Economy a mix of successes and missed chances: positives helped turn a new leaf

DHAKA, Jan 16: Despite there being a lot of criticism about the successes on the economic front, over the last four years of Grand Alliance rule, the economy, in terms of growth prospects, remains attractive, said noted economist Dr Binayak Sen, research director of Bangladesh Institute of Development Studies (BIDS).

“The economy of the country, when the current government came to power, faced a lot of challenges, given the general health of the global economy. From that situation, the country has managed to post average growth rate of over 6 per cent,” he said, adding, “This has been a commendable success and achievement for the government, over these last four years.”

Dr Sen told this to The Independent, in an exclusive interview taken at his Uttara residence, on Tuesday.

In growth perspective, the economy, in these last four years, has performed better than many of the developing countries, he noted. The government has been able to control volatility in the economy, considering the global financial crisis, and this is a commendable success.

“In terms of per capita income growth during the last decade, Bangladesh ranked within the top-20 developing countries, which is also a decent achievement, and an important indicator for judging the success of the economy,” Dr Sen said, adding, “This success has been shared by the private sector, non-government organisations, and the common people at large.”

He said the government could ensure a stable, enabling environment for the private sector, particularly the ready made garments (RMG) sector, and, for this reason, Bangladesh has now become the second largest RMG exporter in the world. This also counts as a success for the government, in these past two years, he said.

He also appreciated the success of the agriculture sector, saying, “Substantial improvement has taken place in real wage rates for agricultural wage workers, during the last four years. In the 1990s, agricultural workers could purchase only 3 kilos of rice with their daily wage, but, now, they can purchase between eight and 10 kilos of rice, with a day’s wage. This marks a substantial change in the agriculture sector.”

He said real agriculture wage has increased during the last four years. “This also indirectly proves that rural poverty is declining and that there has been a further strengthening of the rural economy.”

All these elements of growth are helping to push down the poverty level, particularly in rural areas, he said, adding, “These growth elements helped to maintain the stability of the economy during the last four years of government. It is a commendable achievement for these past four years.”

However, he said that despite these successes of the government, there is a widespread dissatisfaction, primarily because of the increased expectations of the electorate. The latter is attributable to two factors: first, there has been education, especially among the youth population; and second, there has been a considerable economic mobility of people who were the poor and the poorest even a decade ago. “With mobility comes greater expectations from the government; people now want much better performance from the government than was the case before” he explained.

He further said that with improved people have become more conscious, which is a major reason for dissatisfaction and criticism of the government.

He said that, during the last four years, the government was about to achieve most of the targets of Millennium Development Goals (MDG), including primary education, basic health and poverty reduction.

Identifying the lack of skilled manpower, weak infrastructure, bureaucratic problem, scarcity of energy and power, he said that the pace of foreign direct investment (FDI) has been slow. These problems also explain why the overall investment-GDP ratio has remained rather stable in the last few years. This has been an “area of greatest weakness for the present government along with allegations of corruption and low implementation capacity in aided projects, financial sector and capital market”, he added.

He further said that FDI will increase in coming years. For this reason, human resources and IT sectors have to develop, along with the power and energy sector.

Dr Sen said, “We should set up coal-based and atomic power plants, consistent with international good practices, to ensure uninterrupted electricity for the industrial sector.”

About the target of 8 per cent GDP growth by 2015, in Sixth Five Year Plan (SFYP), he said it will not be possible to achieve the target, due to lack of expected investment in total GDP. He further expressed confusion over turning into a middle income country by 2021, as the country’s economic growth is not accelerating, as expected.

Dr Sen stressed the need for turning Bangladesh into a “social democratic state”, where there would a blend between individual incentives and collective responsibility, between market economy and social responsibility, to become a socially sustainable middle income country. “This would require significant change in the quality of democratic politics”, he added.

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