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Bangladesh and Its Giant Neighbors

By Muhammad Yunus

Stable infrastructure, good governance and reduced corruption could help Bangladesh lift itself out of poverty. In this Globalist Bookshelf feature from Creating a World Without Poverty, Muhammad Yunus examines the importance of Bangladesh's geographic location and explores how the country could become a global mega-port.

Bangladesh is a lucky country. It can easily create a dynamic economy by exploiting its attractive geographical location, flanked by two giant, rapidly growing neighbors India and China.

India has already achieved an 8% GDP growth rate while China has surpassed 11% and both have reduced their poverty rate to less than 25%. They are becoming such political and economic powerhouses that the whole world is paying serious attention to them.

Profit by association
With our giant neighbors bringing the whole business world to their doorsteps, Bangladesh can benefit simply from being in the neighborhood. Growing neighbors are convenient sources of technology, experience, skills and contacts.

Bangladesh, in turn, can be an attractive venue for both countries for all kinds of outsourcing. If even a small portion of the business flowing into India or China comes to our shores, we will be a fast-moving economy.

Some Bangladeshis worry that our smaller country will be overwhelmed by its giant Indian neighbor if we open our borders for free trade. India, they say, will flood our markets with goods taking advantage of the free trade zone and stifle the potential for nascent industries in Bangladesh.

Benefits of trade
But India already "floods" the Bangladeshi market with goods, only through unofficial channels that generate no government revenues (other than bribes to border personnel and customs officials). According to figures from Bangladesh Bank, officially recognized imports from India exceeded $1.8 billion in 2005-6, and estimates are that unofficial trade may be as much as 50% higher.

Free trade rules will legalize this unrecognized flow of goods and capture revenues for the government in the process. If reasonable provisions for adjustments by businesses and communities are made and if safeguards are put in place to prevent exploitation of the weak by the powerful small countries can benefit just as much from free trade as large ones.

Trade agreements
Bilateral free-trade agreements are already in effect between some of the SAARC countries for example, India and Sri Lanka. If tiny Sri Lanka, with a population under twenty million, can benefit from open borders with India, why not Bangladesh?

Bangladesh can be an attractive venue for both China and India for all kinds of outsourcing.

There are many reasons why Bangladesh should have an excellent relationship with India, but tensions between the two countries remain needlessly high. Although Bangladesh remains grateful to India for its military help during our liberation war, a pervasive feeling of fear about India persists in Bangladeshi minds. 

Perhaps this is understandable India is seven times bigger than Bangladesh, surrounds Bangladesh almost completely, has the third largest army in the world, and is predominantly Hindu rather than Muslim (although India, in fact, has a larger Muslim population than Bangladesh).

Exploiting the poor
Some Bangladeshi politicians exploit Bangladeshi anxieties by blaming India for anything that goes wrong in Bangladesh and promising to "protect" Bangladesh from the unnamed threats supposedly posed by India. 

For its part, India complains about illegal immigration by poor Bangladeshis looking for work in India. (In this respect, India and Bangladesh have a relationship comparable to that between the United States and Mexico, where border crossings by poor people in search of economic opportunities have also caused international tension.)

The global stage
India also complains that Bangladesh harbors and supports armed guerrilla leaders from Eastern India. Bangladeshi leaders continue to deny this allegation, but it does not seem to disappear.

In an atmosphere of general distrust, it is easy to stoke people's fears in this case, the fear of domination by a giant neighbor. But in today's world, countries generally don't dominate one another through military might but rather through economic power. 

If Bangladesh remains a poor country, everybody will dominate her, not just India. Moving up the economic ladder as quickly as possible is the best protection against every form of foreign domination.

Advantageous location
Bangladesh's strategic location can be the key factor in shaping our country's future. Located at a regional crossroads, Bangladesh can be a converging point for international trade for all its neighbors. All that it has to do is provide shipping facilities for all these countries landlocked Nepal and Bhutan, virtually landlocked eastern India, western China, and northern Myanmar.

These areas have a total population of over 300 million and fast-growing economies with per-capita annual incomes rising steadily beyond the $1,000 mark.

Building new ports
Bangladesh has to to create world-class port facilities for the growing economy and build a network of superhighways to connect these countries with the port facilities.

Bangladesh has to prepare itself to take on a big development venture to create world-class port facilities for the growing economies of Bangladesh as well as her neighbors, and to build a network of superhighways to connect these countries with the port facilities.

This deep-sea mega-port may be built near Cox's Bazar, a city 90 miles south of Chittagong near the Myanmar border. This mega-port could serve this entire region and bring significantly greater prosperity to millions of people.

Under current conditions, Bangladeshi goods are at a great disadvantage compared to those of other nations. It takes several times longer to process products manufactured in Bangladesh for export than in Singapore, and the average cost for exporters in Bangladesh is almost double than that in Indonesia.

Accommodating for heavy traffic
A mega-port at Cox's Bazar, equipped to accommodate the vast new vessels now being used in global trade and the new ships with even deeper draft that will be built in the coming years, will solve these problems.

The port should be equipped with the latest cargo-handling technology and linked to neighboring regions and countries by a network of super highways that will support a continuous flow of vehicles carrying modern containers.

Singapore became one of the most prosperous countries in the world because of its location as a strategic port. There is no reason why Cox's Bazar can't play a similar role in the future development of Bangladesh.

Editor's Note: This feature is adapted from CREATING A WORLD WITHOUT POVERTY by Muhammad Yunus. Copyright 2007 Public Affairs. Reprinted with permission of the publisher.