Why Is Bangladesh Booming?
As a result of progressive social policies and a bit of historical luck, Bangladesh has gone from being one of the poorest countries in South Asia to an aspiring "tiger" economy. But can it avoid the risk factors that have derailed dynamic economies throughout history?
NEW YORK – Bangladesh has become one of Asia’s most remarkable and unexpected success stories in recent years. Once one of the poorest regions of Pakistan, Bangladesh remained an economic basket case – wracked by poverty and famine – for many years after independence in 1971. In fact, by 2006, conditions seemed so hopeless that when Bangladesh registered faster growth than Pakistan, it was dismissed as a fluke.
Yet that year would turn out to be an inflection point. Since then, Bangladesh’s annual GDP growth has exceeded Pakistan’s by roughly 2.5 percentage points per year. And this year, its growth rate is likely to surpass India’s (though this primarily reflects India’s economic slowdown, which should be reversed barring gross policy mismanagement).
Moreover, at 1.1% per year, Bangladesh’s population growth is well below Pakistan’s 2% rate, which means that its per capita income is growing faster than Pakistan’s by approximately 3.3 percentage points per year. By extrapolation, Bangladesh will overtake Pakistan in terms of per capita GDP in 2020, even with a correction for purchasing power parity.