1) my wealthy (even wealthy by american standards) relatives complain about how difficult it is to procure servants (they have drive deep into the countryside to find tweens)
2) my relatives haven't asked me about the USA since about 2015. in the 2000s they would ask constantly about america
The exports have been important, but the key is well-constructed industrial policy, as opposed to market fundamentalism. In that sense, very much like the East Asia Tigers. That's another important lesson that Americans can and should learn.
The core of this economic model is not exports but investments. This is investment led economic growth. It includes a certain level of opening up leading to foreign money being invested in the country, in factories, logistics, resources, making certain people very rich... The country itself invests in factories, roads, bridges, airports etc. Without these investments, there could be no exports and building the infrastructure itself raises GDP. We know the second part of this story and where it usually goes when there is no political will of the rich developed countries to assist in the transition to consumption led economy.
You have explained the economical situation here in Bangladesh really well. But made some significant mistakes in the political breakdown. It hasn't become more democratic. Instead it is becoming more and more authoritarian. Even though there are some islamist elements(it's not concerning, can be considered normal) involved here,people are really respectful and tolerant to other religions. People weren't able to vote in the previous two elections (which I believe is the most important element of democracy). The government is using the "Islamist" and "traitor" tag to suppress any opinions/voice against the regime. From my observation I can say this authoritarian regime has played significant role in the economic development and maintained economic stability. But this doesn't mean the authoritarian regime is a good regime. I would suggest you to look more deeply into the political situation here as you have made some significant mistakes in explaining the situation.
Other than the mass mechanization of these types of industries, and we are just not seeing that kind of productivity growth, I really don’t understand why export led industrialization would not work outside of East Asia. There doesn’t appear to be a theoretical reason why the industrialization strategy followed by South Korea, Taiwan, Japan, China, etc. wouldn’t work in countries like Nigeria, Iraq, Niger, South Africa, etc. Which suggests to me that a sort of racial prejudice is the real reason people believe that African, Middle Eastern, and South American countries can’t follow the same path.
One reason it might not work: it seems to require a fairly strong central government, which is a lot easier when national borders align to monolithic ethnic boundaries.
Looking at the typical examples, no no one really disputes that there is a distinct Japanese or Korean or Vietnamese "people". But in other regions, especially Africa, that's less the case.
I think this dynamic probably goes some way to explaining why the Philippines never made it to "Asian Tiger" status with their 175+ ethnolinguistic nations that are all nominally "Filipino". Like many African countries, the Philippines as a single entity is also a colonialist creation... it just happened back in the 1500s under Spain so has had longer to evolve toward a nationalist identity.
Another reason is the ability to do value addition along existing sea based industrial supply chains between East Asia and Europe. Countries en route (ASEAN - but also India, Bangladesh etc) can reuse logistics chains, do some value addition, and send goods on their way.
Most of Africa and South America doesn't get the advantage of leveraging existing trade routes and incrementally doing value addition. Horn Africa and North Africa get access to this to some extent - Niger simply does not.
I was re-reading How Asia Works and my biggest critique is the voluntaristic view Studwell takes on industrial policy—as if great leaders can simply will an industrial policy by themselves. The role of political-institutional heritage is largely thrown out with the culture bathwater.... Which is slightly ironic given how close Studwell gets to acknowledging this in his comparison of Malaysia vs Korea & Japan, wherein the former failed to create an industrial bureaucracy along the lines of the Economic Planning Board (Korea) or MITI (Japan).
If an accurate assessment, I think there's a disservice to the unique benefits Northeast Asia's political-institutional memory/heritage has wrought, and a failure to identify a critical variable that necessarily complicates Studwell's voluntaristic view of industrial policy.
I don't have any grand insights on either but I'll offer some flavor on education.
First a historical note to put Vietnam's current education in context. When the communists came to power in 1945, Vietnam's literacy rate was under 10%. (nb there is some dispute about whether it was really this low.) A study in the 1930s found that the French investment in Vietnam was the lowest of any colonial power in a colony. When the communists took power in 1945, they embarked on a program of universal education and universal literacy by sending tens of thousands of cadres to villages across the north. (One estimate was that there were 96,000 such teachers; this is the kind of thing that helps explain the popularity of the communists; a similar program happened in the south from 1975-1978 after reunification.) While the next 50 years were hardly ideal for a program of universal education and universal literacy, within a decade or two literacy was essentially universal in Vietnam.
So from the beginning of the modern state, education has always had a place of prominence. It was one of Ho Chi Minh's founding principles of the Vietnamese Communist Party and the three priorities he announced upon becoming President in 1945 were "fighting poverty, fighting illiteracy, fighting invaders".
Fast forward to today. Vietnam regularly outscores all developed nations on PISA assessments. In 2012 it ranked 16th globally, one full standard deviation better than neighboring Indonesia (who has the closest GDP per capita). It is largest positive outlier in the tests. Even when adjustments are made for child-, household-, and school-level variables this holds.
But things aren't quite as rosy as factoids like that make it out to be.
Subjectively I'd say that Vietnam's education system is well-fitted to educate factory workers but poorly-fitted to educate knowledge workers or service-industry workers. If you imagine a stereotype of "rigid, hierarchical, repetition-based, Confucian-inspired, East Asian teaching style" then....you're not going to be too wrong. And this extends to the university level. Initiative, creativity, thinking outside the box, asking questions when you don't understand, offering feedback on your boss's ideas ... foreign companies are often frustrated that even university graduates are weak in these areas.
There's also a fair amount of brain drain. In certain fields, it is common for Singaporean firms to recruit the top graduates. (Though most seem to hate living in Singapore, which is understandable since it is a soulless monstrosity of a country.) Australia is a popular choice, thanks to the widespread private university complex that survives on the fat fees of international students, with students hoping to leverage a student visa into permanent residency. And, of course, America remains the perennial promised land, often thanks to fake marriages for visas or family chain migration. Though all of these are slowly waning, just as Mexican migration to America waned as the Mexican economy continued to develop.
Parents enroll children in after-school classes in staggering numbers. I don't know actual numbers but it certainly feels like "all of them do it". The most popular choice is, unsurprisingly, English classes. (The nearly universal belief that English will be required to succeed in the future has unfortunately led to a bunch of borderline predatory behaviour by unscrupulous English language centers.) But the Mathanasium chain is also fairly widespread.
Primary school teachers are woefully underpaid (I once had a maid who quit being a teacher to become a maid because it paid more) and classes are large. 40 students are standard. Teachers make so little money that virtually all of them offer quasi-mandatory after-school tutoring for addition income. Why "quasi-mandatory"? Because if a student doesn't sign up for tutoring then...don't be surprised if you find your child getting low scores in class regardless of their actual performance.
Relative to its subservient position as a colony, pre-1971, of West Pakistan, Bangladesh has made impressive gains in terms of per capita income, in education, and in life expectancy. Bangladesh has been correct in promotion of manufacturing growth, essentially ready-made garments. But ...
* India is still well ahead of Bangladesh in average per capita GDP:
Noah Smith writes: "A Bloomberg article recently reported that Bangladesh has now surpassed both India and Pakistan in terms of GDP per capita. That’s an astonishing milestone. In purchasing power parity terms, India is still ahead, but the gap is closing." A comparison of per capita GDP in terms of exchange rates is misleading. What matters is the purchasing power parity measure. The World Bank 2019 estimates are: India PPP$4754, Bangladesh PPP$4754, Pakistan PPP$4690.
* Income distribution is grossly unequal in South Asia
Bangladesh leaders are proud to announce that Bangladesh is now a "middle income" country. The World Bank's preferred poverty threshold for lower-middle income countries is PPP$3.20/person/day. Using that threshold, the poverty rate in both India (62%) and Bangladesh (52%) is above 50%. In Pakistan, incidentally, it is "only" 36%.
* The quality of Bangladesh governance is a serious caveat - very weak economic regulation, very weak quality of education, very serious threat to free speech and censorship of the press, politicization of the judiciary.
It is worth recalling the collapse of Rana Plaza in 2013. The building, owned by a prominent politician in the governing party, contained about 3000 garment workers. He threatened government inspectors wanting to shut it down due to structural failures. The following day the building collapsed: 1100 workers died, about 2000 suffered injuries of varying severity. The major garment importers had a choice: abandon Bangladesh as a source country or take over the regulation of garment sector infrastructure. Reluctantly, the government agreed to yield control.
* Very low quality basic education is a serious constraint on future growth.
The simplest explanation for why China is "rich" and South Asia is "poor" is the difference in education quality. By the time Deng Xao Peng came to power and pursued rational development policy, China had achieved universal basic literacy and numeracy. Four decades later, South Asia is nowhere near achieving universal basic literacy and numeracy. South Asian countries - Sri Lanka excepted - "gamed" the UN's Millennium Development Goals, the second of which was universal primary education by 2015. Governments increased enrolment rates, and lowered completion standards sufficiently that about 80% of children in the primary age cohort now graduate. However, in India and Pakistan only half of children in Grade 5 (terminal year of the primary cycle) can read a short story from the Grade 2 curriculum, and only half can perform two-digit subtraction. It is harder to estimate Bangladesh primary grade performance, but it is similar to that in India.
You are right that I made an error in citing India's PPP$ per capita GDP. I wrote a correction (see below). The 2019 Indian statistic is PPP$6700, larger by 40% than the Bangladesh statistic at PPP$4750. Note that the lower-middle poverty rate in both countries is over 50%. This means that median per capita GDP is under PPP$1200 annually (365 days * PPP$3.20/person/day).
"How Asia Works" says that land reform is crucial (The Philippines and to a lesser extent Malaysia are given as examples of what happens without land reform) ... has Bangladesh done this?
I can see lots of word fights happening here. I am a Bangladeshi and I am very happy to see the progress of Bangladesh. But one thing must address that political stability and democracy is under threat by the government. Hasina government is corrupted like no others. I still do not feel safe to go back and start new life in Bangladesh. I know how much people are suffering there.
There is one factor that is overlooked: Bangladesh had resolved all its border issues with its largest neighbour, India.
This has let to relative security, stable political system and the Bangladeshis can now concentrate on economy.
Pakistan on the other hand is a Garrison state that is owned by an Army that has to keep the border issues live to justify the Army itself. Economy is last priority. Security, strategic depth in Afghanistan and parity with India is primary.
The path to Salvation for Bangla,is PRC. They have to let the PRC invest in the Gas and Power infra sector,to produce power at the LOWEST COST IN ASIA.In the time to set up the capacities,the ports can be deep dredged and the road infra be put in order.Once that is in place – the lowest cost manufacturing in THE WORLD,will be in Bangladesh.
The Edge of Bangladesh,is Gas and the Sea (which makes for Offshore wind and tidal,low freight costs) – and combine that,with the power potential in Myanmar – and its cross border wheeling.
The only issue is the rising sea and the soft soil – and so,manufacturing will need to move into the interiors,or power can be wheeled to Myanmarese SEZs.The Bangla success,will wipe out the ENTIRE MANUFACTURING INDUSTRY IN NORTH EAST INDIA,AND THE ENTIRE EAST COAST OF INDIA.
Basically the Bangla state,has to allow Chinese,Korean and Japanese SEZs on an unrestricted basis,with limited NFE and Taxation – and the Taka will overshoot the Thai Baht and Peso,in 5 -10 years.
That will complete the Chinese Triad and the Chinese Parallel in South Asia.
The Chinese Triad is CPEC,Lanka SEZ and the Bangaladesh SEZ.Industry and manufacturing will migrate from Pakistan to Lanka to Chittagong ,on a value addition mode,on an absolute basis.Dhaka will lose its LDC soon,and so,those units can be relocated in Lanka or CPEC. So Chinese SEZ in Bangla,Lanka and CPEC will wipe out the industry in the East,West and South of India – and the impact of that on banking, unemployment and inflation in India,is obvious.
So there is a successful Chinese SEZ Triad
The Chinese Parallel is a line from CPEC to the Deep Draft Port of Myanmar,with its SEZ.The intersection of the Chinese Parallel and the Chinese Triad,is the CRUCIFIXION of the Satanic nation of Hindoosthan
East Bengal,Assam,Tripura and Manipur belong to Bangladesh.The 1st Ahom king was a Chinese,Arunachal are Hans and the rest are South Tibetans,and so,North East belongs to China
Bangladesh ports are the IDEAL PORT TO BYPASS MALACCA,and exit the LOGISTICS TRAP OF THE US NAVY.It is a better option to Gwadar. Then come the ports in Myanmar,and then comes in Gwadar.Gwadar is viable,when Kashmir is an independent nation, Afghan is under Taliban rule (as a US puppet,can block Chinese logistics) and Baloch is under Control.
That provides the pretext to the Chinese,to station the PLN,in The Bay of Bengal,Arabian Sea and build Artificial Islands in the Bay of Bengal, and Indian Ocean.
Once North East India is lost – the Indian weasels will give up Kashmir and Uttarakhand
Hence,the Chinese logistics and economic security strategy,will provide salvation to the People of Pakistan, Bangladesh,Lanka and Myanmar. This is providence and salvation.
A Mahayana Buddhist nation (PRC) is providing salvation to 2 Islamic nations and 2 nations of Theravada or Hinayana Buddhism. dindooohindoo
You are right. Northeast India is a yellow race, mainly a branch of Tibetans. They are all Chinese, not Indians. They must be saved from India’s evil rule.
The beauty of Bangladesh,is that,unlike Pakistan,it does not have Afghanistan and Persia,as neighbours – so it is NOT a proxy battleground,for superpowers.
Its borders with India are an ADVANTAGE,as the North East,is the weakest link in the Indian Military defense and economic deveiopment, and the North East Indians,DO NOT have Indian DNA.dindooohindoo
PLA sponsored freedom struggles,in the North East,can be operated from Myanmar and Bangladesh, with complete deniability,and strategic ambiguity.
With the Chinese Hydel dam on the Brahmaputra,Bangladesh can be flooded with power at less than 1 cent/kwh – and that will doom all manufacturing in North East India and the Export manufacturing of East India.
This destruction will bring out the stark disparities between North East India and the Bangla race,across the border,in education, inflation,infra,health care etc. – and will start an insurgency in the North East – for secession from India.
With the Hydro and Renewable Power from China and Dhaka,and raw materials imported via Chittagong – North East India as a SOVERIGN NATION ,will enjoy LDC status,for exports to the US/EU – besides bringing an inflow,of US/EU Tourists,via the Bangkok-Dhaka Leg and PRC.
In addition,higher cost manufacturing,can migrate from Dhaka to North East India (as a soverign nation) and thus,qualify FOR LDC status (as the Bangla will lose the LDC status)
A simple Statistic – if Made in Bangla items flood North East India – the cost of living in North East India will fall by 50%,and all farmers and residences in North East India,can be supplied free power,for at least 50 years,from the Hydel power in PRC,and Renewable and Gas power in Bangla.The writing is on the wall !
The Impotent Indian Military CANNOT defend North East India and the Indian cannot develop North East India – as there is no Infra in the North East. Everything moves from Kolkata.It is time to liberate North East India – and it is also time for the Bangla race to populate the North East states
The Indian BSF is a race of corrupt and impotent cowards – and the BDR can easily provide cover for Bangla and North East Freedom Fighters !
The People of West Bengal have to see the writing on the wall.They have a port at the tip of the Bay of Bengal.It is time to secede from India.The People of West Bengal are not with Indian DNA
What does the Hindoo shastra think of Easterners ?
The Hindoo scriptures think of “Easterners”, as devil worshippers and the lowest of the low, and as “Easterners follow the practices of the Shudras”- as stated below
The Mahabharata,Book 8:Karna Parva,Section 45
The Pancalas observe the duties enjoined in the Vedas ……. the Easterners follow the practices of the Shudras;
With the formation of Greater Bangladesh and the Soverign United States of North East,and a new race in Dhaka who were born a decade after 1971 – you will have a natural integration with the Islamic Republic of Pakistan !
DUDE! You need to seek help immediately! Dont jump from your window.......Btw, Noah great article, as a Bangladesh-Canadian, makes me hopeful....everyone seems to miss power of growing number of young tech savvy enterprenuers who holds a bigger promise to take Bangladesh to the promise land by 2030.....also despite many challenges Bangladesh maintained a prudent fiscal policy compared to its peers and its paying dividend now.
All will be hunky dorry during initial liberalism of economy same as how India had in the 90s but to put it in sustained development is tough,ex:lk how WB(Bengal) one of the best developed states in India in 50s to a backwards in 90s, don't worry about NE as it's already development,investment is going on there neglected by previous govt. North Easterners hate the Bengal there to the core so nothing will happen or they will never join there hands with banglas.bangladesh is already having a serious threat of raise in Islamists,which will bring the ultimate dome to there development lk the Pakistanis had in 60s,as for India's is time to grab the Popcorn nd see the Bangla Circus.
How big is the total world clothing market? Bangladesh has done a good job at capturing some fraction of it, but garment production is the standard on ramp for industrialization. At some point, they will find themselves competing with other new market entrants and up against overall global demand. What is Bangladesh's plan for the next step? Do they have a plan to grow an internal market?
I think that last question is the tough one. Industrialization is relatively well understood. It's easy to grow supply and still maintain political control. The challenge is usually in developing demand since this places political control at risk. I could see a much smaller country leveraging garments into a powerful niche, perhaps moving upmarket like Italy. It would be much harder for a large nation like Bangladesh.
P.S. Let's hope no one comes up with a way of automating garment production.
I wrote recently about inequality in Bangladesh. The state's compact with industry has had a key role to play in Bangladesh's growth, but it is also becoming a roadblock to tackling inequality in the country. https://suvojitc.substack.com/p/bangladesh-much-more-to-do-to-tackle
1) my wealthy (even wealthy by american standards) relatives complain about how difficult it is to procure servants (they have drive deep into the countryside to find tweens)
2) my relatives haven't asked me about the USA since about 2015. in the 2000s they would ask constantly about america
The exports have been important, but the key is well-constructed industrial policy, as opposed to market fundamentalism. In that sense, very much like the East Asia Tigers. That's another important lesson that Americans can and should learn.
The core of this economic model is not exports but investments. This is investment led economic growth. It includes a certain level of opening up leading to foreign money being invested in the country, in factories, logistics, resources, making certain people very rich... The country itself invests in factories, roads, bridges, airports etc. Without these investments, there could be no exports and building the infrastructure itself raises GDP. We know the second part of this story and where it usually goes when there is no political will of the rich developed countries to assist in the transition to consumption led economy.
Exports are important because they encourage investment and increase productivity.
"And who does Bangladesh sell clothes to? "
Another interesting question to ask, is where does most of the FDI coming from, why and who owns the factories. Then you get your real answer.
You have explained the economical situation here in Bangladesh really well. But made some significant mistakes in the political breakdown. It hasn't become more democratic. Instead it is becoming more and more authoritarian. Even though there are some islamist elements(it's not concerning, can be considered normal) involved here,people are really respectful and tolerant to other religions. People weren't able to vote in the previous two elections (which I believe is the most important element of democracy). The government is using the "Islamist" and "traitor" tag to suppress any opinions/voice against the regime. From my observation I can say this authoritarian regime has played significant role in the economic development and maintained economic stability. But this doesn't mean the authoritarian regime is a good regime. I would suggest you to look more deeply into the political situation here as you have made some significant mistakes in explaining the situation.
Other than the mass mechanization of these types of industries, and we are just not seeing that kind of productivity growth, I really don’t understand why export led industrialization would not work outside of East Asia. There doesn’t appear to be a theoretical reason why the industrialization strategy followed by South Korea, Taiwan, Japan, China, etc. wouldn’t work in countries like Nigeria, Iraq, Niger, South Africa, etc. Which suggests to me that a sort of racial prejudice is the real reason people believe that African, Middle Eastern, and South American countries can’t follow the same path.
One reason it might not work: it seems to require a fairly strong central government, which is a lot easier when national borders align to monolithic ethnic boundaries.
Looking at the typical examples, no no one really disputes that there is a distinct Japanese or Korean or Vietnamese "people". But in other regions, especially Africa, that's less the case.
I think this dynamic probably goes some way to explaining why the Philippines never made it to "Asian Tiger" status with their 175+ ethnolinguistic nations that are all nominally "Filipino". Like many African countries, the Philippines as a single entity is also a colonialist creation... it just happened back in the 1500s under Spain so has had longer to evolve toward a nationalist identity.
Another reason is the ability to do value addition along existing sea based industrial supply chains between East Asia and Europe. Countries en route (ASEAN - but also India, Bangladesh etc) can reuse logistics chains, do some value addition, and send goods on their way.
Most of Africa and South America doesn't get the advantage of leveraging existing trade routes and incrementally doing value addition. Horn Africa and North Africa get access to this to some extent - Niger simply does not.
I was re-reading How Asia Works and my biggest critique is the voluntaristic view Studwell takes on industrial policy—as if great leaders can simply will an industrial policy by themselves. The role of political-institutional heritage is largely thrown out with the culture bathwater.... Which is slightly ironic given how close Studwell gets to acknowledging this in his comparison of Malaysia vs Korea & Japan, wherein the former failed to create an industrial bureaucracy along the lines of the Economic Planning Board (Korea) or MITI (Japan).
If an accurate assessment, I think there's a disservice to the unique benefits Northeast Asia's political-institutional memory/heritage has wrought, and a failure to identify a critical variable that necessarily complicates Studwell's voluntaristic view of industrial policy.
Can you write about the economy of Vietnam or Thailand?
I will!!
What kinds of things do you want to know about the economy of Vietnam? (I live in Vietnam.)
I want to know about Vietnam's education and international trade.
I don't have any grand insights on either but I'll offer some flavor on education.
First a historical note to put Vietnam's current education in context. When the communists came to power in 1945, Vietnam's literacy rate was under 10%. (nb there is some dispute about whether it was really this low.) A study in the 1930s found that the French investment in Vietnam was the lowest of any colonial power in a colony. When the communists took power in 1945, they embarked on a program of universal education and universal literacy by sending tens of thousands of cadres to villages across the north. (One estimate was that there were 96,000 such teachers; this is the kind of thing that helps explain the popularity of the communists; a similar program happened in the south from 1975-1978 after reunification.) While the next 50 years were hardly ideal for a program of universal education and universal literacy, within a decade or two literacy was essentially universal in Vietnam.
So from the beginning of the modern state, education has always had a place of prominence. It was one of Ho Chi Minh's founding principles of the Vietnamese Communist Party and the three priorities he announced upon becoming President in 1945 were "fighting poverty, fighting illiteracy, fighting invaders".
Fast forward to today. Vietnam regularly outscores all developed nations on PISA assessments. In 2012 it ranked 16th globally, one full standard deviation better than neighboring Indonesia (who has the closest GDP per capita). It is largest positive outlier in the tests. Even when adjustments are made for child-, household-, and school-level variables this holds.
But things aren't quite as rosy as factoids like that make it out to be.
Subjectively I'd say that Vietnam's education system is well-fitted to educate factory workers but poorly-fitted to educate knowledge workers or service-industry workers. If you imagine a stereotype of "rigid, hierarchical, repetition-based, Confucian-inspired, East Asian teaching style" then....you're not going to be too wrong. And this extends to the university level. Initiative, creativity, thinking outside the box, asking questions when you don't understand, offering feedback on your boss's ideas ... foreign companies are often frustrated that even university graduates are weak in these areas.
There's also a fair amount of brain drain. In certain fields, it is common for Singaporean firms to recruit the top graduates. (Though most seem to hate living in Singapore, which is understandable since it is a soulless monstrosity of a country.) Australia is a popular choice, thanks to the widespread private university complex that survives on the fat fees of international students, with students hoping to leverage a student visa into permanent residency. And, of course, America remains the perennial promised land, often thanks to fake marriages for visas or family chain migration. Though all of these are slowly waning, just as Mexican migration to America waned as the Mexican economy continued to develop.
Parents enroll children in after-school classes in staggering numbers. I don't know actual numbers but it certainly feels like "all of them do it". The most popular choice is, unsurprisingly, English classes. (The nearly universal belief that English will be required to succeed in the future has unfortunately led to a bunch of borderline predatory behaviour by unscrupulous English language centers.) But the Mathanasium chain is also fairly widespread.
Primary school teachers are woefully underpaid (I once had a maid who quit being a teacher to become a maid because it paid more) and classes are large. 40 students are standard. Teachers make so little money that virtually all of them offer quasi-mandatory after-school tutoring for addition income. Why "quasi-mandatory"? Because if a student doesn't sign up for tutoring then...don't be surprised if you find your child getting low scores in class regardless of their actual performance.
Thank you so much for sharing.
Insightful. Thank you Tran!
Relative to its subservient position as a colony, pre-1971, of West Pakistan, Bangladesh has made impressive gains in terms of per capita income, in education, and in life expectancy. Bangladesh has been correct in promotion of manufacturing growth, essentially ready-made garments. But ...
* India is still well ahead of Bangladesh in average per capita GDP:
Noah Smith writes: "A Bloomberg article recently reported that Bangladesh has now surpassed both India and Pakistan in terms of GDP per capita. That’s an astonishing milestone. In purchasing power parity terms, India is still ahead, but the gap is closing." A comparison of per capita GDP in terms of exchange rates is misleading. What matters is the purchasing power parity measure. The World Bank 2019 estimates are: India PPP$4754, Bangladesh PPP$4754, Pakistan PPP$4690.
* Income distribution is grossly unequal in South Asia
Bangladesh leaders are proud to announce that Bangladesh is now a "middle income" country. The World Bank's preferred poverty threshold for lower-middle income countries is PPP$3.20/person/day. Using that threshold, the poverty rate in both India (62%) and Bangladesh (52%) is above 50%. In Pakistan, incidentally, it is "only" 36%.
* The quality of Bangladesh governance is a serious caveat - very weak economic regulation, very weak quality of education, very serious threat to free speech and censorship of the press, politicization of the judiciary.
It is worth recalling the collapse of Rana Plaza in 2013. The building, owned by a prominent politician in the governing party, contained about 3000 garment workers. He threatened government inspectors wanting to shut it down due to structural failures. The following day the building collapsed: 1100 workers died, about 2000 suffered injuries of varying severity. The major garment importers had a choice: abandon Bangladesh as a source country or take over the regulation of garment sector infrastructure. Reluctantly, the government agreed to yield control.
* Very low quality basic education is a serious constraint on future growth.
The simplest explanation for why China is "rich" and South Asia is "poor" is the difference in education quality. By the time Deng Xao Peng came to power and pursued rational development policy, China had achieved universal basic literacy and numeracy. Four decades later, South Asia is nowhere near achieving universal basic literacy and numeracy. South Asian countries - Sri Lanka excepted - "gamed" the UN's Millennium Development Goals, the second of which was universal primary education by 2015. Governments increased enrolment rates, and lowered completion standards sufficiently that about 80% of children in the primary age cohort now graduate. However, in India and Pakistan only half of children in Grade 5 (terminal year of the primary cycle) can read a short story from the Grade 2 curriculum, and only half can perform two-digit subtraction. It is harder to estimate Bangladesh primary grade performance, but it is similar to that in India.
John Richards
email: jrichard@sfu.ca
please see again indias gdp per capita is 7000 not 4750
You are right that I made an error in citing India's PPP$ per capita GDP. I wrote a correction (see below). The 2019 Indian statistic is PPP$6700, larger by 40% than the Bangladesh statistic at PPP$4750. Note that the lower-middle poverty rate in both countries is over 50%. This means that median per capita GDP is under PPP$1200 annually (365 days * PPP$3.20/person/day).
"How Asia Works" says that land reform is crucial (The Philippines and to a lesser extent Malaysia are given as examples of what happens without land reform) ... has Bangladesh done this?
I can see lots of word fights happening here. I am a Bangladeshi and I am very happy to see the progress of Bangladesh. But one thing must address that political stability and democracy is under threat by the government. Hasina government is corrupted like no others. I still do not feel safe to go back and start new life in Bangladesh. I know how much people are suffering there.
A correction to my post
The World Bank 2019 estimates are: India PPP$6700, Bangladesh PPP$4754, Pakistan PPP$4690.
John Richards
Enjoyed this article
There is one factor that is overlooked: Bangladesh had resolved all its border issues with its largest neighbour, India.
This has let to relative security, stable political system and the Bangladeshis can now concentrate on economy.
Pakistan on the other hand is a Garrison state that is owned by an Army that has to keep the border issues live to justify the Army itself. Economy is last priority. Security, strategic depth in Afghanistan and parity with India is primary.
The path to Salvation for Bangla,is PRC. They have to let the PRC invest in the Gas and Power infra sector,to produce power at the LOWEST COST IN ASIA.In the time to set up the capacities,the ports can be deep dredged and the road infra be put in order.Once that is in place – the lowest cost manufacturing in THE WORLD,will be in Bangladesh.
The Edge of Bangladesh,is Gas and the Sea (which makes for Offshore wind and tidal,low freight costs) – and combine that,with the power potential in Myanmar – and its cross border wheeling.
The only issue is the rising sea and the soft soil – and so,manufacturing will need to move into the interiors,or power can be wheeled to Myanmarese SEZs.The Bangla success,will wipe out the ENTIRE MANUFACTURING INDUSTRY IN NORTH EAST INDIA,AND THE ENTIRE EAST COAST OF INDIA.
Basically the Bangla state,has to allow Chinese,Korean and Japanese SEZs on an unrestricted basis,with limited NFE and Taxation – and the Taka will overshoot the Thai Baht and Peso,in 5 -10 years.
That will complete the Chinese Triad and the Chinese Parallel in South Asia.
The Chinese Triad is CPEC,Lanka SEZ and the Bangaladesh SEZ.Industry and manufacturing will migrate from Pakistan to Lanka to Chittagong ,on a value addition mode,on an absolute basis.Dhaka will lose its LDC soon,and so,those units can be relocated in Lanka or CPEC. So Chinese SEZ in Bangla,Lanka and CPEC will wipe out the industry in the East,West and South of India – and the impact of that on banking, unemployment and inflation in India,is obvious.
So there is a successful Chinese SEZ Triad
The Chinese Parallel is a line from CPEC to the Deep Draft Port of Myanmar,with its SEZ.The intersection of the Chinese Parallel and the Chinese Triad,is the CRUCIFIXION of the Satanic nation of Hindoosthan
East Bengal,Assam,Tripura and Manipur belong to Bangladesh.The 1st Ahom king was a Chinese,Arunachal are Hans and the rest are South Tibetans,and so,North East belongs to China
Bangladesh ports are the IDEAL PORT TO BYPASS MALACCA,and exit the LOGISTICS TRAP OF THE US NAVY.It is a better option to Gwadar. Then come the ports in Myanmar,and then comes in Gwadar.Gwadar is viable,when Kashmir is an independent nation, Afghan is under Taliban rule (as a US puppet,can block Chinese logistics) and Baloch is under Control.
That provides the pretext to the Chinese,to station the PLN,in The Bay of Bengal,Arabian Sea and build Artificial Islands in the Bay of Bengal, and Indian Ocean.
Once North East India is lost – the Indian weasels will give up Kashmir and Uttarakhand
Hence,the Chinese logistics and economic security strategy,will provide salvation to the People of Pakistan, Bangladesh,Lanka and Myanmar. This is providence and salvation.
A Mahayana Buddhist nation (PRC) is providing salvation to 2 Islamic nations and 2 nations of Theravada or Hinayana Buddhism. dindooohindoo
You are right. Northeast India is a yellow race, mainly a branch of Tibetans. They are all Chinese, not Indians. They must be saved from India’s evil rule.
The Grand Plan for Greater Bangla-desh !
The beauty of Bangladesh,is that,unlike Pakistan,it does not have Afghanistan and Persia,as neighbours – so it is NOT a proxy battleground,for superpowers.
Its borders with India are an ADVANTAGE,as the North East,is the weakest link in the Indian Military defense and economic deveiopment, and the North East Indians,DO NOT have Indian DNA.dindooohindoo
PLA sponsored freedom struggles,in the North East,can be operated from Myanmar and Bangladesh, with complete deniability,and strategic ambiguity.
With the Chinese Hydel dam on the Brahmaputra,Bangladesh can be flooded with power at less than 1 cent/kwh – and that will doom all manufacturing in North East India and the Export manufacturing of East India.
This destruction will bring out the stark disparities between North East India and the Bangla race,across the border,in education, inflation,infra,health care etc. – and will start an insurgency in the North East – for secession from India.
With the Hydro and Renewable Power from China and Dhaka,and raw materials imported via Chittagong – North East India as a SOVERIGN NATION ,will enjoy LDC status,for exports to the US/EU – besides bringing an inflow,of US/EU Tourists,via the Bangkok-Dhaka Leg and PRC.
In addition,higher cost manufacturing,can migrate from Dhaka to North East India (as a soverign nation) and thus,qualify FOR LDC status (as the Bangla will lose the LDC status)
A simple Statistic – if Made in Bangla items flood North East India – the cost of living in North East India will fall by 50%,and all farmers and residences in North East India,can be supplied free power,for at least 50 years,from the Hydel power in PRC,and Renewable and Gas power in Bangla.The writing is on the wall !
The Impotent Indian Military CANNOT defend North East India and the Indian cannot develop North East India – as there is no Infra in the North East. Everything moves from Kolkata.It is time to liberate North East India – and it is also time for the Bangla race to populate the North East states
The Indian BSF is a race of corrupt and impotent cowards – and the BDR can easily provide cover for Bangla and North East Freedom Fighters !
The People of West Bengal have to see the writing on the wall.They have a port at the tip of the Bay of Bengal.It is time to secede from India.The People of West Bengal are not with Indian DNA
What does the Hindoo shastra think of Easterners ?
The Hindoo scriptures think of “Easterners”, as devil worshippers and the lowest of the low, and as “Easterners follow the practices of the Shudras”- as stated below
The Mahabharata,Book 8:Karna Parva,Section 45
The Pancalas observe the duties enjoined in the Vedas ……. the Easterners follow the practices of the Shudras;
With the formation of Greater Bangladesh and the Soverign United States of North East,and a new race in Dhaka who were born a decade after 1971 – you will have a natural integration with the Islamic Republic of Pakistan !
It is as inevitable as the Sunrise !
DUDE! You need to seek help immediately! Dont jump from your window.......Btw, Noah great article, as a Bangladesh-Canadian, makes me hopeful....everyone seems to miss power of growing number of young tech savvy enterprenuers who holds a bigger promise to take Bangladesh to the promise land by 2030.....also despite many challenges Bangladesh maintained a prudent fiscal policy compared to its peers and its paying dividend now.
All will be hunky dorry during initial liberalism of economy same as how India had in the 90s but to put it in sustained development is tough,ex:lk how WB(Bengal) one of the best developed states in India in 50s to a backwards in 90s, don't worry about NE as it's already development,investment is going on there neglected by previous govt. North Easterners hate the Bengal there to the core so nothing will happen or they will never join there hands with banglas.bangladesh is already having a serious threat of raise in Islamists,which will bring the ultimate dome to there development lk the Pakistanis had in 60s,as for India's is time to grab the Popcorn nd see the Bangla Circus.
@Pie: Go back to sleep looser, will call you in 5 years when we need tech support
How big is the total world clothing market? Bangladesh has done a good job at capturing some fraction of it, but garment production is the standard on ramp for industrialization. At some point, they will find themselves competing with other new market entrants and up against overall global demand. What is Bangladesh's plan for the next step? Do they have a plan to grow an internal market?
I think that last question is the tough one. Industrialization is relatively well understood. It's easy to grow supply and still maintain political control. The challenge is usually in developing demand since this places political control at risk. I could see a much smaller country leveraging garments into a powerful niche, perhaps moving upmarket like Italy. It would be much harder for a large nation like Bangladesh.
P.S. Let's hope no one comes up with a way of automating garment production.
I wonder if income growth in countries like PRC will make for more customers for export-oriented garment manufacturers
No need to hope, Automation is already fast underway in Bangladesh's RMG sector. There are, however, new sectors opening up.
I wrote recently about inequality in Bangladesh. The state's compact with industry has had a key role to play in Bangladesh's growth, but it is also becoming a roadblock to tackling inequality in the country. https://suvojitc.substack.com/p/bangladesh-much-more-to-do-to-tackle