Bangladesh: A New Asian Tiger On The Horizon – OpEd

The People’s Republic of Bangladesh is a relatively new country, in 2021 it celebrated its 50th birthday. It is best known for its large population. An incredible 165 million (the actual figure is probably higher) live in an area of ​​147 thousand square kilometers, which is roughly the area of ​​two and a half Croatia. Bangladesh is located in South Asia. It is surrounded by India to the west, north and east, and Myanmar to the southeast. In the south, it has access to the Bay of Bengal and the Indian Ocean, and the largest port is Chittagong. It is narrowly separated by land from Bhutan and Nepal by India’s Siliguri Corridor (popularly called the “chicken’s neck”). 

Until 1971 and the war of independence, Bangladesh was known as East Pakistan because that area was given to Muslim-majority Pakistan by the outgoing British colonial authorities. Because of its oppressed position in the Pakistani state and the refusal of the military junta in Islamabad to hand over power to the Awami League led by Sheikh Mujibur Rahman after the 1970 elections, independence was declared on March 26. A bloody war of liberation followed, in which the Pakistani authorities committed terrible massacres and genocide against the Bangladeshi population. Pakistan carried out repression and genocide. It had the active support of the US led by President Richard Nixon because Islamabad was an American ally in the Cold War unlike India which was close to the Soviet Union. Nevertheless, in December 1971, the Bangladeshis won with the help of India, which subsequently joined the conflict. 

After liberation, the country had to be developed, which was a difficult task. The US Secretary of State at the time, Henry Kissinger (a staunch opponent of Bangladeshi independence), coined the infamous phrase “basket case” to describe the plight of the fledgling state on the Indian subcontinent, as Dhaka depended on international aid to prevent starvation of its large population. In addition to overcrowding, Bangladesh is known for poverty, illiteracy, corruption, and climate change, which causes terrible weather disasters. However, in recent times, the country has recorded high rates of economic development, so many analysts call it the new Asian tiger or the emerging Asian tiger. And such statements are correct. The economic development of Bangladesh is very impressive. GDP growth has been steady year after year, and the current nominal GDP ($416 billion) is 50 times higher than the GDP at the time of establishment in 1971. Food production has increased fourfold, and exports, which are now diversified, have increased many more. National GDP consists of services 56.5%, industry 29.3% and agriculture 14.2%.

Bangladesh has become recognized as the center of the global textile industry. China and the EU still dominate the world’s clothing exports. Bangladesh ranks a high third ahead of countries such as Vietnam, India, Turkey and the USA. Apparel dominates Bangladesh’s exports. The top five goods that Dhaka exports are: knitwear ($20.3 billion, 44.5% of total exports), other clothing and fashion accessories ($19.4 billion, 42.4% of total exports), footwear (1.1 billion $), various textiles ($1 billion), paper products and fabric ($603.3 million). Other goods that are exported the most are: fish, animal products, leather, plastic products. Bangladeshis sell their textile products mostly to developed countries such as USA, Germany, United Kingdom, Spain, France. 

Bangladesh has rightly chosen the traditional path of development. It embraced the traditional labor-intensive light manufacturing industry, made plans for its development and built a dominant position. Bangladesh’s success represents a major victory for industrial policy. It has been shown that even in the 21st century, economic growth can be based on classic industry and not exclusively on services and modern activities such as the IT sector. Bangladeshis have ignored warnings that labor-intensive manufacturing will soon be automated, and it has been shown that human labor is still important. 

Bangladesh became the first constitutionally defined secular state in South Asia in 1972. Islam was declared the state religion in 1988. In 2010, the Supreme Court reaffirmed the secular principles in the constitution. A powerful threat to Bangladesh’s growth is political in nature. There is a strong Islamist element in the country, which was suppressed in 2016 with the application of harsh authoritarian measures. Although it is a parliamentary democracy, the country has huge problems with corruption and political malfeasance. However, the biggest threat is climate change. Bangladesh is geographically located on the northern coast of the Bay of Bengal on the delta of the Ganges, Brahmaputra and Meghna rivers. The confluence of these rivers, the Bengal delta, is the largest delta in the world. Such a geographical position makes the country very exposed to floods, storms, variable rainfall and rising sea levels. Bangladesh is one of the countries most sensitive to climate change. Over the course of a century, 508 cyclones hit the Bay of Bengal region. Increased precipitation, sea level rise and tropical cyclones are expected to intensify, adversely affecting agriculture, access to drinking water and food, and human homes. It is estimated that by 2050, rising sea levels will flood about 20% of the land and displace more than 30 million people. To address this threat, the Bangladesh Delta Plan 2100 was launched.

Despite the rapid economic growth, Bangladesh is still a very poor country, as shown by the GDP per capita (GDP PPP) of $6,633. The country is 139th in the world in the rank of Ghana, Honduras and Djibouti. In GDP per capita, Bangladesh will soon surpass its big neighbor, India, and has already overtaken Pakistan. It will take a long time before it reaches the status of a developed country, and it will encounter obstacles along the way. The growth of Bangladesh is also an indicator of how globalization, despite its shortcomings, can serve developing countries well, because if the world had not been globalized, Dhaka would never have become the global center of the textile industry. Access to the export markets of Europe and the USA was crucial for development. Reliance on the US and the EU, which together accounted for at least 80% of Bangladesh’s export earnings over the past decade, has enabled Bangladesh to become a global force in the textile industry. 

According to most items of the Human Development Index, i.e. quality of life, Bangladesh is ahead of India and Pakistan, and it is only a matter of time before it overtakes Sri Lanka, which is in a serious economic crisis. Life expectancy in Bangladesh improved from 46 to 72 years, leaving behind Pakistan at 69 years. Women in Bangladesh are among the most emancipated in the subcontinent, including India. The proportion of women in the workforce is 33.6% in Bangladesh, compared to 22% in Pakistan and a staggering 20.3% in India. Education and health are two areas that the government has put on its priority list. Bangladeshi students study abroad, including in India, and families who are wealthy enough have access to quality healthcare in Indian hospitals. Healthcare has improved in the country itself, but a lot of investment is still needed. Poverty rate halved from 2011 to today. 

Despite the poor prospects, Bangladesh has managed to remain neutral in international relations and at the same time record rapid economic growth. Contemporary Bangladesh is an emerging Asian tiger that has ambitions to become an important factor regionally and globally. Bangladesh aspires to become a middle or regional power in the international arena. This rather bold behavior is particularly visible during the reign of the current Prime Minister Sheikh Hasina, who has been in power since 2009. Hasina is the longest-serving female prime minister in the world. By the way, she is the daughter of the founder and first president of Bangladesh, Sheikh Mujibur Rahman. The geopolitical behavior of Bangladesh is one of the rare examples of successful maneuvering between major powers to secure their own state interests. Bangladesh’s geographical position, being semi-encircled by India, has led Dhaka to have good relations with New Delhi despite minor aggravations. Good relations with India are a barrier to possible Chinese economic aspirations for dominance. China’s significant financial and security investments in Bangladesh of over $18 billion include a series of ambitious infrastructure projects that are part of China’s New Silk Road: the $3.3 billion Padma Bridge, the $1.9 billion Pigeon Power Plant, the development of a power grid worth 1,32 billion dollars and a digitization project worth a billion dollars.

However, Bangladesh did not become a Chinese colony. Dhaka has repeatedly shown that it can stand up to China when its interests are at stake. At a time when ASEAN countries are forced to choose sides between two Asian superpowers, Dhaka’s maneuvering between Beijing and New Delhi shows how small states can have good relations with big ones without siding with one side. This also shows the character of Bangladesh in terms of geopolitics: it is open to the best possible economic cooperation that meets national interests, but will choose political neutrality. 

Dhaka’s relations with Washington have been volatile in recent years. At the height of the 2020 Sino-Indian border clashes in Galwan, Bangladesh agreed to a US$110 million military modernization proposal, though this pales in comparison to the $2.59 billion Bangladesh has spent on Chinese military equipment. Biden’s special climate envoy John Kerry flew to Dhaka in early March 2021 to invite Prime Minister Hasina to the climate summit, underscoring the importance of Bangladesh’s participation as a key interlocutor on climate issues. During the last two decades, Dhaka’s foreign policy has relied heavily on the implementation of UN international support measures for the least developed countries of the world and the acquisition of preferential access to foreign trade, without tariffs. Even when the United States stopped offering trade preferences in 2015 and China stepped in to allow duty-free access for 97% of Bangladeshi goods, it became clear that despite economic ties, Bangladesh would maintain a neutral stance in international relations. 

The same applies to Russia. Dhaka decided to act neutrally in the Ukrainian crisis and did not impose sanctions on Russia because it is an important economic partner. This is completely in line with the decades-long foreign policy under the slogan “friendship to all, malice to none”. However, leaving the club of world’s least developed countries and the consequent loss of trade privileges means that Dhaka will have to rely on regional and bilateral agreements with to maintain economic progress. Many economists believe that Bangladesh will have to turn primarily to cooperation with the advanced countries of East Asia. 

In order to realize further economic development, Bangladesh will have to transform its labor-intensive economy into a capital-intensive one like South Korea did in the 1980s. Dhaka’s aspirations to develop the auto industry by the early 2030s show an intention to avoid the stagnation of Asian countries that have become medium developed but have not advanced further (eg the Philippines and Malaysia). The auto industry in Bangladesh is already the third largest in Asia and the plans for its expansion are very ambitious. Some leading Bangladeshi companies and the government, in cooperation with foreign technology partners (Hyundai, Mitsubishi), proposed multi-million dollar investments for the establishment of modern factories. In order to ensure long-term development, the economy will have to diversify and start producing furniture, larger quantities of food, and additionally revive the pharmaceutical, electronic and IT industries. In order to succeed in this, it is necessary to build a better infrastructure and attract foreign investors, which will definitely happen, the only question is at what level.