List of Contents
Source: The post is based on the article “Bangladesh: A cautionary tale” published in the Business Standard on 16th November 2022.
Syllabus: GS – 2 – India and its neighbourhood- relations.
Relevance: About economic crisis in Bangladesh.
News: Economic difficulties in Bangladesh are exposing the political flaws within the country.
About the iconic economic growth of Bangladesh
For the past decade and a half, Bangladesh has been powering economic growth by linking its democratic dividend to global supply chains, especially for readymade garments.
From being one of the world’s poorest nations at independence in 1971, the country has reached middle-income status and is headed to exit the United Nations’ Least Developed Countries list by 2026.
For example, a) Poverty has declined from 43.5% in 1991 to 14.3%, b) Human development indicators outmatch most of its peers, especially in terms of women’s workforce participation and empowerment.
What is the present status of Bangladesh’s economy?
Bangladesh two years ago faced a balance of payments crisis. This made Bangladesh to approach the International Monetary Fund for a $4.5-billion bailout package. This made it the third South Asian nation to do so in the recent past.
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What is the reason for the economic crisis in Bangladesh?
-Due to the pandemic and the Russian invasion of Ukraine, global demand has been crimped and Bangladesh has seen a surge in inflation.
-Bangladesh’s economy has overwhelming reliance on a single item which is Ready-made garments. These garments alone account for over 80% of its exports.
-There is an absence of a dynamic domestic economy built on a wider economic base, skilled labour, and efficient infrastructure.
–Political reasons: This is one of the key structural limitations of Bangladesh. The present government was in power since 2009 and follows an authoritarian nature such as being intolerant of criticism, etc.
There have been accusations of electoral fraud, extra-judicial killings of critics, a rigged judiciary, and arbitrary arrests.
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What can be done to overcome the economic crisis in Bangladesh?
The need for stable institutions, a robust social security system, implementation of rule of law, and general good governance can make the environment conducive to business investment. This can stabilise the economy in the long run.