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Once-in-a-lifetime opportunity to grow at 10pc awaits Bangladesh
Urgent solution to power, energy problems needed: Prof Papanek
With China's labour costs ballooning, Bangladesh can more than double its exports and grow 10 per cent a year, provided the government fixes power and energy problems through a fast-track decision-making, an American economist said.
Gustav F. Papanek, an emeritus professor at Boston University, said the country can have an annual growth of 8.0 to 10 per cent and can create 3-4 million jobs a year by just taking the advantage of its cheap labour and overcome the key constraints.
China's labour costs went up by 15-20 per cent in its industrial coastal belt, forcing companies to move into the interior part of the world's third largest economy, according to a report at the New York Times.
The decline in China's ability to compete "opened up a once-in-a-lifetime opportunity for 10 per cent growth, economic transformation and dramatic cut in poverty," said Prof Papanek, who did a landmark study on the country's industrialisation and industrial policy in the 1970s. "The main source will be rapid growth of labour-intensive exports overtaking the Chinese markets. If you can grab 10 per cent of China's $185 billion exports, you can achieve that kind of growth intended."
He said the government should target labour-intensive production such as manufacturing of shoes, textiles, furniture, toys, plastic goods, electrical and electronic items and car parts-areas which are no longer attractive for China.
"Today, China needs to buy car parts for its own car brands. You can capture that segment," he said.
Prof Papanek, who is now in the capital to advise the state-run Board of Investment, also said Bangladesh can entice foreign investors from China, given the fact China no longer needs overseas investments after its economy is saddled with $2.5 trillion in foreign reserves.
But he said investors wouldn't come to this country, instead move to Indonesia, India and Vietnam for their better image and infrastructure, both are in short supply in Bangladesh.
"Investors can't wait. They have choice. It's up to you how you can convince them," said Prof Papanek who is turning 84 this July.
The Harvard-trained development economist said the Bangladesh would never be able to reduce poverty with the current rate of growth.
Economic growth in Bangladesh has averaged 6.0 per cent over the last six years, with apparel exports and overseas remittances becoming the two key drivers of that growth. In 2009, the country's exports surged to US$ 14.5 billion while remittances reached an all-time high, amounting to $10 billion.
"The goal of 8.0 to 10 per cent growth is something that must be achieved," he said in an interview with the FE.
"What worries me is that if you miss this opportunity, it wouldn't come in your life time. You either deal with the obstacles, or you are condemned to low growth for the next 10 years," he said.
In 1971, Prof Papanek moved to Kolkata to help garner public opinion in favour of Bangladesh's independence war after then Pakistani government declared him persona non-grata for his support for the liberation war.
He said he requested his Harvard fellow Henry Kissinger, then U.S. secretary of state, to side with Bangladesh, saying it is not possible to put together East Pakistan and West Pakistan into a single nation after the bloodshed and atrocities committed by Pakistani military forces.
But the U.S. government preferred to support the Pakistani government because it was geo-politically more compelling for Washington to support Islamabad than its eastern part.
Prof Papanek came to Bangladesh again in 1974 when the country was experiencing a "terrible" famine in its history, people dying on the street by starvation.
"I think it's morally unacceptable to have widespread poverty that continues to exist in Bangladesh," he said, adding it is important for Bangladesh to create greater equal opportunities and increase the income of the poor.
Once-in-a-lifetime opportunity to grow at 10pc awaits Bangladesh
Urgent solution to power, energy problems needed: Prof Papanek
With China's labour costs ballooning, Bangladesh can more than double its exports and grow 10 per cent a year, provided the government fixes power and energy problems through a fast-track decision-making, an American economist said.
Gustav F. Papanek, an emeritus professor at Boston University, said the country can have an annual growth of 8.0 to 10 per cent and can create 3-4 million jobs a year by just taking the advantage of its cheap labour and overcome the key constraints.
China's labour costs went up by 15-20 per cent in its industrial coastal belt, forcing companies to move into the interior part of the world's third largest economy, according to a report at the New York Times.
The decline in China's ability to compete "opened up a once-in-a-lifetime opportunity for 10 per cent growth, economic transformation and dramatic cut in poverty," said Prof Papanek, who did a landmark study on the country's industrialisation and industrial policy in the 1970s. "The main source will be rapid growth of labour-intensive exports overtaking the Chinese markets. If you can grab 10 per cent of China's $185 billion exports, you can achieve that kind of growth intended."
He said the government should target labour-intensive production such as manufacturing of shoes, textiles, furniture, toys, plastic goods, electrical and electronic items and car parts-areas which are no longer attractive for China.
"Today, China needs to buy car parts for its own car brands. You can capture that segment," he said.
Prof Papanek, who is now in the capital to advise the state-run Board of Investment, also said Bangladesh can entice foreign investors from China, given the fact China no longer needs overseas investments after its economy is saddled with $2.5 trillion in foreign reserves.
But he said investors wouldn't come to this country, instead move to Indonesia, India and Vietnam for their better image and infrastructure, both are in short supply in Bangladesh.
"Investors can't wait. They have choice. It's up to you how you can convince them," said Prof Papanek who is turning 84 this July.
The Harvard-trained development economist said the Bangladesh would never be able to reduce poverty with the current rate of growth.
Economic growth in Bangladesh has averaged 6.0 per cent over the last six years, with apparel exports and overseas remittances becoming the two key drivers of that growth. In 2009, the country's exports surged to US$ 14.5 billion while remittances reached an all-time high, amounting to $10 billion.
"The goal of 8.0 to 10 per cent growth is something that must be achieved," he said in an interview with the FE.
"What worries me is that if you miss this opportunity, it wouldn't come in your life time. You either deal with the obstacles, or you are condemned to low growth for the next 10 years," he said.
In 1971, Prof Papanek moved to Kolkata to help garner public opinion in favour of Bangladesh's independence war after then Pakistani government declared him persona non-grata for his support for the liberation war.
He said he requested his Harvard fellow Henry Kissinger, then U.S. secretary of state, to side with Bangladesh, saying it is not possible to put together East Pakistan and West Pakistan into a single nation after the bloodshed and atrocities committed by Pakistani military forces.
But the U.S. government preferred to support the Pakistani government because it was geo-politically more compelling for Washington to support Islamabad than its eastern part.
Prof Papanek came to Bangladesh again in 1974 when the country was experiencing a "terrible" famine in its history, people dying on the street by starvation.
"I think it's morally unacceptable to have widespread poverty that continues to exist in Bangladesh," he said, adding it is important for Bangladesh to create greater equal opportunities and increase the income of the poor.
Once-in-a-lifetime opportunity to grow at 10pc awaits Bangladesh
