Several indications show that Bangladesh is gaining ground on Pakistan, particularly on the social and economic fronts. Bangladesh’s inspirational target level of development success in the future would most likely be nations like Thailand, Malaysia, and Indonesia, and there is still a lot more work to be done to reach that level of development.
Many notable economic analysts, periodicals, and forums link Bangladesh’s current situation to that of India. India is not only Bangladesh’s closest neighbor and greatest economic partner, but it has also emerged as the country with the most similarities to Bangladesh.
Or perhaps a more appropriate way to put it would be to state that Bangladesh has progressed so quickly and achieved so much that it can now legitimately be compared to India in terms of economics and social development.
Is India, then, Bangladesh’s new rival? Yes, from certain views and economic perspectives, but no, in terms of many other comparisons.
Furthermore, this comparison is not so simple and has a number of subtleties and nuanced elements.
Several articles published in highly reputable Indian origin publications over the last year or so have provided an economic and social comparison between India and Bangladesh, and all of these articles have one thing in common: they conclude that Bangladesh currently outperforms India on many key economic indicators and social objectives.
This was not the case even five years ago, but it appears to be becoming a more common scenario in recent years. However, on a practical and honest basis, India remains far more dominant and strong than Bangladesh, although this is mostly due to India’s massive physical size, population, and natural resources.
Income and GDP
In theory, India has fallen behind Bangladesh in terms of per capita income, since Bangladesh just declared a per capita income of $2,227 for the 2020-2021 fiscal year, up about 10% from $2,064 in the previous fiscal year.
According to the most recent government data, India’s per capita income is $1,947, owing to a drop in India’s economic growth caused by the Covid-19 pandemic.
It is crucial to note that while Bangladesh’s economy has experienced rapid GDP growth since 2004, this rate did not significantly alter the relative status of the two economies between the mid-2000s and the mid-2010s because India’s economy grew faster.
However, India’s growth rate has slowed dramatically in the second part of the decade, while Bangladesh’s has accelerated even faster. Bangladesh’s quicker development rate is due in part to significant improvements in several social and political indicators such as health, sanitation, financial inclusion, and women’s political representation.
Countries are typically compared in economic terms based on their GDP growth rate or absolute GDP. On all measures, India’s economy has done better than Bangladesh’s for the most part since independence.
India’s economy has always been over 10 times the size of Bangladesh’s in terms of GDP growth rates and absolute GDP, and it has risen faster every year. According to recent International Monetary Fund projections, India will likely grow faster again soon, putting it ahead of Bangladesh. However, due to Bangladesh’s slower population growth and comparatively faster economic growth, the two countries are expected to be very close in terms of per capita income comparisons.
Size matters
Would India still be so much more dominant than Bangladesh if it were the same size, geographically, and in terms of people and resources as Bangladesh?
Based on how major financial, social, demographic, and economic variables are currently exhibited, the simple response could be “no.”
If India and Bangladesh were twins in terms of population, size, and resources, it would be clear that Bangladesh is the better-performing twin sister in the 2020s. This is further shown by the fact that, in 2020 and this has gotten everyone’s notice – the average Bangladeshi citizen’s per capita income was higher than the average Indian citizen’s per capita income.
So, the question is whether India and Bangladesh are comparable, and the answer is a complicated yes/no. The fact is that India has significantly more resources, capabilities, and strategic advantages than Bangladesh, owing to its larger geographic expanse and a population that is nowhere near as dense.
As a result, Bangladesh’s exceptionally high population density is continually at odds with its exceedingly limited resources. Bangladesh has no choice but to make the most effective and efficient use of its limited resources and territory.
This is a significant burden that India does not have to bear, giving it a significant competitive edge. For example, if one region of India is harmed by natural disasters or unforeseen events, it has a large pool of ready and available resources and the ability to pool them and manage them quickly and effectively.
Such incidences may or may not have a significant impact on the overall economic balance and standing of the country. Bangladesh, on the other hand, does not have that luxury because it lacks the enormous pool of readily available resources required to properly absorb a catastrophic calamity, and such sad events have befallen Bangladesh numerous times in the past.
Despite such setbacks, Bangladesh always manages to overcome and eventually thrive.
What can be done to mitigate and work with Bangladesh’s comparably tiny geographic size (especially contrasted to its massive population) so that the country may still go forward and become just as economically dominating, if not more so, than India?
Japan, Singapore, and South Korea are all much smaller than India, but despite their small geographic area, they have all had phenomenal economic growth and development. So, how might Bangladesh, like Japan, Singapore, and South Korea, one day completely and utterly overcome India?
For instance, consider India, which rose to prominence as a global economic powerhouse and a force to be reckoned with by upskilling its massive labor population and eventually attempting to become what is known as a knowledge-based economy.
Knowledge-driven economy
- Institutional institutions that encourage entrepreneurship and the application of knowledge
- A thriving innovation ecosystem that encompasses academics, business, and civil society
A knowledge-driven economy is defined by its products and services, which are propelled by knowledge-intensive rather than labor-intensive activities. The premise is that, rather than giving and employing low-skilled manual labor to generate money, such an economy uses knowledge and information to create goods and services.
A knowledge-based economy necessitates a competent labor force and a considerable portion of the population with excellent analytical ability and subject-matter expertise so that data can be manipulated and development can be achieved through research and invention.
In essence, a knowledge economy allows science and academia to be commercialized, which leads to research-based breakthroughs that are protected and backed by strong intellectual property regulations. The world economy has already changed to a knowledge economy in this information age, and if Bangladesh does not follow suit, it will be left far behind.
Because Bangladesh is still an agricultural and manual labor-intensive economy, and the level of skill of its labor force is not yet at the point where truly useful and viable informational analytics or unique technological innovations can be generated, India is far superior to Bangladesh in all of these aspects that define and make a knowledge-based economy.
India, on the other hand, today dominates the global technology industry and has achieved great progress in a variety of other knowledge- and skill-intensive industries, including medical, industrial production, business consulting services, and education.
The harsh reality is that Bangladesh is still a long way behind India in terms of knowledge-based economies. However, Bangladesh has the potential to become a knowledge-driven economy because it possesses the same core underlying elements as other knowledge-driven economies a huge young population ready to study, grow, and progress.
As a result, the concern now is how to promote better knowledge focus, skill acquisition, and technical competency among the young people.
The apparent solution is to place a greater emphasis on education, training, and skill development. The idea would be to encourage and inspire workers to move away from manual labor-intensive jobs and into higher-skilled and knowledge-based jobs.
Since India has reaped significant benefits by training its youth in technology-related fields, Bangladesh should be able to accomplish the same because it has the capability and resources to do so.
However, policymakers, legislators, and those in command must have a strong desire and drive to actively foster and promote a knowledge-based focus when it comes to future vocations, and such goals must then be instilled in the brains of the country’s adolescent population.
Furthermore, fundamental modifications to the country’s educational system would be required to actively enable and incentivize students to acquire the essential skills to update themselves.
Teachers and professors must also be continually trained and educated in order to stay current with the newest advancements in their fields in order to properly pass on that information and expertise to their pupils. Practical skills, rather than academic knowledge, should be emphasized, and originality and invention should be celebrated.
This is so that no one can quickly replicate or steal something that someone else has spent a lot of time and effort developing and creating. If intellectual property rights are not completely safeguarded and guaranteed, firms and individuals would lack the drive to research, develop, and come up with new inventions and technologies, and a knowledge-based economy will never be realized.
Bangladesh’s challenges
The fact that Bangladesh has reached a point in its development cycle where it is being compared to India is surely commendable. Considerable obstacles remain, however, and continue to erect significant barriers to Bangladesh becoming a true competitor to India.
One cause for concern is that Bangladesh’s poverty rate remains much higher than India’s. Poverty is anticipated to rise even more in the short term, according to the World Bank, with daily and self-employed workers in the non-agricultural sector and salaried workers in the manufacturing sector suffering the most.
Furthermore, Bangladesh continues to lag behind India in terms of basic education, resulting in a worse ranking in the Human Development Index.
A truly sustainable developed economy cannot be achieved while still experiencing high rates of poverty and a lack of educational advancement, pointing again to the importance of focusing more on a knowledge-based economy, which has the incredible potential to alleviate poverty while also improving education and literacy.
Bangladesh now falls behind other comparator nations in several measures for “ease of doing business,” and this is due to a lack of reforms and the government’s willingness to take steps to improve the situation.
Furthermore, Bangladesh’s ability to enhance its ease of doing business indices is nearly impossible due to widespread corruption when dealing with any government regulator or authority. Demanding payments from officials has become the norm, even for the tiniest of tasks.
Furthermore, as many important business leaders have often and loudly stated, running a business in Bangladesh remains extremely difficult. For example, some businesses require many licenses and permits from various regulatory organizations, which is incredibly time-consuming and inconvenient.
It’s almost as if the entire system has been designed to make it as difficult as possible for relevant authorities to accept bribes at every level. Bangladesh is unlikely to fall below 100 on the World Bank’s ease of doing business index anytime soon as a result of this.
Despite the fact that the Bangladesh Investment Development Authority was established with the express purpose of making it easier to do business in Bangladesh, it has so far been unable to control, coordinate, and collaborate with other regulatory bodies in order to achieve its goal of becoming a one-stop service center.
If the situation is to be improved, the Bangladesh Investment Development Authority should be given more authority and power to truly make a difference and to be able to override and control the entire process so that aspiring entrepreneurs do not have to spend so much time, money, and effort simply to be regulatory compliant.
If such difficulties are not addressed and resolved in the near future, Bangladesh will continue to fall behind and lose to its competitors, who are also aggressively competing for foreign investment, and who already rank far higher on the ease of doing business index than Bangladesh.
In this ranking, India currently ranks 63rd, whereas Bangladesh ranks 168th, which is extremely shameful.
Bangladesh’s resource
Bangladesh’s most valuable asset and resource is its people, and this is one natural resource that the country has in abundance. Since a result, one of the most essential objectives must be the development of its employees, as it is the ultimate key to future success.
Bangladesh’s continuous progress and expansion must not only be sustainable, but it must also be knowledge-based, as this is the most logical and practical path to becoming a fully developed country.
What accounts for Bangladesh’s high GDP?
Bangladesh’s growth is largely due to its success as a garment exporter, accounting for 84 percent of total exports, and remittances from abroad, which account for over 6% of GDP (Figure 2). Investment, which has increased from 24% of GDP in 2000 to 32% in 2019, is the main driver of growth. Total factor productivity, which has been below 1% per year since 2000 and is the major determinant of long-term income development for all countries, yields very little. To paraphrase Paul Krugman, Bangladesh’s current accomplishment is due to perspiration rather than inspiration.
Why is Bangladesh’s GDP expanding so quickly?
Bangladesh has a strong track record of economic development and poverty alleviation. Over the last decade, it has been one of the world’s fastest growing economies, owing to a demographic dividend, robust ready-made garment (RMG) exports, and stable macroeconomic conditions. Exports and consumption would continue to recover in fiscal year 2021-22, boosting growth rates to 6.4 percent.
Bangladesh provides a stunning story of poverty reduction and progress to the rest of the globe. Bangladesh went from being one of the poorest countries in the world when it was founded in 1971, with the tenth lowest per capita GDP in the world, to becoming a lower-middle-income country in 2015. In 2026, it is expected to be removed from the UN’s list of Least Developed Countries (LDCs). Based on the international poverty line of $1.90 per day, poverty decreased from 43.5 percent in 1991 to 14.3 percent in 2016. (using 2011 Purchasing Power Parity exchange rate). Furthermore, human development outcomes increased in a variety of ways.
Bangladesh, like other countries, is facing a difficult task in fully recovering from the COVID-19 epidemic, which has hampered economic activity and reversed some of the achievements made in the previous decade. In 2020, the COVID-19 epidemic slowed economic growth. Poverty reduction halted, exports fell, inequality worsened across multiple dimensions, and the poverty rate rose to 18.1 percent in 2020, up from 14.4 percent in 2015. Nonetheless, robust remittance inflows and a recovery in the export market have aided the economy’s steady recovery.
Bangladesh must face the challenge of limiting COVID-19 in order to completely recover and accomplish its growth goals of reaching upper-middle income status. Vaccinating the population will reduce disease incidence and death, allowing for a full recovery of economic activity. Bangladesh must also address the issue of job creation by fostering a competitive business environment, increasing human capital and skilled labor, improving infrastructure, and fostering a policy environment that encourages private investment.
Diversifying exports outside the RMG sector, deepening the financial sector, making urbanization more sustainable, and strengthening public institutions are among the other development priorities. Addressing infrastructural gaps will hasten growth and minimize disparities in opportunity across regions and cities. Addressing Bangladesh’s vulnerability to climate change and natural catastrophes will aid the country’s resilience to future shocks. Shifting to green growth would ensure the long-term viability of development outcomes for future generations.
What accounts for India’s low GDP?
There are two things that stand out. The Indian economy began to revive in March 2013 more than a year before the current government took office after a period of contraction following the Global Financial Crisis.
But, more importantly, since the third quarter of 2016-17 (October to December), this recovery has transformed into a secular slowing of growth. While the RBI did not declare so, many experts believe the government’s move to demonetise 86 percent of India’s currency overnight on November 8, 2016, was the catalyst that sent the country’s GDP into a tailspin.
The GDP growth rate steadily fell from over 8% in FY17 to around 4% in FY20, just before Covid-19 hit the country, as the ripples of demonetisation and a poorly designed and hastily implemented Goods and Services Tax (GST) spread through an economy already struggling with massive bad loans in the banking system.
PM Modi voiced hope in January 2020, when GDP growth fell to a 42-year low (in terms of nominal GDP), saying: “The Indian economy’s high absorbent capacity demonstrates the strength of the country’s foundations and its ability to recover.”
The foundations of the Indian economy were already weak in January last year well before the outbreak as an examination of key factors shows. For example, in the recent past (Chart 2), India’s GDP growth trend mirrored an exponential development pattern “Even before Covid-19 came the market, there was a “inverted V.”
Is India’s GDP lower than that of Pakistan?
With a GDP of $2,709 billion dollars in 2020, India’s GDP will be about ten times that of Pakistan’s $263 billion dollars. The disparity is larger in nominal terms (almost ten times) than in ppp terms (8.3 times). In nominal terms, India is the world’s fifth largest economy, while in ppp terms, it is the third largest. Pakistan has a nominal ranking of 48 and a PPP ranking of 24. Maharashtra, India’s most economically powerful state, has a GDP of $398 billion, far exceeding Pakistan’s. Tamil Nadu, India’s second-largest economy ($247 billion), is relatively close. The gap between these two countries was at its narrowest in 1993, when India’s nominal GDP was 5.39 times that of Pakistan, and at its widest in 1973. (13.4x).
In terms of gdp per capita, the two countries have been neck and neck. For only five years between 1960 and 2006, India was wealthier than Pakistan. In 1970, Pakistan’s GDP per capita was 1.54 times that of India. Since 2009, the margin has widened in India’s favor. On an exchange rate basis, India’s per capita income was 1.56 times more than Pakistan’s in 2020, with an all-time high of 1.63x in 2019. The previous year, Pakistan was wealthier than India. Both countries rank near the bottom of the world in terms of GDP per capita. India is ranked 147 (nominal) and 130 (absolute) (PPP). Pakistan is ranked 160 (nominal) and 144 in the world (PPP). There are 28 Indian states/UTs that are wealthier than Pakistan.
In 2020, India’s gdp growth rate (-7.97) will be lower than Pakistan’s (-0.39) after 19 years. India’s GDP growth rate reaches a high of 9.63 percent in 1988 and a low of -5.24 percent in 1979. Pakistan’s inflation rate peaked at 11.35 percent in 1970 and peaked at 0.47 percent in 1971. Pakistan expanded by more than 10% in three years from 1961 to 2017, while India never did. India’s GDP growth rate has been negative for four years, whereas Pakistan’s growth rate has never been negative.
According to the CIA Fackbook, India’s GDP composition in 2017 was as follows: agriculture (15.4%), industry (23%), and services (23%). (61.5 percent ). Agriculture (24.7 percent), Industry (19.1 percent), and Services account for the majority of Pakistan’s GDP in 2017. (56.3 percent ).
Is Bangladesh or India safer?
The law and order index, according to Gallup, is a composite number based on people’s stated trust in their local police, their perceptions of personal safety, and the occurrence of theft, assault, or mugging in the previous year.
The higher the score, the larger the percentage of people who say they feel safe. In 2019, the world’s index score was 82 out of 100, which was unchanged from the previous year. Ninety countries had results that were lower than the global average. Bangladesh, together with Pakistan, received 81 points and are ranked joint 55th on the list.
Out of the 144 countries surveyed, 54 scored higher than Bangladesh, five others scored 81, and 84 countries ranked below Bangladesh.
Bangladesh’s score in South Asia is higher than that of India, Nepal, and Afghanistan, but lower than that of Sri Lanka.
India received a score of 79, Pakistan 81, Sri Lanka 83, Nepal 73, and Afghanistan 43, which was named the world’s most dangerous country for the second year in a row.
According to the Gallup research, the results are based on telephone and face-to-face interviews with around 1,000 respondents aged 15 and older in each country, conducted throughout 2019 in 144 countries and territories.
Singapore, which tops the list nearly every year, received the highest score of 97.
Bangladesh received an 80 on the 2019 index. In other words, there was some improvement in 2019 compared to the country’s law and order condition in 2018.
In India, the law and order situation has deteriorated during the last year. India’s score in the 2019 index was 82, however it has already dropped to 79.
Pakistan, on the other hand, has achieved great progress in terms of law and order. Although the country received a score of 77 in 2019, it received an 81 this time, comparable to Bangladesh.
According to the measure, Myanmar’s law and order situation is also better than Bangladesh’s. Myanmar received an 85 in 2019 and an 82 this year.
Singapore and Turkmenistan are the most developed countries in terms of law and order, according to the survey. Both countries received a perfect score of 97. They were followed by China, who finished third with a score of 94.
Surprisingly, the United States did not make the top ten list of the world’s most secure countries. With an 85 on the law and order rating, it outperformed the global average in 2019.
The United States joins European countries such as Ireland, France, and Sweden, all of which received an 85, as well as its northern neighbor, Canada, which received an 86.
Is Bangladesh a wealthier country than Pakistan?
This not only contributed to internal stability, but also to strong relations with India, the country’s powerful neighbor. As a result, Bangladesh might reduce its defense budget and put public funds to better use.
It’s important to look back at how Bangladesh’s core attitude differed from that of its former ruler, Pakistan. Bangladesh was the poorer of the two portions of Pakistan prior to independence, with the western section being 70% richer. The tables have been turned today.
Bangladesh, once a poor, disease-ridden backwater, is now wealthier than Pakistan, both in absolute and relative terms. With a per capita income of $2,554 compared to Pakistan’s meager $1,543, it is projected to be 45 percent wealthier.
Is Bangladesh wealthier than Pakistan and India?
The Bangladesh Cabinet Secretary told reporters in June that the country’s GDP per capita had increased by 9% in the previous year to $2,227, whereas Pakistan’s per capita income was $1,543.
Pakistan was 70 percent wealthier in 1971 than it is now. Bangladesh, on the other hand, is 45 percent wealthier than Pakistan.