Pakistanis have more children than Bangladeshis this is an important reason behind the lower per capita GDP of Pakistan.
If x person earns 1 lakh in month and y earns 80 thousands. X has 1 wife and 4 children and y has 1 wife and 2 children. Per capita income of x persons family would be less than 17 thousands and y familys per capita income would be 20 thousands
There are many other factors (including HDI Factors) that are at play. You have to understand that rate of literacy for females in Bangladesh is higher, educated females have less fertility (number of babies per woman) and tend to raise healthier babies when they do have them. This trend of educating females in Bangladesh started more than three decades ago, and we are only reaping the benefits in the last two.
Let me put in a MINT article (Indian media) published in 2013. In those days we were poorer than India (GDP per capita PPP) more than we are today, but our many HDI indicators were still higher than India's. In addition,
@PoondolotoPandalum has explained that there are other factors (bottom-up development is the term I believe) which eluded India as a country. This article also talks about that in an indirect way but GINI coefficient (Inequality of wealth) and Gender Parity in Bangladesh is much higher than either India or Pakistan because of cultural reasons. Funnily enough, our nominal GDP per capita has exceeded India's now, and IMF predicts that this will remain so for the near future.
Despite being desperately poor, Bangladesh has done much better than India on many social indicators
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Lessons for India from Bangladesh
A file photo of clean-up work at the Rana Plaza building collapse in Dhaka. Photo: AFP
(AFP)4 min read . Updated: 19 May 2013, 11:34 PM IST
Manas Chakravarty
Despite being desperately poor, Bangladesh has done much better than India on many social indicators
Bangladesh has recently been in the news for all the wrong reasons. The collapse of the by now infamous Rana Plaza has focused the spotlight on the dangerous working conditions in the garment sweatshops there. The country is, of course, the sordid underbelly of globalization. But the garment industry has also lifted millions in the country, especially women, out of poverty. In the inimitable words of
Joan Robinson, “The misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all."
Bangladesh is a much poorer country than India. Its per-capita gross domestic product (GDP) based on purchasing power parity was $2,039 in 2012, compared with $3,830 for India, according to the International Monetary Fund (IMF). Despite being desperately poor, the country has attracted international attention among development economists for the extraordinary improvement in its social indicators. Numerous studies have shown it has done much better than India when it comes to alleviating poverty, reducing child mortality, and on other such indicators of inclusive growth. This improvement has happened in spite of Bangladesh’s rate of GDP growth being well below India’s.
According to the latest United Nations (UN) Human Development Report, Bangladesh comfortably beats India on most such social indicators. It has lower infant and child mortality, higher life expectancy, and does better on gender equality. It has forged ahead of India on these social indicators despite the government spending little on health or education. Bangladesh’s public spending on health, as a proportion of GDP, is the same as India’s, while public spending on education is much lower. Unlike India, welfare programmes haven’t derailed government finances—Bangladesh’s fiscal deficit is much lower than India’s.
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A World Bank policy research paper points out that the most important factors for the decline of poverty in Bangladesh were higher real wages and higher productivity, while lower dependency ratios and a big increase in international remittances also helped.
Why are real wages rising in Bangladesh? It’s here that the garment industry comes in. Over the past few years, Bangladesh has successfully used its low-cost advantage to become a base for garment manufacturing. This has led to the migration of millions of people from rural areas into the manufacturing sector, with women being the biggest beneficiaries. Significantly, the share of employment in the formal sector in Bangladesh is 27.9%, well above that in India, and the proportion of working women in formal employment is even higher. India’s draconian labour laws have ensured that we miss out on the relocation of low-cost manufacturing out of China.
Also, the rise in non-farm employment, together with the increase in remittances from Bangladeshis working abroad (Bangladesh has a current account surplus thanks to them), has led to rising real wages in the countryside and a reduction in poverty rates. Jobs for the masses are the surest means of pulling people out of poverty. Contrast India’s jobless growth.
This is by no means the whole story. The improvement in social outcomes could not have happened without the country’s vast network of non-govern-mental organizations (NGOs), which have been at the forefront of improving health in rural areas. The country’s extensive microfinance programmes have also helped dent poverty. Microfinance is a contentious subject, with many claiming it does little for development and instead traps people in a cycle of debt. Other studies, however, have found significant welfare gains resulting from microcredit participation, especially for women. Research by
S.R. Osmani (2012) found that in Bangladesh, “If microcredit had not existed rural poverty would have been almost 5 per cent higher than what it was in 2010."
In short, a combination of higher real wages, higher productivity in farms, the use of NGOs as agencies for social development, and remittances from abroad have all helped provide a measure of inclusive growth in Bangladesh.
In India, however, growth has been far less inclusive. The paper by Agarwal and Whalley points out that the elasticity of reduction in poverty, malnourishment, infant mortality, child mortality and maternal mortality with respect to growth of per-capita GDP is much less in India than for other countries and regions and even lower than sub-Saharan Africa (see chart). That means the impact on poverty and other social indicators of a percentage point growth in per-capita GDP is lower in India than for most other regions.
India’s GDP growth in 2012, according to the IMF, was lower than Bangladesh’s and is forecast to be lower in 2013 and 2014 as well. The IMF seems to believe that Indian rates of growth will be near that of Bangladesh in the near future. That will hurt our already-poor social welfare measures. It may be time we learnt something from Bangladesh.
Sorry, it is unfortunate that I have little time to read long posts and grasp their true meaning. However, I must say we better do not measure and compare our loin clothes in the open.
All the South Asian countries remain poor and impoverished. Why compare our small loin clothes with each other then? We should compare ourselves with other developing/ developed countries in our east.
All of us remain at the lowest rung of a ladder. All means BD, India, Nepal, Bhutan, SL, the Maldives, Pakistan, and Afghanistan. It seems modernity will not come over our faith matters and we are destined to remain as poor as we are now.
No modernization of thoughts and no modernization of the economy.
I understand that comparing Loin cloths and Langotis are futile.
But we should look at ways in which some formula has worked better in Bangladesh vs. other countries, which rest of them can use. There is common culture in South Asian countries, and we can take lessons in some things from each other, unless ego becomes an issue.
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