Book Review: How China Escaped the Poverty Trap, by Yuen Yuen Ang

September 19, 2017

Book Review: The Aid Lab: Understanding Bangladesh’s Unexpected Success, by Naomi Hossain

September 19, 2017
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Over the summer I read a few absolutely brilliant books – hence the spate of book reviews. This week I will cover two new studies on development’s biggest recent success stories – China, but first Bangladesh.

How did Bangladesh go from being a ‘basket case’ (though ‘not necessarily our basket case’ – Henry Kissinger, 1971) Aid Lab coverto a development success story, claimed by numerous would-be fathers (aid donors, NGOs, feminists, microfinanciers, low cost solution finders)? That’s the subject of an excellent new book by Naomi Hossain.

The success is undeniable. Per capita income is up to $2780 from $890 in 1991 (PPP terms). Today, that economic progess is built on 3 pillars: garments (80% of exports, 3m largely female jobs), migration (remittances = 7-10% GDP, about 9m workers overseas, mainly men) and microfinance (which has been used by about half of all households).

But perhaps even more interesting, social progress has outstripped economic growth. Infant mortality down from 258/1,000 in 1961 to 47 in 2011; women were having 7 kids in 1961 and are now having 2. In Hossain’s words (she writes well) ‘Bangladesh is the smiling, more often than not sweetly female, face of global capitalist development. Better yet – she often wears a headscarf as she goes about enjoying her new economic and political freedoms, signalling that moderate Islam can couple with global capitalism.’ (And yes, she does acknowledge that there is still a lot of hunger and deprivation).

The ‘how’ of Bangladesh’s transformation is reasonably well known. What interests Hossain is the ‘why’. It certainly isn’t down to good governance – ‘it has never been obvious why an elite known best for corruption and violent winner-takes-all politics should have committed its country to a progressive, inclusive development pathway.’

war in East PakistanHossain’s argument is powerful: it all comes down to five traumatic years in the early 1970s, when a massive cyclone was swiftly followed by a brutal war of independence from Pakistan, and that in turn was eclipsed by a horrific famine, in which something like 1.5 million people died. ‘A famine so soon after independence caused a massive crisis of legitimacy for the government, whose overthrow a year later was seen as an expression of the loss of this legitimacy.’

The traumas of the 1970s left a legacy of a political system that, for all its thievery, accepted the moral economy of protecting the people from climate, shocks and hunger (an ‘anti famine contract’). How it achieved this is partly down to other aspects of the Bangladesh story:

Geopolitical/strategic irrelevance: this meant that aid technocrats were not being constantly over-ruled by their political masters, allowing Bangladesh to become the ‘Aid Lab’ of the title.

The lack of entrenched elites: Independence created a country whose nascent elite was still connected with the countryside, farming and normal people and (for all its venality) showed a ‘strong meritocratic streak’ and a faith in the importance of education. Very different from the caste-based paralysis of neighbouring India.

No natural resources: since money wasn’t coming out of the ground, Bangladesh was forced to base its economic progress on its people – a bit like South Korea or Japan (seen as a ‘touchstone’ for its development model)

A breakdown in patriarchy: the war of independence exposed the failure of traditional patriarchy to protect

Dhaka, Bangladesh. 18th July 2012 -- Women celebrate and show the peace sign after the announcement of the Higher Secondary Certificate after being published in Bangladesh. -- The results of the Higher Secondary Certificate (HSC) and equivalent examinations were announced with an average of 94.41 percent examinees who took part in the Higher Secondary Certificate (HSC) and equivalent examinations from five overseas centres

Dhaka, Bangladesh. 18th July 2012 — Women celebrate and show the peace sign after the announcement of the Higher Secondary Certificate after being published in Bangladesh. — The results of the Higher Secondary Certificate (HSC) and equivalent examinations were announced with an average of 94.41 percent examinees who took part in the Higher Secondary Certificate (HSC) and equivalent examinations from five overseas centres

women – there were 200-400,000 rapes and 25,000 forced pregnancies – while women signed up en masse for workfare schemes during the famine . The ‘woman issue’ was dragged irrevocably into the sphere of public policy and has stayed there ever since.

One quibble: I would have liked to see more of a discussion of the relationships between politicians and civil servants. One of the tricks achieved by Japan, South Korea and other ‘developmental states’ has been to insulate technocratic officials from the grasping hands of politicians, allowing chaotic politics to coexist with an effective state – what happened in Bangladesh?

Given this analysis, calling the book ‘The Aid Lab’ seems a bit misleading – the Bangladesh story is much bigger than that (for example the garments boom, the migration bonanza and arguably the transformation in gender rights had very little to do with aid). Hossain herself says she doesn’t much like the title. But the chapter on aid is interesting, highlighting the combination of donor pressure and government resistance that produced economic policies that in many ways were ahead of their time (eg cautious macroeconomic policy, labour-intensive industrialization, but resisting World Bank pressure to privatize grain procurement, overriding patent protection on essential drugs,  along with the focus on women’s empowerment, experimentation and innovative solutions like using 200,000 community health workers to strengthen the healthcare system).

The book ends on the big question: can ‘Golden Bengal’ continue to develop? Hossain argues that Bangladesh is coming to the end of this phase of its development and needs to address some of the weaknesses of its model: in economic terms, its excessive dependence on low end garments and migration leave it vulnerable to shocks; in social

The climate frontline

The climate frontline

terms, its fragmented patchwork of state and NGOs is going to struggle to move on from basic primary provision; politically, ‘individual empowerment has rarely, to date, aggregated to institutionalized forms of collective power.’ Hanging over everything else is the menace of climate change – acute in the case of low lying, flood prone Bangladesh as we are seeing right now.

And then there’s the question of memory – as the traumas of the 1970s fade, will new generations of leaders buy into the programme? Already, Bangladesh seems to be drifting towards a one party state under the Awami League, reducing the government’s accountability to the people.

This matters for Bangladesh and more broadly because, as Hossain concludes ‘As an early exemplar of life in an era of high globalization and accelerating climate change, Bangladesh demonstrates that the political foundations of human development, and the priority of a functioning state, must be protection against the crises of subsistence and survival.’

5 comments

  1. Absolutely agree on the aid point.

    I think the big messages of Naomi’s book are that:

    1. Progress is possible;

    2. Politics & pro-poor commitment are an essential part of that story;

    3. Aid has played a rather minor role in strengthening that social contract (at the macro-level)

    4. Politics continues to shape Bangladeshi politics. Naomi notes that over 60% of politicians are also manufacturers. They try to keep garment factory wages low in order to attract European and American buyers, for fear of buyers going elsewhere. In this context, efforts to support experimentation and improvisation (as flagged up in your earlier blog on complexity, and forthcoming discussion of Yuen Yuen’s book) will lead to higher wages. Whereas China had existential security threats and a realisation of failure (repeated famines); in Bangladesh today there are much lesser incentives for pro-poor directed improvisation in the major industry (garments). I don’t believe PDIA will undo incentives to repress labour. Instead I think rich countries need to use other foreign policy tools, besides aid, to support pro-poor directed improvisation (e.g. working with TNCs ,reforming their practices).

    Also, I want to reiterate the rich, contextual, detailed, historical insights of this book. It is truly spectacular. Naomi is a British Bangladeshi, with long-standing links, interactions and in-depth knowledge of Bangladesh. She has family, friends, [or, more dryly] ‘multiple data points’. She knows more than someone like me could ever know through a few one off trips. If Development Studies remains dominated by white old men from the Global North, we blinker ourselves to these brilliant insights. Building more inclusive research, funding, publishing, conferences etc. is absolutely cardinal to enhancing our understanding of development.

    1. ARGH. TYPO!

      I meant, “In this context, efforts to support experimentation and improvisation… will NOT lead to higher wages”.

      [or at least I think it unlikely].

      1. ‘I don’t believe PDIA will undo incentives to repress labour’ – the understatement of the year! And from someone better known for their ingenious use of gifs than for their understatement … Thanks Alice. And I couldn’t agree more about the need for more inclusive development studies, even if over-privileged old hands like me are not the ones to make it so

  2. I do partially agree to the observations. However to me the economic success of Bangladesh lies in the huge liquidity in rural economy (Micro-credit, Remittance and entrance of huge women workforce in formal sector -RMG). This liquidity created huge consumer demand and purchasing power and it was cyclical. Micro-finance for the first time reversed the capital flight from rural economy. However, at the end, it indebted the 85% of the rural population for generation. So effect of MF is bubble-up. But remittance could make lasting change in lives of the fortunate since this fund is used in both acquiring consumer products and assets in the form of land & building. On the other hand, this consumer boom increased velocity of money and impacted both service and manufacturing sector (not only RMG but plastic, furniture, electronics for local market). So I would like to give credit for this mystic economic prosperity to the people of Bangladesh. Secondly, for other development indicators, NGOs and Government should get absolute credit. Writer pointed out correctly that Government did whatever they could within their limited capacity to ensure food security and education for all. The impact would be much greater if corruption was not that rampant. Focus of the Donors had been right except last decade when they fell in trap of the development businesses actors either knowingly or unknowingly and re-embraced the growth theory in new bottle. Now we see rapid economic development that favoured many at the cost of growing inequality. Since the Governance is poor and the line between Government and big private businesses are disappearing, the masses remain content with minimum.   

    Though Government statistics shows that Bangladesh gained tremendous success in poverty alleviation and increase in per capita income but other findings indicate that while income poverty has down, other poverty indicators worsen, like malnutrition, stunting, and increasing inequality. My personal observation after trotting Bangladesh rural areas that increased income is being used mostly for acquiring non-essential items like TV, Fridge, multiple mobile phone, keeping multiple tutor for children and so they cut back on food expenses. This is perfect example of worst impact of consumerism.

    1. hi Shahed
      I sort of agree about the importance of the cash influx into the rural economy. I don’t feel entirely equipped to assess its overall significance in the decline in rural poverty, but I know scholars like Binayak Sen and Zulfiqar Ali have been studying this in the context of the decline of extreme poverty for the current FYP which you can read here: http://www.plancomm.gov.bd/wp-content/uploads/2015/02/25_Ending-Extreme-Poverty-in-Bangladesh.pdf. For me, the missing analysis of the impact of microfinance has been its role in reducing vulnerability to shocks, co-variate and individual, from the environment and disasters as well as from economic volatility and the life-cycle. I think there is a lot of research and analysis to be done on what microfinance meant for vulnerability reduction in rural Bangladesh, and questions to be asked about its suitability in other contexts.
      Best
      Naomi

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