Trust and trade stand in the way of prosperity in India-Pakistan-Bangladesh
It is 20 per cent cheaper for a company in India to trade with Brazil than with a neighbouring country. Our inter-regional trade is just five per cent of the total
We like to think India is in some way different from the rest of South Asia but we are not. On the meaningful indicators there is little to separate Indians from Bangladeshis or Pakistanis.
For instance, our per capita income is quite similar. In 2021, the three nations had an income per person of $2503 for Bangladesh, $2277 for India and $1537 for Pakistan. For comparison Kenya was at $2006 and South Africa at $6900. Now look at China ($12556), South Korea ($34757) and Japan ($39285). They are clearly in a different league from us while we in South Asia are clubbed together.
Let us take human development indicators. The United Nations describes its Human Development Index as a summary measure of average achievement in key dimensions of human development: a long and healthy life, being knowledgeable and access to a decent standard of living. The health dimension is assessed by life expectancy at birth, the education dimension is measured by the mean of years of schooling for adults aged 25 years and more and expected years of schooling for children of school entering age. The standard of living dimension is measured by gross national income per capita.
In 1990, 32 years ago, Bangladesh’s life expectancy at birth was 56 years and mean years of schooling 3.3 years. Pakistan’s was 60 years and 2.3 years, while India’s was 58 years and 2.8 years.
In 20201, this has become 72 years and 7.4 years for Bangladesh, 67 years and 6.7 years of schooling for India and 66 years and 4.5 years for Pakistan. Nepal at 68 years and 5.1 years, and Sri Lanka 76 years and 10.8 years can be seen for comparison. The world average was 72 years of life expectancy at birth and 8.6 years of schooling; with the exception of Sri Lanka, all South Asian nations are below the world average.
In 1990 China was 68 years and 4.1 years of schooling. Today it is 78 years and 7.6 years, and it is the average income that takes China over the world average for their HDI.
To the outsider looking at such things, it will not seem like India is different from Pakistan or Bangladesh. Confronted with the hard data we would have to agree with them, even if we may have some philosophical idea that India and Indians are different.
If we accept that we are similar, if not the same, then we must turn to why it is that we have not been able to grow faster and make lives better for our people since 1947. Is it, as is often assumed, the ’system’ that is the problem? Again, here if we examine the history of South Asia, we find that in the 75 years we have experimented with every possible type of system but we still remain poor and are clubbed together.
We have dabbled in parliamentary democracy that has been dominated by one party (India under Congress and under BJP since 2014), that has been comprised of various factions (1979, then 1989, 1998 and under Vajpayee), and that has derailed itself with authoritarianism (1975-77). We have tried military dictatorships (Pakistan in the 1960s, 1980s, 2000s and Bangladesh in the 1970s and 80s). We have tried dynastic democracy (Gandhis, Bhuttos, Mujib-Hasina, Zia-Khaleda), we have also tried ‘merit’ in the form of democratic leaders (Morarji, Shastri, Vajpayee, Sharif, Modi, Gujral, Gowda).
We have tried managing the economy through central planning (India in the 1950s and 1960s), through license raj, through ‘liberalisation’. We have returned to the same things we were doing before (import substitution in India in the 1970s and today). We have created sectors where we are leaders (India 30 years ago in IT/BPO and Bangladesh today in garments).
We have developed nuclear weapons; we have spent large sums on our militaries. Pakistan spends 17% of its government spending on the army, India and Bangladesh spend 9%. We have tried to be strong; we have tried to be defiant. We have joined western alliances (Pakistan in the 1960s), we have remained non-aligned (India in the 1950s) and we have tried a patchwork of things in between.
But the end result is the numbers we see at the top of this column. There must be something we are missing. What is it?
The World Bank says that intra-regional trade between Bangladesh, India and Pakistan accounts for 5% of our total trade, compared to South East Asia where the number is five times higher. Trade here is $23 billion though it could be five times more.
The problem is purely man-made. The World Bank says that “border challenges mean it is about 20 percent cheaper for a company in India to trade with Brazil instead of a neighbouring South Asian country” and that the main problem is "a broad trust deficit throughout the region.”
This is the one thing we have not tried. We have not opened ourselves to each other and returned to the sort of geography and economy that we had before 1947. Is it possible that we can do that and what are the effects it can have on our societies?
I do not know if by doing this we can repeat what China and Japan and South Korea did, but I do know that it removes the one restraint that we have put on ourselves and can remove ourselves. The fact that it is not even discussed widely today in the region, despite all three states being democracies, tells us something about how blind we have become to our condition. And how satisfied our political parties are with the way things continue to remain in the South Asia as we enter the second quarter of the 21st century.