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    Term Paper Topic: Economic Development of Bangladesh and India: A Comparative Analysis

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    Term Paper Topic: Economic Development of Bangladesh and India: A Comparative Analysis

    Uploaded by

    Sanjida
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    19161047

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    Term Paper Topic: Economic Development of Bangladesh and India: A Comparative Analysis

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    Sanjida

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    Term Paper Topic

    Economic Development of Bangladesh and India: A Comparative


    Analysis

    Course Name: International Trade

    Course code: PA 4839

    Submitted to:

    Lecturer Md. Robiul Islam

    Faculty of Department of Public Administration

    Bangladesh University of Professionals

    Submitted by:

    Sadia Arin

    ID:19161047

    Department of Public Administration

    Bangladesh University of Professionals


    Abstract

    Bangladesh passed a significant test amid the Covid-19 outbreak and precisely 50 years after it
    gained independence. Last year, the South Asian economy was removed from the UN's list of the
    world's least-developed countries. Its national GDP per capita has surpassed that of neighboring
    India in recent years. A hard-currency shortfall that required a rescue from the International
    Monetary Fund abruptly ended the celebrations, though. Bangladesh briefly outperformed India
    in terms of per capita income. This information sparked a frenzy of media discussion about how
    India ought to have drawn the proper conclusions from Bangladesh's rapid economic
    development. The ragged macroeconomic margins of many nations emerged as the world was
    engulfed by a pandemic, followed by the conflict in Ukraine. One of them was Bangladesh. In
    order to rescue Bangladesh from a dire balance-of-payments position that was made worse by
    exorbitant global energy prices, the government of Bangladesh had to think about approaching
    the International Monetary Fund (IMF).
    Introduction

    In 2007, just 14 years ago, Bangladesh's per capita income was only half that of India. And it
    overtook India the previous year. Bangladesh has had a prosperous second decade of the
    millennium, which the other developing market nations can only enviously. Just keep in mind
    that the world was still struggling to recover from Lehman's crash-landing and the start of the
    world financial crisis in 2010. A crisis of sovereign debt struck the European economies a year
    later, with the potential to develop into a full-blown banking catastrophe. The infamous "taper
    tantrum" occurrence occurred in 2013 as if that weren't enough turmoil for the world economy.
    Ben uttered the word "taper" nonchalantly. But keep in mind that he simply meant to slow down
    the rapid expansion of the money supply.

    The world's financial markets erupted at the mention of this term, and capital fled emerging
    market economies in a fit of fear. India's economy was listed as one of the "fragile five."
    Exchange rates fell, inflation reached double digits, interest rates rose, and bank loans started to
    default in significant numbers. All around bad news for the macro economy, and to top it off, a
    string of corruption allegations that truly dampened investor spirits. After that, India's economy
    steadied, a new government was elected, and foreign investment resumed, however, the 2016
    demonetization was another needless disruptive negative shock. Since then, there have been
    other reforms, including the implementation of the Goods and Services Tax, a new insolvency
    law, and others. But the truth is that India's economic growth rate has been steadily declining for
    the past five years, and the Covid year has caused it to enter a severe recession.
    Analysis

    Bangladesh has expanded its social safety net, made investments in infrastructure, and managed
    its debt and finances carefully since 2009 in order to ensure macroeconomic stability. Over the
    past 40 years, Bangladesh's economy has grown steadily, outpacing South Asia's in terms of
    gross domestic product growth; in 2020, Bangladesh will expand by 3.5% while South Asia
    would shrink by 6.58%. Between 2010 and 2018, the contribution of industry increased from less
    than a fifth to more than a third of Bangladesh's GDP, while agriculture's share declined from a
    third to less than 15%. Since 1980, manufacturing has increased its GDP share by twofold, and
    since the 1990s, exports have increased 20-fold to reach over US$40 billion. The economy has
    also been helped by high remittances from low-wage workers, which totaled US$16.4 billion in
    2019. Bangladesh is anticipated to continue to outperform India in terms of per capita GDP until
    2026 because to robust exports, remittances, and agricultural expansion. India's economic output
    decreased to US$2.66 trillion from US$2.87 trillion in 2020, while its per capita GDP decreased
    to US$1,929 from US$2,098. In the same year, Bangladesh, which has a $355 billion economy
    and a per capita GDP of $1,961 after experiencing 6% growth over the previous 15 years,
    surpassed India.

    Bangladesh's GDP growth has been increasing since 2004, but it wasn't until India's growth
    began to slow down in 2017 that Bangladesh was able to surpass its larger neighbor. Before the
    2008 debt crisis, Bangladesh's per capita GDP was half that of India, but by 2014 that percentage
    had increased to 70%. India's GDP shrank 7.3% in 2020 as a result of COVID-19, whereas
    Bangladesh's expanded 3.5%. In terms of fiscal deficit, merchandise trade balance, employment,
    state debt, and investment-to-GDP ratios, Bangladesh currently performs better than India.
    Through its human development initiatives, notably in the area of girls' education, fertility rates
    and early marriages have decreased.

    On several human development metrics, including life expectancy, fertility, and child nutrition,
    Bangladesh has outperformed India. Compared to India's uneven distribution, the advantages of
    its economic growth are spread among a larger population. Because of this inclusive growth,
    living standards have increased, which has improved access to healthcare and education.

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