The year 1971 proved to be the worst year in Pakistan’s history. Pakistan fell into civil war and lost its eastern half. The eastern province got independence and become an independent country now known as Bangladesh. Many factors led to this including political, social, and most importantly economic. Politically, the west was given preference and all the power was centered in it. The government’s headquarters were established there and automatically the western population benefitted more than the eastern one due to their proximity to power.
There was a huge imbalance of resources between the east and the west. The 72% investment was being done in the development of the west even though the east was generating 62% of the total revenue of the country. This was visible through the fact that the per capita income of that period, which was 32% higher for West-Pakistan during the period of 1959-60 and 61% during 1969-1970. The reason for this can be both economic growth and a slowdown in the population growth of Bangladesh. Bangladesh’s GDP per capita growth is way more than Pakistan’s and it increases every year.
Many factors played a role in Bangladesh growing more economically. First of all, Bangladesh didn’t have to deal with all the terrorism-related problems when Pakistan was embroiled in America’s war on terror post 9/11. Bangladesh had a relatively stable time which let it grow peacefully. But I believe the biggest factor that played a role in Bangladesh’s economic growth is exports. While the textile factories and other businesses related to manufacturing left Pakistan due to load shedding, terrorism, and political turmoil, Bangladesh got more and more textile factories. Their business grew and started exporting to the West and started producing and exporting to companies like Walmart in the USA. This brought a major influx of foreign currency to the country. Bangladesh used its strengths of a huge population base, cheap labor, and an extensive coastline to produce more products and started exporting textile, headgear, clothing and accessories. Clothing and accessories alone brought in $ 19.4 billion into the economy of Bangladesh.
Now the important question is that what can we learn from this and the answer is that to grow the economy and the GDP we need to increase the exports. Which can be done when the businesses are producing enough products, to first of all catering the local needs, and then having excess for export. To make this happen the government can initiate policies that can help the businesses grow and eventually start producing so much that they end up exporting. Many policy options can help us achieve this.
Pakistan can learn from the example of the Grameen Bank of Bangladesh and start giving small loans without interest and collateral. With this, the government should also focus on the ease of starting a business. All of this will encourage people to move towards entrepreneurship and more and more people will start their businesses. Which will further bring a huge positive impact in the country just like it did in Bangladesh. It reduced unemployment and catapulted Bangladesh into an era of entrepreneurship.
Another thing that can be done is to focus on the service industry. The West outsources a lot of segments like communications, IT, etc. to the eastern, third world countries like India, Pakistan and Bangladesh and Pakistan can capitalize on this. Special zones can be built for businesses offering outsourcing services to the west and the population can be trained for such jobs. This will increase the service-related exports and bring in foreign currency.
Another policy that can be initiated is to give tax breaks to businesses that are exporting. Also, tax breaks should be given to companies that are importing raw materials so the production cost is lower. All of this will encourage more businesses to start importing raw materials and make products that have higher market value and exporting becomes a more lucrative business.
Digitization can also help and boost the e-commerce industry which is becoming an important marketplace for people. E-commerce is changing how business is done and bringing in a lot of facilities that can help conduct business from the comfort of one’s own home. This is why e-commerce platforms should be given support from the government so more and more people can benefit from them. All these mentioned policies can help in the economic growth of Pakistan.
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