Growth and the Padma Bridge: Has the Bangladesh PM got it right?

In a recent statement, the Bangladesh Prime Minister noted that, once the nation’s biggest infrastructure project, known as the multi-purpose Padma Bridge, is fully operational, GDP growth would increase by 2% annually. This would mean that the current rate of growth of 7.9% would reach 10%. Where did she get these numbers from? Is she exaggerating the growth impact of the Padma Bridge?

There is little doubt that the Padma Bridge would transform the lives of millions. For the first time, the southwest of Bangladesh would have a continuous road/rail link to the more developed east. The World Bank, which initially wanted to fund the project but pulled out in 2012 because of corruption concerns with the construction and management of the project, had this to say in 2011:

‘The Padma Bridge is expected to… transform the lives of nearly 30 million Bangladeshis living in the South West. By reducing distances to major urban centres like Dhaka by almost 100km, the Bridge will reduce poverty in the region and accelerate growth and development in the country as a whole.’

Formal evaluations that were undertaken by Bangladeshi economists suggest that the net economic benefits would be substantially positive, but the equivalent annualized addition to national GDP would be about 0.33 per cent. On the hand, regional GDP in the southwest would increase between 1.7% and 2.3%.

It is possible that the Prime Minister’s speechwriters glossed over this distinction between regional and national GDP. After all, 2% extra growth – rather than the more modest fractional numbers – acts rather well as a soundbite.

2 thoughts on “Growth and the Padma Bridge: Has the Bangladesh PM got it right?

  1. A reevaluation of financial benefit of Padma bridge is required due to inflated cost of 1b to4b from 2012 to 2018 when it was supposed to be completed, but it appears that the project may not be completed even by the year 2022.The projected inflation cost need recalculation and the impact on gdp regional and natiol need a recalculation.Further a fresh sensitivity on increased investment and reduced return must be reevaluated to assess the overall feasibility and financial justification of the project. As the decisions on any project is not inclusive of people’s participation actual position should be known to people.

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  2. Thank you, Prof. Yan Islam, for raising an important aspect of the political economy of the Padma Bridge.

    No doubt that the successful construction of the Padma Bridge (PB), the nation’s largest and the most expensive infrastructure project ever built in Bangladesh, would not only boost the country’s economy, the residual benefits of this massive multipurpose infrastructure would also contribute to the entire regional economy. What would be the most reasonable estimate of the future additional economic (GDP) growth due to this massive infrastructure (in other words, the attributable benefits)? There is no straightforward answer to this question. Because, any attribution of the true benefit of a large enterprise such as the PB on GDP would require a rigorous assessment of all relevant predictors / contributors of growth (among many other factors and assumptions). I am not sure if any such economic modelling study on the forward-looking GDP growth associated with the PB was ever done.

    The ambit of The Feasibility Study of the Padma Bridge included data on the contribution of different sectors in GDP, but not as growth forecast, nor any attribution of GDP growth to the PB. So, echoing your question – where did the Bangladesh PM get these figures from? Well, it looks like the current rate of 7.9% GDP growth figure was taken from the Asian Development Outlook 2018 data which stated that in 2018, Bangladesh had the highest GDP growth (7.9%) in South Asia region; higher than India (7.3), Pakistan (5.8%) and Sri Lanka (3.8%). Since mid-1990s, the economic growth of Bangladesh averaged 5.7% annually, a spectacular sustained growth rate that very few developing countries have been able to maintain consistently over such a long period.

    A hyperbolic GDP growth forecast and attribution (to PB) in Bangladesh PM’s speech may not be taken literally. After all, the political rhetoric for such a mammoth enterprise is not unusual, although the figures may not necessarily be incorrect either, in the absence of any relevant and credible data.

    At best, the figures lacked a credible reference and at worst – a little exaggeration.

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