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My thoughts on Bangladesh’s economic progress relative to India/Pakistan, in response to @AtifRMian's question posed to me. 13-tweet thread follows.[Warning: these thoughts are of Twitter-length & depth, not the level at which academics normally engage on such complex questions] https://twitter.com/AtifRMian/status/1127505041168973824
1. From macro data, the 2 proximate causes are our 2 biggest exports: (a) Garments and (b) Humans (i.e. remittances), both of which contribute large shares of GDP. [Not "exporting people to India", as trolls claim in Atif's thread, but remittance receipts from ME, SEA and Europe]
2. Why did the garment sector take off? Our comparative advantage has been low-wage labor. Women, who had traditionally not worked outside the home, and therefore had poor outside options, work at lower wage in B’deshi factories than their counterparts in competing countries.
3. Perhaps India and Pakistan should think more about encouraging female labor force participation? Religion and culture, and views about women's role in society, are likely relevant? https://www.livemint.com/Opinion/v80I9EwDz6oyklST8ebqMM/Reversing-womens-decline-in-the-Indian-labour-force.html
4. What makes our workers productive? Investments in human capital. Social indicators for women and children (female school enrollment, maternal and infant mortality, fertility rate, early marriage, vaccination) compare favorably to richer states of India. https://www.thedailystar.net/top-news/bangladesh-ahead-india-social-indicators-amartya-3540
5. Why does BD outperform neighbors in social indicators? Impressive NGOs (BRAC and many others) partly responsible. NGOs operate with minimal interference. Provide healthcare, schools, banks, dairy collectives, phone service, public health campaigns like ORS, immunization drives
6. Impressive reach of NGOs (supported by int’l dev aid) complements govt. Not by providing microcredit, but other massive social programs. Microcredit largely used for consumption not investment. Makes people happier (which is important), but unlikely to produce much growth.
7. I'm not mentioning other contributing factors like agricultural productivity growth due to green revolution, because Pakistan and India experienced that as well. Those were very important, but does not help explain the differential performance
8. To be sure, B'desh still has many problems. Poor state of infrastructure makes us less competitive than SEA neighbors (Thailand, Vietnam..). Filipina women contribute a lot of remittance, but Bangladeshi women don’t migrate much internationally. https://news.abs-cbn.com/focus/03/30/18/philippine-migration-takes-on-a-female-face
9. Poor infrastructure is partly due to very poor tax collection, and poor governance and corruption. We lag behind South Asian neighbors (including Nepal) in Tax/GDP ratio. http://faculty.som.yale.edu/mushfiqmobarak/featuredresearch/taxation.pdf
10. University quality is severely lacking relative to India. As a result, India moved into hi-tech, which we need to emulate. See http://www-personal.umich.edu/~moralesn/Khanna%20Morales.pdf by @econgaurav. [but liberalizing higher ed in the early 90s was a good move. Pvt univ. met pent-up demand for degrees]
11. Poor governance and political instability leaves much to be desired. But politics not nearly as messy as in Pakistan. Thankfully, more limited role for religion in politics. Govt acted decisively to root out terrorist threats, perhaps at the expense of curtailing civil rights
12. Garment factory safety, wages, working conditions remain important concerns. Ensuring , "safe migration" is also a concern. Those are challenges we need to rise up to with creative, innovative, and effective ideas.
13. I am heartened to see the innovative spirit and public mindedness of many young Bangladeshis. But people can only innovate when they have freedom of expression. Our govt should take note, and resist any authoritarian temptations that have trapped other countries in poverty.
