Case Discussion Questions LWhat were the principal reasons forthe economic stagnation of Bangladesh after its war for independence\"? 2. Explain i'lCiW the liberalization program in the 19905 enabied Bangladesh to start climbing the ladder of economic progress. What are the main lessons here that can be applied to economic development in other nations? 3. Bangladesh is dependent for its prosperity upon agriculture and textile exports. What are the risks here? How might Bangiadesh diversify its industriai and commercial base? Economic Development in Bangladesh When Bangladesh gained independence from Pakistan in I9i'1 after a brutal civil war that may have left as many as 3 million dead, the US. National Security Adviser, Henry Kissinger, referred to the country as a \"basket case.'u Kissinger's assessment was accurate enough. Al the time, Bangladesh was one of the world's poorest nations. Although most of the country is dominated by the fertile GangesBrahmaputra delta, a lack of other natural resources, coupled with poor infrastructure, political instability, and high levels of corruption. long held the country back. To com pound matters, Bangladesh is prone to natural disasters. Most of Bangladesh is less than 12 meters above sea level. The extensive low-lying areas are vulnerable to tropical cyclones, oods, and tidal bores. Beginning in the mid1990s, however, Bangladesh began to climb the ladder of economic progress. From the early 2000s onward, the country grew its economy at around 6 percent per annum compounded. Today, this Muslim majority country of I60 million people has joined the ranks of lowermiddle-income nations. Poverty reduction has been dramatic, with the percentage of the population living in poverty falling from 44.2 percent in 1991 to \"5.5 percent in 2Dl0, an achievement that raised 20.5 million people out of abject poverty. Today, the country ranks 54th out of the 154 countries included in the World Bank's global poverty database. It has a considerable way to go, but it is no longer one of the world's poorest countries. Several reasons underlie Bangladesh's relative economic success. In its initial post-independence period. Bangladesh adopted socialist policies, nationalizing many companies and subs idizingthe costs of agricultural production and basic food products. These policies failed to deliver the anticipated gains. Policy reforms in the |930s were directed toward the withdrawal of food and agricultural subsidies. the privatization of stateowned companies, nancial liberalization, and the withdrawal of some import restrictions. Further reforms aimed at liberalizing the economy were launched in the l9905. These included making the currency convertible (which led to a oating exchange rate in 2003), reducing import duties to much lower levels, and removing most of the controls on the movement of foreign private capital [which allowed for more foreign direct investment}. The reforms of the |99CIs coincided with the transition to a parliamentary democracy from semi-autocratic rule. Bangladesh's private sector has expanded rapidly since then. Leading the growth has been the country's vibrant textile sector, which is nowthe secondlargest exporter of ready-made garments in the world after China. Textiles account for 30 percent of Bangladesh's exports. The development of the textile industry has been helped by the availability of lowcost labor, managerial skills, favorable trade agreements, and government policies that eliminated import duties on in puts for the textile business, such as raw materials. The Bangladesh economy has also beneted from its productive agricultural sector and remittances from more than ll] million Bangladesh citizens who work in other nations. Bangladesh is also the home of the micronance movement, which has enabled entrepreneurs with no prior access to the banking system to borrow small amounts of capital to start businesses. This being said, the country still faces considerable impediments to sustaining its growth. Infrastructure remains poor: corruption continues to be a major problem; and the political system is, at best, an imperfect democracy where opposition is stied. The country is too dependent upon its booming textile sector and needs to diversify its industrial base. Bangladesh is also one of the countries most prone to the adverse affects of climate change. A one-meter rise in sea level would leave an estimated I0 percent of the country under water and increase the potential for damaging oods in much of the remainder. Nevertheless, according to the U.S. investment bank Goldman Sachs, Bangladesh is one of the 11 lowermiddle-income nations poised for sustained growth