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Also, the IMF figures are nominal, not adjusted for the purchasing power of the local currency. Bangladesh’s taka is neither widely traded nor totally free-floating, and its GDP figures are inflated by this measure. Indian economists, their patriotism aroused by the IMF, insist that their country is still about 20 per cent ahead on a basis of purchasing-power parity. Moreover, the IMF figures are so close that slightly different estimates of the national populations of the two countries could still leave India ahead. Neither country’s head count is known with any confidence to the nearest million.
Still, Bangladesh nipping ahead of India in nominal per-capita GDP is a sign of remarkable success for the junior member of the pair, which was typically 40 per cent poorer until recently. It’s a little like a one-off upset in a sporting competition that exposes the weaknesses of the stronger club.
What’s happening is that as China grows richer, its textile and garment jobs are flowing south to Bangladesh, where labour is still much cheaper. The Bangladeshi government saw this coming and was prepared for it, creating special development zones where Western traders and fashion firms could recruit vast armies of poor Bangladeshi women from the country’s interior. These companies don’t pay much in taxes or tariffs, but the sheer volume of labour income is enough to buoy the economy.
Textiles and clothing are about 80 per cent of Bangladesh’s exports, so the country, at the moment, has all of its eggs in one basket. (That’s nothing new for Bengal, which was already a globally dominant producer of fabrics in the time of Marco Polo.) No one likes a sweatshop, or at least no one likes thinking about a sweatshop from a distance, but Bangladesh is now characterized by low unemployment, impressive progress on human-development indicators and, by United Nations standards, no extreme poverty.