This is the fourth in a series of six posts about the recent report, Bangladesh: Towards Accelerated, Inclusive and Sustainable Growth. The last post, Be Happy Yet Do Worry: Explaining Resilience in Bangladesh's Economy, explained how the economy has withstood recent shocks. The next post will look at what sort of policies it will take to achieve the goal of middle income status by 2021.
Bangladesh’s economic growth has followed a path both theory and international experience would expect. Starting from a low income level, growth initially tends to accelerate through capital accumulation in a market economy. This is what happened in Bangladesh during the four decades since independence in 1971. A recent article in The Economist rightly said, “Bangladesh has become a model of what can be done”. Progress achieved so far provides a credible basis for aspiring to be a middle income nation by 2021, as observed in the World Bank’s recent report “Bangladesh: Towards Accelerated, Inclusive and Sustainable Growth—Opportunities and Challenges”.
Would it take more than just maintaining recent growth rates to achieve middle-income country (MIC) status? It is important to be clear about how middle-income status is defined. It is based on nominal Gross National Income (GNI) measured in Atlas dollars, not real Gross Domestic Product (GDP). Economies are divided according to 2012 GNI per capita, calculated using the World Bank Atlas method. The income thresholds are: low income—$1,025 or less; lower middle income—$1,026 to $4035; upper middle income—$4036 to $12,475; and high income—$12,476 or more.
At current prices, Bangladesh’s per capita GNI would have to exceed US$1,025 to reach the lower end of “low middle income” status. Nominal Atlas GNI per capita, currently $851, will need to grow at a sustained 2.1% and nominal Atlas total GDP will need to grow at 3.5% per annum from now onwards for Bangladesh to reach the middle-income threshold by 2021, when Bangladesh will celebrate its 50th year of independence.