At the end of the day, economic growth must be converted into economic welfare of the people and not just profits for business
The economy of Bangladesh should grow by more than eight percent per annum in order to achieve the status of upper middle-income country by 2031, but this will inevitably increase income inequality. In order to minimise inequality, the distribution of growth should be widespread both spatially and sectorally.
There is growing opportunity of investments in industry for the domestic market including in food and agro processing, domestic tourism, real estate, automobile assembly, consumer durables and electronics. Policy support will help these sectors particularly if some of these are able to penetrate export markets - there is some indication already that this is happening. These new avenues of growth bode well for income and employment, and will have a beneficial effect on wages. Moreover, it will be important to remain alert about labour standards and compliance whether we talk about the export market or for domestic manufacture. At the end of the day, economic growth must be converted into economic welfare of the people and not just profits for business.
The main initial hurdle towards 2031 is investment. I think, we have potential to attract investment, especially to the SEZ that are currently being constructed all over the country. The key will be connectivity and infrastructure in the SEZs. Entrepreneurs will not invest in remote areas due to absence of transportation and communication linkages. Trying to attract investment to remote areas is a wrong-headed policy although the motive is noble. In fact, a better policy would be to improve connectivity and investment in human skills in remote areas. A better approach is to try to transform these areas into non-remote zones through improved connectivity.
As part of a broader process of continuous economic restructuring, we observe that employment in RMG is declining particularly for women - mainly due to automation, newer technology and increasing productivity. This suggests that lower end RMG products are beginning to get phased out as has happened in many countries before us. At the same time, other sectors will emerge, and it is to these higher value sectors that we must turn to. And it is to these that policy support must increasingly be addressed.
We should also note that while income inequality is high in Bangladesh, consumption inequality is not. This gives us hope because it suggests the absence of conspicuous consumption by the elite and a tendency perhaps to focus more on investment and wealth creation. If this interpretation is correct, our path to upper middle-income status will definitely be smoother. At the same time, the high income inequality would be less disruptive.
If we are worried about employment, income, and wages (as we should be) we must stand by labour rights and refuse to allow workers to be exploited. At the same time, it is the responsibility of both the public and private sector to devise effective ways to improve employability through education and skills development.
Although there are numerous institutions purportedly engaged with skills development, few can be singled out as being good quality. This area clearly requires the utmost attention, not least because we would otherwise be wasting our 'once in a lifetime' advantage with our demographic dividend - an advantage that incidentally will go into decline in about ten years.
In conclusion, I would like to state that the goal that we have set for 2031 can be met - it is not at all unreasonable for a country which repeatedly has demonstrated that it is a development outlier. Even during the current pandemic when many countries are struggling with balance of payments issues and reserves, Bangladesh is marching ahead with high remittance flows and quickly recovering exports. We will essentially need to ensure that our macro-economic balances are strictly maintained, and that we remain always alert to food price instability, and provide policy support to emerging sectors. Finally, we have to remember that our workers need to be taken good care of - an unhappy workforce cannot give us industrial strength.