Bangladesh is celebrating its 50 years of independence and many events have been taking place in the month of victory, December to be precise, to mark the celebration. An important aspect of the celebration is revisiting and reviewing the economic transformation of Bangladesh in the last 50 years. On the world stage, the success stories of Bangladesh in the last five decades are laudable thanks to many socio-economic achievements. At the same time, the list of failures is also not small Thus the overall development is a mixed bag where it is rather difficult to accurately determine the proportion of successes and failures. Those who are enthusiastic would find that the achievements have outweighed the failures significantly. Those who are cautious optimists would observe that the socio-economic areas that lack progress are mostly instances of missed opportunities and those have weakened the successes in many other fronts.
Fifty years ago a vulnerable, poverty-stricken, resource-constrained country with largely unskilled and illiterate people was a hopeless case to many. Some of them even forecasted that Bangladesh would not survive as an independent and sovereign country in the long-run. Labelling the country as a 'basket case' was a vivid example of such negative projection which had started even before the final victory of Bangladesh in the war of independence against Pakistani army. It was on December 6, 1971, when in a meeting presided over by the United States (US) National Security Adviser Henry Kissinger, the Washington Special Action Group discussed the situation in South Asia. In the meeting, Bangladesh was labelled as an 'international basket case' indicating that it was a dysfunctional or run-down country. The US was quite disappointed due to its failure to stop the breakdown of Pakistan and accept the defeat of Pakistani army in the nine-month bloody war where three million Bengalis were killed and two hundred thousand women were violated.
The natural and man-made calamities in the early years of Bangladesh also provided the supporters of the 'basket case' some tools to carry out their propaganda. During the 1972-75 period of Bangabandhu's regime, three years and eight months to be accurate, the country's economy faced a series of external and internal shocks. These include: rising inflation, global oil shock, a decline in trade, foreign aid and food aid, drought, cyclone, flood, an outbreak of famine and surge in smuggling. Then there was administrative mismanagement, inefficiency and corruption. The 'basket case' propagandists did not consider the shocks.
Some international friends and supporters of Bangladesh did, however, still see a glimmer of hope during the same period. Austin Robinson, emeritus professor at Cambridge University, prepared a report titled, Economic Prospects of Bangladesh, which was published by London-based Overseas Development Institute (ODI) in 1973. In the report he wrote: "The question one is constantly asked is: 'Is Bangladesh viable?' To that question an economist has no answer. What is the alternative to viability? Death? Has any country ever died? It can be poor. It can be static. But can a country not be viable?"
Whatever projections and predictions were made by the experts and economists in the early years of Bangladesh, the country has moved ahead gradually by readjusting and revising economic policies from time to time and also by adopting new policies. The policy formulation and implementation did not always bring positive or optimal outcomes. But the economic progress was never stalled even if it slowed down on different occasions.
In the early years, high tariff regimes and protection coupled with import substitution and state-centric development policies were there. It resulted in public sector dominance with limited role of the private sector and low level of investment. Economic reconstruction in a war-ravaged country was also a priority. A policy shift started to take place from the middle of the first decade by gradually opening up the economy, liberalising import and tariff regime, promoting privatisation and market orientation. The shift helped the rise of domestic entrepreneurial class, emergence of export-oriented ready-made garment (RMG) industry, and also the slow rise of the middle class. Thus, the first two decades of Bangladesh were the decades of determining and founding the base and platforms of economic growth. During the period, it became clear that the country will follow market economy. Moreover, attaining autarky in food was the major objective in the first decade which acted as the driver of agriculture production in the next decades.
In the third decade, 1990s to be more specific, Bangladesh entered the era of parliamentary democracy when market-oriented macroeconomic reforms started. Introduction of Value-Added Tax (VAT), partial currency convertibility and further cut in import tariffs were some critical steps during this period. There were also initiatives for institution building, banking regulations, and extended privatisation. In this decade, the country achieved an economic growth rate of 4.70 per cent on average. Non-government organisations (NGOs) appeared as a key driver of development beside the state and the private sector.
A big push in reform was visible in the fourth decade to attain higher economic growth by way of measures like deepening of import liberalisation, floating exchange rates, financial sector reforms including lowering of interest rates. The result was moderately higher GDP growth rate of 5.60 per cent on average, further reduction in poverty, increased business activities and new job opportunities.
The fifth decade of Bangladesh was Rostow's 'take-off stage' of economic growth at a rapid rate. Average GDP growth reached 6.50 per cent and the country rose to a Lower-Middle-Income one at the middle of the decade. Graduation from the Least Developed Country (LDC) status was also confirmed in the later part of the decade, thanks to significant improvement in human development indicators coupled with poverty reduction and persistent economic growth which crossed 7.0 per cent mark finally. Improved telecommunication and digitalisation appeared as a vital tool for overall development in this decade.
The economic advancement of Bangladesh is accompanied by political development and changes in political settlements. Though the country adopted market-oriented approach, state-sponsored capitalism opened the gate of rent-seeking which continued in various forms over the decades. It also consolidated cronyism, crony capitalism to be specific. Thus the nexus between politics and business became stronger. The result is growing income though with attendant socio-economic inequality. This has become the biggest challenge for Bangladesh to make the five decades of achievement sustainable by getting around the failures. It is not unlikely that Bangladesh economy will enter the 'drive to maturity' or the next stage of Rostow's growth model by the end of the sixth decade of its existence. The high optimism is subject to properly addressing the inequality, ensuring social justice and establishing good governance.