ALAG, JERAMIE G. ELLAINE JOY G.

EUSEBIO, MBA
MBA 222 – Economics and National Development Professor

Case Analysis 2: Comparative Economic Development – Pakistan & Bangladesh on State

Introduction

In 1971, Pakistan and Bangladesh, which had been created in 1947 as halves of a
single country, violently separated. Since then, the political, economic, and social
development paths of these two nations, the second and third most populous
Muslim majority nations in the world, have diverged significantly. This case study
seeks to explain why, over the past three decades, these two countries, which share
a common ancestry, have taken such divergent paths. The focus was on political,
economic, and social development.

The World Bank estimates that 23% of the population in Pakistan lives below the
poverty line of $1 per day, compared to 49% in Bangladesh. In the former "basket
case" of Bangladesh, however, poverty reduction has been remarkable, and the
incomes of the poorest people are rising. Bangladesh remains significantly poorer
than Pakistan, with 80% of Bangladeshis living on less than $2 per day compared to
59% of Pakistanis. On the UNDP's new multidimensional poverty index, however, the
two countries scored much more similarly. Pakistan ranked No. 70 with a score of 0,
while Bangladesh ranked No. 73 with a score of 0, when aspects of poverty other
than income were taken into account. In both countries, the adult literacy rate is still
low at 54%, but Bangladesh's literacy rate has increased more rapidly and with
greater gender equality. In Pakistan, only 40% of women are literate, and in some
regions, particularly Baluchistan and the Northwest Frontier, the rate is much lower.
The female literacy rate in Bangladesh is also low. One recent estimate puts it at just
50%. University education receives thirty times as many public education dollars per
student as primary school education.

Conclusion

Pakistan and Bangladesh share a portion of India's cultural heritage. These two
nations occupy significant portions of the southern Asian lowlands. In addition, both
countries are predominantly Muslim. Bangladesh and Pakistan were a single country
from 1947 until 1971, when East Pakistan's successful revolt led to the formation of
Bangladesh as a separate nation. There are more differences between Pakistan and
Bangladesh than similarities. Pakistan consists of arid lowlands and high mountains,
whereas Bangladesh is well-watered and low-lying, with the exception of a small hilly
region in the eastern interior of Chittagong. In Pakistan, the management of scarce
water resources is a significant issue, whereas in Bangladesh, annual flooding is a
greater concern. People and the political evolution of the two countries since their
1971 separation are the primary differences. Bangladesh remained one of the
poorest nations in the world, whereas Pakistan expanded its agricultural and
manufacturing industries. The differences in social development between
Bangladesh and Pakistan are not as pronounced as they would be in Sri Lanka, which
has had favorable human development statistics for its low-income level despite
enduring civil conflict, or between low-income states in India, such as Kerala, which
has relatively high human development, and Bihar, which has relatively high law
development. Pakistan's growth has been greater than that of many countries that
have made much greater social improvements, and it has performed considerably
better with available aid. The alternative interpretation of Pakistan's experience is
that economic growth is possible even without substantial health and education
expenditures. Long-term trends indicate slower growth in Pakistan and greater
growth in Bangladesh, rendering this interpretation untenable. As Easterly
hypothesized, it is possible that a certain level of development and growth was
achievable with a skilled managerial elite and unskilled workers, but over time this
strategy yielded diminishing returns because human capital did not grow at the same
rate as other factors. Utilizing only unskilled agricultural laborers, the landlord elite
could have taken advantage of the vast potential of the irrigation network and the
green revolution to facilitate agricultural growth. As irrigated land and human capital
grew at a slower rate than other factors of production, agricultural growth may have
also encountered diminishing returns.

Reference:

Todaro, M.P. & Smith, S. (2012). Economic Development (11 th ed.). Pearson
Addison-Wesley. ISBN 13: 978-0-13-801388-2