Charting progress and regress
Speaking notes for an academic panel discussion on Bangladesh
On 7 July, I participated in a panel discussion on Bangladesh organised as part of the annual conference of the Development Studies Association of Austalia. The session was chaired by Dr Mubashar Hasan, and other panellists were Dr Maha Mirza and Dr Kajalie Islam. My opening presentation and speaking points are posted below.
Greetings. Acknowledge the first nations people.
Photo of the Padma, inseperable from the history and culture of Bangladesh.
Making these points by using a set of charts, previously published here and elsewhere.
Assume familarity with Bangladesh, but not necessarily economic jargons.
1 and 2 are reasonably well known, 3 and 4 are perhaps less so, and 5 is chrystal ball stuff.
The human tragedy of the 1971 War is well understood. Economic costs are less well appreciated. A fifth drop in income / production in what was already one of the poorest region in the world. Four-fold increase in cost of living. Famine costing 30,000 lives by official measures. Two decades for the living standards to recover to the pre-war level.
That’s the backdrop to the mid-1970s political turbulence.
Dhaka Consensus — Never Again: elite consensus in the late 1970s that the existential crises of the decade must be avoided through whatever mechanisms possible.
While they don’t use the term, I draw on the work of Dr Naomi Hossain and Prof Mushtaq Khan here.
In the decades since: Washington Consensus macro policy; piecemeal and contingency driven privatisation and liberalisation; NGOs to fill in the void where state lacked capability.
By and large, policymakers were pragmatic, not idelogically driven.
Avoidance of macroeconomic crisis in the past four decades.
Specifically not going to talk about ‘higher than India’ per capita GDP or ‘8% economic growth’ — measurement and methodological issues etc, but more importantly, GDP fetish as a propaganda tool.
Rather, the point is that incomes have risen since the early 1990s, and there has been an improvement in living standards.
Bangladesh Paradox — social indicators are better than what would be predicted from income level. There is a literature on this, eg Niaz Asadullah, among others.
Economic growth is driven by the utilisation of the country’s abundant surplus labour. Role of RMG and remittance — well noted and quantified in the literature.
Less appreciated is that Bangladesh is not typical Asian exports-led growth story. Exports / GDP ratio is much smaller than Southeast Asia, and is dominated by RMG.
Successful Asian developers had moved beyond RMG by now. No sign of that in Bangladesh. Why?
Bangladesh still has a large pool of surplus labour — employment-population ratio is lower than Southeast Asia, as is female share of labour force.
Shafiqur Rahman has written about the political economy consequences of abundance of surplus labour as a source of rent for the owners of capital.
Cracks in development model are exposed by Maha Mirza and Zia Hassan, among others.
According to official Bangladesh Bureau of Statistics, rich got richer and poor got poorer during 2010-16.
For all the social progress, more Bangladeshi girls become mothers than elsewhere in monsoon Asia.
The government doesn’t spend much on education.
Because the government doesn’t collect much from taxes.
NGOs are like band aids, and no substitute for the state.
Stefan Dercon has written that sustained economic development happens when there is an elite bargain to ‘gamble on growth’.
By the mid to late 2000s, the need for a new elite settlement became apparent.
Lessons from East Asia (eg Joe Studwell): education; industry policy; infrastructure.
In practice, the new elite bargain may reflect a ‘spin dictatorship’ (Daniel Treisman and Sergei Guriev) backed by an oligarchy.
How will the current order navigate the external economic shocks and domestic political transtions?
There was an excellent question about the definition of ‘elite’, and their motivations (ideology versus contigency / pragmatism). It’s important to spell these out clearly in a proper paper.
Further reading
Fifty years of the evolution of trade policy in Bangladesh
Wednesday, Apr 14, 2021
https://www.pri-bd.org/economy/fifty-years-of-the-evolution-of-trade-policy-in-bangladesh/
The rise and fade of NGOs?
NGOs played a crucial role in the development of Bangladesh, but their role is now declining.
David Lewis October 26th 2021
https://cms.netra.news/2021/the-rise-and-fade-of-ngos/
How local brands replaced foreign ones in 50 years
In modern Bangladesh, consumers take pride in dozens of local brands that either overtook the foreign competitors or gave them a run for money
Mahfuz Ullah Babu & Abbas Uddin Noyon
25 March, 2022
https://www.tbsnews.net/economy/how-local-brands-replaced-foreign-ones-50-years-391306
Non-resident Bangladeshi investment potentials lie untapped
A report proposed measures to boost investment from non-resident Bangladeshis in 2018, but there has been very little progress in this regard so far
Kamran Siddiqui, Jahidul Islam & Ahsan Habib Tuhin
25 December, 2021
https://www.tbsnews.net/economy/non-resident-bangladeshi-investment-potentials-lie-untapped-348454
‘The protection of import-substituting industries is creating an anti-export bias’
The National Industrial Policy 2022 proposes high subsidies on capital investment for import-substituting industries, to make the country self-reliant in production. The Business Standard has interviewed Dr Zaidi Sattar to understand the implication of such a decision
17 April 2022
https://www.tbsnews.net/interviews/protection-import-substituting-industries-creating-anti-export-bias-410170
‘Subsidies are facilitating the concentration of exports, not diversification’
Subsidy management has emerged as a challenge ahead of the budget. The Business Standard spoke to Dr Khondaker Golam Moazzem, Research Director at the Centre for Policy Dialogue (CPD), to discuss subsidy management and the implication and efficacy of increased subsidies for the economy
17 May 2022
https://www.tbsnews.net/interviews/subsidies-are-facilitating-concentration-exports-not-diversification-410862