South Asia should pay attention to its standout star

Don’t hold your breath expecting India to acknowledge Bangladesh’s success: Right-wing figures in India are convinced Bangladesh is so destitute that illegal migrants from there are overrunning the border. In reality, Bangladesh is far richer than the depressed Indian states where Hindu nationalist politicians have been railing against Bangladeshi “termites.” It’s as if Mississippi were fretting about illegal immigration from Canada.

Perhaps that explains why Indian social media exploded with indignation and denial when the GDP numbers were announced. Meanwhile, Bangladeshi media have made little of the comparison. That’s the sort of self-confidence that comes from growing consistently.

Bangladesh’s growth rests on three pillars: exports, social progress and fiscal prudence. Between 2011 and 2019, Bangladesh’s exports grew at 8.6% every year, compared to the world average of 0.4%. The success is largely due to the country’s relentless focus on products, such as apparel, in which it possesses a comparative advantage.

Meanwhile, the share of Bangladeshi women in the labor force has consistently grown, unlike in India and Pakistan, where it has decreased. And Bangladesh has maintained a public debt-to-GDP ratio between 30% and 40%. India and Pakistan will both emerge from the pandemic with public debt close to 90% of GDP. Fiscal restraint has allowed Bangladesh’s private sector to borrow and invest.

Bangladesh should benchmark itself against Vietnam, which is not only part of the China-centric Regional Comprehensive Economic Partnership and the successor to the Trans-Pacific Partnership, but also signed an FTA with the European Union in 2019

Once again, Bangladesh should benchmark itself against Vietnam, which is not only part of the China-centric Regional Comprehensive Economic Partnership and the successor to the Trans-Pacific Partnership, but also signed an FTA with the European Union in 2019. Transforming the terms of Bangladesh’s trade won’t be easy, which is why the effort needs to start now. Dhaka will have to beef up its negotiating capacity in particular: It doesn’t even have a dedicated set of trade negotiators in its commerce ministry.

Nevertheless, the past 50 years have shown how unwise it is to bet against Bangladesh. In 1971, success seemed well beyond a long shot. Today, the country’s 160 million-plus people, packed into a fertile delta that’s more densely populated than the Vatican City, seem destined to be South Asia’s standout success.

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This commentary originally appeared in Bloomberg.