Has Bangladesh Really Left India and Pakistan Behind in Per Capita Income?

[Meengla]

South Asia, particularly India and Bangladesh have high population density, which results in squalid housing for the poor

I don't know enough about economy to comment but looking at You Tube videos, your statement looks correct. Pakistanis do seem to be living better lives. And imagine if Pakistan has the geopolitical peace like BD has. All of Pakistan's neighbors are in global focuses for one reason or another and even though it is overall a good thing to have China as a neighbor, Pakistan still faces significant pressure from the West about China.
I believe Pakistan lost a decade from 1989-1999 due to domestic political infighting but BD also had a lot of political instability due to the rivalries between Khalida Zia and Haseena, however, BD is not cursed with a neighbor like Afghanistan which has for 40+ years contributed too much to Pakistan's losses.

 

[vishwambhar]

Bangladesh wins. .. . Happy

Motorcycle sales IMO is quite valid to see real GDP since I believe countries will not tax motorcycle sales too much.



For rail way case in India, large majority of the rail tract is inherited from British India, so comparing railway system in India and Bangladesh can create huge bias since BD is literally starting from zero.

Hi indos British yes they brought railway in India but in their presence only major cities were connected....later on today what the gigantic railway network you see in India is developed by Indians..... But yes British started this and if they hadn't started maybe things would have been different today.....

 

[Bilal9]

You are wrong.....! Sir. Karachi GDP is not equivalent of all of Bangladesh.

Bangladesh GDP right now is North of US$400 Billion (Nominal) and US$966 Billion (PPP) per IMF. Growing at 6.5% plus per IMF/World Bank estimates.

Pakistan's GDP (PPP) is $1.1 Trillion (see last link).

Karachi's GDP (PPP) is $164 Billion per Wiki.

Dhaka's GDP (PPP) is $210 Billion per Wiki.

All figures are as of 2020/2021 but I don't deny that there may be some fudging on Bangladesh side, no idea about Pakistan.

Of course I could've missed something obvious...

Kamal: Bangladesh GDP reaches $411bn

Also said that Bangladesh has made unprecedented attainments in the macro economy

www.dhakatribune.com

Economy of Karachi - Wikipedia

en.wikipedia.org

Economy of Dhaka - Wikipedia

en.wikipedia.org

List of countries by GDP (PPP) - Wikipedia

en.wikipedia.org

 

[Paitoo]

If I have to use old school economics language, India transitioned from being an agriculture driven economy to a services driven economy directly. The middle transition from agriculture to a manufacturing was mostly skipped because the IT revolution took precedence over everything else. From my limited observations as a commoner, I feel:

A focus on manufacturing has the following pros:

1. It creates jobs away from the traditional urban areas. Therefore growth is better spread out
2. Manufacturing sector forces you invest in infrastructure like highways, power lines, ports etc

The cons of focusing only on manufacturing are:

1. Employment potential is limited (especially as you advance up the value chain) because of automation.

A services dominant economy, like in India tends to accumulate the workforce in urban areas and leads to over crowding. Even if one earns well, the quality of life is compromised because you still have to face the same traffic, pollution and other urban problems. For the poor, the less said the better. They get crowded out, have to live on the edges of the city and commute long distances. For a person earning Rs 20,000 a month in city like Mumbai, Rs 5000 more (which is a 25% growth) is not going to change his life significantly. He will still not be able to move out of his squalid housing. Not unless he starts earning at least Rs 50K per month.

I love Gandhi's concept of India living in its villages. Shedding the romantic image, if this is viewed mainly from a policy standpoint, this means adopting a model where growth is more evenly distributed so that the ugly urbanization typical to Asian cities is arrested.

There are any number of rich Indians who curse for hours every day when they take their expensive SUVs and sedans out on the poor roads. Money can buy you toys but you can't control the environment outside your house. Corruption and poor work ethic is a far bigger problem than GDP growth. It is corruption which denies you maximum bang for the buck for your tax money.

Comparing GDP / wealth of cities is meaningless. Are these cities existing independently of the country? In most calculations, the city GDP includes corporate revenue which is an accounting technicality. A company headquartered in Mumbai / Karachi does not make all its wealth from Mumbai / Karachi.

 

[Maula Jatt]

If I have to use old school economics language, India transitioned from being an agriculture driven economy to a services driven economy directly. The middle transition from agriculture to a manufacturing was mostly skipped because the IT revolution took precedence over everything else. From my limited observations as a commoner, I feel:

A focus on manufacturing has the following pros:

1. It creates jobs away from the traditional urban areas. Therefore growth is better spread out
2. Manufacturing sector forces you invest in infrastructure like highways, power lines, ports etc

The cons of focusing only on manufacturing are:

1. Employment potential is limited (especially as you advance up the value chain) because of automation.

A services dominant economy, like in India tends to accumulate the workforce in urban areas and leads to over crowding. Even if one earns well, the quality of life is compromised because you still have to face the same traffic, pollution and other urban problems. For the poor, the less said the better. They get crowded out, have to live on the edges of the city and commute long distances. For a person earning Rs 20,000 a month in city like Mumbai, Rs 5000 more (which is a 25% growth) is not going to change his life significantly. He will still not be able to move out of his squalid housing. Not unless he starts earning at least Rs 50K per month.

I love Gandhi's concept of India living in its villages. Shedding the romantic image, if this is viewed mainly from a policy standpoint, this means adopting a model where growth is more evenly distributed so that the ugly urbanization typical to Asian cities is arrested.

There are any number of rich Indians who curse for hours every day when they take their expensive SUVs and sedans out on the poor roads. Money can buy you toys but you can't control the environment outside your house. Corruption and poor work ethic is a far bigger problem than GDP growth. It is corruption which denies you maximum bang for the buck for your tax money.

Comparing GDP / wealth of cities is meaningless. Are these cities existing independently of the country? In most calculations, the city GDP includes corporate revenue which is an accounting technicality. A company headquartered in Mumbai / Karachi does not make all its wealth from Mumbai / Karachi.

Why is it that in Indian Punjab this romantic idea of ghandi is realized
As Thier rural areas are not bad compared to rural areas in most of SC
Can rest of India in extension SC replicate Thier success in rural upliftment?

What is it that they do that rest of country fails to emulate?
What is the downside to Thier way of life (personally I think it impacted Thier urbanization or maybe they didn't have the luxury of a major city except for Amritsar, even Chandigarh is shared)

 

[Paitoo]

Why is it that in Indian Punjab this romantic idea of ghandi is realized
As Thier rural areas are not bad compared to rural areas in most of SC
Can rest of India in extension SC replicate Thier success in rural upliftment?

What is it that they do that rest of country fails to emulate?
What is the downside to Thier way of life (personally I think it impacted Thier urbanization or maybe they didn't have the luxury of a major city except for Amritsar, even Chandigarh is shared)

This is a good question and requires looking at various socio-cultural aspects. Indians have a lot of misconceptions about Punjab, both in a positive and negative way. Bollywood has played its role in pushing the Punjabi stereotype.

For someone like me who has lived all over India, I have encountered different kinds of Punjabis:

1. Post partition refugees from Pakistan
2. Punjabis who have never lived in Punjab (typical Bombay Punjabis, some of whom could be refugees too)
3. Punjabis whose parents lived in Punjab but children grew up elsewhere
4. Punjabis who live in Punjab

They all differ in their temperament. But I don't want to get into that.

It's the category 4 Punjabis who are relevant to the answer here. For me who is not very well versed with economic data, it is difficult to say if the Green Revolution caused the prosperity in Indian Punjab or is it Punjab which was the ideal setting for the Green Revolution to start with. Perhaps it is a bit of both. Punjab has had a decent canal system since British times. The hard working stereotype applies more to category 1 and 2 Punjabis. Farmers in all states in India are hard working, so that part was not unique to Punjab.

I think despite the differences in the 4 categories I described above, there is a common thread that runs through all Punjabis, and that is their willingness to spend on things they like. This pushes them to work hard for it and generally creates a consumer culture that is good for the economy. More importantly this mindset applies in rural areas as well, so we see similar spending patterns there. However the image of Punjab as a happy agrarian role model is partly due the absence of large scale industries (except some food processing), due to which it is the farmer and not the businessman which dominates the cultural references. Having said that, Indian Punjab does not lack urban areas. Patiala, Ludhiana, Jalandhar, Bathinda are decently sized cities. Indian Punjab is after all not that big geographically.

Barring the cow belt (also called the BIMARU states), the conditions in rural India are not that bad actually and Punjab is not significantly better. Punjab is certainly not better than rural South India in living standards. I think where Punjab fares better in is how the poorest live, at least as far as diet goes. North Indians in general love their milk and milk products, and would rather spend a larger portion of their income on food, as compared to other things.

Today's Indian Punjab is actually not a role model in any sense as far as policy making is concerned. When examples of progressive states are given, it is almost always the southern states and Maharashtra / Goa, or at best Rajasthan from North India. Punjab is actually considered a state resting on past laurels where the youth are struggling with drug addiction and forever dreaming of migrating to gora lands.

 

[Maula Jatt]

This is a good question and requires looking at various socio-cultural aspects. Indians have a lot of misconceptions about Punjab, both in a positive and negative way. Bollywood has played its role in pushing the Punjabi stereotype.

For someone like me who has lived all over India, I have encountered different kinds of Punjabis:

1. Post partition refugees from Pakistan
2. Punjabis who have never lived in Punjab (typical Bombay Punjabis, some of whom could be refugees too)
3. Punjabis whose parents lived in Punjab but children grew up elsewhere
4. Punjabis who live in Punjab

They all differ in their temperament. But I don't want to get into that.

It's the category 4 Punjabis who are relevant to the answer here. For me who is not very well versed with economic data, it is difficult to say if the Green Revolution caused the prosperity in Indian Punjab or is it Punjab which was the ideal setting for the Green Revolution to start with. Perhaps it is a bit of both. Punjab has had a decent canal system since British times. The hard working stereotype applies more to category 1 and 2 Punjabis. Farmers in all states in India are hard working, so that part was not unique to Punjab.

I think despite the differences in the 4 categories I described above, there is a common thread that runs through all Punjabis, and that is their willingness to spend on things they like. This pushes them to work hard for it and generally creates a consumer culture that is good for the economy. More importantly this mindset applies in rural areas as well, so we see similar spending patterns there. However the image of Punjab as a happy agrarian role model is partly due the absence of large scale industries (except some food processing), due to which it is the farmer and not the businessman which dominates the cultural references. Having said that, Indian Punjab does not lack urban areas. Patiala, Ludhiana, Jalandhar, Bathinda are decently sized cities. Indian Punjab is after all not that big geographically.

Barring the cow belt (also called the BIMARU states), the conditions in rural India are not that bad actually and Punjab is not significantly better. Punjab is certainly not better than rural South India in living standards. I think where Punjab fares better in is how the poorest live, at least as far as diet goes. North Indians in general love their milk and milk products, and would rather spend a larger portion of their income on food, as compared to other things.

Today's Indian Punjab is actually not a role model in any sense as far as policy making is concerned. When examples of progressive states are given, it is almost always the southern states and Maharashtra / Goa, or at best Rajasthan from North India. Punjab is actually considered a state resting on past laurels where the youth are struggling with drug addiction and forever dreaming of migrating to gora lands.

Interesting cause I believed in the stereotype of a rural economy, where farmers lived a good lifestyle and the economy was basically just farming and nothing else

And I know the issues that the state is suffering from rn sad state of affairs (I think they didn't diversify out of green economy, got stuck) , my thing was on the rural side of the economy as you said for common prosperity a good rural lifestyle is required
And in the stereotype atleast they full filed that requirement
But I guess it's just a stereotype, thier rural lifestyle might be better than peers in North India but not really better than SI

I think rural areas can be improved with mix of SME sectors and farming while Urban areas become responsible for LSM and techie stuff

SME is going to be the kingmaker for rural prosperity, especially connecting them with good roads and highways

 

[Paitoo]

It is important that farmers have better standard of living, but for this to happen the farmer needs to earn better for the produce. The difference between what the end consumer pays and what the farmer gets is ridiculously high. I am quoting here a line from the website of a company in Bangalore who are basically coffee farmers turned cafe owners.

"For every Rs. 250/- that you spend on a cup of coffee, the farmer earns as low as 1 paise!"

Farming sector cannot grow beyond a point because arable land is a finite resource. With every subsequent generation land gets divided and for every farming family a point will be reached where the occupation is not viable for the youngest lot, ie assuming they want to be farmers in the first place.

SMEs are very important and I believe governments should do much more to encourage them. In the case of India I felt we surrendered to China without a fight in the manufacturing sector. Not that we did too badly, but we did become spectators for a long time and did not go out of our comfort zone. Chinese speed of execution is tremendously fast and we south Asians dilly dally too much.

 

[Maula Jatt]

@DrJekyll

Village owned enterprises in Indonesia

Village owned enterprises (BUMDes), will accompany Indonesia state owned enterprises (BUMN) and Provincial owned enterprises (BUMD) to develop Indonesia. Around 1.650 BUMDes becomes legal corporations in Indonesia. The creation of BUMDes is something predictable to happen due to huge village...

defence.pk

 

[Wood]

If Pakistan, Bangladesh and Sri Lanka want to objectively compare per capita income in South Asia, the comparison should be with Indian states that have a coast line and port facility like they do. The per-capita income of the more prosperous coastal states in India are roughly around $3000 to $3300 USD.

The other South Asian countries should compare with the coastal provinces in India and then identify what works and does not work for them. Chest thumping blogs and one off boastful comments on message boards are unbecoming of adults

 

[Maira La]

If Pakistan, Bangladesh and Sri Lanka want to objectively compare per capita income in South Asia, the comparison should be with Indian states that have a coast line and port facility like they do. The per-capita income of the more prosperous coastal states in India are roughly around $3000 to $3300 USD.

The other South Asian countries should compare with the coastal provinces in India and then identify what works and does not work for them. Chest thumping blogs and one off boastful comments on message boards are unbecoming of adults

We can compare to W Bengal next door. Their GDP/capita is $1500. Ours is $2400+ . So your coastal states theory goes to the bin.

 

[Wood]

We can compare to W Bengal next door. Their GDP/capita is $1500. Ours is $2400+ . So your coastal states theory goes to the bin.

I meant to say the average income of coastal states.

If you are simply interested in convincing everyone that Bangladesh is the best state in the subcontinent with no scope for comparative analysis (and scope for improvement), then carry on.

 

[Bilal9]

I meant to say the average income of coastal states.

If you are simply interested in convincing everyone that Bangladesh is the best state in the subcontinent with no scope for comparative analysis (and scope for improvement), then carry on.

I believe the problem with your theory

The per-capita income of the more prosperous coastal states in India

is that these coastal states did not become "prosperous" in a vacuum. There is this humongous "sucking noise" everyone can hear when these coastal "prosperous" areas centered by cities like Madras, Calcutta and Bombay (where investments, education and industrialization is concentrated) - suck in capital, talent, all kinds of resources and industrial inputs from the land-locked "poorer" interior states. So one cannot simply dismiss BIMARU or interior Indian states as "not belonging to Indian prosperity" whatever that concept alludes to...

That's like saying - Chinese industrialization, prosperity and export activity is only along the coastal areas, so China can ignore the interior states and not average all of China's economics. Which China does not.

It is rather amusing to see random people in India coming with excuses and clutching at proverbial straws as their actual down-in-the-dumps economic situation is divulged to the rest of the world and the hyper-inflated Hindutva vote-getting concept of "Superpower" identity is deflated. Not all of India belongs to Gurgaon or Navi Mumbai.

 

[PoondolotoPandalum]

Not an economist. And I'd wager whatever you guys are (engineers, businessmen, uber drivers, north London fried chicken shop owner, etc) you probably aren't one? So I will go by conventional wisdom, based on mainstream knowledge, rather than fringe PDF school of economic theories (ain't no one got time to be lectured by Professor Hackimet and his chamcha's)

"A research paper by economists Ali Kemal and Ahmad Waqar Qasim of PIDE (Pakistan Institute of Development Economics) estimated in 2012 that the Pakistani economy’s size then was around $400 billion"

Pakistan Institute of Development Economics sounds legit. Which credible international journal of economics was it accepted in? How many people (outside of PDF) have referenced it?

Does your government use their magical $400 billion GDP figure to set their economic policies, or figures that are closer to what international organizations (IMF, World Bank, ADB, etc etc) use? Do you think one can apply the same set of economic/budgetary policies for a country with a GDP of $400 billion vs $224 billion (Pakistan's GDP in 2012, according to IMF).

Do you think the IMF/World bank will update their current estimation of Pakistan's GDP based on Mr/Dr Kamal's papers? Have you perhaps questioned why their findings and conclusions aren't very convincing to everyone else? Including within Pakistan itself.

I mean, the BBS gets accused of fudging numbers, which isn't unfounded. But it's usually off (by IMF figures) by 5-6%. BBS estimated a per capita income estimate of $2270 in early 2021, whereas the IMF (November revision) put that figure to around $2190. Please show me in the last 20 years (or longer) were BBS's GDP valuation was off by 6% to the numbers IMF/WB/ADB et al use? BBS does fudge their numbers, but they're not stupid enough to be off that much to lose complete international credibility, or for government to make catastrophic economic decisions based on wrong numbers. BBS also presents a lot of less than flattering statistics about Bangladesh. Some people have no problem with that. But when they present something that's damaging to their high and mighty ego, it loses all credibility.

With respect to the wider discussion about GDP and living quality etc. Bangladesh's GDP (according to mainstream IMF) went from $115 to $355 billion in 12 years. Or $411 billion, according to rebasing of GDP calculation (IE not using 2005 standards, which I think is fair). We will see if IMF/World bank updates their GDP estimation accordingly. Pakistan also estimated close to 4% growth, going from $1250 per capita (still the most up-to-date IMF figure to my knowledge) to $1540, based on rising exports among other things. And I believe them. IMF is likely to amend its estimation next year. Anyway, I don't think one can expect that much of a shift in cosmetics or living standards that quickly. It'll take a bit more time for the macroeconomics to manifest in micro (individual scale). Another thing to note policymakers in Bangladesh were less focused on "blinging" up their major cities as they doin Pakistan, and more focused on bridging the urban-to-rural network. Bangladesh doesn't have 8+ lane highways as Pakistan. Which might seem super impressive to peasant-minded people. But one of the critical stumbling blocks for development (for a developing country) is the urban-to-rural divide. And the urban-to-rural divide in Pakistan is sub-saharan level. Bangladesh decided to build less than glamorous roads and infrastructure connecting our many villages to urban areas. We were the largest village on earth in 1971. Now we're the largest (though messy) metropolis on South Asia. The urban-to-rural divide in BD has been changed to an urban-to-rural continuum. This is something Bangladesh did FAR better than both India and Pakistan. It meant better access to jobs (esp formal jobs), health, education, etc. So please don't use your "bling-bling" superficial standards, based on fancy (but guarded) parts of Islamabad, etc, as a yardstick for Devaaalapment. I don't know if it's your feudal upbringing that makes you incapable of understanding certain concepts. We'd rather focus on the basics first, rather than populist projects designed to impress peasants.

If you want a better GDP calculation for Pakistan, perhaps rebase your GDP calculation (i think you also use 2005). Depends on how much your industries have evolved compared to your current base year. In Bangladesh, there's a world of difference between 2015 (current base year) and 2005 (previous base year). Despite RMG being our prime export, GDP, like everywhere else, is mostly driven by internal consumption. In our case, reliance on imports for internal consumer goods has fallen sharply. Bangladesh doesn't have an import-based economy like Pakistan did (which crashed back in 2017 iif you don't remember). Bangladesh prefers to make in Bangladesh as much as possible. Whereas you guys incentivize folks to import more than to produce at home. At least you used to, IK (allegedly) is trying to reverse that. And that'll be a good start. Get rid of this dumbass import-based hyperconsumption economic bubble

 

[Bilal9]

Interesting cause I believed in the stereotype of a rural economy, where farmers lived a good lifestyle and the economy was basically just farming and nothing else

And I know the issues that the state is suffering from rn sad state of affairs (I think they didn't diversify out of green economy, got stuck) , my thing was on the rural side of the economy as you said for common prosperity a good rural lifestyle is required
And in the stereotype atleast they full filed that requirement
But I guess it's just a stereotype, thier rural lifestyle might be better than peers in North India but not really better than SI

I think rural areas can be improved with mix of SME sectors and farming while Urban areas become responsible for LSM and techie stuff

SME is going to be the kingmaker for rural prosperity, especially connecting them with good roads and highways

Two things that I have seen stand out in my mind as far as improving rural areas.

One is access to electricity in rural areas and the other is rural road access. These two factors are these days very important to help prosperity in rural areas in the subcontinent for SME's to prosper. Electricity infra coverage in India and Bangladesh is close to 100%, but then you also have to have electricity generation to supply them. In Pakistan's case it's around 60% (as of 2019) but that could also be due to large areas in Pakistan which are sparsely populated (Baluchistan and Western/Northern areas I imagine).

Bangladesh does not have a problem in these areas because rural areas are mostly arable (other than the hill tracts and haor areas) and it is very densely populated as well. Where electricity has not gone, they have solar situations (even individual solar systems for household use), But solar generation cannot help SME industrialization unless it is large scale generation.