Strategic implications of Bangladesh’s economic rise

INTERNATIONAL/ ECONOMY

Topic: General Studies 2,3:

• Effect of policies and politics of developed and developing countries on India’s interests.

Strategic implications of Bangladesh’s economic rise

Context:  The International Monetary Fund’s latest update on the World Economic Outlook.

Key Findings of Report

• In the IMF’s estimation, in 2020, growth of India’s gross domestic product (GDP) will witness a contraction of over 10%
• But more than the sharp contraction, what has caught everyone’s attention is that in 2020, the per capita income of an average Bangladeshi citizen would be more than the per capita income of an average Indian citizen.

For Critical analysis of the report from economic perspective: Click Here

Five key Strategic implications of Bangladesh’s economic success are:

1. Altering the International Perception of Subcontinent

• First, rapid and sustained economic growth in Bangladesh has begun to alter the world’s mental maps of the subcontinent. Over the last five decades and more, South Asia, for most purposes, has meant India and Pakistan. The economic rise of Bangladesh is changing some of that.

2. Changing Weights of Pakistan & Bangladesh in region

• The second implication is about the changing economic weights of Bangladesh and Pakistan in South Asia. 
• A decade ago, Pakistan’s economy was $60 billion larger than Bangladesh. Today, Bangladesh’s weight is bigger than Pakistan by the same margin. 
• A US dollar today gets you 85 Bangladeshi taka and 162 Pakistani rupees.
• The trend is unlikely to change in future: Bangladesh has controlled its population growth and Pakistan has not. Dhaka has a grip over its inflation and Islamabad does no

3. Scope for acceleration Regional Integration in India’s East

• Third, Bangladesh’s economic growth can accelerate regional integration in the eastern subcontinent. 
• Instead of merely praying for the revival of Saarc, Delhi could usefully focus on promoting regionalism among Bangladesh, Bhutan, India and Nepal.

4. Attracting Investments

• Fourth, the economic success of Bangladesh is drawing attention from a range of countries in East Asia, including China, Japan, South Korea, and Singapore. 
• The US, which traditionally focused on India and Pakistan, has woken up to the possibilities in Bangladesh.

5. Impetus to India’s Act East Policy

• Finally, the economic rise of Bangladesh could boost India’s national plans to accelerate the development of its eastern and north-eastern states. 
• Bangladesh’s economy is now one-and-a-half times as large as that of West Bengal; better integration between the two would provide a huge boost for eastern India. So would connectivity between India’s landlocked Northeast and Bangladesh.

Conclusion

In using Dhaka’s impressive economic performance to attack Delhi’s government, India is missing the bigger story about the strategic consequences of Bangladesh’s economic rise

Connecting the dots:

• SAARC vs BIMSTEC
• 1971 Indo-Pakistan war and the lingering Bangladeshi migrant issue