This op-ed that I wrote was published in the newspaper Dhaka Tribune on December 23, 2015.
As Bangladesh embarks on a new era of being a lower-middle income nation, some questions remain about what steps should be taken next to further develop the country. Complicating matters are the large differences in living conditions and economic opportunities between the urban and rural areas of Bangladesh.
Just travelling a few miles outside of the main cities of Dhaka or Chittagong shows stark differences between rural and urban areas of Bangladesh. The government needs to do a balancing act between Dhaka, the other urban areas of Bangladesh, and the rest of the country to ensure that there is a balanced economic growth across the country.
The labour force of Bangladesh is 77 million and growing, according to the World Bank. This can be both a blessing, and a curse. It is a blessing as it provides a cheap supply of labour who can work with low pay and this factor can attract industries that require a large pool of unskilled workers.
However, unskilled workers will earn a low pay, and the only way to develop the nation is to ensure that the labour force becomes productive and demands a higher pay. Bangladesh needs to create 21 million jobs in 10 years, according to Kaushik Basu, the chief economist of the World Bank.
Herein comes the dilemma. How can Bangladesh continue its growth trajectory if it has to rely on attracting industries that only require low-skilled workers? If the country tries to attract industries that require high-skill workers, it will only employ a small fraction of the workforce, and the unskilled workers will be left behind, creating uneven growth.
Moreover, a recent article in The Wall Street Journal indicates the assumption that manufacturing-led growth is a feasible strategy for poor countries to achieve high-income status may not be so true anymore. Many developing countries are experiencing a fall in the contribution of manufacturing sector to GDP according to the article. A number of reasons were given, but one big reason is the rise of China as the world’s manufacturing hub.
As Bangladesh is currently over-specialising in low-end manufacturing of clothes, it is possible that the country may not move to higher-end manufacturing, and may even see the manufacturing sector shrink in the future.
So what hope does a country like Bangladesh have to achieve upper-middle income status in a reasonable amount of time? Improving infrastructure, such as building seaports or a new airport, can help to improve bottlenecks to trade and employ thousands, but will take years to build and decades to realise the full economic impact.
As mentioned above, there is a large pool of unskilled workers that need to be employed, along with the growing number of skilled workers.
While looking at projects that can improve the long run growth prospects of the country, Bangladesh needs to look into steps that can create new employment opportunities. Besides implementing large-scale infrastructure projects, the government can focus on increasing employment in the service sector. It can encourage local transport companies to trans-ship goods from one part of India to another through Bangladesh.
Online payment sites, such as PayPal, can be allowed to operate in Bangladesh so that small manufacturers can sell their products through online vendors. Non-resident Bangladeshis should be courted to invest in Bangladesh.
Students should be encouraged to be entrepreneurial, and all kinds of facilities, like subsidised office-space for start-ups, can be given to recent college graduates to start their business. But whatever the steps the country takes, there needs to be a balance in employment opportunities so that in the short-run, both skilled and unskilled workers can gain employment to ensure an even development in the country.
Friday, December 25, 2015
Thursday, December 17, 2015
Multidimensional Human Opportunity Index
My paper, co-authored with my colleague Shabana Mitra (Indian Institute of Management-Bangalore) was recently accepted for publication at the journal "Social Indicators Research." The paper, titled Multidimensional Human Opportunity Index, is an extension of the Human Opportunity Index (HOI) developed by the World Bank.
The explanation of the HOI is presented in my earlier blog post. In a nutshell, the HOI first measures the probability of access the children of a country have to a certain basic economic service (such as schooling, clean water, etc.). Let this be M. In the next step, the measure creates bins based on certain characteristics of children that are beyond their control, like their gender, family economic condition, residence, gender of head of household, and other socio-economic factors. In the next step, the probability of access to that service by children in each bin is calculated. The probability of those bins that are below M are selected (if each bin is x, then p(x) is the probability of access for bin x) and the value of HOI is said to be the following:
HOI = M - E(M - p(x) | x is a bin that has access lower than M)
where E(M - p(x) | x is a bin that has access lower than M) is the average of the difference between M and p(x).
In our paper, Multidimensional Human Opportunity Index (MHOI), we note that a child needs a bundle of basic services for proper growth and development. Besides access to clean water, a child needs access to school, access to healthcare, access to electricity and access to good transportation facilities (this list is not exhaustive). If one of them is absent, it can hinder the proper development of the child. For example, school access would not be of much value if the child is sick and does not have a good healthcare facility nearby, or if the child does not have access to clean water. So, instead of looking at the basic services piecemeal, we create a bundle of basic services that are deemed essential to a child. We then measure the probability of access a child has to that bundle of basic services, and then use the similar method to calculate HOI to calculate MHOI. A higher value of MHOI indicates that across the country, there is a more equal distribution of the bundle of services deemed essential for the development of a child.
We use data from Nepal and Bhutan to show how to apply our data to measure MHOI. We find that only about two-thirds of households in Bhutan and one-half of households in Nepal have access to the bundle of basic services that are essential to the development of a child in 2011; although we do find that the MHOI indicator has been improving in both Nepal and Bhutan for the past 10 years. The MHOI of Bhutan is much higher than that of Nepal, but Nepal is catching up.
Such indices can help us evaluate the overall effectiveness of provision of basic services to the population. It can help countries measure whether they are in path to achieving the Sustainable Development Goals of the UN.
The explanation of the HOI is presented in my earlier blog post. In a nutshell, the HOI first measures the probability of access the children of a country have to a certain basic economic service (such as schooling, clean water, etc.). Let this be M. In the next step, the measure creates bins based on certain characteristics of children that are beyond their control, like their gender, family economic condition, residence, gender of head of household, and other socio-economic factors. In the next step, the probability of access to that service by children in each bin is calculated. The probability of those bins that are below M are selected (if each bin is x, then p(x) is the probability of access for bin x) and the value of HOI is said to be the following:
HOI = M - E(M - p(x) | x is a bin that has access lower than M)
where E(M - p(x) | x is a bin that has access lower than M) is the average of the difference between M and p(x).
In our paper, Multidimensional Human Opportunity Index (MHOI), we note that a child needs a bundle of basic services for proper growth and development. Besides access to clean water, a child needs access to school, access to healthcare, access to electricity and access to good transportation facilities (this list is not exhaustive). If one of them is absent, it can hinder the proper development of the child. For example, school access would not be of much value if the child is sick and does not have a good healthcare facility nearby, or if the child does not have access to clean water. So, instead of looking at the basic services piecemeal, we create a bundle of basic services that are deemed essential to a child. We then measure the probability of access a child has to that bundle of basic services, and then use the similar method to calculate HOI to calculate MHOI. A higher value of MHOI indicates that across the country, there is a more equal distribution of the bundle of services deemed essential for the development of a child.
We use data from Nepal and Bhutan to show how to apply our data to measure MHOI. We find that only about two-thirds of households in Bhutan and one-half of households in Nepal have access to the bundle of basic services that are essential to the development of a child in 2011; although we do find that the MHOI indicator has been improving in both Nepal and Bhutan for the past 10 years. The MHOI of Bhutan is much higher than that of Nepal, but Nepal is catching up.
Such indices can help us evaluate the overall effectiveness of provision of basic services to the population. It can help countries measure whether they are in path to achieving the Sustainable Development Goals of the UN.
Tuesday, December 8, 2015
University and community partnership
The location of colleges and universities in the US is diverse. There are universities located in downtown, suburbs or even in sparsely-populated rural community. In many cases, these universities operate in a 'bubble' where students and faculty have little interaction with the wider community around them. As members of the local community, universities can provide valuable community service that can reinvigorate neighboring areas that suffer from many adverse socio-economic issues - such as low-quality public school system, high poverty rates, lack of jobs, etc.
A model can be the "Great Cities" program of the University of Illinois - Chicago (UIC). Students and faculty of UIC provide services to improve the neighborhood public school system, provide technical education to school children in underprivileged communities,and help to improve the neighborhood housing quality. Elon University has the "It takes a Village Project" where undergraduate students tutor elementary and middle-school students of local, under-performing public schools. Similar projects have been undertaken successfully in some other universities, and some of the best practices are listed in this link.
Such community involvement by universities can improve the surrounding communities and therefore, should be actively encouraged. Every university should have an office dedicated to community outreach, and should encourage faculty and students undertake projects that benefit the surrounding communities. The experience of community outreach programs should be shared, and the best practices should be adopted by other universities. This can help universities be more accessible to the locals, and locals will feel that the universities are part of their community, instead of being a foreign bubble in their locality.
A model can be the "Great Cities" program of the University of Illinois - Chicago (UIC). Students and faculty of UIC provide services to improve the neighborhood public school system, provide technical education to school children in underprivileged communities,and help to improve the neighborhood housing quality. Elon University has the "It takes a Village Project" where undergraduate students tutor elementary and middle-school students of local, under-performing public schools. Similar projects have been undertaken successfully in some other universities, and some of the best practices are listed in this link.
Such community involvement by universities can improve the surrounding communities and therefore, should be actively encouraged. Every university should have an office dedicated to community outreach, and should encourage faculty and students undertake projects that benefit the surrounding communities. The experience of community outreach programs should be shared, and the best practices should be adopted by other universities. This can help universities be more accessible to the locals, and locals will feel that the universities are part of their community, instead of being a foreign bubble in their locality.
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