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The Economist and Lancet Views on Bangladesh: What’s Missing?

Hassan Zaman's picture

Women in rural villageAbout a year back the Economist had an editorial piece titled "Out of the basket" and subtitled “Lessons from the achievements – yes, really, achievements – of Bangladesh.” The more in-depth piece that followed appeared somewhat bemused at how a country once labeled a ‘test case for development’ could have made such striking gains in development outcomes over the past two decades (see table 1). These gains were hard to reconcile amidst Bangladesh’s natural and Rana Plaza-type disasters, volatile politics and unfavorable rankings on governance indicators – themes which the Economist has often covered before, and after, this “achievements” piece.

This past week the Lancet has come out with a special issue on Bangladesh which the journal editors say is in order to “investigate one of the great mysteries of global health.” Specifically the published papers are meant to explore how “Bangladesh has made enormous health advances and now has the longest life expectancy, lowest fertility rate and lowest infant and under-5 mortality rates in South Asia despite spending less on health care than several neighbouring countries.” Both these publications help explain the various ‘Bangladesh paradoxes’ but they also overlook, or underplay, a few critical factors.


 

Some of the drivers of these gains in health outcomes summarized in Amartya Sen's 'What's happening in Bangladesh?'and Mushtaque Chowdhury et al’s 'The Bangladesh paradox: exceptional health achievement despite economic poverty' Lancet contributions are also identified by  the broader Economist ‘achievements’ story .  They both argue that the manner by which women have been at the centre of development gains is unprecedented - whether as community-based health care workers  contributing to the halving of fertility in one generation, or as girls outnumbering boys in school, or as recipients of micro-credit loans or as the backbone of the $25 billion garments industry. Second there is general agreement in both the Lancet and Economist view, as well as many others, that a pluralistic approach to the design and delivery of services is particularly unique in Bangladesh and has contributed to these outcomes. Specifically the role of NGOs, including some such as BRAC which are among the largest in the world, in working as partners with government and the pioneering role of the Grameen Bank are highlighted. Pluralism also includes the local private sector pharmaceutical companies, which protected from foreign competition during their infancy, have also provided access to low-cost generic drugs and are now a significant part of Bangladesh’s export basket. Self-sufficiency in food through sharp increases in rice yields (Economist) along with significant improvements in disaster management (Cash et al in the Lancet) and the role of made-in-Bangladesh innovations in health delivery (Adams et al in the Lancet and a subsequent issue of the Economist  describing a new 'birth mat' which has significantly reduced child-birth complications) are other factors which are examined.

However there is an element which is either missing or under-stated in both these review pieces and that relates to the role of increasing incomes. Bangladesh has averaged over 6% economic growth over the past decade, its GDP of around $150 billion has more than tripled since 2000 and as Pritchett and Summers show in figure 5 of a recent paper the volatility of its growth is one of the lowest in a cross-country sample. One reason behind the steady growth and limited volatility is that macro-management has been sensible, with fiscal deficits typically averaging around 4% of GDP, steadily declining public debt to GDP ratios along with the build-up of macro buffers with a current account surplus and international reserves close to six months import cover. Counter-cyclical policies have also shielded the economy from exogenous shocks such as in the immediate aftermath of the global food and financial crisis in 2008/09 using a mix of short term export subsidies and expanded safety nets for the poor along with an easing of policy interest rates.  The ability to react to natural disasters highlighted in the Lancet extends to the ability to react to macro shocks which is less well known. Not only is aggregate volatility low, but growth has been equitably distributed with inequality (measured by the consumption Gini) unchanged since 1995. Poverty fell from 58% in 1990/91 to 32% in 2010 with almost 17 million people moving out of poverty in the 2000-10 period. This pattern of growth has also led to greater convergence across regional divides since 2005. One key difference with other countries is that household income fluctuations are smoothed by the wide availability of reasonably priced credit, in the form of micro-finance, as shown by recent research. As such these equitably distributed economic gains have meant that a larger share of the population can afford better quality food, sanitation, shelter and access to education and health – all of which are confirmed empirically in the latest World Bank Poverty Assessment report.

Reflective pieces on the steady process of improvements in the lives of the 150 million or so ordinary Bangladeshis are unlikely to make headlines. These Lancet and Economist magazine pieces are important contributions in this respect as they help reshape a prevailing narrative, often grounded in dated perceptions and images. The only issue is that both appear to overlook the importance of careful macro management, and more generally the enabling environment that has generated reasonably high pro-poor economic growth with low volatility, with their consequent impact on poverty and social outcomes. So while there remain many poor Bangladeshis, the country is fast approaching the World Bank lower middle income threshold, and it is less of a paradox when one associates the rate – and not level - of poverty reduction with the rate of improvement of social outcomes. Looking forward there is no room for hubris for Bangladeshi policymakers as the challenges of maintaining, and ideally accelerating, these socio-economic gains are not straightforward. But if history is any guide then it is likely that the country will continue to pursue its mix of orthodox macro and unorthodox micro policies and come up with ways to overcome its odds, make the most of its current demographic dividend,  diversify its economy, further reduce poverty and strengthen social outcomes.  

 

Comments

Submitted by Qaiser Khan on

The role of female secondary education in the health and economic achievements in Bangladesh needs to be emphasized. Looking at the last three DHS surveys, it is clear that mother's secondary education trumps over family wealth achievements in health, nutrition and fertility reduction. The proprortion of mothers with secondary education has risen sharply in the last two decades and this is the result of direct policy intervention. Before CCTs became popular all over the world, Bangladesh standard its female secondary scholarship program in the early 1990s which provided cash stipends plus other incentives for girls to stay in school. This reflects a strong commitment to girls education from both sides of a sharp political divide.

Submitted by Hassan on

You are absolutely right that the secondary education CCT played a pivotal role in getting gender parity in secondary schools(in fact now there are more girls than boys)and that in turn has been key to improvements in health outcomes. My point was more about the under-emphasis on the role of economic growth in all this. In fact after re-reading the Economist editorial piece I found a line which I would have inserted in the original blog as it is very strange. It reads "Bangladesh has shown that countries can transform the lives of the poorest without having to wait for economic growth" - I don't know who fact checked this but over the past ten years Bangladesh has growth at 6.2% while the IMF WEO shows that 'emerging and developing country' average was 4.6%. So ensuring that we have a balanced view of the determinants of these social outcomes is I think important.

Submitted by Mushfiq Mobarak on

This is a comment on this side-discussion and not on the main topic:

It turns out that it’s very difficult to explain the impressive gains in girls’ school enrollment in Bangladesh using the female school stipend program, even though that is an intuitively appealing link. Most of the gains in girls schooling can be attributed to the rapid and vast expansion of the garment sector, which opened up new economic opportunities for girls, and in turn made it more sensible for their parents to invest in their daughters’ education. So it was actually mostly a demand-side push. The details of the research are here: http://faculty.som.yale.edu/mushfiqmobarak/garments.pdf.

Easier to digest media coverage of the work here: http://economix.blogs.nytimes.com/2010/07/21/garment-factories-changing-womens-roles-in-poor-countries/ .

World Bank blog coverage here: http://blogs.worldbank.org/impactevaluations/stitching-together-the-future-the-effects-of-the-garment-industry-on-girls-schooling-in-bangladesh-g

Submitted by Greg Chen on

Hassan,

A persuasive piece; especially on the macro-economic stability. Had greater volatility been present over the past decade or more it would likely have meant a much higher degree of disruption of underlying economic activities and even social service delivery (for example, affecting wages of service delivery staff). I tend to agree that the missing pieces you identify are powerful.

Your piece raises one other question to my mind - the relative size of fiscal deficits and government engagement in the economy. Much of the economic growth comes from private industry and small scale enterprise. Perhaps making the case for strong social programs combined with more restrained direct government involvement in the economy. At least this formula seems to have worked so far in Bangladesh.

Greg

Submitted by Hassan on

Greg,
Good points. Had growth been more volatile it would have disproportionately affected the poor - who in turn would then have been less able to afford education and health services.

Submitted by Akhtar Mahmood on

Hassan,

You are right about the ability of successive governments to maintain macro-stability, including an ability to react to a variety of shocks. It appears that the government in Bangladesh is good at holding the steering wheel steady and reacting sharply to the rash driver in the next lane. But has it been good at seeing what lies 100 miles ahead? Can it develop an ability to push the accelerator harder while still keeping the car stable? Conservatism and reactiveness has served the country well so far. But is not time to develop bolder visions and proactivism? What will it take for the government to make a paradigm shift in this direction? Is there something in the conservative/reactive paradigm that the government can build on or will this have to be a completely radical shift?

Submitted by Hassan on

I am not sure I agree with the view that successive governments have been 'reactive' and not focused on the longer-term. So a few examples of pro-active policies which have had major long term implications (i) industrial policy for the pharmaceutical industry mentioned in the blog which led to low-cost medicines and led to a few becoming major exporters (ii) policies which gave the garments sector its competitive advantage (bonded warehouses / back to back L/c) (iii) the CCT program mentioned in Qaiser's comment above which raised girls enrollment. Moreover so-called reactive and proactive policies also overlap. For instance at the central bank we deal a lot with day to day issues but while dealing with them we typically change our regulations or make decisions keeping in mind the medium term outlook for the economy e.g. the current liberalization of forex rules we are engaged in is premised on the fact that Bangladesh will be even more integrated with the rest of the world in ten years time.

Submitted by Akhtar Mahmood on

Thanks for the examples. I do not deny that many governments in Bangladesh have demonstrated long-term vision and pro-activism in some instances. I am not sure, though, that there has been enough of this. On your examples, it is important to distinguish between the following:

a) policies which were not based on a long-term vision but ended up having a long-term effect
b) policies based on a long-term vision but largely prompted by other stakeholders in society (ie government merely reacting)
c) policies based on long-term vision and a result of government pro-activism (I recognize that the line between b and c may sometimes be blurred since governments do not work in isolation).

I would argue that your second example (bonded ware-houses for garments) epitomizes type "a" while your first example could belong to either type "b" or type "c" - we need to know more about the history of that landmark policy to answer this question.

It is good that the central bank is now looking at foreign exchange liberalization from a long-term perspective. Such a long-term vision and pro-activism would have been very rewarding in the area of land titling modernization 30 years ago (recognizing that land-related disputes will one day clog up the judicial system), industrial zoning 15 years ago (recognizing that some parts of the country were rapidly industrializing) and environmental performance of the textile industry 10 years ago (as Bangladesh ramped up its backward linkage development in the RMG industry).

Submitted by Hassan on

These are useful distinctions and you are right a significant number of policies which have had a long term positive effect are in the (a) or (b) category. So while (a) is in some ways 'good luck', your (b) also reflects the fact that in many policy decisions the technocrats who are developing those reforms go and seek out the views of other stakeholders which I don't think is 'government merely reacting'. This consultative approach certainly happens in other countries I've worked in, but in some ways I sense that the large space given to think-tanks, NGOs and media in Bangladesh has perhaps led to an even bigger role for stakeholders than exists elsewhere - but that those outside views are not then just absorbed 'passively' but are filtered through decision-making channels before enacting a reform.

Bangladesh a ‘test case for development’ has already been proved the fact that.. We can do something. Our political heredity, though, sometimes make obstacle, but we hope to overcome it very soon.. Thanks World Bank.. also to u all who contribute a lot in happening the progress.

Submitted by Mushfiq Mobarak on

For any students reading...

Very nice piece, Hassan bhai. Re-calibrating the narrative so that all important underlying sources of the human development gains get properly acknowledged is very important, for both accurate accounting of history and for future policy.

I think there are two facts here: (a) Bangladesh has had impressive gains in health and other social indicators, and (b) Bangladesh's high levels of and large gains in health and social indicators relative to peer countries who have had better economic growth performance, or higher baseline GDP, is doubly impressive. You are right that (a) deserves recognition, and economic growth surely had an important role to play in that achievement. I think the Lancet, Amartya Sen and Jean Dreze, and the Economist were all motivated to write by (b) [although I agree that the Economist’s comment that “BD proves that social achievement is possible without growth” is off the mark]. These other scholars might argue that there's already sufficient recognition in the world of the role of growth in alleviating poverty (the fact that China accounts for the greatest reductions in poverty counts is well known and frequently cited), but the macroeconomy cannot explain (b), and there must be something else going on in Bangladesh that requires further exploration.

For any students reading this, decomposing the sources of the health and socio-economic gains in Bangladesh using data would be a very valuable exercise. To make progress on the important questions that Dr. Zaman raises, it would be useful for us to know how much of this can be explained by growth, and how much is left unexplained.

Submitted by Shanta on

To add to this very interesting discussion, I think Sen and Dreze were more "puzzled" by the fact that Bangladesh spends less public money on health and education (than its neighbor to the west) and yet has better health and education outcomes. To some of us, this is not a puzzle. Bangladesh uses a multiplicity of service providers, including NGOs, the private sector and religious organizations (in the case of schools) to deliver services. In some cases (such as secondary education), financing is still done by the state. There is some evidence that these arrangements yield better efficiency, either because providers are more accountable to the state (through explicit contracts) or because of intrinsic motivation of the service providers (as in the case of some NGOs). The link to growth is that Sen-Dreze and others believe, often implicitly, that higher growth leads to more public resources which, in turn, should yield better social outcomes. But if the second link in this chain is broken, then growth is largely irrelevant, except for--as Mushtaq points out--the effect on the demand for health and education.

Submitted by Akhtar Mahmood on

Quite a bit of the growth in Bangladesh appears to have driven by small and medium sized businesses, whether in industry or services. Entrepreneurship seems to have become almost contagious with all kinds of people wanting to start small businesses, emulating friends and relatives. There is a two-way relationship between the spread of the enterprising spirit and growth - each reinforces the other. When an enterprising spirit becomes wide-spread, it can spillover from business to the social sectors as well. I submit that this is another channel by which growth has helped improve social outcomes in Bangladesh, i.e., by nurturing an "enterprise spirit" that has been spilling over from business to the social sectors.

Submitted by Hassan on

Many thanks Mushfiq, do let us know what your students find. And yes the Lancet and Economist were motivated by (b) and they are both important contributions to the discourse, but my point was simply that in the process they underplayed the growth and distributional part.

Submitted by abhay on

Just to account for cultural factors, can we compare progress in these health outcomes between Bangladesh and West Bengal. My guess is that the difference will not be as drastic.

Submitted by Nahar on

Comment on the effect of Female secondary school stipend program (FSSSP):

I think female education has been a major element behind the overwhelming achievement of Bangladesh in health and other social indicators. The Female Secondary School Stipend Program (FSSSP) in Bangladesh, indeed, has had a significant impact on girls’ schooling. In a study, using a nationwide representative household survey dataset, we find that FSSSP increased the schooling of targeted girls in rural areas by more than two and half years. We also find that the program had a long-term indirect impact, through an increase in the schooling of the younger siblings of the targeted cohort, by about 10%. The working paper is available at:
http://www.buseco.monash.edu.au/eco/research/papers/2013/1713girlsbegumislamsymth.pdf

In a related study, Khandker, Pitt and Fuwa (2003), using administrative data on nationwide school enrolments, find that, at the outset of the program in 1994, the tenth grade included only 36% of female students who had been enrolled in the sixth grade. By 1998, this proportion had increased to 59.2%. Our results support the findings of Khandker et al. Our identification strategy controls for other macro factors such as expansion of the garment industry, which occurred at the same time as the FSSSP was implemented.

Submitted by Niaz Asadullah on

Bangladesh succeeded in a number of social indicators (e.g. fertility, contraception prevalence, child mortality & female schooling) during the 1990s, a period when poverty was higher and growth rate rather modest. By the turn of the new millennium, there was therefore a consensus that income-mediated explanation did not apply to Bangladesh’s social progress. To quote from the HDR on Bangladesh (UNDP 2000), “All these impressive successes show that improvements in living standard need not be mediated through private income growth. There is room to a considerable extent for public action to directly influence the pace of social progress…..This is not to de-emphasise the rapid growth in per capita…”.

Echoing Shanta’s point, the report further states: “Economic growth matters for faster human development in so far as it facilitates expansion of public allocations for social sectors” Yet allocations did not increase over time as the growth rate improved. These issues may have led The Economist, the Lancet series and Sen & Dreze’s latest book to overlook the role of economic growth.

Analysis of the timings of the development gains highlights another phase which is what you focus on. Poverty did reduce a lot during 2000-10 and the growth rate picked up significantly. At the same time, social indicators (e.g. infant and child mortality) also saw further improvements. It is plausible that much of the social progress seen during this period was private income growth mediated. You’re also absolutely right to highlight the importance of macroeconomic stability at a time when rest of the world suffered from the financial crisis. But when choosing between the two distinct phases of Bangladesh’s social progress, it’s not hard to see why someone would pick the first story line.

You can find an updated analysis of Bangladesh’s social indicators here -
http://www.bwpi.manchester.ac.uk/resources/Working-Papers/bwpi-wp-18913.pdf

Submitted by Hassan on

I enjoyed reading your comment and your attached paper. So on your point that "when choosing between the two distinct phases of social progress, its not hard to see why someone would pick the first story line", well the point is that both the Economist and the Lancet covered the whole 1990-2010 period not just the nineties. As such the 'first story line' which in some ways captures the nineties doesn't really hold for the entire period - especially when you consider that between 2000-10 there was, in percentage change terms, a larger improvement in key health indicators (e.g. for infant and child mortality, maternal mortality) during this period when per capita incomes grew faster. So again let me stress that I fully agree with the view that there are some unique features of the delivery model in Bangladesh which make it stand out and these have been covered by the Economist and Lancet - and without these elements the income gains would have had less of an impact. But the fact remains that Bangladesh's economic growth has been pro-poor,consumption inequality has remained unchanged over 15 years, and that increased prosperity which has almost halved poverty during these twenty years has allowed poor people to seek better quality services (so I would stress this more than the impact of growth on public spending which we know is a much more tenuous link)

Submitted by Asif Dowla on

Another missing ingredients are the remittances. These did not slow down even during the recession of 2008-9. This enabled the government to institute countercyclical policies. I am a bit disappointed that the latest poverty assessment report by the bank did not get any attention--not even a blog post after it was published at least by the bank staff. It is frustrating that even sources such as the New York Times and the talking heads still repeat the "prevailing narrative, often grounded in dated perceptions and images."

If I may summarize, the following explains the so-called paradox:
a) the troika of microfinance, garments, and remittances
b) capable macroeconomic management
c) the long tradition of civil society and the role of a progressive elite class

A somewhat mixed story about Bangladesh’s banking
http://www.thebanker.com/World/Asia-Pacific/The-optimism-amid-Bangladesh-s-challenges

By the way, the link to Niaz's paper is not working. The following link works

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2350201

Submitted by Simon on

Thanks for sharing this news with the Bangladeshi people. As a citizen of Bangladesh I want to thanks to the world bank for supporting us.

Thank you
Saimon
www.tunemela.com

The World Bank supported many times to the Bangladeshi peoples. I think the World Bank should monitor the fund and making sure whether the fund is utilized properly or not.

Regards
Mohammed Saimon
www.blogmat.net

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