WHEN Bangladesh won independence from Pakistan in 1971, it was much poorer than the country it left. Industry accounted for only 6-7% of its GDP, compared with over 20% in Pakistan.
Last month revealed a remarkable turnaround. Bangladesh’s GDP per person is now higher than Pakistan’s. Converted into dollars at market exchange rates, it was $1,538 in the past fiscal year (which ended on June 30th). Pakistan’s was about $1,470.
Strange as it may sound, Bangladesh jumped ahead because of an advance in Pakistan. On August 25th Pakistan released the results of its census, updating earlier population estimates. They showed that the country has 207.8m people, more than 9m more than previously thought. It may now have the fifth biggest population in the world, surpassing Brazil’s. But the new count also lopped 4-5% off Pakistan’s GDP per person, the arithmetic consequence of revealing so many more people– last census was conducted 19 years ago.
A similar arithmetic consequence of Pakistan’s per capita income due to the new population count emerges as per capita income measures the average income earned per person in a country in a specified year. It is calculated by dividing the country’s total income by its total population– it’s almost 208m instead of 190m as was estimated for lack of census for two decades.
A caveat should be noted. A dollar stretches further in Pakistan than in Bangladesh because prices in the former tend to be lower. So Pakistan’s $1,470 per person actually has more purchasing power than Bangladesh’s $1,538.
Bangladesh’s annual growth has averaged more than 6% over the past ten years and has run above 7% over the past two while Pakistan’s growth rate last year was 5.3$. Industry accounts for 29% of Bangladesh GDP. Pakistan’s industry accounts for 21% of its GDP, according to several experts.
Also, Bangladesh foreign exchange reserves stand at $33.60 billion as of end of August. Pakistan’s forex reserves stand at roughly $14.6 billion as of first week of September.
A country that once lacked cloth for shrouds now exports more ready-made garments than India and Pakistan combined. Working conditions are still far worse than they should be. They are also far better than they once were.
(Based on original report in The Economist)