To align its economic growth with happiness, Bangladesh must ensure upward social mobility
Only A Booming GDP Will Not Make The Country’s Ordinary Citizens Happy Unless Their Socioeconomic Status Improves.
In recent years, Bangladesh impressed other nations with its remarkable gross domestic product growth story. But that has not duly addressed the impact of the growth on the happiness levels of Bangladeshis. The country now needs to forge a new story of upward social mobility. That will more specifically deal with citizens’ life satisfaction, as I will explain according to a World Economic Forum report.
Bangladesh’s growth story has been a much-touted one. The GDP growth averaged around 6% from 2000 to 2019, the World Bank data shows. It was not long before the term “GDP growth” became a catchphrase in the country.
This is primarily because policymakers have ardently portrayed this metric as a vital sign of development, as if it reflected both economic progress and human well-being. The majority of Bangladeshis have little idea how – and whether at all – this growth impacts their happiness. The GDP growth is an outlandish concept for the poor and those making a living in the informal economy.
Growth during pandemic
Even in 2020 when the coronavirus pandemic rocked economies around the world, Bangladesh managed to be an outlier. It posted a 2.3% growth. That year, the economy of its neighbour, India, shrank by 7.9%. In fact, all South Asian countries registered negative growth in 2020, except for Bangladesh and Pakistan.
In June, Bangladesh Finance Minister Mustafa Kamal said that the country would be on top of the rest of South Asia and Southeast Asia in terms of GDP growth considering the recent pace of the economy. Certainly, it would be an enviable achievement. But will Bangladeshis be significantly happier then?
In fact, Bangladesh’s poor happiness ranking shows there is another side of the GDP growth story that involves a not-so-happy reality. In the 2021 World Happiness Report, Bangladesh ranked 68th among 95 nations. The report especially focused on how the pandemic had affected the happiness levels of nations.
Bangladeshis were found to be much happier than Indians during the pandemic. Yet, their happiness ranking, undeniably, was still poor. More importantly, Bangladesh’s happiness ranking over the years has never been as headline-grabbing as its GDP growth figures.
Why is that? If only high GDP growth could make a nation increasingly happier, Bangladesh’s happiness ranking should have leapt to prominence over time. Yes, economic growth has improved living standards globally. Bangladesh has also made significant strides in poverty reduction as its economy has grown. Poverty declined from 44.2% in 1991 to 13.8% in 2016-’17. Life expectancy and literacy rates have increased markedly as well.
But the relationship between happiness and GDP is not as black-and-white as it may appear. Growth has typically been accompanied by rising happiness, but the correlation is very weak. Happiness has actually declined in countries like the United States and India despite economic growth. Simply put, a country’s economic prosperity does not always push up the happiness levels of its citizens.
A key reason is that economic growth is usually not shared evenly among members of society unless there are robust and fair redistributive measures. As a result, income inequality rises. This widens the rich-poor gap. Globally, the increasingly unequal sharing of the economic pie is behind the rising socioeconomic unhappiness.
This is the case in Bangladesh as well. Economic inequality is rife in this South Asian country of 166 million people, and it is increasing. Between 1992 and 2016, the Gini coefficient rose from 0.388 to 0.482. Wealth is concentrated in the hands of a few while living a comfortable middle-class life is not without challenges. Income inequality has got in the way of Bangladeshi happiness.
GDP story’s limitations
To understand the limitation of Bangladesh GDP story on the happiness front, let us compare Bangladesh with Finland. Finns not only made a name for themselves for having high-quality education and manufacturing Nokia that once dominated the cell phone market. They also came out as the world’s happiest country for the fourth year running in 2021.
Yet, every year from 2001 to 2020, Bangladesh enjoyed higher GDP growth than Finland. Similarly, every year from 2000 to 2019, Bangladesh’s GDP (in terms of purchasing power parity) was bigger than Finland’s. Without considering other details, the conclusion is simple – if GDP growth was the only driver of happiness, Bangladesh would have ranked happier than Finland.
The story of Finnish happiness actually lies elsewhere. When Finland first topped the happiness index in 2018 by outperforming Norway, its GDP per capita was lower than its Nordic neighbours and much lower than the United States. “The Finns are good at converting wealth into wellbeing,” Chief Executive Officer of the Happiness Research Institute in Denmark, Meik Wiking, said.
The Finnish lesson is that it is not the economic growth itself that is important for happiness. Rather, how that growth is utilised to ensure citizens’ wellbeing ultimately makes all the difference. In fact, the Nordic countries have consistently ranked among the happiest nations year after year. But they are not even among the top 10 countries in terms of GDP growth.
The Nordics not only perform very well on the happiness index, but they are also the most upwardly mobile societies in the world. They grabbed the top five positions in the World Economic Forum’s first-ever social mobility index report unveiled in January last year.
Social mobility is the upward or downward change in an individual’s socioeconomic status compared to that of their parents. The key finding of the social mobility report was that most countries do not provide the right conditions for their citizens to thrive and experience upward social mobility. Bangladesh is one of those countries, and this has implications for its low happiness ranking.
Low social mobility
Bangladesh ranked near the bottom, 78th among 82 nations, in the social mobility report. India and Pakistan were placed in 76th and 79th spot respectively. Sri Lanka was named the most socially mobile country in South Asia. Overall, South Asians were found to have way less social mobility than Europeans.
The report mentioned five main determinants of social mobility – education, health, technology access, work opportunities, working conditions and fair wages and social protection and inclusive institutions. Bangladesh ranked poorly in all indicators. Let us assess some of them.
Take social protection first. Even Bangladeshi experts say this is limited to just token programmes. Unlike Nordic citizens, Bangladeshis have no cushion against unexpected disastrous stages in life. If life throws them a curve ball, they are on their own to deal with it. If they lose their job or the main breadwinner in their family dies, it can dramatically worsen their life circumstances as they will get no state support to handle the new reality.
There are social security allocations in the national budget, but the amount remains markedly insignificant compared to the number of potential beneficiaries. Experts also say allocations do not benefit the real poor while there are irregularities in distribution as well. The pandemic created around 2.5 crore new poor, but no support was announced for them in the 2021-’22 fiscal budget.
Now consider the inclusive institutions’ indicator. Transparency International’s Corruption Perceptions Index is a sub-indicator that the social mobility report used to measure the inclusiveness of institutions. Corruption is rampant in Bangladesh that ranked 146th among 180 countries on the 2020 Corruption Perceptions Index. This was the key reason why the country performed poorly in this pillar. Bangladesh also received poor scores in two other sub-indicators of this pillar – government and public services efficiency and political stability and protection from violence.
Bangladesh’s high adolescent birth rate per 1,000 women, which was 81 in 2019, pushed down its overall performance in the health indicator. Besides, its high NEET (not in employment, education or training) ratio, as well as high pupil-to-teacher ratios in primary and secondary education, were behind its overall poor score in the education pillar.
In the technology access pillar, Bangladesh achieved very good scores in the population under the 3G mobile network coverage sub-indicator. In fact, 95% of the population came under 4G coverage in 2020. But the country fared very poorly in two other sub-indicators – internet users (as a percentage of the adult population) and fixed broadband internet subscriptions (per 100 people). This caused its overall performance in this pillar to fall. In 2019, only 12.9% of the population were internet users while only five people per 100 had fixed broadband subscriptions.
Over half of the Bangladeshi labour force are engaged in vulnerable employment that earned Bangladesh poor scores in the work opportunities pillar. This figure has fallen gradually since 2000 but is still very high. In 2018, Bangladesh had the second highest proportion of workforce doing vulnerable jobs in Asia, preceded by India.
With these grim realities, it is no wonder that Bangladesh ended up near the bottom on the social mobility index. Such a position means if you were born poor in Bangladesh, upgrading your socioeconomic status will be like boiling the ocean. Why? Because the cards are highly stacked against you.
Now, what does Bangladesh’s low social mobility have to do with its happiness? There is a close correlation between upward social mobility and increased happiness, the social mobility report noted. It said countries can improve the life satisfaction of their citizens by improving social mobility. It also showed that countries with high social mobility occupy leading positions on the happiness index. Here I have explained in detail how upward social mobility facilitates Finland’s high happiness ranking. Even Bangladeshi experts have argued that GDP as a development indicator should not be taken so seriously, and there is no need to waste time on a “faulty estimate” like this as it does not capture the inequality and inclusivity of economic growth.
Increased social mobility does not just correlate with rising happiness. Another key finding of the report was that if the 82 countries surveyed could increase their social mobility index score by 10 points, this would create an additional GDP growth of 4.41% by 2030. In other words, investing in social mobility is a win-win situation both on social and economic fronts.
The bottom line is that only high GDP growth will not make ordinary Bangladeshis happy unless their socioeconomic status improves. Yes, it is important for a country to flourish economically. But that growth has to offer all citizens the chance to lead a better and happier life.
In Bangladesh, creating favourable conditions for citizens to experience more upward social mobility will be a key step towards weaving GDP growth into happiness. That is how Bangladesh can truly impress other nations and make its citizens happy in the coming days. At the end of the day, it is more important to create happy citizens than just brag about GDP growth that rarely touches the lives of ordinary members of society.
Mahmudul Islam is a writer and a journalist from Bangladesh who is deeply passionate about happiness.