Summary of the article

"Bangladesh's economy in two decades: Growth and poverty alleviation”

Prof. A.B. Mirza Md. Azizul Islam

Submitted by
Navid Anjum Khan
19364071

Bangladesh has had many achievements on the macroeconomic level within the past two
decades. There have been significant changes in economic growth and poverty alleviation within
the macroeconomic dimension. Covid-19 has caused disruptions throughout the world, and its
effect on Bangladesh is no different. Despite the drawbacks, there have been steady
improvements within the diverse issues of GDP growth, poverty reduction, human resources,
controlled inflation, employment and distribution of income.

From 2000-2010, Bangladesh experienced a low level of GDP growth compared to other
Southeast Asian countries. While 6 countries outperformed Bangladesh during the 2000’s, the
following decade would have a totally different outcome. From 2011-2015, Bangladesh’s GDP
growth increased. From 2015 onwards, GDP growth in Bangladesh has been the highest in the
subcontinent. This remained unchanged even after the disrupting economic effects of Covid-19.

Developing countries are always seeking to accelerate growth as it creates more employment
opportunities for both skilled and unskilled labor. Trickle down effects of growth also tend to
benefit the ultra poor. Growth also means that governments have more allocated resources,
which can be used to build infrastructure, healthcare, education and alleviate poverty. Growth
also attracts Foreign Direct Investment (FDI).

Growth and poverty alleviation are complementary and have a strong correlation. Increasing one
can reduce the other and this affects the economic performance of developing countries.

Investment in Bangladesh grew at a slow but steady rate. Investment rose from 24% to 32%
within the last two decades, while exports rose from 12% of GDP to 15% of GDP. Compared to
the subcontinent, these rates are still relatively low. Private investment also remained constant in
Bangladesh throughout the past decade, only to be cut down by half by the spread of Covid-19.
There is also a need to reduce the dependency on the garments sector and to increase quality in
this sector. Remittance has also affected the macroeconomic situation of Bangladesh- and the
remittance rates have been fluctuating throughout the decade. Covid-19 saw an increase in
remittance but this high growth (almost 50% by July-August 2021) is unsustainable.

Bangladesh also faces many challenges within growth performance. Corruption, political
uncertainty, poor quality of education leading to poor quality of human capital as well as low
scores in Governance and Ease of Doing Business (EDB) suggest that Bangladesh still has many
challenges left to overcome.

There is also the issue of Bangladesh graduating from the LDC category, which will make
growth performance even more challenging for the country. The facilities of tax breaks which
LDCs benefit from will no longer benefit Bangladesh if they do indeed graduate from the LDC
category. These are the various achievements and challenges that Bangladesh will face regarding
growth and poverty alleviation.