Charting Progress 5 – Openness

The Liberation of War on 1971 was not just one of the worst humanitarian tragedies of the 20^th century, it also left significant material footprints. Average incomes fell by about a fifth in what was already one of the most impoverished places on earth. Pre-war income levels wouldn’t be reached until the early 1990s. Since then, however, average incomes have tripled, significantly reducing poverty along the way.

Over time, sustained rises in income reflect either a growing pool of workers, or the average worker becoming more productive. The progress notwithstanding, Bangladesh has significant unfulfilled potential. Millions still remain outside the formal labour market, and the average Bangladeshi worker in industry and services sectors remain far less productive than their peers in Southeast Asia.

Countries that are open to foreign trade and investment tend to create more jobs, and their workers tend to be more productive. On both counts, Bangladesh is behind Southeast Asian neighbours.

Charting Progress 3 – labour

This series marks fifty years of Bangladesh with a set of charts each month to show the country’s economic evolution. Previously: GDP per person; poverty and inequality.

Over time, an economy grows from two sources: the number of workers in the formal market, and the productivity of each worker. The economic growth in Bangladesh has accelerated steadily in the past three decades, but employment growth made a stronger contribution to growth in the 1990s than in recent decades (Table 1).

Table 1: Sources of economic growth

	GDP	Employment	Productivity
1991-2019	5.7	2.4	3.4
1990s	4.8	2.9	1.9
2000s	5.6	2.1	3.5
2010s	6.9	2.2	4.7

Source: World Bank World Development Indicators.

Charting Progress 2 — poverty and inequality

This series marks fifty years of Bangladesh with a set of charts each month to show the country’s economic evolution. Previously: GDP per person.

A Bangladeshi today is about three times as well off than their grandparents were on the eve of the Liberation War. But have the poorer sections of the society benefitted from the economic growth of recent decades?

Hungry times

For most people, macroeconomic indicators are gobbledegook — what does the difference between 5% and 8% GDP growth mean?  For most people, economic indicators that matter are the ones that animate dinner table conversations — jobs and incomes, and the cost of living.  In the advanced economies with higher quality data, it is jobs numbers that resonate most — one might not understand what GDP stands for, but it is very clear what a rise in the unemployment rate means if one’s neighbour has been laid off.

In developing economies with large informal sectors, however, quality employment numbers are hard to come by in real time.  Data on the prices of essentials — proverbial chaal, daal, tel, noon — are much more readily available, as are wage rates of different types of workers.  Mix those essentials and voila, there is a plate of khichuri.  Using the data on prices and wages, we can calculate the number of plates of khichuri an average worker could afford a day.

Bangladesh Paradox

 

A new initiative, led by Asif Shibgat Bhuiyan.

Basu’s bizarre bakwas

Bakwas

Rubbish, Worthless, Nonsense, Silliness

(Urban Dictionary)

Upon being asked by a friend whether I had read Kaushik Basu’s recent piece on Bangladesh, my first reaction was — is that the rather lazy piece on why Bangladesh is doing well?

Let me note my gratitude to the friend for pushing me to read the piece. It is, to use the favourite adjective of Bangladesh’s Finance Minister, just bogus.  Out of respect for my personal interactions with the author, I will refrain from using that term.  But this bizarre article should still be debunked.

The transition blues

….nearly every country that experienced a large democratic transition after a period of above-average growth  ….  experienced a sharp deceleration in growth in the 10 years following the democratizing transition.

That’s from the Pritchett-Summers paper covered in the last post.  Let the sentence sink in.  Then, if you’re interested in Bangladesh, read on.

Apocalypse later, maybe

As I read about the 19th Congress of the Chinese Communist Party, it occurred to me that throughout my professional career, for some reason or other, I have had to think about the consequences of a hard landing in the Chinese economy.  It also occurs to me that I first started thinking about Bangladesh towards the end of graduate school — that is, I first fretted about an economic crisis in our People’s Republic before I ever thought about the other one.  Then I remembered this cautionary note about China (and India), which apply just as well to Bangladesh.

In its just released World Economic Outlook, the IMF forecasts Bangladesh economy to grow by 7% a year over the next few years.  It has been a while since I looked at the detailed data, so I am not in a position to comment on whether the IMF is too optimistic.  Look at the chart below, and think about whether 7% growth would be too optimistic?

Economic herstory

I have been trying to get back into the habit of writing.  Nothing fancy or ambitious.  Around a thousand or so words a week.  I asked a close friend on what I should be writing about.  He advised:

Rotate between three big buckets: politics/history, pop culture, and economics. When writing about the first topic, make sure it won’t sound ridiculous in six months. And avoid talking about people and focus more on theory and data.

My friend reminded me of this passage from a three-decade old paper on economic growth.

The consequences for human welfare involved in questions like these are simply staggering: Once one starts to think about them, it is hard to think about anything else.

I wonder what Nancy Stokey feels about that!  My partner will for sure not be happy if I spend all my time thinking about economics.  But when not thinking about strange stuff, it is indeed harder to come up with a bigger question than why some societies have so much higher living standards than others.

Illiberal development

A few years ago, Vietnam was the rage among the Bangladeshi chatteratis who hobnobbed in the development circle.  Look how they have forged ahead under a strong, patriotic leadership, while we languish behind because of our corrupt, venal political class — that was the refrain.  Of course, anyone who knew anything reasonably detailed about both countries would have their eyebrows raised by that.  I have vague recollection of writing something for Zafar Sobhan on this, but can’t find any link anywhere.

In any case, who cares about facts in Bangladesh?