Big picture of economics of development
The word or term ‘development’ is mostly used to refer to a specified state of advancement or economic growth. Development is generally considered a process creating growth, progress or positive change. In a broader perspective, however, the definition development encompasses physical, economic, environmental, social and demographic components too. Thus, the term is quite vast with broader meaning and scope. Nevertheless, development is usually linked with economic advancement having the purpose of rise in the level and quality of life of the population, and the creation or expansion of income and job opportunities.
In fact, development economics has emerged as a critical branch of economics that focuses on improving fiscal, economic, and social conditions in developing countries. It thus ‘considers factors such as health, education, working conditions, domestic and international policies, and market conditions with a focus on improving conditions in the world’s poorest countries.’ To put it another way, economics of development provides the theoretical knowledge, policy awareness, and analytical techniques to address various key issues facing the developing countries in respect of economic development and economic policy analysis. So, a voluminous amount of literate has been prepared by economists, development thinkers, researchers and policymakers shedding light on different dimensions of development. Dr Rizwanul Islam joined the endeavour when his book titled Unnayaner Orthonity (Economics of Development) was published in 2010. Written in lucid Bangla, the book became a valuable addition to understand the multidimensional process of development in brief with clarity. More than a decade later, the author comes again with an expanded and revised version of the book.
The book broadly covers the evolution of development thoughts, various theories of economic growth and development, and roles of different sectors in the development process. The author also focuses on poverty, inequality, employment and globalisation as well as the roles of multilateral agencies like the World Bank and the International Monetary Fund (IMF). The discussions on theories are exemplified with empirical evidences of developing nations.
During the publication of the first edition of the book in 2010, the United Nations (UN)-sponsored Millennium Development Goals (MDGs) was the global agenda for development. Countries were busy measuring their overall development using the eight measurable goals that range from halving extreme poverty and hunger to promoting gender equality and reducing child mortality, by the target date of 2015. Now, the countries are benchmarking their progress in various fields of development with a latest UN-designed gauge, Sustainable Development Goals (SDGs). Being wider in scale and in ambition than the MDGs, the SDGs consist of 17 goals and 169 targets to be achieved by 20230. As such, the latest edition of the book incorporates the SDGs showing the necessity of an updated version of it. On discussing the meanings of development, the author nicely summaries the contribution of Amartya Sen. Sen advanced the entitlement and independence of people to make development meaningful.
The author’s effort to shed light on relationship between growth, employment and poverty makes it easy for all to understand the importance of jobs. By virtue of his long-time involvement with the International Labour Organization (ILO) in Geneva, Rizwanul Islam has gained firsthand knowledge and vast experience on global labour situation and labour policies. So, unlike many economists, he is more capable of decoding the labour and employment issues.
Again, he succinctly presents the issue of income inequality and poverty, saying that these two have deep relationship. In this connection, he mentions that there are two explanations of how inequality casts shadow on growth. One is political, another is economic. The first explanation argues that due to higher inequality, poor people would vote for the party who is committed to imposing higher tax on high-income segment. And, if there is a greater population of poor segment, the party will win the election. The result will be discouragement of savings and investment due to higher tax and so growth will be affected negatively. Again, if there is low inequality, there will be no pressure for rise in tax and so investment will be boosted, leading to higher economic growth.
To find the empirical evidence in this connection, the author looks into Bangladesh. He adds: “Since the beginning of the ‘90s, inequality has been on the rise in Bangladesh. But no political party takes any measure to impose higher tax on high-income people. And no government takes any step to enhance the tax and makes any effort on redistribution of income. So, there is no visible impact of inequality on growth. In reality, both inequality and growth have increased.” (P-71; translated from Bengali to English by this scribe.)
The last two chapters of the book are dedicated to Bangladesh economy. One focuses on the pattern and structure of economic growth in the country. Analysing the relevant data and statistics, Rizwanul Islam concludes: “Mostly the rich people among the higher-income segment of the population has been able to increase their shares in the total income. On the other hand, the situation of the lower-income segment has not only deteriorated but also the share of middle-income households in total income declined....Thus, it can be said easily that top-10 deciles are enjoying the real benefit of the country’s economic growth.” (P-216; translated from Bangla into English by this scribe.) The economist also shows that growth rate of employment generation is lower than the economic growth, which indicates that despite gradual expansion of Bangladesh economy, its capacity to create job is actually contracting. This trend is alarming in the long run.
In this revised edition, the author briefly discusses the crisis that originated from the Covid-19 pandemic which had negative consequences on Bangladesh economy in terms of job loss and income erosion.
The last chapter focuses on the challenges of external shocks on the country’s macroeconomic stability. Analysing the latest trend, up to 2022, Rizwan concludes that though Bangladesh economy doesn’t sink into deep crisis, it has faced a series of challenges like deterioration of balance of payments, depletion of foreign- exchange reserves, and fast depreciation of exchange rate of the taka. The sharp rise in inflation rate has also put the domestic economy under pressure. The author also opines that though the country is not unfamiliar with these kinds of economic problems, current geopolitical tension stemming from the Russia-Ukraine war creates big uncertainty along with growing risks. In this connection, he sounds a note of caution on seeking US$4.50 billon worth of credit from the International Monetary Fund (IMF) as such credit is always conditional. He stresses providing safeguards to low-income people who are already in crisis: “It will be quite unfortunate if measures to face the economic challenges make the crisis of these people deeper.” (P-255)
The core strength of the book is that it concisely presents the big picture of development economics. So, from student to researcher, everyone will find it an essential book, text or reference, to understand the theory, thoughts and practices of development with empirical evidences. Focus on Bangladesh economy makes the book more useful, no doubt.