Nation building: the role of institutions in Bangladesh

To build a viable nation from a fractured society, the process of institution building is of urgent priority. Nothing else would play a more vital role in the long-term sustainability of the nation. In a transparent and participatory society, these institutions would be the foundation of the nation enforcing the "checks and balance" ideals. Competent institutions will guide and navigate through the risky and uncertain landscape full of dark clouds and flashy thunders to the one with sunshine and relative calm. Of course it is not static, but a dynamic process. Those institutions can establish a mechanism for conflict resolution among the competing interest groups, and also minimise inefficiencies and social losses.   

In their masterpiece 'Why Nations Fail', the authors Acemoglu and Robinson using historical observations argue that the key to sustained prosperity for a nation is appropriate inclusive institutions -- both political and economic. Inclusive political institutions distribute power broadly in society instead of power concentrated in the hands of the narrow elite, and allow meaningful constraints on the exercise of this power. These kinds of institutions would most likely support the establishment of inclusive economic institutions, which would not allow expropriation of resources of the masses by the elites. Furthermore, those economic institutions secure property rights, erect unbiased rule of law, and offer public services that provide a level playing field encouraging wide participation of the mass people in the beneficial economics activities. A classic example would be the homogeneous Korean peninsula, where the two different sets of institutions in their respective countries led to hugely divergent economic outcomes-- the North being one of the poorest and the South being one of the most prosperous countries in the world. 

Political process sets the rules of governance in a society. Extractive (Non-inclusive) political institutions in most cases enable the elites in power to structure the economic institutions, extractive ones, to enrich themselves at the expense of the rest of the society. The power of this disproportionate economic wealth further consolidates their political dominance. Sadly, the cycle may continue even when another group challenges and successfully takes over the power from the existing elites. The new group in control have the incentives to maintain the status quo of extractive political and economic institutions to solidify their hold on power.   

Gunnar Myrdal, the Swedish Noble laureate in Economics, has penned the term "Soft State", while studying development problems facing the Third World. It is characterised by social indiscipline in the form of deficiencies in legislation, law observance and enforcement, a widespread disobedience by public officials in maintaining the 'rule of law' and their collusion with powerful elites whose conducts they should regulate; in essence manifest in corruption at all levels of decision-making process and execution. These features would erect barriers in the wide participation of the mass people in economic and political activities.

Bangladesh is a classic example of the "Soft State", i.e. there is an absence of inclusive institutions. The previous government zealously highlighted the infrastructure projects in the form of roads, highways, metro rail, bridges as the benchmark for development, undermining the importance of quality institutions. The lack of that quality is what led to the country's uneven development and this current situation of anarchy. After the recent successful student-led uprising in Bangladesh, to start a new beginning with the foundation to be on the way to long-term sustainable prosperity, there is no alternative but to make the country 'less Soft'. The nature of 'Softness' is one of the most momentous features along with other conditions that contribute to underdevelopment and, in any case, delayed development in many countries.

Indeed the euphoria and considerable energy shown by the students is a great asset for the country. They are enthusiastically eager to serve in nation building activities. The tragedy of losing that excitement would be catastrophic to the country. A galvanising leadership is of paramount importance to organise and harness the energy, at the same time prepare the people to face the challenges in this transition period. Historical lessons should be heeded; the country missed the opportunities after independence as well as after the fall of autocratic President Ershad in 1990. Similarly, for many of the sub-Saharan African countries, such as Sierra Leone and Zimbabwe, independence was an opportunity missed due to the continuation of the harmful extractive institutions that existed in pre-independence colonial time. In contrast, enlightened leadership along with efforts in creating inclusive institutions in the early stages of independence have resulted in remarkable growth and prosperity in Botswana.      

The question now: is Bangladesh ready to take up that challenge? It has to start with political institutions. As has been evident, there is no incentive for the existing political parties to work for the masses and build beneficial inclusive institutions unless there is a significant compulsion from grass-roots pressure groups such as the students in this scenario. To begin with, there is a need for coalition or interim government with people of personal integrity and efficiency who would set the platform for radical reforms through dialogues with the stakeholders. The support of powerful institution like the Army would strengthen the government. Of course, this kind of unelected government or regime is not the long-term solution. The job of the caretaker government would be to help build the framework of some priority-inclusive institutions, which will enforce required legislation and regulations.  This in effect will improve the social discipline needed for effective democracy through participation of the masses in a fair election process.

Dr. Ishrat Hossain is an Adjunct Associate Professor in Economics at East West University and former Economics faculty at Qatar University and former Research Fellow at University of Technology Sydney, Australia. [email protected]