Let me tell you when magic happens. It transpires when few brilliant minds, optimistic hearts, energetic young people, and a fantastic facilitator meet. The Ideashop: Coding your way to opportunity organized by the World Bank in partnership with the Bangladesh StartUp Cup on June 14th at its Dhaka Office showed us glimpses of such magic. And it is only the beginning of our journey together.
Confident that the solutions to many of the challenges facing youth can come from within themselves, the World Bank and Microsoft has launched a regional grant competition in four South Asia countries – Bangladesh, Nepal, Maldives and Sri Lanka. The regional grant competition titled Coding your way to opportunity invites innovative ideas from youth led organizations and NGOs that will expand coding knowledge amongst youth and help them secure gainful employment.
Buy a leather case for your wife’s smartphone on Amazon, select shipping from China with an estimated delivery time of 4-6 weeks, and then be pleasantly surprised when it turns up on your Virginia doorstep in 11 days. The marvels of the modern age – of technology, globalization, and shrinking distances.
Where does South Asia stand on export delivery? Figure 1 illustrates that compared to other economic units around the globe, it is a lot more difficult to trade with(in) SAFTA (South Asia Free Trade Agreement). It also shows that bureaucratic hurdles and the time it takes to trade go hand-in-hand. While the region does relatively well on trade with Europe or East Asia, intra-South Asian trade has remained low and costly. It costs South Asian countries more to trade with their immediate neighbors, compared to their costs to trade with distant Brazil (see below)! In fact, it is cheaper for South Asian countries to export to anywhere else in the world than to export to each other (Figure 3). In other words, South Asia has converted its proximity into a handicap.
Image: Author's Illustration
Freakonomics Radio recently aired a podcast entitled “If Mayors Ruled the World”, based on Benjamin Barber’s new book of the same title, which contends that cities are a good template for governments to rule by, largely due to their mayors who are often uniquely positioned and focused on solving actual city problems. So much so, that he argues for the formation of a “Global Parliament of Mayors” to solve the world’s problems.
Even so, being a mayor of a South Asian city is no easy task. The challenges of city management in South Asia are compounded by its burgeoning urban population. In fact, according to the UN, roughly 315 million people are expected to be added to urban areas in the region by 2030. That number weighs in close to the entire population of the US today. It is no surprise that the theme of managing the challenges of urban transformation was at the top of the agenda at the recent South Asia Regional Workshop and Mayors’ Forum, hosted in Kandy, Sri Lanka.
The Mayors’ Forum, attended by a number of mayors and city leaders from South Asian countries and around, provided insights to what some successful mayors have done for their cities. By being visionary, and at the same time pragmatic problem solvers, mayors have seized opportunities to transform their cities, and quite often out of necessity and within highly constrained environments. Mayors took the opportunity to show how, despite significant institutional and financial limitations, they were able to take proactive initiatives to transform their cities. These were what they had to say:
Fallow lands in the coastal areas during the dry season
Such large areas of fertile lands are left fallow in spite of ample water available right there in the channels near the farms,” exclaimed Prof. M. Abdul Halim Khan in disbelief during our journey in mid-April to Patuakhali and Barguna. We were taking a trip to his agricultural research sites in the coastal region of Bangladesh.
Agriculture is one of the most important sectors of Bangladesh and its performance has tremendous impacts on poverty reduction, food security as well as overall economic development of the country. This is especially true for people in the coastal areas – mostly small rice farmers whose livelihood depend on the production of rice and other crops.
Despite that, most of the farm lands in the coastal areas remain unused in the dry season for as long as 6 months a year. The main causes of such underutilization of lands include: seasonal natural calamities such as cyclone and tidal surges as well as rising water salinity. There are two peak season for the formation of tropical cyclone in the Bay of Bengal; one in May and another in November. Likewise, salinity in drinking and irrigation water peaks from April to May. As a result, farming in the coastal areas is largely constrained to mono-cropping while double or triple cropping are common practices in other parts of Bangladesh.
To address this issue, Prof. Halim – a prominent professor at the Bangladesh Agricultural University (BAU) – launched a research project, “Strengthening Postgraduate Research Capability and Adaptation of Climate Resilient Cropping System in Vulnerable Coastal Region”, with funding of Taka 23 million (US$ 280,000) from the Academic Innovation Fund (AIF) program under the Higher Education Quality Enhancement Project (HEQEP).
Sewing Floor, Armana Apparels, Dhaka. Photo: Shobha Shetty
Contradictory trends in female labor force participation in South Asia continue to pose a puzzle for policymakers. On the one hand, Bangladesh’s ready-made garment industry, one of the mainstays of the national economy, has a high female labor participation rate of 85%. On the other hand, the female labor force participation rates continue to fall in India in spite of recent high economic growth. During my recent visit to Dhaka, I was once again reminded about the enormous challenges of tackling these issues.
I was in Dhaka to attend the 7th Meeting of the BEES (Business, Enterprise and Employment Support for Women in South Asia) Network. Founded in May 2011, the BEES network, facilitated by the World Bank, brings together 15 civil society organisations that work for the economic empowerment of poor women across South Asia. Currently, the network represents women at the bottom of the economic pyramid, with a collective reach of over 100 million. It was a sombre coincidence that the week of our visit marked the first year anniversary of the horrific Rana Plaza disaster in which over 1,100 perished.
The rise of the ready-made garment industry in Bangladesh in the last decade has been stunning by every measure. By 2013, about 4 million people - almost 85% women - were working in the US$22 billion-a-year industry. The industry now contributes to over 75% of Bangladesh’s export earnings and accounts for over 10% of GDP, making it the world's second-largest apparel exporter after China.
But what does it mean for the millions of women employed in this industry? Thanks to Manusher Jonno Foundation (MJF), one of the Bangladesh BEES network members and co-host of the Dhaka meeting, I was lucky to visit the Awaj (“voice”) Foundation to understand this issue better. Founded in 2003, the organisation focuses on empowering female RMG workers. We got an opportunity to meet Nazma Akter, the feisty General Secretary of the foundation and a former garment worker. After spending 7 years in the ready-made garment industry as a young girl, she turned to activism on behalf of her fellow women workers. She is now a well-recognised national name and Awaj has a direct outreach to 60,000 women workers (and 600,000 indirectly).
Promoting competition is considered the best available option for increasing economic well-being. The recent global financial crisis prompted policymakers to reconsider basic assumptions, but the virtues of competition were not among them. However, gone are the days when practitioners slept sound thinking the economy, if left alone, is self-correcting.
The limitations of competition as a force for universal good are well-known. Consumers can be inadequately informed, making it possible for firms to take advantage of them. The intrinsic difficulty of matching skills to positions and the costs associated with moving jobs may make workers stay with abusive employers. More basically, in a world where people have imperfect information and workers can’t always leave their employer, firms may be able to respond by cutting corners and abusing consumers and workers.
Is the problem with competition itself or the legal and informal institutions that yield this type of competition? The answer depends in part on one’s ideological lens—namely the belief of competition existing outside a regulatory framework, necessitating governmental intervention in the marketplace versus the belief that regulatory forces help create, define, and nurture competition in the market, necessitating improvements to the legal framework if competition is failing.
Some policies that supposedly restrict competition are justified for promoting competition. Intellectual property rights, for example, can restrict competition along lets say the use of a trade name. But the argument is that intellectual property and antitrust policies complement, rather than conflict, one another in promoting innovation and competition.
Life will surely be more stressful if we needed to compete for everything. Cooperation is often more relaxing. Society and competitors at times benefit when rivals cooperate in joint ventures to address collective needs. Competition can make people less cooperative, promote free-riding, and reduce contributions to public goods, thus leaving society worse off.
The point is not all forms of competition are beneficial. Just as athletic contests distinguish between fair and foul play, the law distinguishes between fair and unfair methods of competition. Bangladesh’s garment industry is a contemporary case in point. The collapse of Rana Plaza in Bangladesh brought to the fore the pathetic state of working conditions in many factories serving the global supply chains. The structure of the supply chain itself—the relationship among regulators, buyers, suppliers, and workers—is fundamentally related to these problems.
The practice of subcontracting is routine in Bangladesh’s garment industry. The prevalence of competitive indirect sourcing strategies has resulted in a supply chain driven by the pursuit of nominal cost minimization. It has increased risks for business and workers by undermining prices, wages, working conditions, and investment in productivity and quality. The apparel units engaged in sub-contracting are mostly non-compliant particularly in paying wages and maintaining safety standards.
Question is why do compliant factory owners take recourse to such sub-contractors? Major global buyers see Bangladesh as a market where they can obtain the most competitive prices for a high volume of lower end products. Consequently, they set low price targets. The manufacturers compete for large orders by undercutting each other, further driving down the prices. They make delivery commitments far in excess of their capacity to produce without breaching compliance. When prices are dramatically driven down, the natural tendency of a garment manufacturer is to manage their unit at a least cost with regard to overheads and wages. The pressure to drive these down arise inevitably.