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A Comparison of GDP Per Capita of India and Bangladesh

A Comparison of GDP Per Capita of India and Bangladesh
Case Code: ECON094
Case Length: 17 Pages
Period: 2019-21
Pub Date: 2021
Teaching Note: Available
Price: Rs.300
Organization : -
Industry :-
Countries : India
Themes: Macroeconomic Environment, Economic Slowdown
A Comparison of GDP Per Capita of India and Bangladesh
Abstract Case Intro 1 Case Intro 2 Excerpts

Abstract

The case is about the success of the Bangladesh in keeping its economy growing even amidst the COVID-19 pandemic in 2020. When economies in most parts of the world were contracting due to the pandemic, it appeared that the economy of Bangladesh was continuing to expand. The pandemic hit the Indian economy much harder than Bangladesh’s in terms of growth. According to the data released by IMF, Bangladesh’s GDP per capita would exceed that of India’s in 2020, despite India having had a lead of about 24% five years earlier. Bangladesh’s per capita GDP was expected to grow 4% in 2020 while that of India was expected to shrink 10.53% due to the nationwide lockdown imposed to contain the pandemic.

Bangladesh has reported one of the fastest growth rates in the world with a stable economic performance that has helped it to reduce poverty and social inequalities. The nation’s macroeconomic performance, a reflection of its very prudent fiscal management, is underpinned by its solid external sector developments like exports, manufacturing, and remittances among others. It has become an export power house and a major player in the global textiles and garment sector. Bangladesh’s clothing exports have been the backbone of the country’s export economy. Bangladesh has made substantial progress in several key social indicators such as education, sanitation and health, fertility, infant mortality, literacy, female labor participation, and financial inclusion, supporting the country’s strong economic growth. Even where gender parity is concerned, Bangladesh outscores India as women there enjoy better health, mortality, and education status.

However, some argue that GDP per capita is only an estimate for one indicator of the average standard of welfare in a country. It is believed that GDP at constant, purchasing power parity (PPP) exchange rates is the more appropriate economic metric to measure the average standard of welfare in a country. If this PPP metric is used, India is ahead of Bangladesh, and despite the coronavirus-induced lockdown and its effect, India will probably remain so. The IMF also predicts a sharp economic recovery in India in 2021, which is likely to push its per capita GDP ahead of Bangladesh by a small margin.

Issues

The case is structured to achieve the following teaching objectives:

  • Understand the GDP growth of India and Bangladesh in the aftermath of the COVID-19 pandemic.
  • Evaluate Bangladesh’s economic growth over the years.
  • Analyze the reasons for Bangladesh’s better macroeconomic performance compared to that of India.
  • Debate and discuss whether India can regain its economic growth.

Contents

Keywords

Economic growth; Gross Domestic Product; Per capita GDP; Real per capita GDP; Purchasing power parity (PPP); PPP exchange rates; GDP contraction;COVID-19 pandemic; Supply chain disruption; Macroeconomic stability; Macroeconomic performance; Manufacturing sector; Service sector; Informal economy; Social development indicators; Gender equality; Women participation; Migration; Remittance;

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