Monday, December 10, 2012

Comparing Bangladesh With Pakistan in 2012

Lavish praise for Bangladesh and scolding for Pakistan mark the anniversary of the painful events leading up to the breakup of Pakistan in December 1971. This annual ritual is usually led by writers from Pakistan's arch-rival India. A few Bangladeshi  nationalists and disgruntled Pakistanis join in as well. Here are a few samples of it:

 1. Sadanand Dhume, Wall Street Journal

 "Not long ago, when you thought of a South Asian country ravaged by floods, governed by bumblers and apparently teetering on the brink of chaos, it wasn't Pakistan that came to mind. That distinction belonged to Bangladesh.....Bangladesh has much to be proud of. Its economy has grown at nearly 6% a year over the past three years. The country exported $12.3 billion worth of garments last year, making it fourth in the world behind China, the EU and Turkey..... Nearly 40 years ago, only the most reckless optimist would have bet on flood-prone, war-ravaged Bangladesh over relatively stable and prosperous Pakistan. But with a higher growth rate, a lower birth rate, and a more internationally competitive economy, yesterday's basket case may have the last laugh."

2.  Akbar Ali Khan, Bangladesh's Daily Star

"Per capita income in West Pakistan in 1950 was only four per cent higher than that of East Pakistan. In 1970 per capita income in West Pakistan exceeded that of East Pakistan by 61 percent. The increase in disparity of two wings reinforced the secessionist argument that West Pakistan was becoming richer at the expense of East Pakistan....annual per capita income growth in Bangladesh since 1972 exceeded almost every year total per capita income growth in East Pakistan in twenty years. This clearly suggests that political independence provided much more conducive environment for growth in Bangladesh than united Pakistani. . Though economic growth in East Pakistan was revived during Ayub Khan's so-called decade of reforms, growth rate in erstwhile East Pakistan was much lower than that of West Pakistan."

3.  S. Akbar Zaidi, Pakistan's Daily Dawn

"In the world of development achievements and democratic and secular credentials, it is Bangladesh today which offers a rather sad comment on Pakistan`s numerous failed promises. Bangladesh is one of the six countries in Asia and Africa which has been feted for its progress towards achieving its Millennium Development Goals, a set of targets that seek to eradicate extreme poverty and boost health, education and the status of women worldwide by 2015....The West Pakistani elite which lived off the resources of East Pakistan for 25 years and was happy to see the basket case East Pakistan become Bangladesh, needs to seriously come to terms with its continuing hubris and past. The least that the civilian and military Pakistani elite can do is to seek forgiveness for the crimes committed four decades ago, and to begin to learn how basket cases and failed states can become successful democratic, developmental and secular states."

Let's now assess how Bangladesh and Pakistan have performed since 1971 by looking at some key indicators like per capita income, upward mobility and consumption of energy and cement in the two countries.

PPP GDP of Pakistan and Bangladesh Source: World Bank

Per Capita Income:

Economic gap between East and West Pakistan in 1960s is often cited as a key reason for the secessionist movement led by Shaikh Mujib's Awami League and the creation of Bangladesh in 1971. This disparity has grown over the last 40 years, and the per capita income in Pakistan now stands at more than twice Bangladesh's in 2012 in nominal dollar terms,  higher than 1.6 as claimed by Akbar Ali Khan in 1971.

 Here are some figures from Economist magazine's EIU 2013:

Bangladesh GDP per head: $695 (PPP: $1,830)

Pakistan GDP per head: $1,410 (PPP: $2,960)

Pakistan-Bangladesh GDP per head Ratio: 2.03 ( PPP: 1.62)

Bangladesh-Pakistan GDP (Source: World Bank) 

Upward Economic Mobility:

Pakistan has continued to offer much greater upward economic and social mobility to its citizens than Bangladesh and India over the last two decades. Since 1990, Pakistan's middle class had expanded by 36.5%, India's by only 12.8% and Bangladesh's by just 8.3%, according to an ADB report titled "Asia's Emerging Middle Class: Past, Present And Future.

Per Capita Energy Consumption:

Energy consumption in this day and age generally indicates a nation's level of industrialization, productivity and standards of living. Going by this yardstick, Pakistan's 14 million BTUs per capita consumption is well ahead of Bangladesh's 6 million BTUs per capita as estimated by US Energy Information Administration for 2009.

Per Capita Cement Consumption:

Cement use is an important barometer of national economic activity in developing countries. Pakistan's cement consumption of 132 Kg per capita is significantly higher than Bangladesh's 85 Kg per person.  

Agriculture Value Added Per Capita in Constant 2000 US$ (Source: World Bank)

Job Growth:

 Pakistan's employment growth has been the highest in South Asia region since 2000, followed by Nepal, Bangladesh, India, and Sri Lanka in that order, according to a recent World Bank report titled "More and Better Jobs in South Asia".

Total employment in South Asia (excluding Afghanistan and Bhutan) rose from 473 million in 2000 to 568 million in 2010, creating an average of just under 800,000 new jobs a month. In all countries except Maldives and Sri Lanka, the largest share of the employed are the low‐end self-employed.

Other Facts: 

Here are a few other relevant data points in comparing Bangladesh and Pakistan:

1. Bangladesh is still categorized by the World Bank among low income and least developed countries of the world, while Pakistan is a middle income country and classified well above the list of least developed countries of the world.

2. Bangladesh is ranked as 11th poorest country in the world by the World Bank in terms of the percentage of population living on $1.25 or less a day. Neighboring India is the 14th poorest on this list, while Pakistan does not show up on it. The rest of the nations on this list are all in sub-Saharan Africa.

3. In 1947, East Pakistan started with a lower economic base than West Pakistan, and the loss of its Hindu Bengali business elite in 1947 left it worse off. It also didn't have the benefit of the large number of Muslim businessmen who migrated to West Pakistan, particularly Karachi, after partition of India in 1947.

4. Pakistani economist Dr. Ishrat Husain explains it well when he says that "although East Pakistan benefited from Ayub’s economic reforms in 1960s, the fact that these benefits were perceived as a dispensation from a quasi-colonial military regime to its colony—East Pakistan—proved to be lethal."

World Hunger Index Rankings

It must, however, be acknowledged that Bangladeshi economy has been outperforming Pakistan's in the last few years, particularly since President Musharraf's departure in 2008. Bangladesh has also made significant strides on various social indicators and it now ranks just one notch below Pakistan on human development index 2011. Bangladesh's family planning efforts have been remarkably successful in lowering the fertility rate of Bangladeshi women, an area where Pakistan significantly lags behind the rest of South Asia.

Here's a recent video about Pakistan:

Related Links:

Haq's Musings

Economic Disparity Between Bangladesh and Pakistan

Comparing India and Pakistan in 2011

Is This a 1971 Moment in Pakistan's History?

Pakistan Ahead of India in Graduation Rates

Pakistan Tops Job Growth in South Asia

Pakistan Needs More Gujaratis?

President Musharraf's Legacy

Demolishing Indian War Myths


Anonymous said...

LOL. Only Riaz has monopoly over the truth.

Read from today's NYT. See what they say about Pakistan's risk of failure.

Shams said...

The question is not what BD v. PK is doing now.

The question is how BD would have been with PK in control.

PK army (read Punjabi / Pathans) were killing, raping, stealing, and destroying BD all along.

Mayraj said...

Those horrible death trap factories produce 80% of Bangladesh export earning.
That tells you Bangladesh is lacking in leadership.

Hopewins said...

Dr. Haq,

This is a good article. However, I think it is incomplete, as it does not cover many important trends. It may be helpful for your readers if you were to include the following:

Pakistan & Bangladesh;
30-Year TRENDS

(1) GDP Growth Rates:

(2) Per Capita GDP Growth Rates:

(3) Per Capita GDP (PPP)

(4) Gross Savings:

(5) Gross Investments:

(6) CPI Inflation:

(7) Population Growth

(8) Human Development:

(9) CAGR of GDP:

Thank you.

Riaz Haq said...

Shams: "The question is not what BD v. PK is doing now...The question is how BD would have been with PK in control"

My question is how has Pakistan managed to achieve 2X the per capita income of Bangladesh since 1971 if West Pakistanis" lived off the resources of East Pakistan for 25 years"?

Riaz Haq said...

Mayraj: "Those horrible death trap factories produce 80% of Bangladesh export earning.
That tells you Bangladesh is lacking in leadership."

Remember the garment factory fire in Karachi that claimed over 200 lives earlier this year? So Pakistan is not much better in this regard.

Hopewins said...

^^RH: My question is how has Pakistan managed to achieve 2X the per capita income of Bangladesh since 1971 if West Pakistanis" lived off the resources of East Pakistan for 25 years"?


It is called Primitive Accumulation of Capital. The idea was explained 150 years ago.

For example, England used India to boost its Capital Accumulation Rate from 1757-1947.

So by 1947, England had already accumulated disproportional capital than they would have had without control of India.

The faster growth rate of England beyond 1947 was based on this historically-accumulated high capital level.

The SAME is true of our country vis-a-vis Bangladesh. The relationship between England and India between 1757-1947 is the SAME as our relationship with Bangladesh between 1947-1971. We treated Bangladesh exactly like a COLONY.

By way of hard data, look up the source of foreign exchange earnings between 1947-1971 for Unified Pakistan. Then look at where the imported capital equipment that was purchased using that foreign exchange actually went. The evidence is crystal clear.

Hopewins said...

^^RH: "How come China, the doesn't suffer from this;yet South Asia is prone?"

It is impossible to know what China suffers from or not. They do not have a free-press.

Hopewins said...

^^^RH:"True; but it has other ways to earn revenue as well"

This is true. But not by much.

Textiles & Related: 60%
Food & Related: 12%
Leather & Related: 8%
Total Textiles, Food, Leather: 80%

Textiles & Related: 80%
Food & Related: 2%
Leather & Related: 2%
Total Textiles, Food, Leather: 84%

INDIA EXPORTS of Goods & Services
Textiles & Related: 6%
Food & Related: 6%
Leather & Related: 1%
Total Textiles, Food, Leather: 13%

Hopewins said...

^^RH: "Energy consumption in this day and age generally indicates a nation's level of industrialization, productivity and standards of living."

This is true, but in Third-World countries, general "energy" consumption is difficult to measure as a lot of informal (undocumented) sources of energy are used. So the usual parameter used as a proxy for "industrialization, productivity and standards of living" is actually Electricity Consumption per capita.

By way of proof, if you look at our Per Capita Electricity Consumption (pcEC) data from the World Bank you can clearly see (a) the Zia Boom, (b) the Bibi/Sharif Stagnation, (c) the Mushy Boom and (c) the current Zardari Stagnation:

By focusing on 1980-2010 window, we can note the following in that graph:
(1) We had a great boom from 1980-1992, with pcEC growing from 130 to 330 kWh thereby registering a 155% increase in those 12-years.
(2) We then had a LOST Decade from 1992-2002, with pcEC barely growing from 330 to only 360 kWh in those ten years.
(3) We then had another short-lived boom from 2003-2007, with pcEC growing from 360 to 470 kWh in the 5-years of that boom, thereby registering a 30% increase in 5 years
(4) From 2008 onwards, it has been a DISASTER, with pcEC going DOWN from 470 to only 450 kWh in 2010.

SUMMARY: From 1992 to 2010, Pakistan went from 330 kWh to 450 kWh, i.e. a 36% increase.


Compare with Bangladesh:

Note the following for the 1980-2010 window:
(1) Bangladesh went from a SUPER LOW of 20 kWh in 1980 to 60 kWh in 1992, thereby registering a 3-fold (200%) increase in those 12-years .
(2) Bangladesh did not have a lost decade in the 90s. Their pcEC doubled from 60 kWh in 1992 to 120 kWh in 2002.
(3) Bangladesh also had a boom from 2003-2007, in which their pcEC grew from 120 kWh in 2002 to 200 kWh in 2007, thereby registering a 65% increase in just 5 years.
(4) Bangladesh continued to grow after the GFC, with the consumption increasing still further to 250 kWh in 2010.

SUMMARY: From 1992 to 2010, Bangladesh went from 60 kWh to 250 kWh, i.e. a 315% increase.


You can do the same for India as well:

Hopewins said...

In 2002, textiles and apparel manufacturing accounted for $400 billion in global exports, representing 8% of world trade in manufactured goods.

The countries with the largest share of their exports being textiles and apparel were as follows (2002):

Bangladesh: 85.9%
Cambodia: 72.5%
Pakistan: 72.1%
El Salvador: 60.2%
Dominican Republic: 50.9%
Nepal: 48.7%

Anonymous said...

Haq Sb.,

Your wrote :"Since 1990, Pakistan's middle class had expanded by 36.5%".

Some estimates say that in last 10 years Pakistan's middle class has doubled to 40% of the population.

"At the same time, some 70 million Pakistanis—40 percent of the population—have become middle-class, says Sakib Sherani, chief executive of Macro Economic Insights, a research firm in Islamabad"


Riaz Haq said...

Zamir: "Some estimates say that in last 10 years Pakistan's middle class has doubled to 40% of the population."

Yes, it is consistent with Table 2.3 o page 4 of the Asian Development Bank report titled "Asia's Emerging Middle Class: Past, Present and Future".

Riaz Haq said...

Here's an interesting Huffington Post piece by investment adviser Dan Solin:

Pakistan is often in the news and usually in unflattering terms. The relationship between the U.S. and Pakistan is troubled, characterized by deep mutual distrust and conflicting goals.

The economy of Pakistan is equally troubled. According to the Heritage Foundation, its economy has been plagued by "political instability and violence." Much needed economic reform has been stalled by bureaucratic delays and lack of political will. Property rights in Pakistan are "compromised." The rule of law is "fragile." Taxation is "poorly administered." Its public debt is over 50 percent of total domestic output. Foreign investment is declining. Its overall ranking on economic freedom is below the world and even regional averages, placing it in the category of "mostly unfree" economies. To put this in perspective, there is more economic freedom in Yemen, Senegal and Nigeria than in Pakistan. Its unemployment rate is a staggering 15 percent. Its inflation rate is 11.7 percent.

Does this country seem like a good place to invest to you?

Now for the shocker: Year-to-date returns for the stock market of Pakistan were 46.73 percent. That's not a typo. Year-to-date returns for the U.S. during the same period were 11.90 percent.

Here are some other interesting facts. The stock markets in Nigeria and Kenya
were 27.26 percent and 26.56 percent, respectively. What about the returns in fast-growing economies like Brazil and China? Brazil was an anemic 1.43 percent. China was a loss of 10.20 percent.

If you are a typical investor, you believe paying attention to the financial news is important to your investing success. You read the financial media. You watch CNBC and pay special attention to the fund managers who "explain" the stock markets to you and encourage you to follow their advice (often by investing with their firms). Maybe you follow the stock picks served up by Jim Cramer, who appears to have an encyclopedic knowledge of all things financial.

Let me ask you this question. Did any source of financial news advise you to invest in the stock markets of Pakistan, Nigeria or Kenya? Or Turkey, which topped the list with returns of 47.31 percent? How about your broker or financial adviser? They make it appear they have special insight into the financial markets. Did they advise you to invest in any of the countries reporting returns higher than the U.S.?

The average returns of the 77 countries is a positive return of 8.47 percent. In 2011, the average was a negative 14.15 percent and the list of top performers was markedly different, with Venezuela, Jamaica and Botswana turning in stellar results, along with Pakistan which came in second.

Trying to predict which country will perform best in 2013 is a crapshoot. So is trying to pick stocks that are mispriced, or betting on which asset class will outperform. Yet the securities industry continues to thrive by persuading you to pay its members fat fees for dispensing precisely this kind of "advice."

The next time your broker peers into his crystal ball and makes a recommendation, ask this question: Did you predict stellar returns in Pakistan, Nigeria or Kenya for 2012?

Vishesh said...

HAHAHA, haq, you have serious issues. Every year you come up with this comparison with bangladesh at this time and with india during independance day and quote the same statistics.


pakistan hasn't achieved any upward mobility vis-a-vis India and i'm pretty sure bangladesh. Look at per capita income PPP and you will see India has a PPP income 25% higher than pak.

2. Please view the job growth and for India it takes into account the period from 1985 not 2000 as you have convieneintly taken for pak. SO if you take pak it will probably be the lowest considering it has only experienced some semblance of high growth for about 5 years in the early years of 2000 and thats that. Whereas, India has continuously experienced a much higher growth than pak in these years. So get Your figures right!

3. Population of pak is grossly undervalued, it is 200 million and not 180 million as potrayed by your govt.

According to preliminary census 2011 it is 195 million, hence by now it has definitely crossed 200mn.

4.Pakistan is a huge RECEIVER practically beggar of Aid from the west while India is LENDER. So is Bangladesh, But you have to take in mind how pakistan had looted and plundered bangladesh for 24years and used its resources for its own benefit.

5. When you compare the two countries, don't show stats of the past. Give figures of the present and show growth figures over the period in sttention.

Alas, we can never expect that from a frankly dumb person like you.

BTW, last year you were revelling in glory on how INR had depreciated even though your paki currency had depreciated too. Look at the facts not. $1= 97.2 for pak while INR has remained the same at around 54-55 levels. On top of that paks foreign reserves have gone down to $13.5 billion from $18bn while Indias is steady at $295bn which is 23 times that of pak!

Hopewins said...

^^Vishesh said...

2. .....
3. .....
4. .....
5. .....

Alas, we can never expect that from a frankly dumb person like you.

And YET, even after ALL of the above, one basic fact STILL remains the same:

India leads the world in open defecation. India(638m) is followed by Indonesia (58m), China (50m), Ethiopia (49m), Pakistan (48m), Nigeria (33m) and Sudan (17m). In terms of percentage of each country's population resorting to the unhygienic practice, Ethiopia tops the list with 60%, followed by India 54%, Nepal 50%, Pakistan 28%, Indonesia 26%, and China 4%

Hopewins said...

Comparing Per Capital Electricity Production between Pakistan & Bangladesh from 1971 through to 2010:

FY.....Pak....Bangla...Ratio P/B
1971.....91 ....10 .......8.7
1975.....108 ...17 .......6.3
1980.....132 ...19 .......7.0
1985.....192 ...33 .......5.8
1990.....267 ...49 .......5.5
1995.....345 ...77 .......4.5
2000.....357 ...103 ......3.5
2005.....448 ...175 ......2.6
2010.....447 ...262 ......1.7


The very fact that we were consuming NINE times as much electricity as Bangladesh in the early seventies just shows clearly that they were being treated as a second-class colony.

The fact that the ratio has now narrowed to 1.7 shows clearly how rapidly Bangladesh has managed to transform its economy away from colonialism and towards a balanced one capable of standing on its own two feet.

Riaz Haq said...

HWJ: "The very fact that we were consuming NINE times as much electricity as Bangladesh in the early seventies just shows clearly that they were being treated as a second-class colony."

Your data is bogus. It makes no sense that people in West Pakistan 9X more electricity per capita than East Pakistanis to produce just 70% more GDP per capita, unless East Pakistanis used other forms of energy for which you need to look at total energy consumption in terms of millions of BTUs rather than just KWhs.

It makes no sense even if you accept Dr. Kaiser Bengali's data that "Dhaka city had no electricity in 1947".

Hopewins said...

^^RH: "Your data is bogus. It makes no sense.."

Dr. Haq,

That data is not "mine". It comes from the World Bank. If it were "bogus", surely somebody would have raised a red flag at the World Bank. You can check it yourself:

And it COULD make sense depending on the structures of the economies of the two countries.

Here is how:

(1) Assume that in 1971, Bangladesh, as a 95% agricultural (human & animal power) economy, produced 100 Units of agricultural output with only 10 kWh/person electric power.

(2) Similarly, assume that Pakistan also produced 100 Units of agricultural output with the same 10 kWh/person electric power. However, Pakistan having more industry, used the OTHER 80 kWh/person to produce an additional 70 Units of Industrial goods.

Using (1) & (2), we can see that Pakistan could have a 70% higher output than Bangladesh with 9 times the electric power consumed.

The number do not necessarily scale linearly. It all depends on how the economies are structured.

What are your thoughts?

Thank you.

Hopewins said...

^^RH: "Your data is bogus..."

You can see the actual World Bank data plotted by google itself:

It shows the same thing. In 1971, we had about 90 kWh/person and they had about 10 kWh/person. In 2009, we have about 450 kWh/person and they had about 250 kwh/person.

So the ratio went from about 1:9 in 1971 to about 1:1.8 in 2009.

You can see all this with your own eyes. You don't have to depend on "my data or interpretation".

Hopewins said...

Too see the transformational difference between Bangladesh and Pakistan, look at the Absolute Fixed Investments in Current USD that were made in the two countries from 1992-2011:

Do a comparison between these two graphs:

1) In 1992, Bangladesh invested 5.5 Bilion$, while we invested 9.1 Billion$

2) In 2000, Bangladesh invested 10.75 Bilion$, while we invested 11.5 Billion$

3) In 2008, Bangladesh invested 19.2 Bilion$, while we invested 33.5 Billion$

4) In 2011, Bangladesh invested 27.5 Bilion$, while we invested 24.5 Billion$.

In summary, Bangladesh's performance post 1992 has been spectacularly better than that of Pakistan in general. After 2008, especially, this difference has been greatly magnified to the point that Pakistan is rapidly being bypassed in almost all parameters except Defence Spending.

These are the verifiable facts.

Hopewins said...

^^RH:"...A few Bangladeshi nationalists....join in as well."

You mean like this?

Dec 19, 2012:

Hopewins said...

Here's a recent video about Pakistan:

Entitled: "We will Survive!"

Dr. Haq,

I am just curious about why a video in an article about how well we have done compared to Bangladesh is entitled, "We will SURVIVE!".

Has Bangladesh collapsed? Is anyone saying that they are close to collapse? Is the survival or existence of Bangladesh in question or jeopardy? If not, then why are we publishing these "survival" videos about Pakistan?

Please explain.

Thank you.

Anonymous said...

Compare the literacy rate of females between Bangladesh and Pakistan, then you get the real picture of how backward Pakistan is.

Hopewins said...

Western Aid to Bangladesh is projected to hold steady over the next three years.

Western Aid to India is projected to be cut, with a complete end in 2015.

Western Aid to our country is projected to INCREASE.


If, as you say, we have less hunger, higher graduation rates, better sanitation, more social mobility, and a larger middle-class than Bangladesh & India, then why are we projected to receive an INCREASE in aid? Why is the West not increasing aid to Bangladesh? Why is the West planning to decrease aid to India?

Am I missing something? Please explain.

Riaz Haq said...

HWJ: "Why is the West planning to decrease aid to India?"

I can't think of a better answer than India blogger Cybergandhi who says as follows:

"Due to the fake ‘India Shining’ propaganda launched by Hindutva idiots, foreign donors are reluctant to help the poor people in this country. According to figures provided by Britain’s aid agency, the total aid to India, from all sources, is only $1.50 a head, compared with an average of $17 per head for low-income countries."

Meanwhile Israel, a rich OECD country, gets more foreign aid per capita than any other country, and it does not say NO to it.

Riaz Haq said...

Here's Bloomberg on informal savings and investment in Pakistan:

Ali has been selling wall clocks and wristwatches in a crowded Karachi market for 15 years. He’s been participating in savings circles with fellow shopkeepers for just as long, and has used the proceeds to buy a car and acquire a new store.

Now he’s a few months away from getting 400,000 rupees ($4,100) from a savings group of 16 shopkeepers into which he’s been paying 1,000 rupees a day for almost a year. He plans to put a down payment on an apartment. “This system is flawless,” says Ali, 35, who goes by one name. “You can never save this way without this binding commitment of making payments every day or every month. At banks there are hassles and procedures that waste time. This is simple. The organizer comes to collect the money himself, and because of the trust element, it’s a given that we’ll get the money.”

Millions of Pakistanis save billions of rupees in informal, interest-free savings circles called ballot committees—popularly known as BCs—run by housewives, students, office workers, shopkeepers, even high-society ladies. Each member of a group of trusted friends or relatives contributes the same sum daily or monthly to a pool for a predetermined length of time, usually one year. Through a ballot, each participant is allotted a number indicating his or her turn. Every month, one participant gets the pool total. Everyone on the committee keeps contributing until each member gets a pot of cash.


No one knows the origins of savings circles, but they’re found in Africa and Latin America as well as Asia. “This system has existed in South Asia as long as I’ve known, and it was started by low-income women who were financially insecure,” says Ashfaque Hasan Khan, dean at the business school of the National University of Sciences & Technology in Islamabad. “The purpose was to hedge against a problem or to pay for a son or daughter’s wedding.” In India a similar savings plan, called a chit fund, flourishes. The big difference is that India’s savings circles, after years of operating on their own, are now regulated by the government.

No estimates exist of the total amount of the funds collected by the committees. In Karachi alone, the All Karachi Traders Alliance Association estimates 10 million rupees pour into ballot committees on a daily basis. “The size and volume of the circles is on the rise because inflationary pressures mean people need more cash now to do the same things,” says Dean Khan of National University. Inflation in Pakistan is close to 8 percent. While the official savings rate is 10.7 percent of gross domestic product, it is probably higher thanks to the committees.

Another reason the ballot committees are flourishing is the low level of financial literacy in Pakistan and the reluctance of ordinary Pakistanis to take part in cumbersome banking procedures. “Coverage by bank branches is fairly limited, especially in rural areas,” says Sakib Sherani, chief executive officer at Macro Economic Insights, a research firm in Islamabad. “The ballot committees offer greater flexibility and avoid the hassle of traveling to a bank, keeping documentation, and paying service charges.”

Only 14 percent of Pakistanis use a financial product from a formal financial institution, according to a 2009 World Bank report. That compares with 48 percent for India. But when informal financial networks such as the BCs are taken into account, 50.5 percent of Pakistanis have access to finance, according to the report. ....

Hopewins said...

Bangladesh Court sentenced Jamaat-e-Islami leaders to death after being convicted of murder, arson, looting-- especially directly at the Hindu-minority-- during the 1971 conflict.

Jamaat-e-Islami members admit to opposing the creation of Bangladesh, but they that they did not indulge in violence against anyone.

Here is how the Jamaat-e-Islami are protesting the "trumped-up charges" of war-crimes against the Hindu-minority and the "false convictions" of murder, arson and looting:

Our Jamaat-e-Islami should learn from their Bangladeshi counterparts on how to maintain credibility in the eyes of the world.

Riaz Haq said...

Here's an interesting Op Ed by Mazur Ejaz in Friday Times:

The condition of an economy is often confused with the financial health of its government. Pakistan's economy is perceived to be in a deep hole because of its near-bankrupt fiscal conditions. Similarly, America's inability to settle on a national budget is taken to be an indicator of the collapse of the US Empire.

In some ways, the condition of the economy and the financial health of the government are separate matters. Major stock market indexes at Karachi Stock Exchange and the Wall Street are at their highest level, but both governments are facing serious financial problems. Most of the countries around the world are facing similar dichotomous situations. So how does one solve the riddle of the corporate sector making record profits while governments around the world are in serious financial jeopardy?

The phenomenon needs to be analyzed at grass-roots level. A shopkeeper from my village comes to mind. He told me that he sells PTCL internet cards grossing about Rs 9,000 every day. There are several other such shops in the village. That means that just in one village, the total sale of PTCL internet cards is up to 50,000 rupees. This consumer item was not present five years ago, which means hundreds of computers have been bought in the village recently. Furthermore, if such luxury products are making such huge profits for village shops, traders throughout the country must be making much larger profits selling essentials every day. One of the indicators of booming business in our village is that the United Bank branch in the village is doing very well, according to its manager.

There are thousands of such villages in the country, and that gives one an idea of the mammoth growth of rural markets. Such an undocumented economy is not even factored in estimating the economic growth of the country. From these supposedly marginal markets, one can extrapolate the profits of the corporate sector in towns and cities.

It may be astounding for some that Pakistan's banking sector is considered fourth in profitability in the entire world. Producers of other major industrial and agricultural products are also making huge profits. Cement, fertilizer, automobile, construction and telecommunication industries are doing extremely well. Other than the textile industry, which has been hit by power shortages, there is hardly any manufacturer or importer/exporter of any kind of goods who is not making money. The stock markets look at the profits of these industries and price them accordingly. Therefore the claims of Pakistan's economic growth are not a fairy tale. The evidence is out there in the market.

The government is also like a large corporation whose income depends mainly on tax revenue. Most of the goods and services (such as roads, defense, education and health) provided by the government are public goods which are not priced directly. The government has to price its public goods through direct taxes on income and sales, or indirectly. Following a certain brand of capitalism, countries like Pakistan and the US are not collecting enough taxes to cover the cost of public goods. They have failed mainly in collecting direct taxes on income. While Pakistan cannot implement an appropriate tax collection mechanism because of corruption, the US has leaned towards favoring high income groups and ended up in a jam. The net result is the same: the rich are getting richer, appropriating most of the new wealth generated....

Riaz Haq said...

Here's interesting data on GDP of Indian states...look at the per capita incomes of Chadigarh, Punjab and Haryana and compare with West Bengal:

Chadigarh Rs. 140,073

Punjab Rs. 78,594

Haryana Rs. 109,064

West Bengal Rs. 55,222

Riaz Haq said...

According to World Values Survey done by two Swedish researchers, India, Jordan, Bangladesh and Hong Kong by far the least tolerant.

In only three of 81 surveyed countries, more than 40 percent of respondents said they would not want a neighbor of a different race. This included 43.5 percent of Indians, 51.4 percent of Jordanians and an astonishingly high 71.8 percent of Hong Kongers and 71.7 percent of Bangladeshis.

Unfortunately, the Swedish economists did not include all of the World Values Survey data in their final research paper. So I went back to the source, compiled the original data and mapped it out on the infographic above. In the bluer countries, fewer people said they would not want neighbors of a different race; in red countries, more people did.

Pakistan, remarkably tolerant, also an outlier. Although the country has a number of factors that coincide with racial intolerance – sectarian violence, its location in the least-tolerant region of the world, low economic and human development indices – only 6.5 percent of Pakistanis objected to a neighbor of a different race. This would appear to suggest Pakistanis are more racially tolerant than even the Germans or the Dutch.

Riaz Haq said...

Here's a Dhaka Tribune report comparing Bangladesh, India and Pakistan:

South Asia is one of the fastest growing regions of the world and is home to one-fifth of the global population. India, Pakistan and Bangladesh, the three largest economies of the region, hold the key to lifting several millions out of the vicious poverty cycle into economic prosperity. Although traditionally India and Pakistan generated the most interest around the globe,

Bangladesh has come into the spotlight over the past decade with drastically improving social indicators and a growth rate of around 6% throughout the financial crisis and global recession.

So how has the Bangladeshi economy performed over the past decade compared to the Indian and Pakistani economies?

The simplest measure of economic well-being of a country is its GDP per capita which is a measure of the value of total goods and services produced in a country divided by the total population. From the graph below, one can see that all three nations have more than doubled their GDP per capita with India and Pakistan bringing larger absolute increase compared to Bangladesh.

Sadly, Bangladesh continues to remain poorer than India and Pakistan with the gap increasing over the decade and the gaps in absolute terms have more than doubled with India and Pakistan (see graph 1).

A much more dynamic performance of the economy can be seen from observing the trend in the economic growth rate of the three nations. The Bangladeshi economy maintained a near constant growth rate of around 6% throughout the decade compared to the large gyrations in growth rate of India and Pakistan and it managed to do so throughout the global financial crisis of 2008-12.....
Long term growth potential in an economy can usually be seen from gross savings (% of GDP). Gross savings is gross national income and net transfers less total consumption in the economy. Saving in an economy is important as it in turn provides internal fund for borrowing and investment in the economy.

Bangladesh did manage to attain the highest gross savings as a proportion of GDP by 2011. It saved over 30 cents for every $1 of goods and services produced from year to year since 2003. This broadly shows that the country has a large potential to bring about significant investment from its own fund just like India and unlike Pakistan which saw a drastic fall in gross savings over the decade (see graph 4).

However, capital formation has been rather sluggish in Bangladesh despite growth in savings. Gross capital formation (Gross domestic investment) as a proportion of GDP remained constant at 25% throughout the decade unlike India, which increased it significantly. This shows that, in general, Bangladesh has been building less infrastructure and investing less in industries than it can, something that the government needs to take look into account.

Bari said...

Pak GDP per cpaita is indeed higher than BD -- but given how fast BD textile sector is developing(still) -- things will look different in 3 years

Riaz Haq said...

Bari: "Pak GDP per cpaita is indeed higher than BD -- but given how fast BD textile sector is developing(still) -- things will look different in 3 years"

Textile growth in BD is the result of US and European cos hopping to cheaper and cheaper locations to exploit extreme poverty and non-existent safety standards---hence the worst ever disasters in BD factory building collapses and fires last year and this year.

Being among the poorest and least developed countries of the world as defined by UN and WTO, BD also gets special preferences called GSP+ for exports.

Riaz Haq said...

The observatory of economic complexity at MIT ranks countries by the level and diversity of trade in terms of products and partners. It ranks Pakistan at 81, well ahead of BD at 104.

HopeWins Junior said...

New Article on 1971:

Riaz Haq said...

I think JI leader Abdul Quader #Molla's real "crime" was that he opposed the creation of #Bangladesh and supported #Pakistan in 1971 war. There have been very serious concerns by Int'l Bar abt fairness of #Bangladesh courts. …

Sarmila Bose on 1971 pictures of dead West #Pakistanis deliberately mislabeled as #Bengalis:

UN HR chief Navi Pillay says Molla's trial "did not meet international standards". …

Farhat said...

The military crackdown in EP on March 25 was undertaken to stop the slaughter and rape of non-Bengalis and pro-government Bengalis undertaken by AL militants and to save the federation from breaking apart. While it achieved its short-term objectives, in reality it lost the first battle of united Pakistan. Thereon, it was a downhill journey. Had the military action not been undertaken, the AL with the help of East Bengal Regiments and East Pakistan Rifles and Police together with ex servicemen and armed infiltrators from India would have unleashed its battle plan which was to go into effect on the morning of 26 March to forcibly takeover EP.
Besides addressing political grievances, Yahya Khan went a step ahead of Ayub Khan to address inter-wing economic disparities and gave out categorical orders to narrow down the gap between the two wings. 52.5% resources were allotted to the eastern wing as against 47.5% to West Pakistan. Capital inflow in East Pakistan increased from 40 to 75%, while the investments grew from 39 to 54%. Rs. 231 crores was allocated for development in public sector as against Rs. 190 crores for West Pakistan. The development loans to East Pakistan that stood at Rs. 28.77 crore in 1957-58 increased to Rs. 210.41 crore in 1970-71, that is, an increase of 631%. West Pakistan received only Rs. 126.07 crore loans in that year. Grants in aid from the government to East Pakistan grew from Rs. 7140 crore in 1948-49 to 1958-9 to that of Rs. 293.89 during 1958-59 to 1970-71; that is, an increase of 312%. In case of western wing, the increase was only 202%.
By 1971, East Pakistan had 600 major industries. These included 77 jute mills, 4 paper mills, 2 paper-board/newsprint mills, 20 sugar mills, 42 cotton mills, one huge steel mill, a petroleum refinery, one oil refinery, 2 Rayon mills, about 30 match factories, several oil and vegetable ghee mills, two fertiliser factories, leather tanning factories and a cement plant. Tea production had shot up considerably to the extent that East Pakistan met the needs of West Pakistan at a higher rate. East Pakistan became self-sufficient in sugar, fertiliser and tea and started exporting tea, jute items, tanned leather, paper and newsprint. Sugar production increased from 23000 tons to over one lakh tons in 1970. Out of 23 match factories in the country, 20 were in East Pakistan. Consequently, West Pakistan had become a captive market instead of East Pakistan. In the field of education, there were five universities, three colleges and six schools of engineering, eight polytechnics, five colleges and several schools of medicine, dozens of hospitals and more than 200 degree colleges for arts and science. It had more than 3000 miles of metalled road and its power capacity exceeded 100,000 KW.
Two modern ports were built at Chittagong and Chalna. Besides, a welfare-oriented scheme was put into operation in East Pakistan in middle 1970 by virtue of which commercial banks provided loans to the depressed class. Head offices of the House Building Finance Corporation, Refugee Rehabilitation Finance Corporation and IDBP were shifted to Dacca in 1970. With this kind of development in all the fields at a massive scale, it was indeed preposterous on part of the vested groups within East Pakistan to sing the song of exploitation by West Pakistan. Having laid a sufficiently strong economic base, it would have achieved greater political strength with improved degree of provincial autonomy. By all standards, East Pakistan would have gained by keeping within the federation of Pakistan. Bangladesh’s prosperity owes a great deal to Ayub Khan’s reforms. Barring the hard core Awami League members, even to this day the people of Bangladesh hold Ayub Khan in high esteem.
The falsehood of the manipulated grievances was exposed within the first two years of creation of Bangladesh. The agonising truth dawned upon the people of Bangladesh that they had been cheated and duped by Mujib and AL.

Riaz Haq said...

World Bank's 2012 data show Bangladesh's PPP GDP is $372 billion and Pakistan's PPP GDP at $795 billion is more than twice Bangladesh's.

Khalid Gorsi said...

Dear Mr. Haq,
Many thanks for such a wonderful blog, it is enlightening and balanced.
"Dead Reckoning" is a book some of the commenters need reading.

Anonymous said...

If both countries economies grow at current levels for the next few years then I think we (Bangladesh) should be able to overtake Pakistan in the next few years.

The estimates for Pakistan for 2014 is $245bn nominal GDP and $576bn PPP while Bangladesh is projected to grow to $175bn nominal and $419bn in PPP for the same year. But since Bangladesh is and has been growing at 6% and Pakistan around half that, a few more years of those respective rates should result in Bangladesh eclipsing Pakistan within a matter of years.

Riaz Haq said...

Bangladesh in crisis by Raza Rumi

The recent political turbulence sweeping Bangladesh has cost more than 100 lives since January and job strikes have brought near standstill to Dhaka, the country’s capital and economic nerve center. Stretching back to independence, the country’s divorce with Pakistan has left a trail of political instability resulting from frequent military interventions, high-profile political assassinations and a dysfunctional democratic order that revolves around two political parties. Atop these bipolar camps are two women known as the ‘Begums’ — the current Prime Minister Sheikh Hasina of the Awami League (AL) and the opposition leader Khaleda Zia. The former is the daughter of the country’s founder and national hero Sheikh Mujib ur Rehman, and the latter the widow of the first military ruler Gen Zia ur Rehman, who was popular with the conservative sections of society.

On January 5, the date coinciding with the first anniversary of 2014 elections, the opposition called for countrywide demonstrations under the slogan ‘Murder of Democracy Day’. The government responded with an iron hand by arresting members of the opposition parties and banning the demonstrations. In reaction, the opposition called for an indefinite blockade of road and railways leading to Dhaka. The demonstrations by the opposition and counter-demonstrations by the ruling AL party have since continued and many have turned violent. The government confined Zia for more than two weeks and accelerated the prosecution of corruption charges against the opposition leader. Members of the JeI have also been pressurized through pending court cases for the party’s support to Pakistan during the 1971 War of Liberation. Since January, 7000 opposition activists and supporters have been detained by the police. More than 100 people have lost their lives during street battles, arson attacks, and bombing of the buses while 20 opposition supporters allegedly died through extra-judicial methods.

Civil society in Bangladesh is deeply worried. The last time such a political deadlock happened was in 2007 when the military intervened. Nurul Amin, a political analyst at North South University in Dhaka, says the hardliners in both camps “think no compromise is possible.” Similarly, Citizens for Good Governance say the two leaders are acting as “partisan authoritarians,” who are dividing the country “into two warring camps.” Human Rights Watch has also expressed concern, saying “violent crimes being committed by some members of the opposition cannot justify killings, injuries, and wrongful arrests by the government.”

Economic and Government Woes

In the midst of this political turbulence, Bangladesh’s economy has been rocked with a communications blockade, urban violence, and a prevailing sense of uncertainty in the country. The hardest hit is the $24 billion a year ready-made garments industry. The supply chain of the industry has been disrupted. The Federation of Bangladesh Chamber of Commerce and Industries (FBCCI) maintains that the garments industry has already incurred a loss of over $3.9 billion while the retail sector may have suffered losses to the tune of $2.1 billion. The agriculture sector of the country has also been affected to the tune of $533 million in recent weeks as farmers are not able to move their products to the cities due to the blockades. Moody’s downgraded the country’s credit rating because of the ongoing political violence.

Riaz Haq said...

#Indian #Muslims in West Bengal poorer, less literate and less healthy than #Hindus …

Muslims, who form 27.01 per cent of West Bengal’s population, “constitute a very large proportion of the poor” in the State, Professor Amartya Sen said.

He was releasing a voluminous report on the condition of Muslims in West Bengal titled ‘Living Reality of Muslims in West Bengal.’

“The fact that Muslims in West Bengal are disproportionately poorer and more deprived in terms of living conditions is an empirical recognition that gives this report an inescapable immediacy and practical urgency,” Prof. Sen said, releasing the report with long chapters dedicated to education, health, economic conditions and gender of Muslims of Bengal who constitute a majority in 65 of 341 blocks in the State.

The survey — the most extensive one on Bengal’s Muslims — was carried out in 325 villages and 75 urban wards from a sample of 81 community development blocks and 30 municipal bodies. The 368-page report was produced by two Kolkata-based research organisations, Association SNAP and Guidance Guild, in association with Prof. Sen’s trust, Pratichi India.

Low literacy rate
Though the ruling Trinamool Congress (TMC) has claimed to have played a significant role in the uplift of Muslims in Bengal since 2011, the report points to little improvement in areas such as literacy, health or participation in work. For example, Muslims have a literacy rate seven per cent lower than the State’s average.

“Around five per cent of those who discontinued education admitted lack of motivation as the factor behind dropping out of school as they did not see any future benefits from education,” the synopsis said. However, the report has not named any political party or held any government institution responsible.

In the health sector, the condition of, Muslims is no better and the report observes on the basis of State government data and field-level survey that “when Muslim population percentage increases in the blocks, the hospital facilities dwindle down.”

As a result “almost double the number of hospital beds is available in blocks with less than 15 per cent population share of Muslims in comparison with blocks having 50 per cent or above of (Muslim population).” Such discrimination is underscored in nearly every page of the report.

While in the entire report it was never said the ruling party in the State is responsible for the discrimination against the main minority of Bengal, it is expected to take political colour as it has been released only months before the Assembly elections.

Muslim bodies differ
One of the most well-spread cadre-based Islamic political organisation, Jama’at e Islami-Hind (JIH), West Bengal, which does not contest elections or is affiliated to any political party, believe that Muslims of Bengal have “moderately benefited” during the TMC rule. The media and public relations chief of JIH, Masihur Rahman, underscored how the minorities have benefited during TMC’s rule, without referring to the report.

“Firstly, the number of Muslim students clearing West Bengal Civil Services is much higher than in earlier years. It is 24 this year. Secondly, Aliah University, started during the Left’s time, was given a grant of Rs. 300 crore and many hostels for Muslim girls were built in the districts,” said Mr. Rahman.

Riaz Haq said...

#Drought-hit India's plan to divert Ganges and Brahmaputra river water will hit #Bangladesh hard

India is set to start work on a massive, unprecedented river diversion programme, which will channel water away from the north and west of the country to drought-prone areas in the east and south. The plan could be disastrous for the local ecology, environmental activists warn.

The project involves rerouting water from major rivers including the Ganges and Brahmaputra and creating canals to link the Ken and Batwa rivers in central India and Damanganga-Pinjal in the west.

The minister of water resources, Uma Bharti, said this week that work could start in a few days. A spokesperson from her department told the Guardian that the government is still waiting for clearance from the environment ministry.

India's drought migrants head to cities in desperate search for water
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The project will cost an estimated 20tn rupees (£207bn) and take 20 to 30 years to complete.


Scientists say the government needs to do a full audit of its existing water resources and analyse the environmental impact of linking rivers before pressing on with its plans.

Dr Latha Anantha, from the River Research Centre, said the project could be catastrophic for India’s river-dependent ecology. “The government is trying to redraw the entire geography of the country,” she said. “What will happen to communities, the wildlife, the farmers who live downstream of the rivers? They need to look at a river not just as a source of water, but as an entire ecosystem.

“They will have to dig canals everywhere and defy the ecology of the country. It is a waste of money and they have overestimated how much water there is in the rivers they want to divert.”

Governments have toyed with the idea of redrawing river routes since the 1800s, when the country was still under colonial rule. The resulting disputes still play out today. The Mullaperiyar dam, which diverted water from the southern state of Kerala to neighbouring Tamil Nadu, was built in the late 1800s, and was considered at the time to be one of the most extraordinary feats of engineering ever achieved. Now, the two state governments continue to dispute control of the dam.


The river-linking project could lead to further disputes not just between states, but with the neighbouring government of Bangladesh. India’s plans will affect 100 million people in Bangladesh, who live downstream of the Ganges and Brahmaputra and rely on the rivers for their livelihoods. On Monday, Bangladesh’s minister of water, Nazrul Islam, urged the Indian government to take Bangladesh’s water needs into considerationnoting that 54 of 56 Indian rivers flowed through the country.

“India is giving a lot of importance to its own people hit by drought,” he said, “but it must not ignore our rights.”

The Indian water resources ministry spokesperson said: “The Indian government is addressing Bangladesh’s water problems too,” adding that ministers from the two countries had discussed the water issue in the past. “We don’t have the details, but we will ensure Bangladesh gets its share of water too.”

A proud bangladeshi said...

What is the position of Brother Riaz now in 2019 ?
Is he still obsessed with a strong antibangladeshi emotions , Skewed ideas and strong denial of east pakistans political and economic exploitation by pak regime for 23 years ?