The time for upgrading the Bangladesh economy is now
If Bangladesh wishes to attain its Vision 2041 goal of becoming a higher income country (HIC), it needs to prepare itself for another journey altogether - that of economic upgrading and diversification
It was only last year that Bangladesh celebrated its golden jubilee, marking fifty years of independence from Pakistan. In the aftermath of the Liberation War, the country was faced with a host of challenges - extreme poverty, crippled infrastructure, and skyrocketing inflation among others. Bangladesh was referred to as a basket-case with no prospect of ever coming out of the poverty trap.
A lot has changed since then. Bangladesh has been enjoying unparalleled growth and economic success. It has defied the expectations from fifty years ago cementing its place in the world.
Despite Bangladesh's overwhelming fifty years of success, it is undeniable that there is much more that needs to be done. The coronavirus pandemic and worsening climate change have both demonstrated the need for a more shock-resilient economy.
If Bangladesh wishes to attain its Vision 2041 goal of becoming a higher income country (HIC), it needs to prepare itself for another journey altogether - that of economic upgrading and diversification. Economic upgrading is the concerted move towards higher value economic activities brought forward by enhancement of technology, skills, or wider participation in global value chains.
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The value added is not strictly economical, but often has positive spillovers to the wellbeing and welfare of economic actors. Complemented with diversification, the strategy of economic upgrading has the potential to create robust economies that are primed to succeed in both local and global markets.
One such initiative of economic upgrading has been taken by the Youth Policy Forum CUBE division - a collective impact coalition for economic diversification and upgrading. After a successful multi-sector dialogue that critically explored the economic upgrading of Bangladesh and set a foundation for CUBE, YPF has been actively seeking and inviting organisations from different sectors to form a collective active coalition.
The vision of CUBE is not just economic upgrading but also social upgrading as the latter is equally important. In simple terms, while economic upgrading is ensuring workers are more efficient and productive, social upgrading is guaranteeing workers are more safe and secure.
In the Handbook of the International Political Economy of Governance, Frederick Mayer has mentioned a case of the Bangladesh garment industry in the context of economic and social upgrading. An unprecedented multi-stakeholder coalition of global retailers and brands pressured both the Bangladesh government and local factory owners to change legislation and business practices that led to dangerous and degrading workplace conditions.
This (economic and social upgrading) may be happening not only in the Bangladesh garment industry. In manufacturing powerhouses like China, synergistic governance also forced changes upon Foxconn and Apple in the electronics sector (Mayer 2014).
While Bangladesh has a long way to go, the road is a hopeful one. The current generation is certainly more awake and realises the importance of upgrading in global aspects. As the world is becoming more and more connected, upgrading has become imperative so as to place Bangladesh at par with others.
As per the Vision 2041, Bangladesh aspires to become an upper middle income (UMIC) country by 2031 and an HIC by 2041. To this end, the Eighth Five Year Plan has already set ambitious targets to increase private investment, foreign direct investment, and exports. One of the best strategies to meet these targets is to carry out comprehensive economic upgrading. Bangladesh has already started to make inroads in high value industries.
Walton, in the electronics industry, is one pioneer that has succeeded in establishing itself in the local market and now looks beyond it. It is a case of a high value economic activity that has provided returns to labourers benefitting from new opportunities to skill up, a local economy benefiting from technology and capital inflows, and a global market provided with competitive goods and services.
However, one actor alone cannot bring about Bangladesh's economic upgrading: it requires a concerted, collective effort from multiple stakeholders who are able to jointly provide the infrastructure and incentives necessary to build up high value industries in the country.
In doing so, the stakeholders would be able to leverage Bangladesh's ongoing demographic dividend and integrate its labour advantage with the skills and technology of the 21st century in order to produce high value goods and services for a global market that provides a lot of promise for the prosperity of Bangladesh.
What makes our journey of economic upgrading distinct over all others is a single stakeholder: the youth. The case for youth in economic upgrading is simple. There is no other actor that will benefit as much from economic upgrading as young people will, ten years from now.
Young people are primed to seize the opportunities brought forward by the global economy, technology and skills of the 21st century. Hence, they must play a stronger participatory role in the process of economic upgrading in order to design an economy that they will be able to prosper in, in the years to come.
In our own work in Youth Policy Forum, we are attempting to forge a coalition between young and old, public sector and private sector, as well as government and opposition for this journey of economic upgrading. Together, these stakeholders will advance the twin goals of economic upgrading and diversification on a platform that will ensure mutual accountability and monitoring.
Fifty years ago, we were called a basket case economy. We have spent fifty years working diligently to defy those very expectations. But we cannot rest easy today: Bangladesh must continue to fight for its next fifty years, and the years after that, in order to create a prosperous, robust economy that promotes the wellbeing and welfare of all its actors. This chapter of economic upgrading has just been opened.
Now, we must work together to add value to our economy, so that it may in turn add value to our lives, and to the futures of millions more Bangladeshis who will follow our footsteps.
Saima Khan is a graduate student at Monash University, Australia & the co-founder of YPF. Zaheer Abbas is an undergraduate student at Sciences Po, France & Head of Reforms in YPF.
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.
