Where Do Pakistan and Bangladesh Stand Today?

A Comparative Economic Analysis of Pakistan and Bangladesh 

Since gaining independence, Pakistan and Bangladesh have followed starkly different paths in their economic, social, and political evolution. Bangladesh, despite early struggles, has emerged as a rapidly developing economy, while Pakistan has grappled with stagnation and structural challenges. This blog delves into the factors that have shaped these trajectories, offering insights into lessons Pakistan might draw from its former eastern wing.

 

Bangladesh: Secular Foundations and Political Stability 

Following independence in 1971, Bangladesh confronted political instability and economic devastation. However, the nation made decisive steps to establish a secular constitution, aiming to separate religion from governance. Over the last 35 years, it has largely contained military interference in politics, allowing civilian leaders to focus on governance and economic development. In contrast, Pakistan's political landscape remains heavily influenced by both religious ideologues and military interventions, often skewing policy priorities away from economic growth.

 

Economic Growth Rates: A Tale of Diverging Trends 

Bangladesh's economic transformation is a story of resilience and sustained growth.

In 1972, its GDP growth rate was a dismal -13%,

but by 2024, it has risen to a robust 5.82%.

For over a decade, Bangladesh has consistently maintained growth rates exceeding 6%.

Pakistan, on the other hand, has struggled, with its GDP growth rate in the fiscal year ending 2023 languishing at 0.29%, reflecting deep economic distress.  While it bit gearing up now is around 2.4%

 

Per Capita Income: Closing and Surpassing the Gap 

In 1972, Pakistan's per capita income was $150

compared to Bangladesh's $90.

Now a days, Bangladesh's per capita income stands at $2,600, 

significantly outpacing Pakistan’s $1,500.

This shift underscores Bangladesh's focus on equitable economic policies and industrial growth, particularly in the export-driven sectors.

 

Export Performance: A Model of Success 

Bangladesh's export success, particularly in the garments sector, has been pivotal.

Bangladesh exports in 1972 were only $35 million,

it now boasts $64 billion,

its garments share alone with $42 billion.

Bangladesh is the world's second-largest garments exporter after China. 

Pakistan, despite its potential, trails in exports with $35 billion. 

 

Factors: such as Bangladesh's affordable labor, consistent energy supplies, and government support for export industries have driven this success. In contrast, Pakistan's export sectors suffer from energy shortages, limited policy focus, and underutilised female labor. 

 

Poverty Reduction and Social Progress 

In the 1970s, Bangladesh's population lived below the poverty line 70-80%.

Today, this figure has dropped to just 10.44%,

They targeted interventions in education, health, and economic inclusion. Over 8 million people have been lifted out of poverty in the past decade alone.

Pakistan, however, has seen poverty levels rise to 39.4%,

exacerbated by economic mismanagement and insufficient social safety nets.

 

Education and Workforce Development 

Bangladesh has made significant strides in education, having literacy rate 75%

compared to Pakistan's 60%.

Moreover, Bangladeshi children enroll in primary school 98%,

while Pakistan struggles with 72%.

Importantly, Bangladesh has effectively integrated women into its workforce, particularly in the garments sector, where they constitute 80% of the labor force. This empowerment has not only spurred economic growth but also contributed to lower population growth rates and improved social outcomes. 

 

Policy Priorities: Industrial Growth vs. Real Estate 

Bangladesh’s elite—from politicians to business leaders—have aligned their interests with industrial and export growth. The collective focus has driven investment in manufacturing and infrastructure. 

Conversely, Pakistan's elite have largely concentrated on real estate, siphoning resources away from productive industries. This misalignment has stifled Pakistan's growth potential over the past two decades. 

 

Energy and Ease of Doing Business 

Bangladesh has prioritized stable and affordable energy supplies, reducing barriers to business development. 

In contrast, Pakistan faces chronic energy shortages, bureaucratic red tape, and inefficiencies, hampering its industrial competitiveness. 

 

Demographics and Population Management 

Bangladesh has successfully managed its population growth, reducing the rate to 1% from 2.5% at independence.

Public awareness campaigns and women’s economic empowerment have played crucial roles.

Pakistan, however, has one of the world’s highest population growth rates at 2.55%, adding immense pressure on its limited resources. 

 

Defence Spending and Development Trade-offs 

Pakistan Defence budget is over $12 billion,

Bangladesh spends only $4.27 billion.

Bangladesh’s limited military expenditure has allowed it to channel resources into education, health, and infrastructure, yielding significant social and economic dividends. 

 

The Role of NGOs 

Non-governmental organizations (NGOs) have been instrumental in Bangladesh's development, driving grassroots initiatives in health, education, and microfinance. 

In Pakistan, NGOs often face suspicion and resistance, limiting their potential impact. 

 

Lessons for Pakistan 

Bangladesh’s economic ascent is a testament to the power of focused policy, inclusive governance, and investment in human capital. It is not merely a story of Bangladesh's rise but also a reflection of Pakistan's missed opportunities. To emulate its neighbor’s success, Pakistan must prioritise industrial growth, reduce reliance on defense spending, empower women, and ensure political stability. Only then can Pakistan unlock its vast potential and reclaim its place among the region's thriving economies. 

Sources: Comparative analysis based on historical data, World Bank reports, and recent economic surveys.