Rainbow over the Padma

What I said about the Padma bridge 10 years ago

I wasn’t going to write about the Padma bridge because I don’t really have anything particularly novel to say that hasn’t been said by others (couple of links are provided below). But people keep asking, and one should respond to requests. So, let me share something I wrote in the previous blog 10 years ago.

Money is no(t the main) problem

Posted in development, economics, institutions by jrahman on September 16, 2012

Money is no problem — I have heard multiple, and contradictory, stories about the context of the quote attributed to Ziaur Rahman.  I’m reminded of one particular story by the recent fracas about the Padma bridge — for those who came in late, here is a good primer.

Okay, there are multiple aspects of the Padma bridge scandal.  I am leaving the political aspects of the issue — enormous as they are — to others more knowledgeable than me.  Let me talk about the economics of the matter.

The Economist, in its story on the issue, says: Bangladesh relies heavily on Western aid for a vast array of projects that otherwise would not exist. Without the Bank, there can be no bridge.

The implication is clear — money is the problem, no Bank funding, no bridge.  I don’t think this is quite right.

Firstly, much of the development budget in recent years have been financed domestically — I’ll do a separate post on this — so it just ain’t so that Bangladesh relies on foreign aid for ‘a vast array projects’.  Secondly, as Nofel Wahid — an upcoming Bangladeshi economist — explains here, the government has options such as ‘infrastructure bond’ to finance the bridge. Mr Wahid also shows here that self-financing the bridge won’t put much pressure on balance of payments or the exchange rate.

These explain pretty clearly that money really is no problem when it comes to building the bridge — I wish I had written those pieces myself.  The thing is, money isn’t the only thing that matters.  Consider the following from Wahid’s Forum piece:

A project of this size will undoubtedly require the implementation of lots of other side projects, such as dredging the river, river training, construction and maintenance etc. Does the government have the managerial capability to put all the little bit and pieces together?

Wahid goes on to argue that World Bank supervision will not necessarily guarantee that things will fall into pieces.  His conclusion:

There is no substitute for the government doing its job honestly and properly. No amount of donor paperwork and process of checks-and-balances will excuse the government from its duty to conduct due diligence.

I agree.  And we did it in the past.  In the late 1970s, international donors didn’t want to pay for a barrage over the river Teesta.  Ziaur Rahman defied the donors — at a time when Bangladesh was actually far more reliant on foreign aid and grants than it is today — and started building the barrage in 1979.  It was completed in 1984, with Bangladesh’s own money and technology.  If the barrage hasn’t delivered its full potential, it’s because of a lack of durable water sharing agreement with India, not because of a failure to implement the project at the micro level.

In one story I’ve heard, Zia is supposed to have quipped ‘money is no problem’ when it comes to building the barrage.  I have no idea if it is true.  But that’s not relevant for this post.  The relevant question is, if the Zia regime could build a barrage over the Teesta three decades ago with domestic finance and technology, then why should we doubt the current government’s ability to build a bridge over the Padma?

And yet, doubts I have a-plenty.  

Nothing I have seen in the past four years make me believe that this government has the capacity to pull off a major infrastructure project like this.  The issue here is not corruption as such.  Rather, the issue is debilitating injuries done to the state machinery that would be asked to implement a project like this.  Similar injuries were done by every elected government in the past, but the current government has made it an art form.  I am talking about the rampant doliokoron (appointing partisan hacks) and doling out of tenders on patronage considerations.  I am talking about ill-qualified engineers supervising crucial aspects of projects.  Compared with the corrosive effects of these, financial corruption such as bribery are rather insignificant.

And that’s why I think money is not the problem when it comes to building a bridge over the Padma.  The problem, dear reader, is this government.  Will a future government be any better when it comes to doliokoron?  I haven’t the foggiest clue.  

But can this government pull it off?

As Michelle Tanner would say:

I have not re-posted the September 2012 piece unedited. I am struck at how lighthearted, playful even, my writing used to. A lot has happened in the past decade.

Further, the links don’t work, probably because the authors have deleted them. Again, a lot has happened in the past decade.

The title of the post refers to a novel by SM Ali, the late pioneer journalist. About that, some other time.

The economics of infrastructure is not straightforward. On the one hand, mega infrastructure such as bridges like this add to a country’s productive capital stock, increasing the GDP in the long run. But there is probably diminishing returns to these, and at some point a new infrastructure is no longer beneficial at the margin. Is Bangladesh at that point? Probably not.

A different perspective, pushed by Larry Summers among others a decade ago, was that many developed countries were facing a demand shortfall and weak potential growth — secular stagnation — and one antidote was infrastructure projects. I am not sure where that debate stands now.

Yet another angle is about how these projects are financed, and the longer term macro-fiscal and political economy legacies. The debt to China, particularly, is the subject of a booming literature. Perhaps money is a problem after all!

Two very instructive posts on the bridge

• Shafiqul Alam observes that the traffic bottlenecks around the toll booths significantly raise travel time.

• Zia Hassan shows how much more expensive the roads leading to the bridge have been compared to neighbouring countries.

Further reading

• Gillian Tett says recent controversies point to the importance of scrutiny and credibility in getting critical work done, in the World Bank.

  The World Bank needs a new age of transparency

  21 Oct 2021

  https://www.ft.com/content/80419311-7623-442f-8316-449af636cf36

• Ariful Islam Mithu and Mubin S khan shows how Bangladesh Railway could cut its losses by a fifth by effectively using the land in its possession.

  How Bangladesh Railway can cut its losses by a fifth

  1 Dec 2021

  https://www.tbsnews.net/features/panorama/how-bangladesh-railway-can-cut-its-losses-fifth-337081

• Shamsul Hoque argues Bangladesh needs more infrastructure.

  Transport infrastructures: we are far away from where we should have been

  25 Jan 2022

  https://www.tbsnews.net/supplement/transport-infrastructures-we-are-far-away-where-we-should-have-been-361996

• Mariano Moszoro and Mauricio Soto show that Pakistan has faster roads than the neighbours.

  Where are the world’s fastest roads?

  15 June 2022

  https://blogs.imf.org/2022/06/15/where-are-the-worlds-fastest-roads/?utm_medium=email&utm_source=govdelivery#