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Economic symbiosis

Bangladesh in the 21st Century

This piece is the first in a series devoted to summaries of papers presented at the conference on "Bangladesh in the 21st Century," Harvard University, (June 13-14). The conference was organised by Bangladesh Development Initiative (USA), Democracy and Development in Bangladesh Forum (USA), and The Ash Institute of Democratic Governance & Innovation at the Kennedy School of Government, Harvard University. Other pieces presented at the conference will be forthcoming in the following weeks. The series is being coordinated by Dr. Syed Saad Andaleeb, Professor and Program Chair, Pennsylvania State University, Erie, and President of Bangladesh Development Initiative (www.bdiusa.org). The views expressed in the articles are expressly those of the authors.

ASHRAF Ali
A previous study found that there is a strong relationship between per capita income (PCI) and several indices such as life expectancy, infant mortality. male and female illiteracy rates, percent urban population, commercial energy use, etc. All the indices improve with the increase in the PCI. The implication of this important finding is. if the Bangladeshi development practitioners and policy-makers can increase the national PCI, improvements in the socio-economic indices will naturally follow.
The study also revealed that all the indices, after gradually improving with increasing PCI, reach a plateau when the PCI reaches $5,000 to $10,000 US dollars (in 2000 US dollar value). In other words, the citizens of any country will be able to lead a decent life if the PCI reaches $5,000 to $10,000. We designated this level of income as the benchmark PCI that all developing countries should strive to reach.
This article examines the prospects of reaching the proposed PCI levels by establishing a symbiotic relationship between an industrially advanced country such as USA or Japan on one side and a developing country like Bangladesh on the other. The symbiosis can be
described in the following manner: The Economic Symbiosis concept
The developed country will need to split its entire R&D effort roughly into two halves designated as 'advanced high-level technology" and "intermediate-level technology.' The companies of the advanced country would maintain control over the former component, but the government of the advanced country should actively assist developing countries to produce goods and services utilizing the latter component.
Under this scheme, while the developing countries hire "white" workers to sustain domestic R&D related to intermediate-level technologies and thus obtain a higher level of domestic per capita income, the advanced country engages in R&D research activities for the next generation of still higher level technologies. The idea behind this proposition is to assist developing countries to have enough income, at least around $5,000 to $10,000 in 2000 US dollars (the benchmark per capita income), under the patronage of the developed country so that their effective demand for high-ticket goods produced in the advanced country increases significantly and also they can afford to purchase those goods from the
advanced country.
The study explores how, in addition to benefiting developing countries, the above mechanism puts the developed country on a still higher economic growth path never thought possible. The study also examines current world income structure and subjects it to the hypothesis proposed above. The question the study addresses is the additional amount of income that can be generated by upgrading the production and income of the developing countries through intermediate-level technology.
World income structure
The World Bank income and population data for the year 2004 are utilised for the study. The total world output for the year 2004 is found to be 39 trillion US dollars in which the US output was 12 trillion US dollars, whereas Bangladesh output was only 0.06 trillion US dollars. The United States held the fifth position on the PCI ranking with PCI of $41,400 and population of 294 million. Bangladesh had 175th PCI ranking with PCI of $440 only with a population of 140 million!
When we group all the countries of the world into two categories, one having PCI greater than the benchmark PCI ($5,000 to $10,000) and the other with PCI below it, we discover that about 75% countries
of the world have per capital income below the level of benchmark PCI. The total income for the group with PCI’s above the benchmark is 32 trillion US dollars, whereas that for the other group is 7 trillion US dollars.
We then hypothetically increase the PCIs of these countries to just the level of benchmark PCI and see that the total income for the low-income group increases dramatically from 7 trillion US dollars to 25 trillion US dollars for a benchmark PCI of $5,000 and as high as 52 trillion US dollars for benchmark PCI of $10,000!
For the low-income countries, this represents an increase in total income of 18 trillion US dollars for benchmark PCI of $5,000 and $44 trillion dollars for benchmark PCI of $ 10,000. These income increases significantly expand the potential markets in the developing countries that are awaiting to be developed by the developed countries.
Economic symbiosis
The increase in total income in the low-income countries would be 48% and 113% of the current total world income for $5,000 and $10,000 benchmark PCI respectively. This represents a fraction of total current world income that has not yet been generated, but could be generated under the patronage of the developed countries creating
additional market for high-ticket goods and services produced in the developed countries. This is a perfect example of a possible symbiotic relationship between the two groups of countries, growing together, supporting each other and benefiting from each other.
Today 84% of world's population has PCI below the benchmark level. This represents that fraction of population in the world who are waiting to engage in more productive and meaningful work and thus to contribute effectively to the local economies. At the same time this same fraction of population is waiting to turn into serious consumers demanding high-ticket goods and services from the developed countries both for production and consumption. If this world population fraction stays where they are today, they are poverty-stricken, unskilled, unproductive, and non-consumers. But if turned around, this same population fraction would get more tightly connected to the world economy and become agents who would help
convert this increased world income into additional per capita income for the people in the developed world.
Now, how much of this new world income would return to the developed countries through added global consumption would depend upon the level of engagement on the part of developed countries with R&D and production using intermediate-level technology. For example, if US could derive 20% added return from its engagement into the developing countries of the world, its PCI would jump from $41,400 to $54,000 with a benchmark PCI of $5,000 and to $72,000 with a benchmark PCI of $ 10,000!
Examples of economic symbiosis and prospects for Bangladesh
The symbiotic partnership between Japan and Malaysia during Mahathir Mohammad administration may be designated as one of the most successful progressive economic symbiosis between two countries where Malaysia sought
investments from Japan in the areas of heavy industries. The Perwaja Steel and the Proton automobile manufacturing firms are examples of industries that were created as Malaysia-Japan joint ventures in order to promote heavy industry in Malaysia.
Dr. Mahathir Mohammad adopted the so-called "Look East" policy, which is naturally aligned with his anti-Western position. Learning from the success of the symbiotic relationship of Japan-Malaysia and Japan-other Southeastern countries, India has also launched a similar "Look East" policy to seek greater economic ties with the Asian countries, including those in the Asean block. It is noteworthy that although India is pursuing the "Look East" policy, it also is building economic alliances with The United States at the same time.
Bangladesh may have multiple options in front of her. She can work with Japan, more or less like Malaysia did, but without adopting
the ultra-nationalist element. Bangladesh can also enter into symbiotic relationship with Singapore, South Korea, Taiwan, Malaysia, China, or India. Or, it could build close economic ties with multiple partner countries.
The bottom line is to ensure that the relationship is truly symbiotic, which would allow Bangladesh to secure the right to perform domestic research and development (R&D) at least with intermediate-level technologies. Since geographically Bangladesh is almost surrounded by India, Bangladesh should always keep India in its mix of choices for partners while it pursues other partners elsewhere. Given the huge income gap and development asymmetries, the symbiosis advocated in this study may be the best option for countries like Bangladesh.
Dr. Ashraf Afi, D.Sc., MBA a former Lecturer of Civil Engineering Department of BUET, is the founding President and current Treasurer of BDI.