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Current Affairs

Strategic implications of Bangladesh’s economic rise

Date: 21 October 2020 Tags: Miscellaneous

Issue

The International Monetary Fund’s latest World Economic Outlook published last week has triggered much outrage in India. The provocation was the IMF’s prediction that Bangladesh’s per capita GDP will overtake that of India this year.

 

Background

By using Bangladesh’s economic performance to attack Delhi’s government, India is missing the bigger story about the strategic consequences of Bangladesh’s economic rise.

 

Details

  • First, rapid and sustained economic growth in Bangladesh has begun to alter the world’s mental maps of the subcontinent. Over the last five decades and more, South Asia, for most purposes, has meant India and Pakistan. The economic rise of Bangladesh is changing some of that.

  • The second implication is about the changing economic weights of Bangladesh and Pakistan in South Asia. A decade ago, Pakistan’s economy was $60 billion larger than Bangladesh. Today, Bangladesh’s weight is bigger than Pakistan by the same margin.

  • The trend line is unlikely to change in the near future — for Bangladesh has controlled its population growth and Pakistan has not. Dhaka has a grip over its inflation and Islamabad does not.

  • Third, Bangladesh’s economic growth can accelerate regional integration in the eastern subcontinent. Instead of merely praying for the revival of SAARC, Delhi could usefully focus on promoting regionalism among Bangladesh, Bhutan, India, and Nepal.

  • Fourth, the economic success of Bangladesh is drawing attention from a range of countries in East Asia, including China, Japan, South Korea, and Singapore.

  • The US, which traditionally focused on India and Pakistan, has woken up to the possibilities in Bangladesh.

  • Finally, the economic rise of Bangladesh could boost India’s national plans to accelerate the development of its eastern and north-eastern states.