Why Burma will beat Bangaldesh: human capital matters

When I was a little kid I would check out countries whose vital economic and social statistics were not as good as Bangladesh's. I basically was curious as to what could have happened, how can you be more miserable than Bangladesh??? How??? During the 1980s Vietnam was one of those nations. Torn by war for decade & saddled by a anti-productive Communist economic system this was a nation where I noted that indices like caloric intake and GDP PPP actually had Bangladesh on top!

No more. Vietnam's economy has grown a great deal from its extremely low base over the last 20 years, and it has now surpassed Bangaldesh. South Asians often like to complain that the reason East Asian nations like South Korea and Japan did so well, while their nations languished, was that the United States injected capital inputs after World War II. That model doesn't work for Vietnam for obvious reasons.

So what is going on? Vietnam's literacy rate is 90%, while Bangladesh's is 43%. I am well aware that terms such as "literacy rate" are subject to a great deal of fudging, and aren't always comparable, but I think such a wide variance in this case reflects a real qualitative difference. And this gap in literacy is a good proxy for a an enormous difference in endogenous human capital, the natural implication is that Vietnam was always poised to enter the global economy and transition toward higher value sectors and surpass Bangaldesh.

Which brings me to Burma, whose GDP PPP is $1,691 vs. $2,270 for Bangladesh. Burma's literacy rate though happens to be around 90%. Like Vietnam, when Burma opens up to the rest of the world I assume it will quickly leap-frog over Bangladesh and leverage its bank of human capital to shift into industries where South Asian workforces simply do not have the requisite skill levels (think about the handicaps which might result from having a substantially illiterate labor force on the factory floor!).

I use Bangladesh as a comparison because Burma is right next door, and I would not be surprised if two decades from now Bangladeshi workers stream into its eastern neighbor to take advantage of economic opportunies at the bottom of the skill ladder. But the human capital surfeit is endemic to all of South Asia.

Take a look at these two maps....

i-fadccae0bab7bc5a9362c52449430230-undernourished.gif

i-089f13d5a0226d1d8a6cd3868e267858-g-gpw-population-map.gif

I don't want to minimize the suffering in Sub-Saharan African; but do note that this region has a population of 770 million vs. a population of nearly 1.4 billion in South Asia. Also, note that in very densely population nations such as Nigeria nutrition is better than in most of South Asia. In vast swaths of the continent such as the Congo Basin one can chalk up malnutrition to exogenous shocks such as war; in contrast, South Asia is characterized by a basal rate of poor nutrition.

When reading articles about the Indian economic revolution, keeps these data in mind.

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Mongolia?
Wiki List_of_countries_by_population_density -

pop/ area/pp. per km^2
238 Mongolia 2,646,487 1,564,116 1.7
239 Western Sahara 341,421 266,000 1.3
240 Falkland Islands (UK) 3,060 12,173 0.25
241 Greenland (Denmark) 56,916 2,175,600 0.026
242 Baffin Island (Canada) 11,000
The end

There are semicultural reasons (diet lacking something it shouldn't lack) - or really food shortage?:(

By kostya puhov (not verified) on 10 Apr 2008 #permalink

On the whole, for Burma, the last 200 years kinda sucked, but I do remember reading that before the British conquered the country, Burma was quite successful, a unified kingdom with a reasonable standard of living and relatively high literacy rate.

Regarding comparison with India - should be noted that during colonial times immigrants from India formed a classic market-dominant minority, where they controlled much of the economy. Burma's military regime has discriminated against them and many have since left. I wonder what the condition of Burmese Indians (which includes many Bangladeshis) is nowadays.

Nevertheless, I think you are right, Burma has more potential than Bangladesh; the entire subcontinent is characterized by severe inequality, combining a quite advanced middle class with shockingly backward lower classes that suffer illiteracy and malnutrition.

I wonder what the condition of Burmese Indians (which includes many Bangladeshis) is nowadays.

most of them were expelled in the 1960s if they didn't leave during world war II. most of the hindus who remain have reidentified as buddhists, and i suspect they will be absorbed ino the bamar majority over time. the muslims are a different cup of tea; the rohingya of arakan are related to bengalis and are treated like crap like other non-buddhist minorities (karens, kachin, etc.).

Great post, Razib. I wholeheartedly agree that "human developement" markers such as literacy and nutrition are the essential fundaments for a society being able to develope also economically. Add maybe corruption to the list, though this may be more variable.

I suspect that India (unlike Bangla Desh) has some positive elements too (as mentioned: a quite stable democratic system, for instance) but (like China too) it largely relies (must rely?) in an internal division of the country in two layers: one that approaches developed standards and another that is deeply "third-worldly". Internal colonialism in other words (and that may be fueling increasing Maoist guerrillas, btw).

I wonder also if cultural aspects, like the "karmic fatalism" that I have read from some Indian online friends can be a factor too. Though not sure if that could apply to Bangla Desh.

Wouldn't an issue like IQ enter here? It tends to track well with gdp per capita. And several of the outliers, high IQ and low gdp per capita, are east Asian societies -- North Korea, Mongolia, Vietnam. Implying that all will prosper if they embrace capitalism. South Asian societies seem to have a quite lower average IQ, which doesn't bode especially well for the future.

As an American it's always interesting since so many of the South Asians here are the high IQ crowd. Sure, in America the East Asian kid is assumed to be smart, nonetheless, there are enough regular Chinese people working in restaurants that Americans are, I think, exposed to a broader swath of East Asian people. Indian immigration, on the other hand, has been so recent and so selective for high IQ that it gives Americans a very false picture of what Indians are like as a whole.

Wouldn't an issue like IQ enter here? It tends to track well with gdp per capita. And several of the outliers, high IQ and low gdp per capita, are east Asian societies -- North Korea, Mongolia, Vietnam. Implying that all will prosper if they embrace capitalism. South Asian societies seem to have a quite lower average IQ, which doesn't bode especially well for the future.

yes. but remember that IQ and economics have a two-directional relationship (check out mauritius' mysterious increase in IQ in the lynn & vanhanen data in the past 20 years). genes can't totally account for the 15 point diff. between black american IQ and that in africa, nor can it explain the higher IQ of ashkenazi jews in english speaking countries. i assume south asian countries can gain some on the margins when you note that there are several million retarded cretins due to malnutrition who are pathological due to environmental inputs.

My impression is that higher education levels (absolute terms) are significantly better in BD than in Burma. And absolute numbers of elementary educated (potential factory workers) are also much higher. So, while poor Bengalis may well move to Burma to work as slave labor in the future (as they move right now to India, Pakistan and the Middle East), thats not the same thing as Burma becoming more developed than BD. Barring religious fundamentalist takeover and a taliban like collective social disaster, BD will still have more Industry, more research and more economic activity than Burma (absolute terms)...while also having more illiterate and dirt poor people. Where Burma really has an advantage is in natural resources and land....so exploitation of those by MNCs will be heavy once it "opens up" and Bengali slave labor will play a role in that (creating future conflicts with immigrant Bengalis vs. local Burmese)..