TGS


Research and analysis: Bangladesh Inclusive Growth Diagnostic - June 2014

Bangladesh has made remarkable progress over the past two decades, lifting millions out of poverty and sustaining expanding levels of economic growth. These achievements have been realized despite major internal and external challenges, including global economic downturns, natural disasters, and periods of political uncertainty. Reaching the Government of Bangladesh’s ambitious goal of becoming a middle income country by 2021 – the country’s 50th year anniversary – will require annual growth rates of between 7.5 and 8% (World Bank 2012). This growth must be inclusive of poor households and women if Bangladesh hopes to raise income levels and end extreme poverty.

Expanding levels of economic growth has led to a rise in Bangladesh’s gross national income (GNI) at 2005 Purchasing Power Parity (PPP), increasing by 79% from $985 GNI per capita in 2000 to $1,768 in 2010. Nonetheless, Bangladesh remains a low-income country, with millions still living below the international poverty line of $1.25 per day and millions more living on less than $2.00 per day. By 2010, over 43% of the population lived below the International Extreme Poverty Line of $1.25 per person per day at 2005 PPP, compared to a poverty headcount of 58% in 2000. To put this in perspective, in 2010 there were around 65 million Bangladeshis living in extreme poverty – roughly the same population as the United Kingdom. Bangladesh also has a large share of its population remaining just above the extreme poverty line and thus remains vulnerable to external shocks and any adverse fluctuations in income or required spending. For example, in 2010 some 50 million Bangladeshis were above the $1.25/day extreme poverty line yet lived on less than $2.00 per day.

The governments of the United States, the United Kingdom, and other countries, as well as international organizations like the World Bank have committed themselves to help eradicate extreme poverty by 2030. Assuming no major shocks, continued economic growth at rates similar to that recorded since 2000 could permit Bangladesh to reduce the prevalence of extreme poverty to 2.4% by 2030. At the same time, one should bear in mind that in the current international context, “extreme poverty” is defined relative to an extremely low poverty line – the average of the poverty lines of the poorest countries in the world. This means that rising above the $1.25/day line by no means entails escaping “poverty,” but simply becoming a bit less poor than previously. Although reducing $1.25/day poverty to 2.4% by 2030 would represent an historic achievement for Bangladesh, reaching the consumption level needed to do that would still leave more than half the population living on less than $4 per day. In short, for Bangladeshis to escape from “poverty” as viewed by the citizens of the donor countries will require sustained and inclusive growth for decades – a marathon, rather than just a sprint to 2030. As a result, policies and programs should keep both the long-term as well as medium-term goals in mind.

The purpose of this analysis is to identify the binding constraints that deter households and firms from making investments and taking risks that would significantly increase their incomes. The analysis is not intended to dictate specific interventions, but rather to provide a framework that will focus attention on the most pressing obstacles to development. Using this analysis as a point of departure, policy makers may identify appropriate reforms and projects that will ease those binding constraints, thereby stimulating economic growth.

https://www.gov.uk/government/publications/bangladesh-inclusive-growth-diagnostic-june-2014

seen at 09:31, 19 October in Publications on GOV.UK.
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