World optimistic about Bangladesh: WB

, Nov 21 (—Bangladesh’s development pessimism in global circles after its birth in 1971 has been proven ‘wrong’, the World Bank says.

In its World Development Report 2013 on jobs, it says Bangladesh now belongs to a small group of countries that ‘have done well’ in both human development indicators and economic growth in recent decades.

“This is the crux of the surprise,” says the report that stresses the role of strong private sector-led growth in creating jobs.

The report finds that poverty falls as people work their way out of hardship and as jobs empower women to invest more in their children.

“Efficiency increases as workers get better at what they do, as more productive jobs appear, and as less productive ones disappear. Societies flourish as jobs foster diversity and provide alternatives to conflict.”

The report came amid ongoing crisis between Bangladesh and the Washington-based global lender on a major Padma bridge funding and the latter’s call to accelerate Bangladesh’s economic growth to 8 percent to be a middle-income country by 2021.

It says the successes have been built on ‘modernization in the agricultural sector, an industrial sector able to absorb low-skilled surplus farm labor and supportive social policies’.

During the 1970s, it goes on, Bangladesh was regarded as the ‘test case of development’ and study on famines in 1978 concluded that Bangladesh was ‘below poverty equilibrium.’

Such a negative perception of the viability of Bangladesh economy ‘was conditioned by the adverse initial conditions’ the country was facing after independence –high population density, a limited natural-resource base, underdeveloped infrastructure, frequent natural disasters and political uncertainty.

“This negative perception has given way to optimism in global development circles because of Bangladesh’s positive record of socioeconomic development in recent decades.”

It says with rapid urbanisation, industrialisation is growing in large cities like Dhaka and Chittagong and the industrial sector now accounts for nearly 30 percent of value added, up from 20 percent in 1990.

Exports as a percentage of GDP tripled between 1990 and 2010, with much of the increase in a ‘thriving’ readymade garment industry that is highly intensive in female labour.

“This structural transformation, along with improvements in agricultural productivity, has had a major impact on living standards.”

GDP per capita has doubled in the past two decades and the share of the population living below $1.25 a day fell to 43 percent in 2010 from 70 percent in 1992.

It says faster technology adoption has led to productivity increases in agriculture and access to finance due to microfinance institutions has facilitated human capital buildup, especially in women’s education and health.

The report listed Bangladesh’s readymade garment industry ‘an important part of jobs story’ as it employs about 3 million women, migrating to cities.

Construction has been seen an important employer for men moving out of rural agriculture, and remittances from ‘low-skilled workers’ in abroad are growing by about 10 percent per year.

The report finds opportunities to work in garment industry stimulate schooling, especially for girls as the educational attainments of garment workers have found more than those work in agriculture.

In addition, growing labour earnings increase ‘the opportunity cost’ of raising children, which in turn, may raise the age of marriage and reduce the birth rate.

“To that extent that women’s educational attainment and labour market participation rise, the status of women in society in enhanced.”

On social policy issues, the report says, both government and non-government organisations have established ‘pro-poor, pro-youth and pro-women’ programmes.

“These have been instrumental in reducing population growth and encouraging more effective public and private investments in education and health.”

The report, however, says Bangladesh stands out as an ‘intriguing case that is important to understand, especially given its starting point’.

It says the government has provided some support, with export processing zones, bonded warehouses, special treatment of garment at ports and large infrastructure projects like Jamuna bridge that bridged the prosperous eastern and lagging western regions.

“But government has not played the leading role in the transformation.

“Corruption is a problem and the cost of doing business is high. Power failures are frequent, many roads are unpaved, and those that are paved are highly congested.”

Despite these obstacles, agricultural modernisation has occurred, it says, crediting ‘Green Revolution’ associated with the development and diffusion of high-yielding varieties of rice and access to finance.

“Labour has moved out of agriculture through industrialization, and social policies have been supportive through family planning and social protection.”

The report says urbanizing countries like Bangladesh have the potentials ‘to exploit several spillovers.’

But a key challenge is ‘to find a way to move up the value-added chain and diversify manufacturing exports.’

“Apart from ready-made garments, few sectors have grown substantially in Bangladesh.

“The pharmaceutical industry has developed, but the high skill levels required in this sector and other value-added export sectors are unlikely to make them a source of jobs for the masses of youth with only primary education,” according to the report.

World Bank’s President Jim Yong Kim, in the foreword of the report, says the private sector is the key engine of job creation, ‘accounting for 90 percent of all jobs in the developing world.’

“But governments play a vital role by ensuring that the conditions are in place for strong private sector–led growth.”

Source: Bd News24

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