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Bangladesh
Formerly East Pakistan, Bangladesh came into being only in 1971. It is one of the world's most densely populated countries, with its people crammed into a delta of rivers that empties into the Bay of Bengal. Poverty is deep and widespread. However, Bangladesh has reduced population growth and improved health and education.
With economic growth rates averaging five per cent for the past decade and noteworthy progress in agriculture, health, and education, Bangladesh is considered a well-performing transitional development country. The government of Bangladesh has increased its investments in education, health, food security, and other social services to reduce poverty by roughly one per cent per year.
Despite being one of the most densely populated countries in the world, Bangladesh remains largely dependent on an agrarian economy. Nearly half of Bangladeshis live below the national poverty level of $1 per day. Natural disasters, including annual flooding, arsenic contamination, and seismic risk, compounded by substandard and unavailable public services, condemn millions of people to misery and misfortune.
The major employer is agriculture, but it is unable to meet the demand for jobs. Thus many Bangladeshis - in common with citizens from other countries in the region - seek work abroad, sometimes illegally. The country is trying to diversify its economy, with industrial development a priority.
Overseas investors have pumped money into manufacturing and the energy sector. Onshore and offshore gas reserves hold out some chance of future prosperity. There has been a debate about whether the reserves should be reserved for domestic use or exported. Some international energy companies are involved in the gas sector.
Bangladesh spent 15 years under military rule and, although democracy was restored in 1990, the political scene remains volatile. Political tensions have spilled over into violence; hundreds of people have been killed in recent years. Attacks have targeted opposition rallies and public gatherings. Senior opposition figures have also been targeted.
Regrettably, the deterioration of law and order, government ineffectiveness, and large-scale corruption reveal governance issues that could derail the country's fragile progress, thwart democratic development, and threaten stability. At the heart of the country's governance conundrum is the longstanding political impasse between the two major parties.
A combination of generous international aid since 1990, a dynamic civil society culture and sympathetic government policies has however created a generally positive environment for development indicators, none more so than gender equality in school enrolment, a rare achievement in South Asia. In some areas such as this, progress is more rapid than in neighbouring India or Pakistan.
Widespread poverty has its most visible impact in children’s health; 48 per cent of children under five are underweight and 43 per cent have stunted growth. Standards are worse in rural areas where health services are either non-existent or unaffordable to poor families. Lack of robust healthcare in Bangladesh has also contributed to concerns about HIV infection which has increased threefold in the last 6 years.
Many Bangladeshis feel that the scale of foreign aid may itself feed a culture of dishonesty – through its tendency to create a micro-economy managed by NGO staff, politicians, bureaucrats, consultants and contractors - all wrestling with the potential conflict of personal benefit in the name of development and poverty alleviation. Some NGOs have been accused of taking money from donors whilst doing little for the intended beneficiaries and not being held accountable.
The largest donors to Bangladesh in order are Japan, the World Bank, the Asian Development Bank, the United Kingdom, the United States, the European Union, and the Netherlands. USAID coordinates with multilateral finance institutions and with the United Nations Family Planning Agency, United Nations Children's Fund, International Labor Organization, World Food Programme, United Nations Development Programme, and World Health Organization.
Gross Domestic product (GDP) is projected to grow by 6.5 per cent in FY2007, down from 6.7 per cent last year. Growth in agriculture is likely to moderate from the post-flood high growth of preceding year. The industry sector, lifted by strong external demand, continues to show robust performance. Bangladesh, however, faces several downside risks including political disruption and infrastructure constraints, particularly power shortage.
Weak revenue collection poses considerable risk to fiscal sustainability. Despite tight monetary policy, high money and credit growth continues. Aided by robust growth in exports and workers’ remittances, the current account shows higher surplus even with strong growth of imports. Inflationary pressures have moderated with food prices easing.
Sri Lanka
Nestling off the southern tip of India, the tropical island of Sri Lanka has beguiled travellers for centuries with its palm-fringed beaches, diverse landscapes and historical monuments. But for nearly two decades, the island was scarred by a bitter civil war arising out of ethnic tensions. On paper, a ceasefire signed in 2002 remains in place, but it has been undermined by deadly violence
Known as "Serendip" to Arab geographers, the island fell under Portuguese and Dutch influence and finally came under British rule when it was called Ceylon. There is a long-established Tamil minority in the north and east. The British also brought in Tamil labourers to work the coffee and tea plantations in the central highlands, making the island a major tea producer.
Sri Lanka prides itself for possessing the most advanced development indicators in South Asia. The country is known for the strides it has taken in reducing levels of maternal and infant mortality through an effective network of community health workers. Literacy levels for both sexes are close to 100 per cent and life expectancy high. The net enrolment ratio in primary education is above 95 per cent and immunisation coverage is successful with 88 per cent of one-year-olds immunised against measles and polio.
Despite the strong track record, there are deep regional disparities across the MDG indicators associated with income, poverty and child nutrition. Firstly, these welfare standards are not matched by adequate livelihoods, with 23 per cent of Sri Lankans living below the poverty line and malnutrition affecting 29 per cent of children. A recent World Bank poverty assessment report states that rural areas account for 80% of the population and about 88 per cent of the poor.
Much of the country’s wealth and economic activity is concentrated in the Western province where growth is two to three times faster than the rest of the country. The Millennium Development Goals (MDGs) for poverty and hunger are assessed as “not on track”. Swathes of the country have been largely cut off to government agencies for over 20 years and reliable human development data for the conflict regions in the north and east is not yet forthcoming.
The devastation of the tsunami of December 2004 clearly represents a serious setback to development in the affected coastal regions, already home to some of the country’s poorest communities. Ironically, post-tsunami assessments of relief requirements have provided detailed costings for long-term development, a feature typically absent from MDG reports, Sri Lanka being no exception.
2006 has seen the worst violence in Sri Lanka in the last four years. Efforts to cajole both parties into a peace settlement have proved futile, with signs of a return to civil war. Although economic growth remains strong, concerns are emerging over monetary stability. Real GDP growth is forecast to average six per cent a year in 2007-08, and the current-account deficit will average 1.8 per cent of GDP over the same period.
The Central Bank of Sri Lanka raised policy interest rates by 0.5 percentage points taking the repurchase rate to 10.5 per cent. The move came after figures showed that the Colombo Consumer Price Index was up by 20.5 per cent year on year in January, although inflation eased slightly in February. The Economist Intelligence Unit has revised up its forecast for average annual inflation in 2007 from 9.3% to 13.2%. Given that real interest rates are still negative, it is likely that further interest-rate rises will be needed to bring inflation under control.
