Why Developing Countries Like Bangladesh Remain Poor
February 20, 2005
*Adjunct Professor of Economics, C W Post Campus, Long Island University, New
York, USA; author of "Economic Exploitation of Bangladesh" available
from Amazon.com.
Achievement of economic growth is the single most important goal of every
nation. Economic growth refers to the ability of a nation to produce more goods
and services and thereby raising the living standard of its people. But as we
can see, not all nations of the world have fared well in their endeavors. Over
the years some nations have achieved very high standards of living, while others
continue to languish in poverty. Here is some factual information, which should
give a better picture about the prevailing disparity in the world. Based on
World Development Report of 2000 prepared by World Bank, the annual per capita
income of one-sixth of the world population in 1999 was about $25,000, while
two-thirds of them earned less than $5,000, and the earning of the lowest third
hardly amounted to $1,500 per year. Now the question is, why does there exist
such an inequality?
One easy answer to the question may be the uneven distribution of world
resources. Let's face it, some countries are endowed with more natural resources
than others. So logically that would make the people of those countries richer
than the rest. But mere possession of resources does not guarantee economic
growth. An abundance of natural resources could bring prosperity, but without
industrialization that prosperity would last as long as the resources last.
Hence, industrialization is considered to be the key to economic development
because that is the surest way to increase the productive capacity of a nation.
A nation's GDP or per capita income of its people is measured by the market
value of goods and services it produces annually. It thus follows that in order
for a nation to attain or retain its economic growth it must manage its
resources efficiently and at the same time it must employ them in the
modernization of its production facilities.
The early economic growth achieved by the European and North American
countries, for example, was helped by the spread of the industrial revolution
that originated in England in the late eighteenth century. Ironically, lack of
natural resources was not an impediment to economic growth. A number of
countries, notably Japan, Taiwan, South Korea and Singapore, were later able to
achieve their impressive economic growth by embarking on industrialization, even
though they had no or little natural resources of their own. But unfortunately
most of the underdeveloped countries of the world are finding it very hard to
come out of their economic doldrums. What's holding them back? If progress is to
depend on a country's ability to overcome obstacles and to adapt in changing
circumstances, then one needs to look into the historical background of these
countries to understand the difficulties they face.
The biggest obstruction for these underdeveloped countries is poverty. Other
critical challenges they confront, such as illiteracy or ill-health, are mainly
attributable to poverty itself. Since success of a country's industrialization
depends primarily on the education and health of its workers, poverty could be a
serious drawback. To put it another way, without having met the basic human
requirements of food, clothing and shelter other challenges could not be
effectively addressed. The roots of poverty in most underdeveloped countries
could be traced to the era of colonial rule. Many years of neglect and
oppression by the colonial powers have created such an impact in these countries
that they find themselves in an extremely serious "logjam" from which
they find it very difficult to escape.
So, for removing or reducing the impact of poverty in these countries, what
is essentially needed is a revolutionary change both socially and culturally.
But the problem is that this kind of change does not come easily in a
traditional society where most people are illiterates. To bring about this kind
of change it would require great sacrifice and a very intelligent political
guidance. Without having achieved such a change, it is not possible for a nation
to turn its situation around. In other words, appropriate political changes are
required in these countries before their economy could be improved. Those
countries, such as India and Mexico that have succeeded in making the changes
and adopted policies to modernize their production facilities are making
progress. But, as evidence clearly points out, quite a number of South Asian,
African and Latin American countries, after so many years of political freedom
from their colonial rules, have yet to implement such changes. As a result,
these countries' economies remained very depressed and their people seem
hopelessly trapped in poverty. Until such time that the political leadership of
these countries is prepared to implement the changes necessary, there will be no
escape from the present predicament.
Bangladesh, with 133 million people, is an impoverished country in South Asia
and it embodies all of the above characteristics and difficulties of a
developing country. What can we learn from the Bangladesh situation? First,
let's consider its historical background. It was once a prosperous region in the
Indian sub-continent, and was considered to have a great potential. But then it
had to serve as part of a British colony for almost 200 years, during which time
it witnessed an enormous drain of its wealth to Britain. After the British left
in 1947, it was victimized once again when it chose to join Pakistan. The
worsening economic situation that followed compelled some to refer to its
Pakistan era as the era of 'the colony of a colony'. In any case, its people had
to fight two wars of independence within a time span of just 24 years - first
with the British and second with the Pakistanis. When Bangladesh finally emerged
as an independent country in 1971, its economy was very much in shambles and the
situation was desperate.
The world community thought it had a solution for Bangladesh. It poured
billions of dollars of economic aid to bolster the country's economy. Many
non-governmental organizations also came forward to help. Despite the tremendous
influx of foreign aid, the country's overall economy for the general people
didn't improve much even after some 30 years of its existence as an independent
state. It's not to say that Bangladesh hasn't made any improvement. The
country's economy is said to have grown 5 per cent a year during the past
decade. But the general public benefited little from it since most of the gain
was forfeited by the privileged few and part of it was offset by the population
growth. The amazing result of the aid money was the creation of an unprecedented
number of billionaires in the country. However, the most troubling fact of all,
instead of making advances in industrialization, its core industrial base
continued to dwindle, though the country could claim gains in certain service
industries like garments manufacturing. But economists question the viability of
Bangladesh economy based on those service industries alone. Besides, under the
current globalization process, the country is not likely to sustain them for too
long. Although the CIA World Factbook of 2003 came up with an estimate of
Bangladesh's GDP or annual per capita income to be $1,700 for 2002, the country
is still one of the most impoverished countries in the world.
What went wrong with Bangladesh? The simple answer is its corrupt political
system that has miserably failed to implement the kind of changes required for
turning the country around. The world pretty much knows how corrupt Bangladesh
is - Transparency International has rated it as one of the most corrupt
countries of the world for four consecutive years since 2001. Here is an example
of the extent of corruption in the country. Of the billions of dollars the world
sent to Bangladesh for its economic development, only a mere 25 per cent had
gone towards that purpose. The rest of the money was one way or another
misappropriated by the privileged. Professor Abul Barkat, the Secretary General
of the Bangladesh Economic Association, in his report of February 10, 2001,
documented this astonishing fact. The presence of various NGOs in the country
has no doubt made a difference, but the economic effect is not as great as it is
advertised. Here is another example. Bangladesh had inherited some industries,
which were immediately nationalized at independence. Later the elites, after
having acquired authority over them, used these industries for their own
personal gain and put them in a precarious bankrupt situation. As a result,
thousands of industries from small to large have already closed - estimates put
the figure close to 10,000.
What happened in the field of education and healthcare is no different
either. The overall quality of education in the country has deteriorated to such
an extent that every year the so-called elites send their children to schools
abroad. But, except those who feel they could reap a big economic benefit by
going back, very few of them return to the country. The medical facilities are
so inadequate and antiquated that the affluent citizens always seek healthcare
outside the country. Additionally, there is a more serious and challenging
situation the country faces now - the crime rate. The crime rate has risen so
much that in 2002 the government felt obligated to deploy the army to suppress
it. But evidently that made little difference as the crime in the country
continued to rise day by day.
Therefore, for improving the economy of Bangladesh a number of measures must
be taken before the situation gets out of hand. These most obvious measures are:
full democratization of its institutions including the judiciary, control of
corruption in the government, adoption of appropriate economic policy,
improvement of its education and healthcare system, and especially control of
the crime in the country. Without addressing these issues effectively,
Bangladesh couldn't be expected to come out of its poverty.
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