Growing income inequality in Bangladesh causes concern

[Homo Sapiens]

Growing income inequality in Bangladesh causes concern

Bangladesh has attained an impressive economic growth but growing income inequality in the country remains a matter of concern. Bangladesh is set to be among the top three fastest-growing economies in the world by 2022, but such disparity in income distribution among people also peaks. Never sin

www.thefinancialexpress.com.bd

Growing income inequality in Bangladesh causes concern
Jehangir Hussain | Published: August 02, 2021 21:28:06 | Updated: August 04, 2021 22:22:27

Bangladesh has attained an impressive economic growth but growing income inequality in the country remains a matter of concern. Bangladesh is set to be among the top three fastest-growing economies in the world by 2022, but such disparity in income distribution among people also peaks.

Never since 1972 has income inequality been seen so glaring in this country. Studies show that people from low-income groups are struggling to make two ends meet or have three square meals a day. The benefits of economic growth have trickled up rather than trickled down, show studies on income distribution. Economists are getting increasingly concerned over such gaping gaps in incomes. The latest Human Development Index ranked Bangladesh 133rd out of 189 countries.

The income share of the bottom 40 per cent of people is 21 per cent, and in a sharp contrast, for the richest 10 per cent it is 27 per cent. Bangladesh Bank noted with concern that the second wave of the pandemic and the consequent lockdowns could slow down the pace of economic development. Travel restrictions imposed by many countries could affect migration, remittances and exports, fears the central bank.

Bangladesh seems to be headed on the path of contrasts, feel economists, though the country has achieved a remarkable economic development in last 50 years and is on track to get the lower-middle-income tag.

Despite the pandemic disruptions, the GDP growth of Bangladesh was 3.8 per cent in 2020, according to the International Monetary Fund, and the growth is expected to clock 4.4 per cent in 2021 and 7.9 per cent in 2022.

A study, jointly done by Brac, New York University's Centre on International Cooperation and UN Women Bangladesh, shows that 36 per cent of children below five suffer from moderate stunting and underweight due to malnutrition, and youth unemployment stands at 12 per cent.

The state of the country's economy calls for reality check. According to the findings, the rate of child marriage increased during the coronavirus pandemic, which has slowed life and income-generating activities.

Hardship together with shutdown of schools compelled families to get their under- age girls married off, though it is illegal in Bangladesh. Over 77 per cent of the brides were below 18, while 61 per cent were below 16 at the time of their marriage, shows the study.

The pandemic's worst casualty is education, and the authorities simply don't know how to make a recovery. Borrowing from informal lenders to face the economic crunch created by the scourge made many low-income families indebted, shows a study done by Brac University's Centre for Peace and Justice.

For the study, researchers interviewed 1,056 respondents, 425 of them RMG workers, 425 non-RMG workers and 206 migrant returnees in November and December 2020. The migrant returnee respondents were from two city corporation areas in the capital as well as from Savar and Nawabganj in Dhaka district and from Manikganj and Madaripur.

In Bangladesh, income inequality seems to be growing at an alarming rate. A small section of society enjoys most of the country's wealth, depriving the larger sections. Income share held by the highest 10 per cent increased from 21 per cent in 1984 to 27 per cent in 2010. Income share held by the lowest 10 per cent declined from 4.13 per cent to 3.99 per cent.

Amidst many positive achievements, an important area of concern for Bangladesh economy is the rise in inequality in income distribution. After all, the dream of economic emancipation through alleviation of economic inequality was one of the driving forces of our liberation war. Regrettably, though, there has been an increase in the degree of inequality in income distribution since the mid-1980s. As per the latest Household Income and Expenditure Survey (HIES) by Bangladesh Bureau of Statistics (BBS), the country's Gini coefficient, which is the economic measure of inequality, stood at 0.482 in 2016, up from 0.458 in 2010, in a worrying development. Historically the Gini index stood at 33.12 in 2010 from 33.22 in 2005. It was 25.88 in 1984 and went up to 33.46 in 1996.

From over 90 per cent of Bangladeshis living in the villages in 1971, now nearly 60 per cent of them live there. More and more people are expected to flock to the cities.

The capital city is now home to 10 per cent of the population, up from 2 per cent in 1980. Lack of decentralisation has caused the growing spatial inequality in income earnings. People living in Dhaka and Chottogram earn more than those living elsewhere.

Though macroeconomic growth contributed to higher national income, the country's growing income inequality needs to be addressed. Geographically centralised industrialisation has contributed to a higher flow of domestic migration.
The trend raises questions about the quality of Bangladesh's much-lauded GDP growth as the economic growth in recent years has been far from inclusive.
Official statistics show that the country has experienced accelerated GDP growth since 2013, the highest mark in the country's history. But inequalities also rose rapidly during this period.

Though figures show that GDP growth has accelerated in recent years, job growth has slowed and real wage growth has been sluggish as the high growth couldn't create sufficient jobs. The country is witnessing a phase of what is termed jobless growth as poor people are not getting income-generating work.

This has resulted in slow progress in poverty reduction amid rising inequalities. The public expenditure on education and health as a share of GDP has declined in recent years. Such low spending does not help improve productivity of workers and is not consistent with the effort to reduce poverty and inequalities. There is also an increasing inequality of opportunities, particularly to access healthcare, education, financial services and social protection.

The poor cannot access privileges that the government gives to particular businesses and interest groups in the form of bailouts, loan rescheduling, tax exemptions, subsidies, licences and so on. The social protection programmes are too inadequate to dent poverty and regional disparities.

Due to what seems to be unstoppable leakages and pilferages, expenditures for the poor seldom benefit them as much as the authorities claim. Sustainable growth and social stability require social and economic equity, if not equality.
jehangirh@yahoo.com

 

[MH.Yang]

The gap between the rich and the poor is too large, which will lead to the stagnation of economic development.

In 1960s, the economies of South Korea and the Philippines were similar, but the gap between the rich and the poor in South Korea was very small, and the gap between the rich and the poor in the Philippines was very large. Look at the current economic gap between the two countries.

India's current economic level is equivalent to that of China in 2005, but there is a big gap between the rich and the poor in India. China's economy grew by 12.72% in 2006 , 14.23% in 2007.…And India's economy has stagnated now.

 

[SpaceMan18]

The gap between the rich and the poor is too large, which will lead to the stagnation of economic development.

In 1960s, the economies of South Korea and the Philippines were similar, but the gap between the rich and the poor in South Korea was very small, and the gap between the rich and the poor in the Philippines was very large. Look at the current economic gap between the two countries.

India's current economic level is equivalent to that of China in 2005, but there is a big gap between the rich and the poor in India. China's economy grew by 12.72% in 2006 , 14.23% in 2007.…And India's economy has stagnated now.

Koreans worked their @sses off along with good leadership/American help made what South Korea is today. BD on the other hand is full of Indians bootlickers/corrupt traitorious bastards who rather would steal capita and invest it in other developed nations.

Koreans didn't mess around when it came to development , BD however just acts like braindead fools for some reason.

 

[UKBengali]

Koreans worked their @sses off along with good leadership/American help made what South Korea is today. BD on the other hand is full of Indians bootlickers/corrupt traitorious bastards who rather would steal capita and invest it in other developed nations.

Koreans didn't mess around when it came to development , BD however just acts like braindead fools for some reason.

Like I have mentioned before many times, BD is not anywhere near as bad as this.

How do you think BD built such a large garment industry? If it was this easy then both India and Pakistan would have also done it but they both failed miserably.

Look at the electronics and pharma industries in BD. Both are thriving now due to government support. BD's pharma exports are growing 15% a year and last fiscal hit nearly 200 million US dollars.
A pharma park is nearly ready and next year in 2022 BD will be making its own active ingredients rather than having to import them. This has been in the BD government and industry planning for the last decade.


Low external debt, high infrastructure and GDP growth for a population of 165 million does not happen without at least a semi-competent government and a plan in place. You do not create a 350 billion US dollar economy by sheer luck.

 

[mmr]

Koreans worked their @sses off along with good leadership/American help made what South Korea is today. BD on the other hand is full of Indians bootlickers/corrupt traitorious bastards who rather would steal capita and invest it in other developed nations.

Koreans didn't mess around when it came to development , BD however just acts like braindead fools for some reason.

You summed up what is happening in bangladesh nicely.

Korean start with garments and move to way more complex products within a decade.

Bd start with underwear in 1980s with the help of koreans setting up factory and after 40 years still only make underwear. Zero diversified products offered.

The country including its police.. army... govt ...media is full of indian boot lickers. Bd wont go further with these policies. After bunch of infrastructure projects done gdp growth will come down significantly.

It sound harsh but its the reality and i only have bd ppl it self to blame.

 

[SpaceMan18]

Like I have mentioned before many times, BD is not anywhere near as bad as this.

How do you think BD built such a large garment industry? If it was this easy then both India and Pakistan would have also done it but they both failed miserably.

Look at the electronics and pharma industries in BD. Both are thriving now due to government support. BD's pharma exports are growing 15% a year and last fiscal hit nearly 200 million US dollars.
A pharma park is nearly ready and next year in 2022 BD will be making its own active ingredients rather than having to import them. This has been in the BD government and industry planning for the last decade.


Low external debt, high infrastructure and GDP growth for a population of 165 million does not happen without at least a semi-competent government and a plan in place. You do not create a 350 billion US dollar economy by sheer luck.

This sounds good , but understand that BD is still not as competent as they should be.

 

[UKBengali]

This sounds good , but understand that BD is still not as competent as they should be.

You expect too much out of a S Asian country.

BD is doing better than the others and that is good.

It is making progress in the right direction and that is the important thing.

 

[Maula Jatt]

The gap between the rich and the poor is too large, which will lead to the stagnation of economic development.

In 1960s, the economies of South Korea and the Philippines were similar, but the gap between the rich and the poor in South Korea was very small, and the gap between the rich and the poor in the Philippines was very large. Look at the current economic gap between the two countries.

India's current economic level is equivalent to that of China in 2005, but there is a big gap between the rich and the poor in India. China's economy grew by 12.72% in 2006 , 14.23% in 2007.…And India's economy has stagnated now.

When China was poor and devoloping did they pay attention to it's people in terms of thier welfare? (Like 90s,200s)

Like did they pay attention to nutrition, free healthcare, housing etc?

How did China lift so many people out of poverty

Cutthroat capitalism or there were some government programs that helped in this regard?

(Like vocational training, tech training, or business loans etc)

 

[Bilal9]

Koreans worked their @sses off along with good leadership/American help made what South Korea is today. BD on the other hand is full of Indians bootlickers/corrupt traitorious bastards who rather would steal capita and invest it in other developed nations.

Koreans didn't mess around when it came to development , BD however just acts like braindead fools for some reason.

Koreans initially did subcontracting for an industrial juggernaut, Japan (and its companies) in the 60's.

Hyundai was subcontracting for Mitsubishi. Their first car was a Mitsubishi copy bolt for bolt.

Same with Kia, they were subcontracting for Mazda.

Korean labor cost was lower than Japan in those days (primary reason), but Korean industrial leaders and planners were also very dedicated like you said. They were not happy being the second best to Japan because of traditional rivalry and past history (Japan occupied Korea before WWII). They wanted to best Japan in all sectors as an export-led economy.

For Bangladesh this is absolutely the best development benchmark to follow, because we (like Korea) possess so little of internal resources except agriculture (and related labor intensive resources) and people.

Slowly Korea overtook Japanese industrial capability in important sectors, with cellphones (semiconductor and SOC Chip capability), microwaves (radiation tube capability) and now large screen TV's (OLED screen capability) where Japanese were handily surpassed. Today LG and Samsung are market leaders in the most important markets in those areas. To say Chaebol got boost from their govt. in policy/tariff support and help in negotiating exports to the US/EU is an understatement.

Japanese govt. support (MITI) support to Keiretsu industrial members in Japan could not help save them from this calamity.

 

[chinasun]

Joe Studwell
《How Asia Works: Success and Failure in the World's Most Dynamic Region》
The book talks about the successes and failures of Asia's emerging economies. The above video shows him giving an important speech in Singapore.

 

[Bilal9]

Income inequality is measured in a benchmark called the GINI coefficient.

https://data.oecd.org/chart/6ram

You can see that most civilized countries (i.e. Scandinavian, even EU countries like Czech Republic) have less of an unequal distribution of wealth in their societies than say US, UK, Mexico, Chile and Costa Rica. The wealthy keeping it all for themselves with lack of socialized medicine, healthcare or other social programs and safety nets.

The Gini coefficient is based on the comparison of cumulative proportions of the population against cumulative proportions of income they receive, and it ranges between 0 in the case of perfect equality and 1 in the case of perfect inequality.

This is data for Bangladesh:
https://data.worldbank.org/share/widget?indicators=SI.POV.GINI&locations=BD

Comparison for India, Pakistan and Bangladesh. Pakistan has less income inequality than Bangladesh now, we have rogue rich people running rampant, but still less of a bad situation than India has.

https://data.worldbank.org/share/widget?indicators=SI.POV.GINI&locations=BD-PK-IN

 

[bluesky]

How do you think BD built such a large garment industry? If it was this easy then both India and Pakistan would have also done it but they both failed miserably.

And, unlike many other countries, BD remains stuck in garments only. All countries promoted themselves to mechanized industries after the initial cotton-based stitching tailor shops, but BD has chosen to remain a low-value producer of garments all time.

The result is unemployment, foreign loans, and aids. Go to a Langarkhana to collect your lunch. This is what destitute people are being forced to do because of a lack of jobs.

And, here you are glorifying this achievement as if BD has won the 3rd WW. Bloody greedy and shameless BAL brat!! Below is a random picture of a workshop. BD needs millions of workshops, mills, factories and plants to employ millions of people in productive jobs.

 

[Bilal9]

When China was poor and devoloping did they pay attention to it's people in terms of thier welfare? (Like 90s,200s)

Like did they pay attention to nutrition, free healthcare, housing etc?

How did China lift so many people out of poverty

Cutthroat capitalism or there were some government programs that helped in this regard?

(Like vocational training, tech training, or business loans etc)

It was a communist state, therefore social safety net were present. May be one of the Chinese members can comment.

 

[MH.Yang]

When China was poor and devoloping did they pay attention to it's people in terms of thier welfare? (Like 90s,200s)

Like did they pay attention to nutrition, free healthcare, housing etc?

How did China lift so many people out of poverty

Cutthroat capitalism or there were some government programs that helped in this regard?

(Like vocational training, tech training, or business loans etc)

In 1988, China and India had the same economic scale, but China's average life expectancy was 69 years and India's was 58 years. And the mortality rate of children under the age of 5 in China is 6.1%, and that in India is 12.8%. And the literacy rate is 89% in China and 49% in India. The gap is caused by the different welfare between the two countries.
1, 9 years of free education. China's compulsory education began in 1951 when China was carrying out two wars and was fighting the Korean war with the USA, and helping Vietnam with France carry out the first Indochina war. Japan's 9 years of compulsory education began in 1947, when Japan had just ended World War II and was still in ruins. Compulsory education in South Korea and North Korea began in 1953, when the two countries had just ended the Korean War and were in ruins. Therefore, we believe that no government in the world has any excuse to refuse to give its people the right to education, which is a real human right.
The human right to education is only inferior to the right to life, and the right to education is the second priority human right.

2, The government on providing for the disabled, orphans and the elderly without children (women over 55 and men over 60).
By the way, according to Chinese standards, those with IQ lower than 85 are mentally handicapped and can receive government support every month. Therefore, it is difficult for India to implement our standards…LOL

3, The government subsidizes transportation, food, residential electricity and water, fuel and other livelihood projects. This is a train ticket for 2017. The train ticket from Taishan city to Shanggao city. The distance between them is about 100 kilometers, which is equivalent to half the distance from Dhaka to Chittagong. The ticket price is equivalent to 13 Bangladesh Taka(1 CNY). But there is no subsidy for high-speed rail tickets and air tickets. China has always refused to privatize enterprises such as railway hospitals in order to enable the people to enjoy these resources at a low price.

4, Chinese farmers don't have any taxes, and the government will give them subsidies. China's agriculture is very weak and their production cost is very high. In order to protect China's food security, we must prevent farmers from going bankrupt, because the West has been deliberately pushing down food prices. The Chinese government buys farmers' grain at a price higher than the market, subsidizes the transportation and sales of agricultural products, and gives subsidies to farmers every year (South Korea and Japan also subsidize farmers because their agricultural status is the same as that in China. Because China hardly exports agricultural products, it will not be prosecuted for dumping because of subsidies. Of course, no country has sued the Chinese government for agricultural subsidies in China). By the way, there is no private land in China, and every farmer owns the same amount of land.
By the way, China was founded in 1949, but the CCP had begun land reform in 1947, when they were still fighting a civil war.

5, In 1964, the government provided free sports and cultural facilities to citizens on a large scale, which was the first step in the strength of Chinese sports. At that time, we had just spent three years of famine (1959-1961). Incidentally, the reason for the three-year famine is that the government is too eager to repair infrastructure and industrial foundation. For example, there are 15 large reservoirs in Zhuzhou City, of which 12 were built in 1959, and there are 3 large state-owned enterprises(the 601 factory, the 331 factory, the 430 factory) in Zhuzhou, all of which were established in 1959. The government spent three years doing 30 years of work, which led to famine.

6, The government subsidizes pregnant women and prohibits the dismissal of pregnant women, reduces taxes for enterprises employing disabled people, arranges jobs for veterans, builds cheap rental houses, gives extra points to ethnic minorities and poor areas in the college entrance examination (universities must have a certain number of ethnic minorities and students in poor areas), and so on.

 

[Maula Jatt]

It was a communist state, therefore social safety net were present. May be one of the Chinese members can comment.

So in Pak our PM is talking about Chinese model, poverty alleviation constantly and honestly most are confused on what it entails

And is going towards that direction as except for 1 province we already have and in some cases will have free universal healthcare in couple of months, free nutritious food for poor mothers and thier newborns, (this is pipeline and some are already available) reforms in banking sectors where gov is subsidizing loans for lower middle class homeowners, incentivizing construction firms to build 30 lack pkr homes (magic number to target low income people), paying half of downpayment for poor people, (the housing schemes are mostly in plans only though), (this one just launched couple months ago) providing intrest free loans through banks (no gov involvement in decision making) to enterpaunuers and loans can range from low to high depending on business feasibility study, providing free vocational, tech training to lower middle, lower classes, one person per family

So as they may on face value seems good but I was a little hesitant as we grew up studying that only a capitalist way is the way forward

But maybe the Chinese model is this

Cut the bad parts of sociolist model's

So following that model this gov started giving energy subsidies to industry, lowering taxes for importing of materials that are needed for exports, making of SEZ, and tax free tech zones for tech companies to invest in, focusing on specific industries like mobile phones, tech, electronics, automobiles and giving them big incentives

collaborating with the Chinese to increase agricultural yield, bringing new tech so Pak can solve it's hunger issues

(Mind you all of these devolpments are fairly recent and some are just at planning phase on how to role these out- we have no idea how they'll work out)

If Pak starts achiveing consistent at or above 6% growth in about 2-3 years time

than that means we can replicate China model in SA (with ofcourse our own twist) and there's another way out of poverty, a little less painful one

If it doesn't, it was just a pipe dream

I am a little pessimistic/anxious on how this gamble works out