Bangladesh’s living standards undergo a quiet revolution

Neil Ford

When Bangladesh finds itself in the international headlines, it’s rarely because there is good news. Industrial disasters with high numbers of fatalities and large-scale floods have filled many column inches in the West. Yet a social and economic revolution has seen life expectancy rise by ten years since 1990 and absolute poverty halve  

At first sight, Bangladesh has little going for it. Among countries of any significant size, it is the most densely populated and the most threatened by climate change. At the same time, conflict between the country’s two main parties, the Awami League and the Bangladesh Nationalist Party, seems to be driven by personal enmity rather than political concerns. To add insult to injury, rich nations have threatened to block its main source of exports because of poor working conditions. 

Yet, with little fanfare, Bangladesh has also achieved some of the greatest and most rapid improvements in living standards in human history. Would the real Bangladesh please stand up? 

Bangladesh hit the headlines in April when the Rana Plaza clothing factory collapsed, killing 1,129 people. This was the latest and most horrific of a string of factory disasters, including a fire at the Tazreen fashion factory last November that resulted in 112 deaths. Limited implementation of planning regulations and poor working conditions were to blame. While European governments offered support, the US government decided to suspend Bangladesh from its Generalized System of Preferences (GSP) programme, which gave the country’s exporters duty-free access to the world’s biggest economy for many products. 

Less than one per cent of Bangladesh’s exports to the USA benefited from the scheme, but clothing companies may think twice about manufacturing apparel in Bangladesh because of the potential impact to their reputation, even where they have high standards of corporate social responsibility (CSR). To make matters worse, strikes over working conditions have sometimes been aggressive and have become caught up in political violence in the run-up to January’s elections. CSR-focused marketing is required in Bangladesh’s main markets in the West, if ‘Made in Bangladesh’ is to become an attractive label. 

The country’s garment sector grew slowly from 1985, when it employed about 100,000 Bangladeshis. But rising wage levels in China saw more companies switch production to Bangladesh, where four million people are now employed in the textile industry, making it the world’s second biggest garment exporter, with industry revenues of US$18 billion a year. However, low costs generally mean low standards and some factory owners in the country argue that improved working conditions would see jobs moved to lower-cost manufacturing centres. Given that Bangladeshi wages are among the very lowest in the world, this seems unlikely. The official minimum wage for full-time workers is just $38 a month. 

Yet the country still does not attract the same levels of foreign direct investment as other export-orientated economies in the region, such as Vietnam. Indeed, the second biggest source of foreign exchange is overseas remittances from the estimated six million Bangladeshis who work overseas, many of them in the Middle East. The country also has significant coal reserves, which the government hopes to tap to supply a new power plant, plus gas production of 710 billion cubic feet a year, although further hydrocarbon investment has been deterred by a debate over whether output could be exported. 

Infrastructural investment is increasing, but is almost entirely provided by Beijing to fund projects that will directly benefit China. In particular, Beijing is pouring billions of dollars into the development of the Port of Chittagong, as part of its ‘string of pearls’ strategy to develop ports in allied nations in South Asia in order to reduce its dependence on the Malacca Straits. The country has also established itself as a world leader in micro-lending as a result of the Bangladesh Rehabilitation Assistance Committee (BRAC) and Grameen Bank, which was founded by Muhammad Yunus. Grameen provides small loans, usually for much less than $100 and mainly to women. Yunus aims to turn a “vicious circle of low income, low savings and low investment” into “a virtuous circle of low income, injection of credit, investment, more income, more savings, more investment, more income”. He says: “You have to have those financial facilities coming to women, because it is totally unfair to deny half the population of the world financial services.” 

Indeed, this focus on the role of women in socio-economic development appears to lie behind startling improvements in living standards over the past 20 years. Widespread access to family planning services has seen the fertility rate fall from about seven children per woman in 1970 to 2.3 today. Average life expectancy increased by a massive ten years between 1990 and 2010, from 59 to 69, while Bangladesh has made great progress in meeting the Millennium Development Goals. 

Access to clean water and primary school education has widened markedly and the proportion of the population living in absolute poverty has halved since 1990. The country is also on course to cut the proportion of children dying before their fifth birthday by two thirds between 1990 and 2015. Food security has improved through the implementation of Green Revolution technology, so that Bangladesh is now self-sufficient in rice. Fertile soil allows rice to be cultivated three times a year. 

All this is not the result of economic growth. GDP may have grown by an average of six per cent a year over the past five years, but these socio-economic gains were already being registered during the previous decade and a half of slower growth. India’s Rural Development Minister Jairam Ramesh says: “Bangladesh’s experience shows we don’t have to wait for high economic growth to trigger social transformations. Robust grass-roots institutions can achieve much that money can’t buy.” Bangladesh will enjoy a demographic dividend over the next 20 years, with a growing adult population in relation to its child population. Yet with 152 million people living on just 143,998 sq km of land, any threat to agricultural space is to be feared. About 80 per cent of the entire country is situated in the Ganges River Delta, so Bangladesh is particularly prone to the effects of climate change. 

The Inter-governmental Panel on Climate Change warns that a rise in sea levels of just one metre would flood almost a fifth of the country. Shamsul Alam, a member of the Bangladesh Planning Commission, says: “The threat of climate change can diminish the hard-earned beneficial impacts of years of growth and development, not just for the people in impoverished settlements along coastal belts and riverbanks, but for the entire nation.” 

Few gave the country any real chance of succeeding as an independent state when it seceded from Pakistan in 1971. It has confounded its critics thus far but could yet face its greatest challenge. 


About the author:

Dr Neil Ford is an independent consultant and journalist, focusing on international affairs, particularly in Africa and Asia


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