Charting Progress 5 – Openness
The Liberation of War on 1971 was not just one of the worst humanitarian tragedies of the 20th 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.
Decoding The Bangladesh Paradox — A Research Agenda
The macroeconomic fact is, in the last decade, under all three governments, per capita GDP have grown by around 4½ per cent a year. At that rate, average real (that is, inflation-adjusted) income doubles in 16 years. …. This is impressive stuff, for which every recent government deserves some credit.
That’s the conclusion from the post on real GDP per capita growth under different governments. Of course, real GDP per capita is a means to the end, not the end in itself. What we really care more about is the standard of living that higher real GDP per capita entails —that is, it’s the development record, and not just the growth, under different governments that we want to know.
This, however, raises two questions. First, how do we attribute to any particular government the growth and development record when policies under any particular government are likely to have long term consequences? And second, how do we explain the Bangladesh Paradox:
The belief that growth brings development with it—the “Washington consensus”—is often criticised on the basis that some countries have had good growth but little poverty reduction. Bangladesh embodies the inverse of that: it has had disproportionate poverty reduction for its amount of growth.
That quote is from a November 2012 Economist article. That article, and accompanying editorial, had a go at explaining the paradox. Joseph Allchin had a crack more recently at the NY Times. The suspects are usual: garments, remittance, NGOs. But we economists are a parsimonious lot, or so we like to think. We would like to know exactly what contribution each of these factors made, what was the channel through which the factors affected growth and development, what role, if any, did government policy play, and what all that means for future.
I haven’t seen a comprehensive analysis of the Bangladesh Paradox. And no, I am not going to provide the answer in this post. Rather, over the fold is a research agenda on how to analyse the Paradox.
On the garment sector’s woes
The scene of hundred something young men women locked in while fire and smoke start choking them. This is horror and sadness. When I hear factory mid management started locking the gates after fire alarm goes off — I get angry. Then when I hear the prime minister immediately puting the blame, without any investigation, on Jamaat-Shibir — I become speechless in disbelief.
A friend wrote to me thus after the fire at Tazreen garment that killed over a hundred workers on 25 November. It was followed by a lot of emotional facebook status updates, blog posts, newspaper op eds, and shouting heads in TV.
Well, it’s now official — it was ‘sabotage’. So that’s that, eh? Well, not quite. The official recommends taking legal actions against factory owner and nine mid-level managers for gross negligence that contributed to the tragedy. Is there anything more to be said? What about another facebook status update about ‘evil capitalism’?
Over the fold are some thoughts I haven’t seen/heard expressed. And I promise, there is no infantile, emotional outbursts about ‘greedy killers’.
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Is the Bangladeshi garments sector facing collapse?
Deyalpotrika has compiled recent New York Times articles on labour unrest in the Bangladeshi garments sector. She provocatively asks whether ‘Made in Bangladesh’ will become a scarlett letter. In the comments section, Naeem Mohaiemen claims:
If you don’t think this is the coming crisis that will destroy Bangladesh’s economy, you’re too busy with other tamasha …. Look at the NYT reader comments and you can see the contours of the coming Bangladeshi goods boycott.
Now, I enjoy a tamasha as the next person. But I enjoy thinking about economics even more, and definitely lot more than the next person. So I’ve thought about the issue. Are we really likely to see a boycott of Bangladeshi goods? No, I doubt we will.
Mukti 
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