A Tale of Two Economies: Comparing Bangladesh & Pakistan 1971-Present

[Abdal Ali]

This thread is intended to initiate a discussion about the comparative strengths and weaknesses of our Economy vis-a-vis the Economy of Bangladesh from the 1971-Present Period.

In particular, the objective is to look at the economic data for the two economies over extended intervals to see if we can ascertain any distinct trends over a 20 or 30 year period. If any trends are discovered, this thread hopes to promote discussion on the underlying causes of any such trends.

Posters are requested to provide reliable references (World Bank, IMF, National Central Banks et cetera) for any statistics they may quote. Please try to avoid unsubstantiated claims or anecdotal statements.
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The following economic statistics are from the IMF Database for the years 1980-2012 with a 5-year additional IMF projection.

REFERENCE: IMF Public Database

In the graphs below, we can see a clear trend that on a long-term sustainable average basis, Bangladesh has been consistently performing better than our country. This is clearly visible in the fact that our country's trends have a long-term downward inclination. The trend-lines (shown) are all downward from left to right. The trends for Bangladesh, on the other hand, are clearly upward. Their trend-lines (shown) are all upward from left to right.

Questions for Discussion: What is causing this? What factors do you think are hampering our long-term economic trends and what factors are assisting Bangladesh's long-terms trend? What should Pakistan do to pull out of the relative nose-dive seen in the graphs below?

Note: While "Zardari Chor Saala" could be a small factor, the trend is too long-term to be attributable to any one individual President/PM. In addition, while the War on Terror (WOT) may also be a short-term factor, the trend is still too long-term to be caused soley by the TTP or Hakimullah Mehsud. Please keep the long-term nature of the trends in mind while you try to analyze the underlying cause(s) of our sub-par performance vis-a-vis Bangladesh.

1) Trends in the Annualized GDP Growth-Rates of Bangladesh & Pakistan

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2) Trends in the Investment-rate Patterns of Bangladesh & Pakistan

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3) Trends in the Savings-rate Patterns of Bangladesh & Pakistan

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4) Trends in the Inflation-rate Patterns of Bangladesh & Pakistan

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5) Comparing Per Capita GDP of Bangladesh & Pakistan

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6) Extended Projection of per Capita GDP trend for Bangladesh & Pakistan

 

[Armstrong]

Nope it isn't because of Zardari or the TTP though one would be justified in assuming that they, combined, are probably responsible for the biggest and, apparently, most persistent dip in our economy and the condition of the country at large, to have ever visited Pakistan. Having said that I think the rot goes back to the late 70s and the ensuing Afghan Jihad and its repercussions on Pakistan ! Whether those repercussions manifest themselves in a Russian invasion of Afghanistan spilling over into Pakistan or its after-math a protracted civil war and our attempts and putting a lid on it effecting us, is up for discussion. In the meantime the sanctions certainly didn't help. Top that up with us trying to maintain some semblance of parity with India drained even more resources. A combination of all of that is probably what could be used to explain the 'tale of our economy when compared with BD's' for they haven't had anything close to any of those problems - 40 years of peace would do wonders to most countries !

 

[Pak47]

With good government, the skies the limit.

 

[Hyperion]

Dude simple: Adjust the relevant data of Islamization of the 80's, readjust the variables and then run an analysis on EViews (It will be a perfect fit)

 

[American Pakistani]

Pakistan's comparision with Bangladesh is totally illogical. While Pakistan should be compared with Iran, Turkey, Egypt, South Africa or Mexico, Bangladesh should be compared with Srilanka, Vietnam etc. Pakistan & Bangladesh does not face similar challenges & Pakistan having a big land mass with huge natural resources can go to skies compared to Bdsh. The stability in Bdsh & preferences it received from Western world in trade if applied on Pakistan than Pakistan's economy can cross trillion $ mark.

I hope you guys get my point.

 

[eastwatch]

Posters are requested to provide reliable references (World Bank, IMF, National Central Banks et cetera) for any statistics they may quote. Please try to avoid unsubstantiated claims or anecdotal statements.
--------------------------------------------------------------------------------------------------------------------------------------------------------------

The following economic statistics are from the IMF Database for the years 1980-2012 with a 5-year additional IMF projection.

REFERENCE: IMF Public Database

In the graphs below, we can see a clear trend that on a long-term sustainable average basis, Bangladesh has been consistently performing better than our country. This is clearly visible in the fact that our country's trends have a long-term downward inclination. The trend-lines (shown) are all downward from left to right. The trends for Bangladesh, on the other hand, are clearly upward. Their trend-lines (shown) are all upward from left to right.

Questions for Discussion: What is causing this? What factors do you think are hampering our long-term economic trends and what factors are assisting Bangladesh's long-terms trend? What should Pakistan do to pull out of the relative nose-dive seen in the graphs below?

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3) Trends in the Savings-rate Patterns of Bangladesh & Pakistan

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1) One very important factor for a developing economy is the rate of savings which is about 28% in Bangladesh and less than 15% in Pakistan.

2) When the rate of savings is low, it automatically leads to a lower rate of national capital investment.

3) When the total or as a percentage of GDP the capital investment is low, it leads to a lower increase of GDP.

4) Usually, a developing economy's capital investment:output ratio is in between 3-4:1. It means if an (additional) investment between 3 to 4 billion dollars is made, the economy will grow annually by about 1 billion dollar.

5) In case of BD the saving rate (28%) is much higher than the saving rate of (15%) of Pakistan. Afghan war and an excessive military expenditure in Pakistan may be two of the reasons that the savings rate there is low.

Unless Pakistan dis-engages itself from Afghanistan war and also does not amend its relationship with India, the economy of Pakistan will keep on sliding down for a foreseeable future. This is what I believe. However, if it finds oil or gold the economic factors will change suddenly to a better. These two golds will produce wealth for the country that can be continuously used as monetary capital that will be invested and this will produce new wealths in the factory floors.

In case of BD no govt will ever allow fanatism to grow because these fanatics will take their destructive war to Arakan and Assam. This will be a drag on the economy and foreign investments. BD has a smaller military comparing to that of Pakistan. This military is sustainable with the present economic conditions of the country.

So, unless Pakistan reduces its non-productive military forces there is a very little possibility that it will be able to overcome the current economic drag due to shortage of capital that results in lower investment and production. Note also that a weak economy will finally be unable to support a large military. So, why not reduce the burden now?

 

[karan21]

Bagladeshis will soon overtake pakistan economically. bangladesh is now eady to be the new darling of south asia. A place where all investors will run. 7% and stable economially with population of over 100 million. No wars and a decent government. Indian investments in bangladesh have crossed 15 billion. Its time for bengalis to rise. Ur comparion is not with pakistan. The country is a warzone with the most curropted regime in the world. Bangelis will soo beat them in economic numbers.

 

[Abdal Ali]

REFERENCE: HDI at UN Database linked at International Human Development Indicators - UNDP

We can see a clear trend that on a long-term basis, Bangladesh has been consistently performing better than our country in terms of slower population growth. In addition, our Human Development Index (HDI) is not making progress as fast as Bangladesh's.

In fact, Bangladesh & India look almost like parallel rail-tracks in terms of population growth-rates and rate of improvement of the HDI. In our case, however, clearly our population has been growing much faster and we have not been able to match their improvements in the HDI.

We can clearly see that we started out with the Best HDI rating in 1980 and with a population smaller than Bangladesh's. Since then, however, Bangladesh has been gaining ground and they finally caught up with us in 2010 in terms of HDI. Our population, however, now exceeds that of Bangladesh by a considerable number.

Questions for Discussion: Are we facing (or going to face) an over-population problem? Is our fast-growing population a cause of our relatively dismal socio-economic performance vis-a-vis Bangladesh in the last 20-30 years? How does fast population growth negatively affect our economic performance? Or, conversely, how does slower population growth encourage better economic performance in Bangladesh?
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1) Trends in the growth of the Populations of Bangladesh & Pakistan

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2) Trends in the improvements in the Human Development Indices of Bangladesh & Pakistan

 

[zip]

If situation remains same ,banglades will overtake pakistan within a decade

 

[SHAMK9]

Pakistan is at a point where it cant be compared with anyone, our country faces an uncertain economical future, hopefully it will be better thn today, good luck to Bangladesh though

 

[Abdal Ali]

Pakistan's comparision with Bangladesh is totally illogical. While Pakistan should be compared with Iran, Turkey, Egypt, South Africa or Mexico, Bangladesh should be compared with Srilanka, Vietnam etc. Pakistan & Bangladesh does not face similar challenges & Pakistan having a big land mass with huge natural resources can go to skies compared to Bdsh. The stability in Bdsh & preferences it received from Western world in trade if applied on Pakistan than Pakistan's economy can cross trillion $ mark.

I hope you guys get my point.

I am afraid I, for one, did not quite get your point. In fact, I think I probably missed it altogether.

You say:

(1) Pakistan's comparison to Bangladesh is totally illogical.
(2) (i) Pakistan should be compared with Iran, Turkey, Egypt, South Africa or Mexico.
(2) (ii) Bangladesh should be compared to Sri Lanka or Vietnam.
(3) Pakistan has big land mass with huge resources, which Bangladesh does not.
(4) Bangladesh received (tariff) preferences from the Western World for its textile exports

In response to (1) to (4), I would point to the following:

(1) Pakistan's comparison to Bangladesh does seem somewhat logical to me. Here is why:

(a) Pakistan and Bangladesh are in about the same demographic range (160-180 Million)
(b) Their institutions were created from the political ruins of the same British Empire in 1947.
(c) They both started off in 1947 with similar literacy (15%) and savings-rates (9%).
(d) They were both part of the same country and the same economy from 1947-1971.
(e) They both show clear signs of the common chaotic South-Asian social culture.
(f) They have both been repeatedly plagued by economical instablity and IMF bailouts.
(g) They both suffer from the repeated (Democrazy, Coup, Martial Law, Democracy) cycles.
(h) They both suffer from political merry-go-rounds (e.g. Sharif v/s Bhutto & One-Begum v/s Other-Begum)
(i) They are both governed using English Common-Law with some minor differences.
(j) They both use English for Higher Education and for Business, Law & Administrative purposes
(k) They are both principally run on Keynesian & Friedmanite Economics with negligible Marxist influence.

Most of the other countries you mention (except Sri Lanka & South Africa) are very, very different.

(2) Let us look at (Pakistan, Iran, Turkey, Egypt, South Africa, Mexico) and (Bangladesh, Sri Lanka, Vietnam):

(a) Population: Pakistan is right there next to Bangladesh

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(b) Per Capita Income: Pakistan is again right there next to Bangladesh

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(c) Size of Economy: Pakistan is once again right there next to Bangladesh & Vietnam.

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(3) Pakistan has always had a bigger land mass and more plentiful mineral resources compared to Bangladesh. Nothing new there, so why are all the trends for our country sinking? Despite having few mineral resources, as the data in this thread are indicating, Bangladesh is racing ahead and may soon surpass us on all fronts.

(4) Mexico, Turkey, South-Africa have a Free-Trade Agreement with the Western OECD countries, which the other countries on your list don't have. Iran has always been under some sort of Western sanctions or the other for the last 30 years. Sri Lanka has just come out of a horrifically brutal, bloody and destructive civil-war. Vietnam was first destroyed by American bombing and then ruined again by wasteful Soviet economic planning. Egypt has also had numerous wars and military coups, with IMF imposed austerities. There is nothing special about Bangladesh. Or for that matter Pakistan.

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PS: Note that if your comment was triggered not by any logic, but by the old psychological bias of "Tall, fair, advanced, kabab-eating Pakistanis" are inherently superior to "short, dark, backward, smelly-fish-eating Bangalis"-- then all of my statements in this post are meaningless. It is impossible to discuss such visceral prejudices in a rational manner.....

 

[A1Kaid]

I think if Imran Khan is elected things will dramatically change in Pakistan for the better for the most part so these long term
projections expect things to stay as is which isn't taking into account change in government's impact on economic performance.


PS the OP is a known false flag and has made multiple IDs

 

[arp2041]

If i am not wrong than Pakistan started the LPG (Liberalization, Privatization & Globalization) policy 3 years before India in 1988, on the one hand Indian economy has been growing around average of 6% since than, Pakistan on the other is finding hard to even maintain a growth rate of 3-4%. People in Pakistan & it's govt. needs to understand that nations first build there economy & than go for building there military, like China did, like US did or for that matter like India did. Here we have a situation where Pakistan is spending a shocking 4-5% of it's GDP to add military muscle when it does not have the economy to support it. Members from Pakistan here often raise questions on India's high military expenditure, but they often forget that howsoever high it may be ($ 40 billion compared to $ 7 billion of Pak) it is still just 2% of our GDP (even world average is around 2.5%). This is where Bangladesh have a definitive edge over Pakistan, though it's economy is half of Pakistan ($ 110 billion to Pakistan's $220 billion) in nominal terms but with growth rate of around 7% to Pakistan's 3-4%, it can easily surpass the Pakistan's economy in around a decade or so if things remains as it is in Pakistan. Those who think that Pakistan cannot be compared to Bangladesh can take it this way that Pakistan had a 25 years advantage over Bangladesh (IMHO Bangladesh started true nation building effort only after 1971) & still Bangladesh's economy is half of Pakistan & growing at around solid 7%.

 

[A1Kaid]

With climate change these economic projections mean little.

 

[veekysingh]

With climate change these economic projections mean little.

world is not gonna last very next day my friend.