The benefits of the country’s recent economic growth have been distributed very unevenly that has been manifested in growing inequality, said Dr Debapriya Bhattacharya in a public lecture on Sunday.
The discrepancy ranges from consumption, income and asset ownership to employment, human asset and regional development, he specified.“While Bangladesh is being applauded by the global community for its remarkable economic growth performance, it has been lately singled out for inability to achieve inclusive growth,” he commented.
Debapriya was delivering Abdul Ghafur Momorial Lecture 2018 at Bangladesh Institute of Development Studies (BIDS). Its title was ‘Uncomfortable Truth Recent Economic Growth Performance of Bangladesh.’
In broad terms, the growth has favoured the richest section of rural population and richer section of urban population with growing middle class not being able to enhance its share is expanding economy, the renowned economist explained.
The trend has been reflected in youth unemployment, informal sector jobs, wages for Women, child mortality rates in poor households, school enrollment of urban poor and poverty stricken Rangpur region.
In recent decades, robust economic growth had contribution to noticeably lowering poverty, but in contrast to growth acceleration, the poverty reduction rate slowed down in post-2005 period, he noted.
Bangladesh economy- in terms of consumption, income and assets- has become more unequal during the recent decade, particularly between 2010-2016, according to him.He pointed out that asset inequality in increasing at a faster pace than income inequality and income inequality is increasing at a faster pace than consumption inequality.
These trends of growing inequality have been largely driven by higher concentration of income in the 10 percent of population and greater concentration of assets in the top 5 percent, he said, adding that urban inequality is still higher than the rural inequality.
As sources of growth, role of industries and services, especially manufacturing and wholesale or retail trade, have more contribution to GDP. However, the economy continues to remain service-sector dominated with agriculture sector with 10 percent contribution to GDP is still the largest employing sector to employ 40 percent, he noted.
He said it is a paradoxical fact that youth unemployment rate increases along with the education level, adding that in 2016-17 more than one-third of the youth labour force with tertiary education 34.3 percent remained unemployed.
If the estimated Tk 20,000 siphoned off the capital market, Tk 89,340 crore non-performing loans and $11 billion annual illicit outflow of capital from the country, got invested in the country in proper ways, the country would have seen a radically different gainful employment and inequality situation, Dr Devapriya observed.
In his speech, Dr KAS Murshid, BIDS Director General, said the recent development lacked a green revolution, and social innovation by NGOs and institutional gas are the main reasons behind the growing inequality.
Singling out poor governance as the main cause of expanding inequality, Dr Kazi Shahabuddin, former DG of BIDS, remarked that the country achieved higher growth in absence of good governance.
Former BIDS research director Dr Asaduzzaman said most of the public investments in the country are not cost-effective and that ‘tremendous wastage’ in public investment is behind the expanding inequality.
He argued that construction of one kilometer of road is five to 10 times higher than that of neighbouring India. Through repeated revisions, project cost some times goes up by even 700 percent, he also alleged. Dr Binayak Sen, BIDS research director, said before drawing such conclusion regarding inequality, more micro level evidences should have been examined instead of banking more on macro level data. He thinks that poverty level in the country fell because of stable consumption inequality. He said the job trend of migrating from agriculture sector might have contributed to growth in inequality.