Economic Growth in Bangladesh
Economic growth in Bangladesh: experience and policy priorities
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The Liberation War of 1971 destroyed about a fifth of Bangladesh’s economy, and the post-war dislocations left the country on a slow growth trajectory for better part of two decades. Then the economy accelerated from 1990, driven by a remarkable turnaround in the growth of multi-factor productivity. We identify factors that inhibit another growth spurt: low levels of human capital; poor infrastructure; market failures specific to individual industries; low levels of international trade; corruption; and cumbersome regulations.
Of these, we consider tackling infrastructure bottlenecks, promoting trade, and carrying out regulatory reforms as top priorities for the policymakers.
____________________________________________________________
______
Jyoti Rahman
Drishtipat Writers’ Collective jyoti.rahman@drishtipat.org Asif Yusuf
Driven Partnership asif.yusuf@gmail.com We are grateful to Syeed Ahamed, Rumi Ahmed, Towfiqul Islam Khan, Naeem Mohaiemen, and Asif Saleh for their comments and suggestions. All errors are ours, and ours alone.
1. INTRODUCTION
In the 1960s, the then East Pakistan’s economy grew by an annual average rate of around
4 per cent. About a fifth of that economy was destroyed during the Liberation War of 1971, and severe dislocations caused at that time left Bangladesh on a slower economic growth trajectory for the following two decades. Then the economy accelerated sharply from 1990.
Chart 1 illustrates Bangladesh’s economic trajectory over the past five decades.
Chart 1: Real GDP
13.00
13.25
13.50
13.75
14.00
14.25
14.50
14.75
15.00
15.25
1960 1967 1974 1981 1988 1995 2002 2009
13.00
13.25
13.50
13.75
14.00
14.25
14.50
14.75
15.00
Log of million taka Log of million taka 15.25
The solid grey line shows actual path of GDP. Dotted lines are hypothetical trend paths based on: 1960s
____________________________________________________________
The Liberation War of 1971 destroyed about a fifth of Bangladesh’s economy, and the post-war dislocations left the country on a slow growth trajectory for better part of two decades. Then the economy accelerated from 1990, driven by a remarkable turnaround in the growth of multi-factor productivity. We identify factors that inhibit another growth spurt: low levels of human capital; poor infrastructure; market failures specific to individual industries; low levels of international trade; corruption; and cumbersome regulations.
Of these, we consider tackling infrastructure bottlenecks, promoting trade, and carrying out regulatory reforms as top priorities for the policymakers.
____________________________________________________________
______
Jyoti Rahman
Drishtipat Writers’ Collective jyoti.rahman@drishtipat.org Asif Yusuf
Driven Partnership asif.yusuf@gmail.com We are grateful to Syeed Ahamed, Rumi Ahmed, Towfiqul Islam Khan, Naeem Mohaiemen, and Asif Saleh for their comments and suggestions. All errors are ours, and ours alone.
1. INTRODUCTION
In the 1960s, the then East Pakistan’s economy grew by an annual average rate of around
4 per cent. About a fifth of that economy was destroyed during the Liberation War of 1971, and severe dislocations caused at that time left Bangladesh on a slower economic growth trajectory for the following two decades. Then the economy accelerated sharply from 1990.
Chart 1 illustrates Bangladesh’s economic trajectory over the past five decades.
Chart 1: Real GDP
13.00
13.25
13.50
13.75
14.00
14.25
14.50
14.75
15.00
15.25
1960 1967 1974 1981 1988 1995 2002 2009
13.00
13.25
13.50
13.75
14.00
14.25
14.50
14.75
15.00
Log of million taka Log of million taka 15.25
The solid grey line shows actual path of GDP. Dotted lines are hypothetical trend paths based on: 1960s