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

Expand full comment

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.

Expand full comment
Jun 5, 2021Liked by Noah Smith

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.

Expand full comment

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.

Expand full comment

Can you write about the economy of Vietnam or Thailand?

Expand full comment

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.

Expand full comment

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

Expand full comment

"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?

Expand full comment

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.

Expand full comment

A correction to my post

The World Bank 2019 estimates are: India PPP$6700, Bangladesh PPP$4754, Pakistan PPP$4690.

John Richards

Expand full comment

Enjoyed this article

Expand full comment

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.

Expand full comment

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

Expand full comment

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 !

Expand full comment

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.

Expand full comment

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

Expand full comment