Bangladesh should be a much more open economy to escape the middle-income trap, Indermit S Gill, chief economist of the World Bank Group, has said.
Six billion people in middle-income countries are in a race against time and the external environment is making things harder, he said at the Annual BIDS Conference on Development (ABCD) 2024, organised by the Bangladesh Institute of Development Studies (BIDS), in Dhaka today.
To escape the middle-income trap, countries need to undergo two transitions, he said. “The transitions are between investment, infusion, and innovation. To grow quickly through middle income, they have to discipline incumbents, reward merit, and capitalise on crises.
“You have to have an open economy when you are shifting from an investment-led phase to an infusion-led phase. Here, Bangladesh should be much more open regardless of what others are doing.
“It should not be choosing between the US and China, manufacturing and services, or international and domestic policy reform for example.”
The transitions are between investment, infusion, and innovation. To grow quickly through middle income, they have to discipline incumbents, reward merit, and capitalise on crises.
Gill said there are many more middle-income economies, but they are different from their natural resources and ties with various countries. “We have seen that the inequality has gone up slightly, however, it is not too bad if socio-economic mobility is going up too.”
The economist further said if socio-economic mobility is going down, then it doesn’t matter if the inequality is going up or down.
“In the energy sector, Bangladesh is only looking into where the energy comes from, which means from the renewable sector or fossil fuel. This is a completely wrong approach,” added Gill.
“We have to look at how efficient Bangladesh is converting energy into output. If it is not efficient, it means the amount of carbon emission against per capita output is too high.”
The event was also attended by Planning and Education Adviser Wahiduddin Mahmud. During the opening remarks, BIDS Director General Binayak Sen introduced the theme of ABCD 2024 – “Interconnectedness: Equality, Opportunity, Freedom and Dignity”.