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October - D
ecember 2017
Bangladesh Economic D
evelopment : D
riving Towards the Future
October - December 2017
ECONOMICDEVELOPMENT
DRIVING TOWARDS THE FUTURE
BANGLADESH
1OCTOBER - DECEMBER 2017 | The Bangladesh Accountant
ISSN 1993-3649
EDITORIAL BOARD CONTACT US
Chairman
Dr. Jamshed S A Choudhury FCA
Co-Chairman
Harun Mahmud FCA
Members
Akhtar Sohel Kasem FCAA F Nesaruddin FCANasir Uddin Ahmed FCAMd. Shahadat Hossain FCAGopal Chandra Ghosh FCAModdassar Ahmed Siddique FCAAmanullah Khan FCAM Idris Ali FCAMasih Malik Chowdhury FCADr. Md. Abu Sayed Khan FCAMd Abdus Salam FCAMohammad Zahid Hossain FCAS. M. Rafiqul Islam FCADr. ASM Hossain Tayiab FCAMohammad Redwanur Rahman FCASk. Md. Tarikul Islam FCADhali Tanvir Ahmad Siddiqui ACAAnika Sultana ACABidhan Chandra Mandal ACAIsmat Jahan ACAAfratul Kawsar ACAMustaq Ahmed ACAChairman DRC-ICAB
Member Secretary
Mohammed Emdadul Haque FCATechnical Adviser, ICAB
Published by the Editorial Board of the Council
The Institute of CharteredAccountants of Bangladesh (ICAB)
CA Bhaban100 Kazi Nazrul Islam AvenueDhaka 1215, Bangladesh
880 2 9115340, 9612612100 9117521, 9137847 (O�.)
880 2 9125266
facebook.com/icabdhaka
icab.org.bd
Design & PrintDominant Printing & PackagingM 01794550916E [email protected]
The Bangladesh Accountant
"The opinions expressed in this publication are those of the respective authors themselves and do not necessarily reflect the views of the Editorial Board of the Institute of Chartered Accountants of Bangladesh (ICAB) or ICAB itself."
DISCLAIMER
2 OCTOBER - DECEMBER 2017 | The Bangladesh Accountant
ICAB PUBLICATIONS
ContentsOctober - December 2017
P6
for more details, please visit
www.icab.org.bd
P7 Income Inequality on the Rise: A Thwack to World Economy and Social Cohesion M Jalal Hussain FCA
P13 E�cacies in SOCBs Myths, Realities & Remedies Masih Malik Chowdhury FCA
P17 Bangladesh Towards Sustainable Food Security: Contribution of Agribusiness Md. Mustaq Ahmed ACA1 Md Abdullah Al Mamun2
P25 Critical Analysis of Transfer Pricing Regulations in Bangladesh Md. Kamruzzaman ACA
P31 The Paradox of Growth and Inequality Md. Shahadat Hossain FCA
P35 Resolving Ambiguity in Calculating Workers’ Profit Participation and Other Funds Md. Saiful Islam FCA
P41 Continuous Accounting: The Pathway to Modernization of Accounting Services S M Ashfaqur Rahman ACA
P4 Editorial
P6 President’s Desk
ICAB publications include, inter alia, a quarterly journal titled 'The Bangladesh Accountant' and a monthly mouthpiece 'ICAB News Bulletin'. In the quarterly journal articles of ICAB Members, Members from other Accountancy bodies, Academics and Business Leaders from home and abroad are published. These articles cover an wide area of our profession, i.e, Auditing, Accounting, Financial and Economic. The monthly news bulletin publishes latest ICAB events mostly of the month it is published. This bulletin also acts as an information hub for the Members to keep up to date what is happening in and around ICAB. In addition to these two regular publications, ICAB also publishes books, monographs, booklets and Students Study Manuals regularly.
3OCTOBER - DECEMBER 2017 | The Bangladesh Accountant
The Bangladesh Accountant
P49 Exchange Rate Policy Bangladesh Perspective Foyed Ahmed ACA
P53 E-Commerce and E-Commerce Scenario in Bangladesh Sayed Ashraf Mohammed Iqbal ACA
P59 Financial Markets of Bangladesh Development and Challenges M A Wahab Akanda ACA
P69 Corporate Social and Environmental Reporting (CSER) The Development of Theoretical Framework Muhammad Omar Faruk ACA1 Dr. Md. Ali Noor2
P79 Literacy Rate and Primary Education: A Study on 64 Districts of Bangladesh Sujan Chandra Paul ACA1 Dr. Anup Kumar Saha2
P91 Economic Trends and Prospects in Developing Bangladesh Arif Hossain ACA
P101 Journey Towards 2050: Prospect of Bangladesh Economy H M Ashraf-uz-Zaman FCA
P107 Myanmar Pushouts Fiasco in Bangladesh Aleya Ferdous
P115 Productivity in RMG: Continuous Improvement is Key to Achieve USD 50 Billion Landmark Mohammad Zahid Hossain FCA
P119 PPP’s Role on Country’s Development M. Idris Ali FCA
News & Events
News Bulletin
Journal
Circular & Notice
Digital Highlightswww.icab.org.bd
The October-December issue of the Bangladesh Accountant encompasses a wide variety of current and burning topics as there was no fixed theme for this issue. We have endeavored to collect views and opinions of writers on economic development prospects and current issues of Bangladesh.
Bangladesh economy now is progressing its pace of growth in a progressive manner and has undergone a major transformation over the past two decades. Growth was fueled mainly by a rise in readymade garment exports, overseas workers' remittances, and domestic consumption. In the past 2 decades, growth was steady and inclusive creating jobs for low-skilled workers and women. A large increase in food production together with a sharp decline in
population growth led to higher food availability per capita. Macroeconomic stability was maintained in the past 5 years. The inflation rate dropped, the fiscal deficit was kept in check, foreign exchange reserves showed robust growth, the exchange rate stayed broadly unchanged and external debt as a percentage of gross domestic product (GDP) steadily decreased. Bangladesh is undergoing substantial economic and social change, and this will intensify in the coming decades. The result has been a sustained increase in per capita income. It is important to recognize that Bangladesh is making important progress towards its goal of middle-income status.
Bangladesh has successfully stepped towards SDGs from MDGs. It has become a role model in South
4 OCTOBER - DECEMBER 2017 | The Bangladesh Accountant
“Bangladesh economy now is progressing its pace of growth in a progressive manner and has undergone a major transformation over the past two decades.”
Editorial
Dr. Jamshed SanyiathAhmed Choudhury FCAChairman – Editorial BoardCouncil Member - ICAB
5OCTOBER - DECEMBER 2017 | The Bangladesh Accountant
The Bangladesh Accountant
Asia and in the world in achieving the MDGs. Our Government is persistently working hard to achieve SDGs though we have limitations that need to be overcome. These are not easy to achieve, lots of internal and external challenges are there. Government has set targets to bring down poverty to 13.5 percent in the population by 2021 and also achieve universal literacy by the end of this decade.
Encouraging foreign investment in Bangladesh has had significant success - particularly in the power generation, gas production, pharmaceutical, textile and cellular telephony sectors. The government has also made e�orts to create an
'investor-friendly' environment so as to attract foreign trade. For achieving the growth rate of 7% to 8%, the country needs 32% of GDP from 10 years’ indigenous investment with a significant amount of FDI. Investment in the power sector is the number one priority of the government to meet the growing infrastructure needs.
The government and the people of Bangladesh have their eyes fixed on the horizon, working hard to realize the twin dreams of eradicating poverty and achieving middle-income status by 2021. The country’s success in achieving the Millennium Development Goals has shown that this is not only possible, but highly likely. In this journey, we all citizens of our beloved nation must come forward and work together to reach our dreamed destination.
As always, we all must try to enrich our fellow members and honourable readers with the scholarly thoughts and insight shared by the writers. This journal is a means to grow the writing skill of prospective writers of our members. And thus, helps develop our profession. Improvement is a continuous process, so like always we solicit your suggestions to uphold the advancement of the Bangladesh Account at home and abroad.
GOVERNMENTHAS SET TARGETS TO
BRING DOWN POVERTY TO
13.5 PERCENTIN THE POPULATION
BY 2021
6 OCTOBER - DECEMBER 2017 | The Bangladesh Accountant
“I strongly urge our members to make the effort and put in the time to contribute to the contents of this Journal, and encourage the publication team to continue to the good work they have been doing.”
President’s Desk
Adeeb Hossain Khan FCAPresident-ICAB
As members of ICAB, we should
take pride in our quarterly Journal.
The Journal tends to have a rich
content of a wide range of topics
ranging from technical accounting
issues to National Budget to
developments in management and
technology. I am delighted that in
2017 this prized document has
received commendable face lifting
under the leadership of Council
Member Dr. Jamshed Sanyiath
Ahmed Choudhury FCA.
This Journal is not just a key
mouthpiece of our profession, but
is a source of information for those
within and outside our profession. It
is part of our identify; it is a
component of the CA brand. I
strongly urge our members to make
the e�ort and put in the time to
contribute to the contents of this
Journal, and encourage the
publication team to continue to the
good work they have been doing.
Best wishes.
7OCTOBER - DECEMBER 2017 | The Bangladesh Accountant
ARTICLE
development agenda, etiolating inequalities across and within many countries have been an important part of the discussions at di�erent international colloquiums. There’s an ever-increasing deference among sponsors that economic growth is not adequate to sustainably reduce poverty if it’s not wide-ranging. When world leaders adopted the Millennium Declaration in 2000, they promised to generate a more equitable economic world. So far, in many countries, the hierarchy of prospects and opportunities have become much sti�er to scramble. Huge disparities are there in health and education services, land and other productive assets between the richest and the poorest households.
Wealth inequalities are braided directly with income inequality. They are inherited from generations and are intensely seen across many locations around the globe, ensnaring large pouches of society in poverty and deprivation. Across the globe, people living in poverty and vulnerable social groups have been hit hard by the global financial and economic crisis and its repercussion, adding urgency to the need to discourse inequalities and their consequences. There’s growing global conciliation on the need to abridge the high-gap between those ‘haves’ and those ‘have-nots’.
As underscored in the
ntroduction
“The greatest country, the richest country is not that which has the most capitalists, monopolists, immense grabbings, vast fortunes, with its sad, sad soil of extreme, degrading, damning poverty, but the land which there are the most homesteads, freeholds-where wealth does not show much such contrasts-high and low, where all men have enough-a modest living and beautiful necessities” said Walt Whitman, a renowned American essayist and journalist.
Flared income inequality is the crucial test of our time. In advanced economies, the gap between the rich and poor is at its highest level in decades. Inequality trends have been more mixed in emerging and developing countries, with some countries experiencing declining inequality, but ubiquitous inequities in access to education, health care, and finance are ongoing. The extent of inequality, its diverse, its recusant e�ect on the economy and the society-have become some of the most fiercely deliberated issues by economists, policymakers and researchers.
The concept of rising income inequality and its global residuum has brought the attention of the world leaders, business communities and economists. The international communities silhouette its vision for a post-2015 global
trends that will determine the shape of the world in the next decade.
The WEF said it had been pointing out the threats of rising inequality and political polarization for more than a decade, but that the slow pace of recovery from the deep recession of 2008 had intensified income gaps within countries. Emergency measures such as quantitative easing – the creation of money by central banks – had become permanent features of economic policy, and had aggravated inequality by boosting the returns of those holding financial assets. It added that the trends of recent years had come into sharp focus in 2016 with rising discontent and dissatisfaction evident in the UK referendum and in the US with Trump’s victory over Hillary Clinton.
“Urgent action is needed to overcome political or ideological di�erences and work together to solve critical challenges as income inequality,” said Margareta Drzeniek-Hanouz, head of global competitiveness and risks at the WEF. (Source WEF Risks Report 2017).
The Author is aChartered Accountant and
a Fellow Member of theInstitute of Chartered Accountants
of Bangladesh-ICAB
I bizarre combination pattern in which opulence is booming for CEOs and Wall Street speculators, while the rest of the economy – particularly workers, the middle-income class, and small businesses – have undergone a predominantly rancorous cycle. Productivity has grown massively, but wages have festered. Consumption has remained reasonably high because, in an e�ort to maintain their standard of living, working people have: a) added hours, became two-income families, often with two and even three jobs per person; b) increased household debt c) retroactions and ricochets of globalization and technology advancement. Inequality has skyrocketed because e�ective tax rates on the 1% have dropped, while their income and profits have risen steeply.
Some people born with a silver spoon and rich inheritance makes them more rich and
Both vicious and virtuous cycles have befallen in various economies at several times and under numerous economic theories and policy pressures. But, for the last 30 years, the global economy in general and the American economy in particular have witnessed a
Economic, Social and Natural Causes of Income Inequality
A “tour d’horizon“ of the origins of inequality started with the convergence and divergence since 1950. The review of the causes of income inequality will show that various archetypes are ostensible in the progression of inequality at the country level. Depending on the inequality concept used, those outlines are sometimes hard to resolve, except if one appreciates that di�erent sources may lead to di�erent assessments. Overall, the conclusion is that inequality is higher today in a large number of countries than it was some 25 years ago. The reason is simple: People who already grasp wealth have the resources to reinvest or to leverage the reaping of wealth, which procreates neoteric wealth.
conclusion document of the United Nations Conference on Sustainable Development, finding ways and means to successfully down-size income inequality will necessitate a transformative modification and an all-encompassing slant to the three actinoids of sustainable development – economic, environmental and societal. Properly balanced social, economic and environmental policies and institutions can help decrease income inequalities when they warrant equality of opportunity, irradiate job creation and guarantee entree to
Income Inequality on the RiseA Thwack to World Economy and Social Cohesion
M Jalal Hussain FCA
who have started to say that technology, like globalization, is adversely a�ecting the lives of many people. The internationally acclaimed British physicist, Stephen Hawking has warned that technology is partly to blame for the rise in income inequality; and, that great technological advances can leave most people “miserably poor.” He said: “Everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine owners successfully lobby against wealth redistribution... so far the trend seems to be toward the second option with technology driving ever-increasing inequality.”
Professor Erik Brynjolfsson of the MIT Sloan School of Management, recently wrote: “My reading of the data is that technology is the main driver of the recent increases in inequality. It is the biggest factor.” The problem is that
quick-witted life. On the contrary some people born landless, homeless and penniless as their parents die with huge burden of debt finally shifted to the unfortunate inheritors. So long the system of inheritance continues, inequalities are bound to be perpetuated in the society. Inequality of income also causes due to natural reasons as some people are endowed by nature with superior talent, intelligence, better physique and greater capability than others. In additions, governments’ policies on wage structures, minimum wages, education policies and facilities, taxation policies, etc. are the deep-rooted reasons for income equalities in an economy.
Technology Pullulates Income Inequality
The tech CEOs of Apple, Microsoft, Amazon, Facebook are resounding the world that they are making the world a better place. But there are those
has been connected with intentional homicide and robbery, violent crime well as a higher prevalence of other social problems such as drug abuse and mental illness. Besides, this increase in social tensions have been found as a formidable blockade for the strengthening of democratic institutions and a source of political unpredictability.
Income Inequality in the Context of Bangladesh
There’s no doubt that the GDP growth and per capita income of Bangladesh have been increasing during the last few years. At the same time income gap between the rich and the poor widened though per capita
social unrests in the forms of riot, protest, shooting, looting and loss of many people’s lives.
Nigeria has one of the world’s biggest populations, the country is overflowing with oil reserves, and a starving young workforce busting with innovative ideas. Why is the West African Giant still so poor that almost 100 million people live on less than $1 per day? The oil rich country is submersed with inequality of income, according to a global index, which ranks Nigeria at the very bottom of 152 countries in terms of their commitment to fight inequality.
Inequality of income has been strongly linked with crimes and social conflicts. In particular it
Inequality is a Vicious Cycle for the Economy and the Society
“The rich get richer; the poor get poorer” is not just a cliché. The concept behind it is a theoretical process called “wealth concentration.” Under certain conditions, newly created wealth is concentrated in the possession of already-wealthy individuals. The process of wealth concentration arguably makes economic inequality a rancorous cycle. The e�ects of wealth concentration may extend to future generations. Children born in a rich family have an economic advantage, because of wealth inherited and possibly education, which may increase their chances of earning a higher income than their peers. These advantages create another round of the malicious cycle.
Growing inequality and flaring income gaps will lead to social unrest and chaos in many developed and developing countries. In practical terms, according to an analysis by Standard & Poor’s, as the income gap has amplified, it has created an undercurrent of social unrest that, should the trend continue, will worsen – perhaps even to the point of civil unrest, conflicts and societal onslaught. The backlashes of income inequality had been visible in the world’s 1st largest economy-USA since long time back. Starting from the Springfest Riot, April 10, 2010 to St. Louis Protests, September 15, 2017, the country faced 29 serious and miasmatic
passable social protection for all. Aplenty can be erudite from those economies that managed to reduce substantially inequality even under an erratic, dicey and fierce global environment. The international community can play a significant role in providing backing to policies that help cut down income inequality.
Assessments of World Economic Forum 2017 on Inequality of Income
The WEF’s annual global risks report – hand-picked from 700 experts from the world– found that rising income and wealth disparity, and increasing polarization of sectors of society, were ranked first and third among the underlying
As a result, extreme inequality is being created in our society between the rich and the poor. Majority people are also being deprived of good medical treatment, nutrition and entertainment which lead to intensify social tensions, conflicts, political and social unpredictability. As the inequality in a county increases, the loss in human development also increases, according to the Human Development Report, released jointly by the UNDP and the General Economics Division of the Planning Commission in 2016.
Business policy, minimum wages policy, taxation policy and education policy are very important to reduce income heterogeneity and economic disparity in the county. There was a news in the local newspapers recently that fetched the attention of the scribe that one restaurant is opened in the capital city of Dhaka where ‘robots” were used to serve customers replacing “hotel boys/girls”. Bangladesh is a country of 161 million people, millions of skilled and educated people are unemployed and under employed in the country. In this economic scenario, how could business owner get permission/license to use “robots” in restaurants? What’s the government policy about this? This type of economic activity will surely create unemployment, income inequality and end up with social instability, chaos and conflicts.
income increased significantly, according to the preliminary report of the Household Income and Expenditure Survey-2016. The report shows that Gini co-e�cient, which is used to measure income inequality, increased to 0.483 at national level in 2016 from 0.458 in 2010 meaning that the rich became richer while the poor became poorer during the period.
Per capita income in the country grew swiftly in the past three decades with economic growth, but failed to prevent spreading inequality. Economists blamed lack of good governance, widespread corruption and poor institutional capacity for the unpleasant situation. The per capita income in the county grew five folds to $1602 in 2016-17 from $330 in 1994-95, thanks to the inflow of remittance, growing exports at the cost of low-priced labor and inside consumption. The rich, however, became richer and the poor became poorer day by day amid unequal distribution of the economic gains over the years.
The impacts of inequality on di�erent sectors of the society have become acute as only a small section of people is getting high quality education and health care, while the majority people are being deprived of it. The huge number of workers have been working in garments and textile industries for the last few decades with skimpy wages that don’t support them to educate their children properly.
8 OCTOBER - DECEMBER 2017 | The Bangladesh Accountant
development agenda, etiolating inequalities across and within many countries have been an important part of the discussions at di�erent international colloquiums. There’s an ever-increasing deference among sponsors that economic growth is not adequate to sustainably reduce poverty if it’s not wide-ranging. When world leaders adopted the Millennium Declaration in 2000, they promised to generate a more equitable economic world. So far, in many countries, the hierarchy of prospects and opportunities have become much sti�er to scramble. Huge disparities are there in health and education services, land and other productive assets between the richest and the poorest households.
Wealth inequalities are braided directly with income inequality. They are inherited from generations and are intensely seen across many locations around the globe, ensnaring large pouches of society in poverty and deprivation. Across the globe, people living in poverty and vulnerable social groups have been hit hard by the global financial and economic crisis and its repercussion, adding urgency to the need to discourse inequalities and their consequences. There’s growing global conciliation on the need to abridge the high-gap between those ‘haves’ and those ‘have-nots’.
As underscored in the
ntroduction
“The greatest country, the richest country is not that which has the most capitalists, monopolists, immense grabbings, vast fortunes, with its sad, sad soil of extreme, degrading, damning poverty, but the land which there are the most homesteads, freeholds-where wealth does not show much such contrasts-high and low, where all men have enough-a modest living and beautiful necessities” said Walt Whitman, a renowned American essayist and journalist.
Flared income inequality is the crucial test of our time. In advanced economies, the gap between the rich and poor is at its highest level in decades. Inequality trends have been more mixed in emerging and developing countries, with some countries experiencing declining inequality, but ubiquitous inequities in access to education, health care, and finance are ongoing. The extent of inequality, its diverse, its recusant e�ect on the economy and the society-have become some of the most fiercely deliberated issues by economists, policymakers and researchers.
The concept of rising income inequality and its global residuum has brought the attention of the world leaders, business communities and economists. The international communities silhouette its vision for a post-2015 global
trends that will determine the shape of the world in the next decade.
The WEF said it had been pointing out the threats of rising inequality and political polarization for more than a decade, but that the slow pace of recovery from the deep recession of 2008 had intensified income gaps within countries. Emergency measures such as quantitative easing – the creation of money by central banks – had become permanent features of economic policy, and had aggravated inequality by boosting the returns of those holding financial assets. It added that the trends of recent years had come into sharp focus in 2016 with rising discontent and dissatisfaction evident in the UK referendum and in the US with Trump’s victory over Hillary Clinton.
“Urgent action is needed to overcome political or ideological di�erences and work together to solve critical challenges as income inequality,” said Margareta Drzeniek-Hanouz, head of global competitiveness and risks at the WEF. (Source WEF Risks Report 2017).
The concept of rising incomeinequality and its global residuumhas brought the attention of theworld leaders, business communitiesand economists. The internationalcommunities silhouette its visionfor a post-2015 global developmentagenda, etiolating inequalities acrossand within many countries have beenan important part of the discussionsat di�erent international colloquiums.
bizarre combination pattern in which opulence is booming for CEOs and Wall Street speculators, while the rest of the economy – particularly workers, the middle-income class, and small businesses – have undergone a predominantly rancorous cycle. Productivity has grown massively, but wages have festered. Consumption has remained reasonably high because, in an e�ort to maintain their standard of living, working people have: a) added hours, became two-income families, often with two and even three jobs per person; b) increased household debt c) retroactions and ricochets of globalization and technology advancement. Inequality has skyrocketed because e�ective tax rates on the 1% have dropped, while their income and profits have risen steeply.
Some people born with a silver spoon and rich inheritance makes them more rich and
Both vicious and virtuous cycles have befallen in various economies at several times and under numerous economic theories and policy pressures. But, for the last 30 years, the global economy in general and the American economy in particular have witnessed a
Economic, Social and Natural Causes of Income Inequality
A “tour d’horizon“ of the origins of inequality started with the convergence and divergence since 1950. The review of the causes of income inequality will show that various archetypes are ostensible in the progression of inequality at the country level. Depending on the inequality concept used, those outlines are sometimes hard to resolve, except if one appreciates that di�erent sources may lead to di�erent assessments. Overall, the conclusion is that inequality is higher today in a large number of countries than it was some 25 years ago. The reason is simple: People who already grasp wealth have the resources to reinvest or to leverage the reaping of wealth, which procreates neoteric wealth.
conclusion document of the United Nations Conference on Sustainable Development, finding ways and means to successfully down-size income inequality will necessitate a transformative modification and an all-encompassing slant to the three actinoids of sustainable development – economic, environmental and societal. Properly balanced social, economic and environmental policies and institutions can help decrease income inequalities when they warrant equality of opportunity, irradiate job creation and guarantee entree to
Income Inequality on the RiseA Thwack to World Economy and Social Cohesion
who have started to say that technology, like globalization, is adversely a�ecting the lives of many people. The internationally acclaimed British physicist, Stephen Hawking has warned that technology is partly to blame for the rise in income inequality; and, that great technological advances can leave most people “miserably poor.” He said: “Everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine owners successfully lobby against wealth redistribution... so far the trend seems to be toward the second option with technology driving ever-increasing inequality.”
Professor Erik Brynjolfsson of the MIT Sloan School of Management, recently wrote: “My reading of the data is that technology is the main driver of the recent increases in inequality. It is the biggest factor.” The problem is that
quick-witted life. On the contrary some people born landless, homeless and penniless as their parents die with huge burden of debt finally shifted to the unfortunate inheritors. So long the system of inheritance continues, inequalities are bound to be perpetuated in the society. Inequality of income also causes due to natural reasons as some people are endowed by nature with superior talent, intelligence, better physique and greater capability than others. In additions, governments’ policies on wage structures, minimum wages, education policies and facilities, taxation policies, etc. are the deep-rooted reasons for income equalities in an economy.
Technology Pullulates Income Inequality
The tech CEOs of Apple, Microsoft, Amazon, Facebook are resounding the world that they are making the world a better place. But there are those
has been connected with intentional homicide and robbery, violent crime well as a higher prevalence of other social problems such as drug abuse and mental illness. Besides, this increase in social tensions have been found as a formidable blockade for the strengthening of democratic institutions and a source of political unpredictability.
Income Inequality in the Context of Bangladesh
There’s no doubt that the GDP growth and per capita income of Bangladesh have been increasing during the last few years. At the same time income gap between the rich and the poor widened though per capita
social unrests in the forms of riot, protest, shooting, looting and loss of many people’s lives.
Nigeria has one of the world’s biggest populations, the country is overflowing with oil reserves, and a starving young workforce busting with innovative ideas. Why is the West African Giant still so poor that almost 100 million people live on less than $1 per day? The oil rich country is submersed with inequality of income, according to a global index, which ranks Nigeria at the very bottom of 152 countries in terms of their commitment to fight inequality.
Inequality of income has been strongly linked with crimes and social conflicts. In particular it
Inequality is a Vicious Cycle for the Economy and the Society
“The rich get richer; the poor get poorer” is not just a cliché. The concept behind it is a theoretical process called “wealth concentration.” Under certain conditions, newly created wealth is concentrated in the possession of already-wealthy individuals. The process of wealth concentration arguably makes economic inequality a rancorous cycle. The e�ects of wealth concentration may extend to future generations. Children born in a rich family have an economic advantage, because of wealth inherited and possibly education, which may increase their chances of earning a higher income than their peers. These advantages create another round of the malicious cycle.
Growing inequality and flaring income gaps will lead to social unrest and chaos in many developed and developing countries. In practical terms, according to an analysis by Standard & Poor’s, as the income gap has amplified, it has created an undercurrent of social unrest that, should the trend continue, will worsen – perhaps even to the point of civil unrest, conflicts and societal onslaught. The backlashes of income inequality had been visible in the world’s 1st largest economy-USA since long time back. Starting from the Springfest Riot, April 10, 2010 to St. Louis Protests, September 15, 2017, the country faced 29 serious and miasmatic
passable social protection for all. Aplenty can be erudite from those economies that managed to reduce substantially inequality even under an erratic, dicey and fierce global environment. The international community can play a significant role in providing backing to policies that help cut down income inequality.
Assessments of World Economic Forum 2017 on Inequality of Income
The WEF’s annual global risks report – hand-picked from 700 experts from the world– found that rising income and wealth disparity, and increasing polarization of sectors of society, were ranked first and third among the underlying
Maps – Current World Income Distribution
Source: World GDP density map, 1990 and 2025–SEDAC (NASA)
As a result, extreme inequality is being created in our society between the rich and the poor. Majority people are also being deprived of good medical treatment, nutrition and entertainment which lead to intensify social tensions, conflicts, political and social unpredictability. As the inequality in a county increases, the loss in human development also increases, according to the Human Development Report, released jointly by the UNDP and the General Economics Division of the Planning Commission in 2016.
Business policy, minimum wages policy, taxation policy and education policy are very important to reduce income heterogeneity and economic disparity in the county. There was a news in the local newspapers recently that fetched the attention of the scribe that one restaurant is opened in the capital city of Dhaka where ‘robots” were used to serve customers replacing “hotel boys/girls”. Bangladesh is a country of 161 million people, millions of skilled and educated people are unemployed and under employed in the country. In this economic scenario, how could business owner get permission/license to use “robots” in restaurants? What’s the government policy about this? This type of economic activity will surely create unemployment, income inequality and end up with social instability, chaos and conflicts.
income increased significantly, according to the preliminary report of the Household Income and Expenditure Survey-2016. The report shows that Gini co-e�cient, which is used to measure income inequality, increased to 0.483 at national level in 2016 from 0.458 in 2010 meaning that the rich became richer while the poor became poorer during the period.
Per capita income in the country grew swiftly in the past three decades with economic growth, but failed to prevent spreading inequality. Economists blamed lack of good governance, widespread corruption and poor institutional capacity for the unpleasant situation. The per capita income in the county grew five folds to $1602 in 2016-17 from $330 in 1994-95, thanks to the inflow of remittance, growing exports at the cost of low-priced labor and inside consumption. The rich, however, became richer and the poor became poorer day by day amid unequal distribution of the economic gains over the years.
The impacts of inequality on di�erent sectors of the society have become acute as only a small section of people is getting high quality education and health care, while the majority people are being deprived of it. The huge number of workers have been working in garments and textile industries for the last few decades with skimpy wages that don’t support them to educate their children properly.
development agenda, etiolating inequalities across and within many countries have been an important part of the discussions at di�erent international colloquiums. There’s an ever-increasing deference among sponsors that economic growth is not adequate to sustainably reduce poverty if it’s not wide-ranging. When world leaders adopted the Millennium Declaration in 2000, they promised to generate a more equitable economic world. So far, in many countries, the hierarchy of prospects and opportunities have become much sti�er to scramble. Huge disparities are there in health and education services, land and other productive assets between the richest and the poorest households.
Wealth inequalities are braided directly with income inequality. They are inherited from generations and are intensely seen across many locations around the globe, ensnaring large pouches of society in poverty and deprivation. Across the globe, people living in poverty and vulnerable social groups have been hit hard by the global financial and economic crisis and its repercussion, adding urgency to the need to discourse inequalities and their consequences. There’s growing global conciliation on the need to abridge the high-gap between those ‘haves’ and those ‘have-nots’.
As underscored in the
ntroduction
“The greatest country, the richest country is not that which has the most capitalists, monopolists, immense grabbings, vast fortunes, with its sad, sad soil of extreme, degrading, damning poverty, but the land which there are the most homesteads, freeholds-where wealth does not show much such contrasts-high and low, where all men have enough-a modest living and beautiful necessities” said Walt Whitman, a renowned American essayist and journalist.
Flared income inequality is the crucial test of our time. In advanced economies, the gap between the rich and poor is at its highest level in decades. Inequality trends have been more mixed in emerging and developing countries, with some countries experiencing declining inequality, but ubiquitous inequities in access to education, health care, and finance are ongoing. The extent of inequality, its diverse, its recusant e�ect on the economy and the society-have become some of the most fiercely deliberated issues by economists, policymakers and researchers.
The concept of rising income inequality and its global residuum has brought the attention of the world leaders, business communities and economists. The international communities silhouette its vision for a post-2015 global
trends that will determine the shape of the world in the next decade.
The WEF said it had been pointing out the threats of rising inequality and political polarization for more than a decade, but that the slow pace of recovery from the deep recession of 2008 had intensified income gaps within countries. Emergency measures such as quantitative easing – the creation of money by central banks – had become permanent features of economic policy, and had aggravated inequality by boosting the returns of those holding financial assets. It added that the trends of recent years had come into sharp focus in 2016 with rising discontent and dissatisfaction evident in the UK referendum and in the US with Trump’s victory over Hillary Clinton.
“Urgent action is needed to overcome political or ideological di�erences and work together to solve critical challenges as income inequality,” said Margareta Drzeniek-Hanouz, head of global competitiveness and risks at the WEF. (Source WEF Risks Report 2017).
bizarre combination pattern in which opulence is booming for CEOs and Wall Street speculators, while the rest of the economy – particularly workers, the middle-income class, and small businesses – have undergone a predominantly rancorous cycle. Productivity has grown massively, but wages have festered. Consumption has remained reasonably high because, in an e�ort to maintain their standard of living, working people have: a) added hours, became two-income families, often with two and even three jobs per person; b) increased household debt c) retroactions and ricochets of globalization and technology advancement. Inequality has skyrocketed because e�ective tax rates on the 1% have dropped, while their income and profits have risen steeply.
Some people born with a silver spoon and rich inheritance makes them more rich and
Both vicious and virtuous cycles have befallen in various economies at several times and under numerous economic theories and policy pressures. But, for the last 30 years, the global economy in general and the American economy in particular have witnessed a
Economic, Social and Natural Causes of Income Inequality
A “tour d’horizon“ of the origins of inequality started with the convergence and divergence since 1950. The review of the causes of income inequality will show that various archetypes are ostensible in the progression of inequality at the country level. Depending on the inequality concept used, those outlines are sometimes hard to resolve, except if one appreciates that di�erent sources may lead to di�erent assessments. Overall, the conclusion is that inequality is higher today in a large number of countries than it was some 25 years ago. The reason is simple: People who already grasp wealth have the resources to reinvest or to leverage the reaping of wealth, which procreates neoteric wealth.
conclusion document of the United Nations Conference on Sustainable Development, finding ways and means to successfully down-size income inequality will necessitate a transformative modification and an all-encompassing slant to the three actinoids of sustainable development – economic, environmental and societal. Properly balanced social, economic and environmental policies and institutions can help decrease income inequalities when they warrant equality of opportunity, irradiate job creation and guarantee entree to
9OCTOBER - DECEMBER 2017 | The Bangladesh Accountant
ARTICLE
who have started to say that technology, like globalization, is adversely a�ecting the lives of many people. The internationally acclaimed British physicist, Stephen Hawking has warned that technology is partly to blame for the rise in income inequality; and, that great technological advances can leave most people “miserably poor.” He said: “Everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine owners successfully lobby against wealth redistribution... so far the trend seems to be toward the second option with technology driving ever-increasing inequality.”
Professor Erik Brynjolfsson of the MIT Sloan School of Management, recently wrote: “My reading of the data is that technology is the main driver of the recent increases in inequality. It is the biggest factor.” The problem is that
quick-witted life. On the contrary some people born landless, homeless and penniless as their parents die with huge burden of debt finally shifted to the unfortunate inheritors. So long the system of inheritance continues, inequalities are bound to be perpetuated in the society. Inequality of income also causes due to natural reasons as some people are endowed by nature with superior talent, intelligence, better physique and greater capability than others. In additions, governments’ policies on wage structures, minimum wages, education policies and facilities, taxation policies, etc. are the deep-rooted reasons for income equalities in an economy.
Technology Pullulates Income Inequality
The tech CEOs of Apple, Microsoft, Amazon, Facebook are resounding the world that they are making the world a better place. But there are those
has been connected with intentional homicide and robbery, violent crime well as a higher prevalence of other social problems such as drug abuse and mental illness. Besides, this increase in social tensions have been found as a formidable blockade for the strengthening of democratic institutions and a source of political unpredictability.
Income Inequality in the Context of Bangladesh
There’s no doubt that the GDP growth and per capita income of Bangladesh have been increasing during the last few years. At the same time income gap between the rich and the poor widened though per capita
social unrests in the forms of riot, protest, shooting, looting and loss of many people’s lives.
Nigeria has one of the world’s biggest populations, the country is overflowing with oil reserves, and a starving young workforce busting with innovative ideas. Why is the West African Giant still so poor that almost 100 million people live on less than $1 per day? The oil rich country is submersed with inequality of income, according to a global index, which ranks Nigeria at the very bottom of 152 countries in terms of their commitment to fight inequality.
Inequality of income has been strongly linked with crimes and social conflicts. In particular it
Inequality is a Vicious Cycle for the Economy and the Society
“The rich get richer; the poor get poorer” is not just a cliché. The concept behind it is a theoretical process called “wealth concentration.” Under certain conditions, newly created wealth is concentrated in the possession of already-wealthy individuals. The process of wealth concentration arguably makes economic inequality a rancorous cycle. The e�ects of wealth concentration may extend to future generations. Children born in a rich family have an economic advantage, because of wealth inherited and possibly education, which may increase their chances of earning a higher income than their peers. These advantages create another round of the malicious cycle.
Growing inequality and flaring income gaps will lead to social unrest and chaos in many developed and developing countries. In practical terms, according to an analysis by Standard & Poor’s, as the income gap has amplified, it has created an undercurrent of social unrest that, should the trend continue, will worsen – perhaps even to the point of civil unrest, conflicts and societal onslaught. The backlashes of income inequality had been visible in the world’s 1st largest economy-USA since long time back. Starting from the Springfest Riot, April 10, 2010 to St. Louis Protests, September 15, 2017, the country faced 29 serious and miasmatic
passable social protection for all. Aplenty can be erudite from those economies that managed to reduce substantially inequality even under an erratic, dicey and fierce global environment. The international community can play a significant role in providing backing to policies that help cut down income inequality.
Assessments of World Economic Forum 2017 on Inequality of Income
The WEF’s annual global risks report – hand-picked from 700 experts from the world– found that rising income and wealth disparity, and increasing polarization of sectors of society, were ranked first and third among the underlying
As a result, extreme inequality is being created in our society between the rich and the poor. Majority people are also being deprived of good medical treatment, nutrition and entertainment which lead to intensify social tensions, conflicts, political and social unpredictability. As the inequality in a county increases, the loss in human development also increases, according to the Human Development Report, released jointly by the UNDP and the General Economics Division of the Planning Commission in 2016.
Business policy, minimum wages policy, taxation policy and education policy are very important to reduce income heterogeneity and economic disparity in the county. There was a news in the local newspapers recently that fetched the attention of the scribe that one restaurant is opened in the capital city of Dhaka where ‘robots” were used to serve customers replacing “hotel boys/girls”. Bangladesh is a country of 161 million people, millions of skilled and educated people are unemployed and under employed in the country. In this economic scenario, how could business owner get permission/license to use “robots” in restaurants? What’s the government policy about this? This type of economic activity will surely create unemployment, income inequality and end up with social instability, chaos and conflicts.
income increased significantly, according to the preliminary report of the Household Income and Expenditure Survey-2016. The report shows that Gini co-e�cient, which is used to measure income inequality, increased to 0.483 at national level in 2016 from 0.458 in 2010 meaning that the rich became richer while the poor became poorer during the period.
Per capita income in the country grew swiftly in the past three decades with economic growth, but failed to prevent spreading inequality. Economists blamed lack of good governance, widespread corruption and poor institutional capacity for the unpleasant situation. The per capita income in the county grew five folds to $1602 in 2016-17 from $330 in 1994-95, thanks to the inflow of remittance, growing exports at the cost of low-priced labor and inside consumption. The rich, however, became richer and the poor became poorer day by day amid unequal distribution of the economic gains over the years.
The impacts of inequality on di�erent sectors of the society have become acute as only a small section of people is getting high quality education and health care, while the majority people are being deprived of it. The huge number of workers have been working in garments and textile industries for the last few decades with skimpy wages that don’t support them to educate their children properly.
www.equalitytrust.org.uk
Income gapsHow may times richerare the richest 11th thanthe poorest 11th?
Inequality... How much richer are the richest 20% in each country than the poorest 20%
Japa
nFi
nlan
dNo
rway
Swed
enDe
nmar
kBe
lgiu
mAu
stria
Germ
any
Neth
erla
nds
Spai
nFr
ance
Cana
daSw
izte
rland
Irela
ndGr
eece
Italy
Israe
lNe
w Z
eala
ndAu
stra
lia
Port
ugal
USA
Sing
apor
e
UK
Wikins on & Pickett, The Spirit Level
3.4 3.73.9 4.0 4.3
4.6 4.85.2 5.3
5.6 5.6 5.6 5.76.1 6.2
6.7 6.8 6.8 7.07.2
8.08.5
9.7
development agenda, etiolating inequalities across and within many countries have been an important part of the discussions at di�erent international colloquiums. There’s an ever-increasing deference among sponsors that economic growth is not adequate to sustainably reduce poverty if it’s not wide-ranging. When world leaders adopted the Millennium Declaration in 2000, they promised to generate a more equitable economic world. So far, in many countries, the hierarchy of prospects and opportunities have become much sti�er to scramble. Huge disparities are there in health and education services, land and other productive assets between the richest and the poorest households.
Wealth inequalities are braided directly with income inequality. They are inherited from generations and are intensely seen across many locations around the globe, ensnaring large pouches of society in poverty and deprivation. Across the globe, people living in poverty and vulnerable social groups have been hit hard by the global financial and economic crisis and its repercussion, adding urgency to the need to discourse inequalities and their consequences. There’s growing global conciliation on the need to abridge the high-gap between those ‘haves’ and those ‘have-nots’.
As underscored in the
ntroduction
“The greatest country, the richest country is not that which has the most capitalists, monopolists, immense grabbings, vast fortunes, with its sad, sad soil of extreme, degrading, damning poverty, but the land which there are the most homesteads, freeholds-where wealth does not show much such contrasts-high and low, where all men have enough-a modest living and beautiful necessities” said Walt Whitman, a renowned American essayist and journalist.
Flared income inequality is the crucial test of our time. In advanced economies, the gap between the rich and poor is at its highest level in decades. Inequality trends have been more mixed in emerging and developing countries, with some countries experiencing declining inequality, but ubiquitous inequities in access to education, health care, and finance are ongoing. The extent of inequality, its diverse, its recusant e�ect on the economy and the society-have become some of the most fiercely deliberated issues by economists, policymakers and researchers.
The concept of rising income inequality and its global residuum has brought the attention of the world leaders, business communities and economists. The international communities silhouette its vision for a post-2015 global
trends that will determine the shape of the world in the next decade.
The WEF said it had been pointing out the threats of rising inequality and political polarization for more than a decade, but that the slow pace of recovery from the deep recession of 2008 had intensified income gaps within countries. Emergency measures such as quantitative easing – the creation of money by central banks – had become permanent features of economic policy, and had aggravated inequality by boosting the returns of those holding financial assets. It added that the trends of recent years had come into sharp focus in 2016 with rising discontent and dissatisfaction evident in the UK referendum and in the US with Trump’s victory over Hillary Clinton.
“Urgent action is needed to overcome political or ideological di�erences and work together to solve critical challenges as income inequality,” said Margareta Drzeniek-Hanouz, head of global competitiveness and risks at the WEF. (Source WEF Risks Report 2017).
bizarre combination pattern in which opulence is booming for CEOs and Wall Street speculators, while the rest of the economy – particularly workers, the middle-income class, and small businesses – have undergone a predominantly rancorous cycle. Productivity has grown massively, but wages have festered. Consumption has remained reasonably high because, in an e�ort to maintain their standard of living, working people have: a) added hours, became two-income families, often with two and even three jobs per person; b) increased household debt c) retroactions and ricochets of globalization and technology advancement. Inequality has skyrocketed because e�ective tax rates on the 1% have dropped, while their income and profits have risen steeply.
Some people born with a silver spoon and rich inheritance makes them more rich and
Both vicious and virtuous cycles have befallen in various economies at several times and under numerous economic theories and policy pressures. But, for the last 30 years, the global economy in general and the American economy in particular have witnessed a
Economic, Social and Natural Causes of Income Inequality
A “tour d’horizon“ of the origins of inequality started with the convergence and divergence since 1950. The review of the causes of income inequality will show that various archetypes are ostensible in the progression of inequality at the country level. Depending on the inequality concept used, those outlines are sometimes hard to resolve, except if one appreciates that di�erent sources may lead to di�erent assessments. Overall, the conclusion is that inequality is higher today in a large number of countries than it was some 25 years ago. The reason is simple: People who already grasp wealth have the resources to reinvest or to leverage the reaping of wealth, which procreates neoteric wealth.
conclusion document of the United Nations Conference on Sustainable Development, finding ways and means to successfully down-size income inequality will necessitate a transformative modification and an all-encompassing slant to the three actinoids of sustainable development – economic, environmental and societal. Properly balanced social, economic and environmental policies and institutions can help decrease income inequalities when they warrant equality of opportunity, irradiate job creation and guarantee entree to
10 OCTOBER - DECEMBER 2017 | The Bangladesh Accountant
Income Inequality on the RiseA Thwack to World Economy and Social Cohesion
technology has replaced many white and blue-collar jobs that paid well. Workers in the manufacturing sector have to switch to other lower paying jobs. In a recent interview, the Honeywell CEO said half of their manufacturing jobs are actually in software and not the physical assembling of parts. But Honeywell is considered as one of the biggest manufacturers in the world.
The rise of populism and the electoral victory of populists like Trump and the Brexit vote are actually partly the result of anger of people at the loss of jobs due to technology. According to Stephen Hawking: “The automation of factories has already decimated jobs in traditional manufacturing and the rise of artificial intelligence is likely to extend this job destruction deep into middle classes, with only the most caring, creative or supervisory roles remaining.”
The loss of jobs in the manufacturing sector due to technology is now beginning to happen in the service sector. Amazon is the largest distribution company in the world. In 2016, the company announced that it now has 45,000 robots across 20 fulfillment centers. A year before, it announced it had 30,000 robots. This means that in a single year, Amazon had increased its robots from 30,000 to 45,000 or a 50 percent increase and the end result is loss of jobs of humans.
who have started to say that technology, like globalization, is adversely a�ecting the lives of many people. The internationally acclaimed British physicist, Stephen Hawking has warned that technology is partly to blame for the rise in income inequality; and, that great technological advances can leave most people “miserably poor.” He said: “Everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine owners successfully lobby against wealth redistribution... so far the trend seems to be toward the second option with technology driving ever-increasing inequality.”
Professor Erik Brynjolfsson of the MIT Sloan School of Management, recently wrote: “My reading of the data is that technology is the main driver of the recent increases in inequality. It is the biggest factor.” The problem is that
quick-witted life. On the contrary some people born landless, homeless and penniless as their parents die with huge burden of debt finally shifted to the unfortunate inheritors. So long the system of inheritance continues, inequalities are bound to be perpetuated in the society. Inequality of income also causes due to natural reasons as some people are endowed by nature with superior talent, intelligence, better physique and greater capability than others. In additions, governments’ policies on wage structures, minimum wages, education policies and facilities, taxation policies, etc. are the deep-rooted reasons for income equalities in an economy.
Technology Pullulates Income Inequality
The tech CEOs of Apple, Microsoft, Amazon, Facebook are resounding the world that they are making the world a better place. But there are those
has been connected with intentional homicide and robbery, violent crime well as a higher prevalence of other social problems such as drug abuse and mental illness. Besides, this increase in social tensions have been found as a formidable blockade for the strengthening of democratic institutions and a source of political unpredictability.
Income Inequality in the Context of Bangladesh
There’s no doubt that the GDP growth and per capita income of Bangladesh have been increasing during the last few years. At the same time income gap between the rich and the poor widened though per capita
social unrests in the forms of riot, protest, shooting, looting and loss of many people’s lives.
Nigeria has one of the world’s biggest populations, the country is overflowing with oil reserves, and a starving young workforce busting with innovative ideas. Why is the West African Giant still so poor that almost 100 million people live on less than $1 per day? The oil rich country is submersed with inequality of income, according to a global index, which ranks Nigeria at the very bottom of 152 countries in terms of their commitment to fight inequality.
Inequality of income has been strongly linked with crimes and social conflicts. In particular it
Inequality is a Vicious Cycle for the Economy and the Society
“The rich get richer; the poor get poorer” is not just a cliché. The concept behind it is a theoretical process called “wealth concentration.” Under certain conditions, newly created wealth is concentrated in the possession of already-wealthy individuals. The process of wealth concentration arguably makes economic inequality a rancorous cycle. The e�ects of wealth concentration may extend to future generations. Children born in a rich family have an economic advantage, because of wealth inherited and possibly education, which may increase their chances of earning a higher income than their peers. These advantages create another round of the malicious cycle.
Growing inequality and flaring income gaps will lead to social unrest and chaos in many developed and developing countries. In practical terms, according to an analysis by Standard & Poor’s, as the income gap has amplified, it has created an undercurrent of social unrest that, should the trend continue, will worsen – perhaps even to the point of civil unrest, conflicts and societal onslaught. The backlashes of income inequality had been visible in the world’s 1st largest economy-USA since long time back. Starting from the Springfest Riot, April 10, 2010 to St. Louis Protests, September 15, 2017, the country faced 29 serious and miasmatic
passable social protection for all. Aplenty can be erudite from those economies that managed to reduce substantially inequality even under an erratic, dicey and fierce global environment. The international community can play a significant role in providing backing to policies that help cut down income inequality.
Assessments of World Economic Forum 2017 on Inequality of Income
The WEF’s annual global risks report – hand-picked from 700 experts from the world– found that rising income and wealth disparity, and increasing polarization of sectors of society, were ranked first and third among the underlying
As a result, extreme inequality is being created in our society between the rich and the poor. Majority people are also being deprived of good medical treatment, nutrition and entertainment which lead to intensify social tensions, conflicts, political and social unpredictability. As the inequality in a county increases, the loss in human development also increases, according to the Human Development Report, released jointly by the UNDP and the General Economics Division of the Planning Commission in 2016.
Business policy, minimum wages policy, taxation policy and education policy are very important to reduce income heterogeneity and economic disparity in the county. There was a news in the local newspapers recently that fetched the attention of the scribe that one restaurant is opened in the capital city of Dhaka where ‘robots” were used to serve customers replacing “hotel boys/girls”. Bangladesh is a country of 161 million people, millions of skilled and educated people are unemployed and under employed in the country. In this economic scenario, how could business owner get permission/license to use “robots” in restaurants? What’s the government policy about this? This type of economic activity will surely create unemployment, income inequality and end up with social instability, chaos and conflicts.
income increased significantly, according to the preliminary report of the Household Income and Expenditure Survey-2016. The report shows that Gini co-e�cient, which is used to measure income inequality, increased to 0.483 at national level in 2016 from 0.458 in 2010 meaning that the rich became richer while the poor became poorer during the period.
Per capita income in the country grew swiftly in the past three decades with economic growth, but failed to prevent spreading inequality. Economists blamed lack of good governance, widespread corruption and poor institutional capacity for the unpleasant situation. The per capita income in the county grew five folds to $1602 in 2016-17 from $330 in 1994-95, thanks to the inflow of remittance, growing exports at the cost of low-priced labor and inside consumption. The rich, however, became richer and the poor became poorer day by day amid unequal distribution of the economic gains over the years.
The impacts of inequality on di�erent sectors of the society have become acute as only a small section of people is getting high quality education and health care, while the majority people are being deprived of it. The huge number of workers have been working in garments and textile industries for the last few decades with skimpy wages that don’t support them to educate their children properly.
11OCTOBER - DECEMBER 2017 | The Bangladesh Accountant
development agenda, etiolating inequalities across and within many countries have been an important part of the discussions at di�erent international colloquiums. There’s an ever-increasing deference among sponsors that economic growth is not adequate to sustainably reduce poverty if it’s not wide-ranging. When world leaders adopted the Millennium Declaration in 2000, they promised to generate a more equitable economic world. So far, in many countries, the hierarchy of prospects and opportunities have become much sti�er to scramble. Huge disparities are there in health and education services, land and other productive assets between the richest and the poorest households.
Wealth inequalities are braided directly with income inequality. They are inherited from generations and are intensely seen across many locations around the globe, ensnaring large pouches of society in poverty and deprivation. Across the globe, people living in poverty and vulnerable social groups have been hit hard by the global financial and economic crisis and its repercussion, adding urgency to the need to discourse inequalities and their consequences. There’s growing global conciliation on the need to abridge the high-gap between those ‘haves’ and those ‘have-nots’.
As underscored in the
ntroduction
“The greatest country, the richest country is not that which has the most capitalists, monopolists, immense grabbings, vast fortunes, with its sad, sad soil of extreme, degrading, damning poverty, but the land which there are the most homesteads, freeholds-where wealth does not show much such contrasts-high and low, where all men have enough-a modest living and beautiful necessities” said Walt Whitman, a renowned American essayist and journalist.
Flared income inequality is the crucial test of our time. In advanced economies, the gap between the rich and poor is at its highest level in decades. Inequality trends have been more mixed in emerging and developing countries, with some countries experiencing declining inequality, but ubiquitous inequities in access to education, health care, and finance are ongoing. The extent of inequality, its diverse, its recusant e�ect on the economy and the society-have become some of the most fiercely deliberated issues by economists, policymakers and researchers.
The concept of rising income inequality and its global residuum has brought the attention of the world leaders, business communities and economists. The international communities silhouette its vision for a post-2015 global
trends that will determine the shape of the world in the next decade.
The WEF said it had been pointing out the threats of rising inequality and political polarization for more than a decade, but that the slow pace of recovery from the deep recession of 2008 had intensified income gaps within countries. Emergency measures such as quantitative easing – the creation of money by central banks – had become permanent features of economic policy, and had aggravated inequality by boosting the returns of those holding financial assets. It added that the trends of recent years had come into sharp focus in 2016 with rising discontent and dissatisfaction evident in the UK referendum and in the US with Trump’s victory over Hillary Clinton.
“Urgent action is needed to overcome political or ideological di�erences and work together to solve critical challenges as income inequality,” said Margareta Drzeniek-Hanouz, head of global competitiveness and risks at the WEF. (Source WEF Risks Report 2017).
bizarre combination pattern in which opulence is booming for CEOs and Wall Street speculators, while the rest of the economy – particularly workers, the middle-income class, and small businesses – have undergone a predominantly rancorous cycle. Productivity has grown massively, but wages have festered. Consumption has remained reasonably high because, in an e�ort to maintain their standard of living, working people have: a) added hours, became two-income families, often with two and even three jobs per person; b) increased household debt c) retroactions and ricochets of globalization and technology advancement. Inequality has skyrocketed because e�ective tax rates on the 1% have dropped, while their income and profits have risen steeply.
Some people born with a silver spoon and rich inheritance makes them more rich and
Both vicious and virtuous cycles have befallen in various economies at several times and under numerous economic theories and policy pressures. But, for the last 30 years, the global economy in general and the American economy in particular have witnessed a
Economic, Social and Natural Causes of Income Inequality
A “tour d’horizon“ of the origins of inequality started with the convergence and divergence since 1950. The review of the causes of income inequality will show that various archetypes are ostensible in the progression of inequality at the country level. Depending on the inequality concept used, those outlines are sometimes hard to resolve, except if one appreciates that di�erent sources may lead to di�erent assessments. Overall, the conclusion is that inequality is higher today in a large number of countries than it was some 25 years ago. The reason is simple: People who already grasp wealth have the resources to reinvest or to leverage the reaping of wealth, which procreates neoteric wealth.
conclusion document of the United Nations Conference on Sustainable Development, finding ways and means to successfully down-size income inequality will necessitate a transformative modification and an all-encompassing slant to the three actinoids of sustainable development – economic, environmental and societal. Properly balanced social, economic and environmental policies and institutions can help decrease income inequalities when they warrant equality of opportunity, irradiate job creation and guarantee entree to
who have started to say that technology, like globalization, is adversely a�ecting the lives of many people. The internationally acclaimed British physicist, Stephen Hawking has warned that technology is partly to blame for the rise in income inequality; and, that great technological advances can leave most people “miserably poor.” He said: “Everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine owners successfully lobby against wealth redistribution... so far the trend seems to be toward the second option with technology driving ever-increasing inequality.”
Professor Erik Brynjolfsson of the MIT Sloan School of Management, recently wrote: “My reading of the data is that technology is the main driver of the recent increases in inequality. It is the biggest factor.” The problem is that
quick-witted life. On the contrary some people born landless, homeless and penniless as their parents die with huge burden of debt finally shifted to the unfortunate inheritors. So long the system of inheritance continues, inequalities are bound to be perpetuated in the society. Inequality of income also causes due to natural reasons as some people are endowed by nature with superior talent, intelligence, better physique and greater capability than others. In additions, governments’ policies on wage structures, minimum wages, education policies and facilities, taxation policies, etc. are the deep-rooted reasons for income equalities in an economy.
Technology Pullulates Income Inequality
The tech CEOs of Apple, Microsoft, Amazon, Facebook are resounding the world that they are making the world a better place. But there are those
has been connected with intentional homicide and robbery, violent crime well as a higher prevalence of other social problems such as drug abuse and mental illness. Besides, this increase in social tensions have been found as a formidable blockade for the strengthening of democratic institutions and a source of political unpredictability.
Income Inequality in the Context of Bangladesh
There’s no doubt that the GDP growth and per capita income of Bangladesh have been increasing during the last few years. At the same time income gap between the rich and the poor widened though per capita
social unrests in the forms of riot, protest, shooting, looting and loss of many people’s lives.
Nigeria has one of the world’s biggest populations, the country is overflowing with oil reserves, and a starving young workforce busting with innovative ideas. Why is the West African Giant still so poor that almost 100 million people live on less than $1 per day? The oil rich country is submersed with inequality of income, according to a global index, which ranks Nigeria at the very bottom of 152 countries in terms of their commitment to fight inequality.
Inequality of income has been strongly linked with crimes and social conflicts. In particular it
Inequality is a Vicious Cycle for the Economy and the Society
“The rich get richer; the poor get poorer” is not just a cliché. The concept behind it is a theoretical process called “wealth concentration.” Under certain conditions, newly created wealth is concentrated in the possession of already-wealthy individuals. The process of wealth concentration arguably makes economic inequality a rancorous cycle. The e�ects of wealth concentration may extend to future generations. Children born in a rich family have an economic advantage, because of wealth inherited and possibly education, which may increase their chances of earning a higher income than their peers. These advantages create another round of the malicious cycle.
Growing inequality and flaring income gaps will lead to social unrest and chaos in many developed and developing countries. In practical terms, according to an analysis by Standard & Poor’s, as the income gap has amplified, it has created an undercurrent of social unrest that, should the trend continue, will worsen – perhaps even to the point of civil unrest, conflicts and societal onslaught. The backlashes of income inequality had been visible in the world’s 1st largest economy-USA since long time back. Starting from the Springfest Riot, April 10, 2010 to St. Louis Protests, September 15, 2017, the country faced 29 serious and miasmatic
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passable social protection for all. Aplenty can be erudite from those economies that managed to reduce substantially inequality even under an erratic, dicey and fierce global environment. The international community can play a significant role in providing backing to policies that help cut down income inequality.
Assessments of World Economic Forum 2017 on Inequality of Income
The WEF’s annual global risks report – hand-picked from 700 experts from the world– found that rising income and wealth disparity, and increasing polarization of sectors of society, were ranked first and third among the underlying
As a result, extreme inequality is being created in our society between the rich and the poor. Majority people are also being deprived of good medical treatment, nutrition and entertainment which lead to intensify social tensions, conflicts, political and social unpredictability. As the inequality in a county increases, the loss in human development also increases, according to the Human Development Report, released jointly by the UNDP and the General Economics Division of the Planning Commission in 2016.
Business policy, minimum wages policy, taxation policy and education policy are very important to reduce income heterogeneity and economic disparity in the county. There was a news in the local newspapers recently that fetched the attention of the scribe that one restaurant is opened in the capital city of Dhaka where ‘robots” were used to serve customers replacing “hotel boys/girls”. Bangladesh is a country of 161 million people, millions of skilled and educated people are unemployed and under employed in the country. In this economic scenario, how could business owner get permission/license to use “robots” in restaurants? What’s the government policy about this? This type of economic activity will surely create unemployment, income inequality and end up with social instability, chaos and conflicts.
income increased significantly, according to the preliminary report of the Household Income and Expenditure Survey-2016. The report shows that Gini co-e�cient, which is used to measure income inequality, increased to 0.483 at national level in 2016 from 0.458 in 2010 meaning that the rich became richer while the poor became poorer during the period.
Per capita income in the country grew swiftly in the past three decades with economic growth, but failed to prevent spreading inequality. Economists blamed lack of good governance, widespread corruption and poor institutional capacity for the unpleasant situation. The per capita income in the county grew five folds to $1602 in 2016-17 from $330 in 1994-95, thanks to the inflow of remittance, growing exports at the cost of low-priced labor and inside consumption. The rich, however, became richer and the poor became poorer day by day amid unequal distribution of the economic gains over the years.
The impacts of inequality on di�erent sectors of the society have become acute as only a small section of people is getting high quality education and health care, while the majority people are being deprived of it. The huge number of workers have been working in garments and textile industries for the last few decades with skimpy wages that don’t support them to educate their children properly.
ChileMexico
U. S.Turkey
IsraelEstonia
U.K.Lithuania
LatviaSpain
GreecePortugalAustralia
New ZealandJapan
ItalyCanada
OECD AverageIreland
KoreaPoland
SwitzerlandFrance
GermanyHungary
NetherlandsLuxembourg
SwedenAustria
Slovak RepublicBelgium
Czech RepublicFinland
SloveniaDenmark
NorwayIceland
Income InequalityChile, Mexico and the U.S. top the OECD’s list
Gini Coe�cient
0.00
Source: Organization for Economic Cooperation and Development
0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 0.45 0.50
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development agenda, etiolating inequalities across and within many countries have been an important part of the discussions at di�erent international colloquiums. There’s an ever-increasing deference among sponsors that economic growth is not adequate to sustainably reduce poverty if it’s not wide-ranging. When world leaders adopted the Millennium Declaration in 2000, they promised to generate a more equitable economic world. So far, in many countries, the hierarchy of prospects and opportunities have become much sti�er to scramble. Huge disparities are there in health and education services, land and other productive assets between the richest and the poorest households.
Wealth inequalities are braided directly with income inequality. They are inherited from generations and are intensely seen across many locations around the globe, ensnaring large pouches of society in poverty and deprivation. Across the globe, people living in poverty and vulnerable social groups have been hit hard by the global financial and economic crisis and its repercussion, adding urgency to the need to discourse inequalities and their consequences. There’s growing global conciliation on the need to abridge the high-gap between those ‘haves’ and those ‘have-nots’.
As underscored in the
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“The greatest country, the richest country is not that which has the most capitalists, monopolists, immense grabbings, vast fortunes, with its sad, sad soil of extreme, degrading, damning poverty, but the land which there are the most homesteads, freeholds-where wealth does not show much such contrasts-high and low, where all men have enough-a modest living and beautiful necessities” said Walt Whitman, a renowned American essayist and journalist.
Flared income inequality is the crucial test of our time. In advanced economies, the gap between the rich and poor is at its highest level in decades. Inequality trends have been more mixed in emerging and developing countries, with some countries experiencing declining inequality, but ubiquitous inequities in access to education, health care, and finance are ongoing. The extent of inequality, its diverse, its recusant e�ect on the economy and the society-have become some of the most fiercely deliberated issues by economists, policymakers and researchers.
The concept of rising income inequality and its global residuum has brought the attention of the world leaders, business communities and economists. The international communities silhouette its vision for a post-2015 global
trends that will determine the shape of the world in the next decade.
The WEF said it had been pointing out the threats of rising inequality and political polarization for more than a decade, but that the slow pace of recovery from the deep recession of 2008 had intensified income gaps within countries. Emergency measures such as quantitative easing – the creation of money by central banks – had become permanent features of economic policy, and had aggravated inequality by boosting the returns of those holding financial assets. It added that the trends of recent years had come into sharp focus in 2016 with rising discontent and dissatisfaction evident in the UK referendum and in the US with Trump’s victory over Hillary Clinton.
“Urgent action is needed to overcome political or ideological di�erences and work together to solve critical challenges as income inequality,” said Margareta Drzeniek-Hanouz, head of global competitiveness and risks at the WEF. (Source WEF Risks Report 2017).
bizarre combination pattern in which opulence is booming for CEOs and Wall Street speculators, while the rest of the economy – particularly workers, the middle-income class, and small businesses – have undergone a predominantly rancorous cycle. Productivity has grown massively, but wages have festered. Consumption has remained reasonably high because, in an e�ort to maintain their standard of living, working people have: a) added hours, became two-income families, often with two and even three jobs per person; b) increased household debt c) retroactions and ricochets of globalization and technology advancement. Inequality has skyrocketed because e�ective tax rates on the 1% have dropped, while their income and profits have risen steeply.
Some people born with a silver spoon and rich inheritance makes them more rich and
Both vicious and virtuous cycles have befallen in various economies at several times and under numerous economic theories and policy pressures. But, for the last 30 years, the global economy in general and the American economy in particular have witnessed a
Economic, Social and Natural Causes of Income Inequality
A “tour d’horizon“ of the origins of inequality started with the convergence and divergence since 1950. The review of the causes of income inequality will show that various archetypes are ostensible in the progression of inequality at the country level. Depending on the inequality concept used, those outlines are sometimes hard to resolve, except if one appreciates that di�erent sources may lead to di�erent assessments. Overall, the conclusion is that inequality is higher today in a large number of countries than it was some 25 years ago. The reason is simple: People who already grasp wealth have the resources to reinvest or to leverage the reaping of wealth, which procreates neoteric wealth.
conclusion document of the United Nations Conference on Sustainable Development, finding ways and means to successfully down-size income inequality will necessitate a transformative modification and an all-encompassing slant to the three actinoids of sustainable development – economic, environmental and societal. Properly balanced social, economic and environmental policies and institutions can help decrease income inequalities when they warrant equality of opportunity, irradiate job creation and guarantee entree to
who have started to say that technology, like globalization, is adversely a�ecting the lives of many people. The internationally acclaimed British physicist, Stephen Hawking has warned that technology is partly to blame for the