otherwise, hard-earned progress would slow down and national aspirations would be far distant.
Md Waheed Alam tudied International Political Economy at Nanyang Technological University, Singapore.