Preparing for the new Bangladesh

What makes some countries rich and others poor? How can one tell when a nation is poised for economic development and prosperity? In the scheme of things, there are a few more important questions worth answering. The “Father of Economics” Adam Smith observed quite rightly over 200 years ago that “Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice: all the rest being brought about by the natural course of things.”

Of course, Adam Smith was a supreme believer in the natural industry of mankind, but once a country begins on the road to prosperity, history shows that it is very difficult to divert that path. By almost any measure, Bangladesh is now on that path. Of course, in our hectic, stressful daily lives it is not always easy to recognise the long-term trends that are unfolding under the surface. The media is usually full of stories of countless social problems such as crime, corruption and congestion and the personal anecdotes we hear are often similarly depressing. Thus it will always be; it was the same during the economic development of every country from America to Korea to Brazil.

TRAFFIC IS ACTUALLY GOOD NEWS

For instance, let us consider Dhaka's notorious traffic congestion. That is actually good economic news because it reflects rising incomes. The first thing people do when their incomes rise is to buy consumer goods and cars, but it takes nation years to build the required transport infrastructure. All the world's great cities have suffered this problem. Truly bad news is no traffic problem as that reflects stagnant incomes.

“THE RULE OF 70”

One of the most powerful forces in nature is compounding growth or “the exponential function”. When something is growing at 10 percent per year, that means it will double in size in seven years (70 divided by 10 percent = seven). If something grows at 2 percent, it will take 35 years to double (70/2), and so on. Bangladesh's economy is growing at a rate of nearly 7 percent which means the total value of goods and services this nation produces is set to double from current levels in just 10 years by 2022. This is a similar rate seen across many developing nations over the past several years and the economic and social change is transformational. And, all this occurs as we are stuck in traffic worrying about the latest personal or social problems.

POWER OF THE MIDDLE CLASS

History also shows us that as the middle class expands, corruption necessarily declines because, unlike the very rich and the many poor, a middle class of merchants and entrepreneurs cannot -- and will not -- tolerate corruption.

THE NEW BANGLADESH -- AN EMERGING ASIAN TIGER

For years, many Bangladeshis have wanted to emigrate to the West. But the West now looks to have entered a sustained “post growth world”. The West may still be a pleasant place to live, but South Asia is now where all the action and opportunity lays. The secret in business is always to be where the growth is. Although it may not always feel like it, Bangladesh is the right place -- and now is the right time. Indeed, increasingly the new recommendation must be “Go East, young man!”

By - William Westgate, an economist and director of London Training Services, lectures at Regent College in Gulshan, Dhaka. He can be reached at wwestgate@gmail.com.

Source -www.thedailystar.net