The importance of economic performance in overall well-being
Discuss about the Development Dynamics Of Remittances In Bangladesh.
The wellbeing of people in any country across the globe is remains hugely dependent on the overall social, political and economic performance of the country, which in turn can be seen from the different indicators for measurement of these performances. Of these, the economic performance of the country significantly influences the overall welfare of the residents of the same as much of their employment status, purchasing power, income level, economic abundance and standard of living, are dependent on the same (Agénor and Montiel 2015).
The economic aspects of different countries in the global framework, however, are often subjected to several evils, of which one of the most significant and persistent one is that of poverty. The term “Poverty” denotes that state of a person or a section of the population of a region, where they suffer from the lack of access to basic materialistic amenities and to the basic requirements for sustenance (Pearce, Barbier and Markandya 2013). The notion of poverty is a multifaceted concept, including political, economic and social components, having widespread and multidimensional implications, not only on the life of the residents of the country but also on the overall economic health of the country as well. Poverty in an economy, is again influenced by various inherent as well as exogenous factors present in the economy (Ravallion 2017).
Keeping this into consideration, the concerned report tries to discuss the concept of poverty in the context of the economy of Bangladesh, which has been facing this economic evil for a prolonged period. The report also tries to draw the linkage of the presence of poverty with the possible causal factors for the same, mainly those of lack of educational scopes and presence of high unemployment, in Bangladesh, thereby recommending possible strategy options which can be taken up and implemented by the government of the country to combat the problem efficiently.
Poverty, as discussed above, is the lack of ability of people to meet their basic sustenance needs and the pronounced deprivation in the wellbeing of the individuals of a country. The same is generally measured in terms of the income earned by the people of a country. In general, poverty, in its absolute sense, is measured in a country, by designating the basic income level required by the people in the concerned country to meet the basic requirements for sustaining and then calculating the share of population in the country who are unable to achieve the target level of income (Barrett and Carter 2013). The targeted minimum level is usually known as the “Poverty Line” and the same varies across different countries.
The significance of poverty as an economic evil
To understand the extent and magnitude of poverty in Bangladesh, it is of immense importance to analyse the overall economic conditions of the concerned country. The country, with 43rd rank in the global economy in nominal terms, is a market-based developing economy, which is also classified among the eleven middle-income countries as the “Next Eleven Emerging Market Income” (Rahman 2013). The country has a dominant agriculture sector, which is also the source of major exports of the country, followed by the basic manufacturing sector. The economy of the country has however, over the years, experienced considerable growth in the last few decades, which can be seen as follows:
Figure 1: GDP of Bangladesh over the years
(Source: Tradingeconomics.com 2018)
As is evident from the above figure, the GDP of the country has increased over the last few decades, with the increase being more evident especially from 2002. The economic growth of the country has been impressive in the last few years, much of which can be attributed to the expansion of the industrial sector to a considerable extent and the country, being a middle-income, is expected to be emerging as one of the global economies in the coming years (Barai 2012). However, in spite of the robust economic growth of the country, Bangladesh can be seen to be reeling under the pressure of several socio-economic issues, primary one of which is that of persistent and long-term poverty in the country over the years.
The economy of Bangladesh has been suffering from long term and acute problems of poverty in spite of being an independent country for nearly fifty years. The extent of poverty in Bangladesh can be seen from the following figure:
Figure 2: Poverty Headcount Ratio of Bangladesh at the national poverty line
(Source: Tradingeconomics.com 2018)
As is evident from the above figure, in spite of the considerable fall in the percentage of population living below the poverty line of Bangladesh, there still remains considerably high percentage of population below the same for Bangladesh, as compared to other middle-income countries (Manni and Afzal 2012). The poverty line of the country is almost equivalent to USD 2 per day and in the contemporary period (as can be seen in 2010) the percentage of population of the country living below the poverty line is more than 30%, which is much higher than that of India, Bhutan, Nepal, South Asia and Sri Lanka.
Overview of the economy of Bangladesh
In this context, the concept of Purchasing Power Parity needs to be introduced, which shows the amount of domestic currency of a country which is required to buy the same commodity basket which can be bought by the numeraire currency (usually USD) taken as the yardstick, in the country where the numeraire currency is used (conventionally the United State of America). When seen from the aspects of purchasing power adjusted scenario, this difference is seen to be even more acute Bangladesh can be seen to be lagging more behind the other middle-income countries with highest percentage of people living below the PPP incorporated income poverty line, which can be seen as follows:
This in turn indicates towards the lack of purchasing power in the hands of major share of the population of the country, which is the reflection of the presence of poverty as a serious problem in the concerned country, over the years (Imai and Azam 2012). The long-term poverty crisis in the country can be attributed to various inherent issues in the country, which are discussed in the following section of the report.
As discussed above, the economy of Bangladesh, over the decades, experience visibly high levels of poverty, which seem to be sustaining and a long-term attribute of the country, thereby affecting the lives of major share of the population in the country and the overall health of the economy and its growth dynamics negatively.
There are different factors contributing to the acute as well as extensive levels of poverty in the country, the primary ones being the lack of proper education facilities, especially for the under-privileged share of the population and also the presence of high unemployment in the country, the two aspects being again interrelated (Khandker 2012).
In spite of getting its freedom nearly fifty years, the education sector of Bangladesh has remained considerably underdeveloped over the years. The extent of spread of education among the population of a country can be broadly measured with the help of literacy rate, which measures the dynamics in the share of population in the country who are literate. In case of Bangladesh, the literacy rate can be seen to be experience the following dynamics:
Figure 4: Adult Literacy Rate in Bangladesh over the years
(Source: Knoema.com 2018)
The adult literacy rate, measuring the literacy rate of the population of age fifteen years and above, in case of Bangladesh, can be seen to be rising over the years. In 1981, the rate can be seen to be strikingly low (below 30%), which over the least few decades have increased consistently, with the rate of increase slowing down to some extent in the recent period. The adult literacy rate in the country can be seen to be nearly 61.5% in the current period (2015), which thought better than the situation prevailing in the education sector of the country in 1981, can still be found to be comparatively much lower than many other countries which started of from the same position as that of the country itself (Greenwatchbd.com 2018).
Extent and magnitude of poverty in Bangladesh
There are several structural problems underlying the education sector of the country, some of the most crucial ones being as follows:
- Lack of service providers- Bangladesh has one of the largest primary education framework in the global scenario with nearly 37,670 government primary schools and with nearly 10.7 million children between 6 years to 10 years of age who are supposed to avail these services. However, the country suffers from lack of human resources in this sector. There is an acute lack of qualified teachers in the country which in turn leads to the presence of only one teacher for 53 students, while the general international standard for the same is 1:30 (Schreiner 2016). Also, apart from that, nearly 6,300 primary schools in the country suffer from the lack of a headmaster.
- Lack of amenities- Apart from the lack of teachers and other human capital resources required in the education sector, the same in the concerned country also suffers from a general lack in the aspects of basic school amenities like that of classrooms, libraries, playgrounds, laboratories and others.
- Stalled innovations and lack of inclusiveness- The teaching system in the country is very much rigid as the teachers and the other service providers, mostly try to stick to the conventional norms of knowledge imparting and do not usually take into account or implement newer and more innovative methods. This in turn leads to the absence of industrial or job-oriented education in the country, which in turn hampers the skill development of the potential labour force, thereby hampering the employment prospects of the same, increasing the probability of poverty in the country (Khan et al. 2012).
The lack of proper and age-appropriate job-specific education provision leads to the following effects on the youth of the society, thereby affecting the society as a whole, which are as follows:
- Lack of proper professional and technological skills
- Lack of capability of getting absorbed in economic welfare increasing employment
- Lack of capability of creating self-employment
- Inability to participate in the decision-making processes
- No development of leadership qualities
- Increased involvement of the youth in the anti-social activities
- Overall stagnation in productivity
- Lower standard of living (Sultana)
Together the absence of proper and job-oriented education in the country can be seen to be affecting the total skill development of the country which in turn leads to lower ability of the population to get engaged in productive economic activities, thereby decreasing their overall welfare in terms of economic abundance. Due to lack of proper skill development, the economy can also be seen to be experiencing stagnation, in the aspects of development, thereby leading to sustained low levels of living and increased poverty levels in the country over the years (Malak 2013).
This in turn, is a vicious cycle as with the lack of proper education, proper and productive employment opportunities for the population of a country decreases, which in turn leads to economic scarcity and lack of income among the population, thereby affecting the aggregate demand negatively, which in turn decreases the overall productivity of the country, thereby aggravating the poverty in the country.
Another aspect in the economy of the country which is directly affected by the absence of proper job-oriented educational opportunities and which has direct implications on the poverty crisis in the country is the lack of generation of enough employment and labour market growth in the economy of the county over the years. The overall conditions of the labour market of the country can be seen broadly from the rate of unemployment prevailing in the country over the years, which measures the total share of the population in the labour force of the country who are eligible and willing to work but do not get the opportunity to engage in any kind of employment in the country. In case of Bangladesh, the same can be seen as follows:
Figure 5: Rate of unemployment in Bangladesh (2000-2018)
(Source: Tradingeconomics.com 2018)
As is evident from the above figure, the rate of unemployment which was 3.3% in 2001, increased to as high as 4.5% in 2004. The rate of unemployment then decreased drastically to 3% post 2007, before rising strikingly to 5% in 2009. The rate of unemployment then decreased to some extent post 2010. However, the rate of unemployment, from 2010 to the current period, can be seen to be remaining at a moderately high level (varying between the range of 4% to 4.5%).
The role of education in poverty reduction
However, the creation of employment, has not also been uniform in all the sectors of the economy, as can be seen as following diagram:
Figure 6: Distribution of employment by sectors in the economy of Bangladesh
(Source: Statista 2018)
As can be seen from the above figure the lions’ share of the employment generation in the country, over the years has been in the agricultural sector, with the share of employment in the same sector being 62.1% in 2000. The share of employment in the agricultural sector decreased over the years. However, in the contemporary period (in the year 2010), the employment in the agricultural sector can be seen to be still as high as 47.49%. Compared to that the industrial sector can be seen to be contributing nearly 17.71% of the total employment generation and the service sector contributing nearly 35.31% of the total employment in the country (Chowdhury and Hossain 2014).
The moderately high unemployment trends in the country is expected to have direct negative implications on the poverty levels of the country. On the other hand, the main attribute of the employment trend in the country is that a major share of the employed population of the country is absorbed in the agricultural sector, which is a low-wage subsistence sector with less contribution to the economic welfare of the population of the country.
The average wage level in the country can also be seen to be visibly low. This together with the unemployment rate and the employment trends contribute towards the poverty crisis in the economy of the country as can be seen to be existing in the contemporary period.
Recommendation and Conclusion
As is evident from the above discussion, the economy of Bangladesh, in spite of being one of the eminent and emerging middle-income countries in the contemporary global scenario, has been experiencing poverty crisis for a prolonged period of time, much of which can be attributed to the lack of proper education and employment opportunities. The government in this context, need to build up human capital in the educational sector by providing the teachers with proper wages and incentives and also need to bear the expenses of provision of primary education to the underprivileged children in the country. The schools and the learning centres need to be more well-equipped and filled with amenities to attract more number of students in the coming years. Apart from that, employment generating and skill developing education also needs to be imparted to develop a productive labour force in the country. The government also needs to emphasize on developing the industrial and the service sector of the country in order to generate more number and higher quality of employments to rule out the poverty crisis in the economy. All these factors can cumulatively help in combating the problem of poverty in the country to a considerable extent in the coming years.
The link between education and unemployment in Bangladesh
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