The Bangladesh Bureau of Statistics (BBS) has just released a Survey on the Use of Remittances. The survey provides interesting update on the demographic and economic characteristics of the 8.6 million Bangladeshi workers currently working abroad. Conducted during 12-23 June 2013, the survey enumerated 9,961 Remittance Receiving Households (RRHs) from all the seven divisions of the country.
Overall, the survey mostly reaffirms findings from previous surveys and studies about migration and remittance behavior of Bangladeshis.
Who are the migrants?
The overwhelming majority (97.4 percent) of migrants are males, married (67.1 percent), Muslims (97.8 percent) most of whom (78.2 percent) are less than 39 years old with majority (61.5 percent) having less than ten years of education.
The majority (over 57 percent) of the migrants have been staying abroad for over 5 years and a significant (22.3 percent) proportion (largely from Sylhet) have been staying abroad for over ten years. Most (91 percent) work as blue colored labor in Saudi Arabia, UAE, Malaysia, Oman, Kuwait, South Korea and Singapore. Most of them (87.8 percent) received no formal training before leaving the country.
South Asia’s Commerce Ministers meet in Thimphu on July 24. Getting there would not have been easy for many of them, with no direct flights between Thimphu and four of the seven capitals. In June, when some of us convened for a regional meeting in Kathmandu, our Pakistani colleagues had to take a 20 hour flight from Karachi to Dubai in order to get to Kathmandu! This is symptomatic of the overall state of economic engagement within South Asia—in trade in goods and services, foreign direct investment and tourism.
South Asian countries’ trade policies remain inward-looking compared to other regions, and there are even bigger barriers to trade within the region. Today, South Asia today is less economically integrated than it was 50 years ago. Figure 1 below shows that intra-regional trade in South Asia accounts for less than 5 percent of total trade, lower than any other region.
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.
The standard definition of political instability is the propensity of a government collapse either because of conflicts or rampant competition between various political parties. Also, the occurrence of a government change increases the likelihood of subsequent changes. Political instability tends to be persistent.
Economic growth and political stability are deeply interconnected. On the one hand, the uncertainty associated with an unstable political environment may reduce investment and the pace of economic development. On the other hand, poor economic performance may lead to government collapse and political unrest. However, political stability can be achieved through oppression or through having a political party in place that does not have to compete to be re-elected. In these cases, political stability is a double edged sword. While the peaceful environment that political stability may offer is a desideratum, it could easily become a breeding ground for cronyism with impunity. Such is the dilemma that many countries with a fragile political order have to face.
Political stability is by no means the norm in human history. Democratic regimes, like all political regimes, are fragile. Irrespective of political regimes, if a country does not need to worry about conflicts and radical changes of regimes, the people can concentrate on working, saving, and investing. The recent empirical literature on corruption has identified a long list of variables that correlate significantly with corruption. Among the factors found to reduce corruption are decades-long tradition of democracy and political stability. In today’s world, however, there are many countries that combine one of these two robust determinants of corruption with the opposite of the other: politically stable autocracies or newly formed and unstable democracies.
Some see political stability as a condition that not only precludes any form of change, but also demoralizes the public. Innovation and ingenuity take a backseat. Many seek change in all sectors of life--politics, business, culture--in order to have a brighter future through better opportunities. Of course change is always risky. Yet it is necessary. Political stability can take the form of complacency and stagnation that does not allow competition. The principles of competition do not only apply to business. Competition can be applied in everything – political systems, education, business, innovation, even arts. Political stability in this case refers to the lack of real competition for the governing elite. The ‘politically stable’ system enforces stringent barriers to personal freedoms. Similarly, other freedoms such as freedom of press, freedom of religion, access to the internet, and political dissent are also truncated. This breeds abuse of power and corruption.
Vietnam, for example, is controlled entirely by the ruling party. The economy is one of the most volatile in Asia. What once was thought of being a promising economy has recently been in distress. Vietnam’s macro economy was relatively stable in the 1997-2006 period, with low inflation, a 7 to 9 percent total output expansion annually and a moderate level of trade deficit. But Vietnam could not weather the adverse impact from the 1997-98 Asian financial turmoil, which partly curbed the FDI flow into its economy. Starting in late 2006, both public and private sector firms began to experience structural problems, rising inefficiency, and waste of resources. The daunting problem of inflation recurred, peaking at an annualized 23 percent level for that year.
The success story of Maafushi, an island in the Kaafu Atoll in the Maldives, dates back to 2009 when the government liberalized its policy on local tourism. A visionary entrepreneur, Ahmed Naseer, lost no time in starting a four roomed guest house in 2010, to kick start the concept of local tourism in his home island Maafushi. And the rest is history!
Maafushi’s expansion from one guest house in 2010 to thirty guest houses to date is a remarkable success story which I was privileged to witness firsthand last week.
An island with 2000 locals had welcomed 600 tourists last year. They were coming in search of an affordable, simple holiday, just for the sun and sea experience, living amongst the islanders while experiencing theiruniqueculture and lifestyle. Maafushi’s model of attracting local tourists has provided an alternative to the high end tourism that Maldives is known world over for.