Investment slowdown may hurt Bangladesh economy

The Business Desk in Dhaka/The Daily Star
Asia News Network9 March 2012

Dhaka (The Daily Star/ANN) - Years of sluggish investments may slow economy growth, an economist said yesterday.

Investment as percentage of gross domestic product (GDP) declined to 24.3 percent in 2010 from 24.7 percent four years ago, raising fears that economic growth may slow down, unless the trend is reversed, Rushidan Islam Rahman said.

The research director of Bangladesh Institute of Development Studies (BIDS) shared with the audience excerpts of her book - Economy and development of Bangladesh: 40 years after independence - at a seminar at BIDS.

Analysing data, she observed that economic growth in Bangladesh accelerated every five years. Between 2006 and 2010, the growth rate was 0.62 percent.

And the prospects of the acceleration of growth from 2010-2015 depend largely on the scaling-up of investment. But low rate of investment gives signals of slowdown in economic growth, said Rushidan.

"It will be possible to maintain the growth rate if there is political stability and quality education for the poor to create better human resources," she said.

Divided in 12 chapters, the 259-page book touched upon various issues that began with debates and perceptions surrounding the development prospects of Bangladesh since its birth.

The book written in Bangla and published by Shahittya Prakash is a tribute to those who sacrificed their lives for independence.

In the book, Rushidan cited data on various economic and social sectors and showed that Bangladesh has made progress on various fronts that proved the negative perceptions about the country, such as the 'basket case' of former US Secretary of State Henry Kissinger, wrong.

She shed light on industrialisation and agriculture, rural non-farm sector, microcredit, jobs, poverty, education, population growth and women in industry.

"I have tried to mark the turning points in the development of Bangladesh since independence."

The country has emerged as almost self-sufficient in food from the food deficit status just after independence.

Poverty declined and more people got jobs as the economy grew, bolstered by industrialisation and steady growth in agriculture and services sectors. Per capita income has increased along with investment and savings as percentage of GDP, she said.

Progress is also seen in various social and human development indicators. Child mortality in per thousand fell by more than half to 20.5 in 2008 from 47 in 1974-76.

A huge number of women joined economic activities due to the growth of the export-oriented garment industry. "Still there are some problems,¿ Rushidan said.

Poverty declined but the rate of savings by families tumbled down to 4.3 percent in 2010 from 17.2 percent in 2005. A major portion of job has been created in informal sectors with export earnings being highly dependent on the clothing industry.

"The economy is at a crossroads."

Rushidan said increased savings and investment, political stability and quality education for poor people will help Bangladesh attain faster development.

The writer mentioned that the small industries are more efficient than the large industries, said Mohammed Farashuddin, former central bank governor. The book has proved the perception of the inefficiency of small industries false, he said in a write-up.

Mahabub Hossain, who follows agriculture and rural economy, praised the writer but said she should have included the issues of health and nutrition, impact of remittances on employment and rural economy.

Shamsul Alam, member of Planning Commission, suggested the writer share her views on the method of calculation of employment and underemployment in Bangladesh in the next edition of the book.

Bangladesh has a lower unemployment rate than in the US, according to Bangladesh Bureau of Statistics.

BIDS Director General Mustafa K Mujeri said the book provides an analysis on various issues and will be helpful for all.