The ugly truth about Bangladesh’s successful attack on poverty

Published on 14 October 2016

Image of Naomi Hossain
Naomi Hossain

Research Fellow

Apart from our impressive cricket team, spectacular cuisine and the fact that your clothes were probably made in Bangladesh, the world’s 8th biggest country (by population) punches well below its weight in terms of international recognition.

That’s why it is always good news when someone as important as Qimiao Fan, the head of the World Bank in Bangladesh, says that Bangladesh sets the global standard for poverty reduction. But why did Bangladesh succeed, when at its birth, things looked so hopeless? On International Eradication of Poverty Day, when the great and the good are celebrating Bangladesh’s success, it is a good time to consider the real reasons behind Bangladesh’s unexpected success.

Test case for development?

The news is certainly good – assuming the contentious revised 2011 Purchasing Power Parity (PPP) estimates make sense, and that they apply to Bangladesh (pdf) (possibly some heroic assumptions there, but who really knows?), the poverty headcount ratio was around 18.5 per cent as far back as 2010. Before you get too excited, note that with 28 million people below the international poverty line, Bangladesh still had more people living in poverty than most countries have people. But it’s undeniably vast progress compared to the 1970s, when around 80 per cent of the population was thought to be poor.

Bangladesh has always provided the World Bank and the international community with a global benchmark for development – if Bangladesh, the basket case itself, can develop, surely anywhere can?

But back in the 1970s, nobody thought Bangladesh would succeed. Fan’s predecessor as the first head of the World Bank in Bangladesh, gloomily depicted the new nation as the ‘Test Case for Development’ by Just Faaland and Jack Parkinson:

“It must be the fond hope of most educated people that man can control events and his own future. There is little to give credence to that view in the situation of Bangladesh…Nature, not man, is in charge of the situation in Bangladesh…All of this would not matter if Bangladesh were rich in natural resources and underpopulated, if it were effectively governed and if its social order and economic system were geared to growth, but none of these things obtain”.

True enough: after the devastation of 400 years of British imperial and Pakistani neo-colonial rule, one of the deadliest cyclones ever and a bloody civil war, the new nation of Bangladesh was not in great shape in the early 1970s.

‘Bad’ politics vs. ‘good’ economics

One thing to notice about the World Bank’s diagnoses of Bangladesh’s development: when the outlook is bad, the World Bank frequently reaches for the political explanation. But when the going is good? Then the reason for Bangladesh’s progress is ‘good’ i.e. liberalising, globalising policies of open markets, macro-fiscal discipline and flexible labour. This is how the surprising story of Bangladesh’s success was told in the World Bank’s Annual Report in 2006 (pdf):

Bangladesh is 1 of only 18 developing countries with an annual growth rate that has never fallen below 2 percent. Since the 1990s, economic growth has been steady at 4 to 5 percent annually, with relatively low inflation and stable domestic debt, interest, and exchange rates…The country has achieved universal primary education and has an equal number of girls and boys in secondary school, and it is on track to reach the Millennium Development Goal in child mortality. These growth and development gains have taken place despite widely held perceptions of weak governance, a phenomenon referred to as the Bangladesh conundrum. If not addressed, poor governance will be a growth constraint, particularly in critical areas such as power and transport.”

In other words, ‘good’ growth-driven policies trumped ‘bad’ governance.

The argument that Bangladesh will prosper to the extent that the politics gets out of the way of growth persists. In line with the World Bank’s new political turn, it’s current diagnosis of what might go wrong with Bangladesh’s development predicts political violence and confrontation might restrain growth, limit investment, and slow the pace of poverty reduction. This may be true, but perhaps not so great a threat as the recent upsurge in Islamist-related terror attacks, or the likelihood that right-wing populist politics in Europe and the US will cause global economic slowdown. As one of the most globally integrated developing countries, Bangladesh is highly exposed to whatever is happening in the global economy.

Elite commitment matters

If we really want to understand why Bangladesh sets the global standard for poverty reduction we need to properly understand the role of politics – not only as a fig leaf for when times are hard, but also to explain what has worked. More specifically, we need to make sense of the political settlement, or effective agreements between the elites as to how to share the spoils of power, and what those mean for poverty and inclusive development. As Mushtaq Khan has convincingly argued, Bangladesh’s development success owes much to how the elites managed to coordinate enough to permit broad-based economic growth.

But Bangladesh’s pattern of development has been poverty-reducing, partly because of its strong emphasis on human development (pdf), particularly for women. And to explain that, we have to understand why Bangladesh’s elites agreed that it was so vital to tackle poverty head-on, and to ensure that the poor rural masses got at least some modicum of protection against the elements and the vicissitudes of life on the Bengal Delta.

The emergence of the aid lab

My own analysis of the politics of Bangladesh’s unexpected development success is less congratulatory of the aid industry and its clever prescriptions. It is also an altogether uglier story of how the international community applied ‘lifeboat ethics‘ to justify their neglect of the 1.5 million victims of the 1974 famine in Bangladesh, and of the violent aftermath of that particularly tragic period in Bangladesh’s history.

My reconstruction of the political history of that time concludes that an elite consensus emerged that committed the Bangladeshi ruling class to protecting the rural masses against the crises of subsistence and survival that so frequently swept their way. This elite consensus included accepting the painful conditions that came with foreign aid, because without external support the short term survival of the country, let alone of the political elite, looked bleak. And it meant letting aid experts treat Bangladesh as a kind of laboratory for aid, in which they often treated as the targets and objects of development, instead of as people with rights, agency and autonomy. It may have got the Bangladeshi people into the global market, but it has done so on terms that are precarious, at best.

And so the World Bank, and the aid community in general, has little to congratulate itself for treating Bangladesh as the world’s aid lab. It should instead look again at the politics that underpin successful transitions. And it should take more seriously not only where development is taking us, but the ethics of how we are to get there. If Bangladesh was really the Test Case for Development, what does that say about development?

In Basantapur, Moyna, Momtaj, Tasnim and Morium collect purified water from a pond water filter for all the family to drink. DFID has funded hundreds of pond filters across the district.

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