Bangladesh has a resilient economy, will not collapse like Pakistan; is streets ahead of it in all-round development

Pakistan will never catch up with Bangladesh in the race for economic development. The GDP growth rate of Bangladesh increased gradually to 8.13 percent in the fiscal year 2018-19. In 2020-22, the impact of the novel coronavirus pandemic and the Russia-Ukraine war slowed down the growth rate of Bangladesh, but it was much higher than that of Pakistan and the growth rate is estimated to exceed 6.5 percent in the fiscal year 2022-23.

Sufian Siddique Mar 09, 2023

Pakistan's economy is on the brink of bankruptcy like Sri Lanka's. Pakistan's foreign exchange reserves have fallen below $3 billion. They asked the IMF for a 'bailout loan' a long time ago, but the IMF is trying to impose strict conditions that Pakistan's current ruling coalition has no capacity to meet. Even China and Saudi Arabia, Pakistan's long-standing friends, are now reluctant to shoulder Pakistan's burden. 

China has stopped power supply from the power plants built by Pakistan through Chinese loans after Pakistan failed to pay the long-delayed installments. Due to this, the people of Pakistan are suffering from frequent and long power outages. The value of the dollar against the Pakistani rupee has gone up dramatically; currently, Pakistanis have to pay 277 rupees to get 1 dollar.

Inflation in Pakistan has reached such an alarming level that the price of a kilogram of flour now exceeds 160 rupees and a kilogram of sugar is over 300 rupees. The main reason for this crisis is the burden of maintaining an outsized armed force of 700,000, including a half-a-million-strong army. It is not economically feasible for Pakistan to maintain such a large army just for war with India. Hostilities between the two countries began with the Kashmir War of 1947-49, which ended with an UN-imposed ceasefire. Although the 1965 war was not decisive, the diplomatic victory in the war settled by the Tashkent accord went to India. In the 1971 war, the Pakistani armed forces surrendered in Dhaka after being defeated by the Bangladesh-India joint forces, through which Bangladesh declared independence on 26 March 1971 and marched in victory on 16 December. In the last Kargil war of 1999, Pakistan was forced to accept a ceasefire and failed to achieve its military objective. 

As an inevitable consequence of this permanent state of war, the actual governance of the Pakistani state went into the hands of the military establishment 1958-71. And when the military is forced to give up power to the civilian rulers for some time, they kept the real reins of governance under their control. 

In the current phase, Imran Khan came to power through the election as a favorite of the military, but within a few years, due to a power struggle with then-army chief Qamar Bajwa, no one had any difficulty understanding that the military establishment was also behind the installation of Shahbaz Sharif, the present prime minister. ISI, the intelligence agency of the armed forces of Pakistan, plays a powerful tool of the military establishment in this power-grab game.

Pakistan's resource-gobbling military

In 2007 the book "Military Incorporation: Inside Pakistan's Military Economy" by Ayesha Siddiqui caused a stir around the world after its publication. After presenting the history of how Pakistan's military took control of Pakistan after 1947, Siddiqa describes and analyzes in detail how army officers, led by generals, came to dominate Pakistan's economy.

In 2005, the military economy became a major force in Pakistan's economy, with four armed forces-created organizations, the Fauji Foundation, the Army Welfare Trust, the Shaheen Foundation and the Baharia Foundation, becoming the country's four largest military-industrial enterprises. Fauji Foundation has 25 projects, Army Welfare Trust has 41 projects, Shaheen Foundation has 14 projects and Baharia Foundation has 19 projects—99 projects are mentioned in the book as of 2005. Military officers trump all others in Pakistan as the neo-landlord class due to the predilection of armed forces personnel to lease government-owned or encroached rural or urban land. Around 1.1 million acres of land across Pakistan have gone to the ownership of serving or retired officers and employees of the military. Several Defense Officers Housing Societies have now become the largest residential area in any large or medium city in Pakistan. The state of Pakistan will not be freed from the occupation of military forces in the near future, as per Siddiqa's assessment. 

The world's sixth-largest populous country, Pakistan's population has grown rapidly to over 250 million. Every year, after meeting the huge allocation for the defense sector, it is beyond the government's financial capacity to carry out the minimum necessary expenditure on public education and health. The country's annual export earnings still remain below $25 billion, while import spending is reaching $80-90 billion per year.  

Bangladesh has surged ahead 

Pakistan's position in the world ranking of the United Nations Human Development Index is going down every year. In 2022, where Bangladesh rose to the 129th position, and Pakistan's position dropped to 147th. In 2023 the comparative picture of Bangladesh and Pakistan is as follows:      

1) In terms of per capita GDP, Bangladesh has surpassed Pakistan by 80 percent. Bangladesh's per capita GDP in 2021-22 is $2793 and Pakistan's is $1547. 2) Bangladesh's export earnings are more than double that of Pakistan's, exceeding $52 billion in FY 2021-22. 3) Bangladesh's foreign exchange reserves reached $48 billion in August 2021, declining over the past 17 months to $24 billion in January 2023 as per IMF calculations, more than eight times Pakistan's. (According to the Bangladesh government's account, the foreign exchange reserve of Bangladesh is 32 billion dollars). 4) The average life expectancy of the people of Bangladesh is 73 years; 66 years in Pakistan. 5) The literacy rate of the people of Bangladesh is 76 percent, while that of Pakistan is 59 percent. 6) The total GDP of Bangladesh is 465 billion dollars, and that of Pakistan is 346 billion dollars. 7) Population growth rate of Bangladesh is 1.2 percent and Pakistan is 2.1 percent. As a result, the population of Pakistan has increased to 22.5 million, and the population of Bangladesh is 16.98 million. 8) 1 dollar is available for a maximum of 107 takas in Bangladesh; it is 277 rupees to a dollar in Pakistan. But till 2007 the foreign exchange value of the rupee was 8 percent higher than take. 9) Bangladesh's total foreign debt is 20.48 percent of GDP, while in Pakistan it is 46 percent of GDP. 10) 36 percent of women in Bangladesh work outside the home, compared to only 14 percent in Pakistan. 11) In Bangladesh the infant mortality rate is 21 per thousand, and in Pakistan, it is 59. 12) 100 per cent population of Bangladesh is covered by electricity, while 73 only per cent population of Pakistan is getting electricity.

The above data shows that Pakistan can never catch up with Bangladesh in the race of economic development. The GDP growth rate of Bangladesh increased gradually to 8.13 percent in the fiscal year 2018-19. In 2020-22, the impact of the novel coronavirus pandemic and the Russia-Ukraine war slowed down the growth rate of Bangladesh, but it was much higher than that of Pakistan and the growth rate is estimated to exceed 6.5 percent in the fiscal year 2022-23. Development thinkers are optimistic that the economy of Bangladesh, a low-middle-income country, will rise to the upper-middle-income category very quickly if harmful activities like corruption, looting and money laundering are strictly controlled. But for this, the root problems like corruption, looting and money laundering need to be tackled properly.

(The author, a graduate in International Relations from Bangladesh, is an independent researcher and columnist on South Asian affairs. Views are personal. He can be contacted at 

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