The Financial Express

Sustainable development - a long-term challenge

| Updated: January 31, 2019 20:31:45

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Sustainable development - a long-term challenge

Fundamental theme of 'Vision 2021' and the associated Perspective Plan is the achievement of a development outcome where citizens will have a higher standard of living, will be better educated, will face better social justice, and will have a more equitable socio-economic environment. The PP2021, therefore, places a strong emphasis on reducing poverty, improving human development and instituting a sound system of social protection. This emphasis on equity and social justice is a hallmark of Perspective Plan 2021.

A review of progress shows considerable momentum was gained. All human development indicators continued to improve under the PP2021 including life expectancy, infant and maternal mortality, total fertility rate, population growth rate, child nutrition, adult literacy, and education enrolment and completion rates at all levels. Life expectancy surged to an amazing 71.6 years in 2015, which is higher than many countries with higher per capita income. However, there are two areas where greater attention is needed.  First concerns the quality of education and the second concerns labour skills. The government adopted numerous schemes in both areas in the 6th and 7th Five Year Plans, yet progress is below what is needed to attain upper middle-income status.  A particular constraint is the continued low level of spending on education and training.  At 1.8 per cent of gross domestic product (GDP), Bangladesh spends much less on education and training from the budget than in upper middle-income countries.  This needs to go up to 3-4 per cent of GDP over the next few years in order to give a big push to the quality agenda. In training, a stronger partnership with the business sector is needed to make training demand-driven.

Progress on the poverty front has been solid. Both moderate and extreme poverty rate fell considerably. In particular moderate poverty fell from 31.5 per cent in FY2010 to 24.3 per cent in FY2016. The underlying poverty strategy of PP2021 is broad-based with emphasis on rapid GDP growth, employment, human development and social protection as key elements of the poverty reduction strategy. As noted, progress with GDP growth has been substantial. The associated structural change, whereby the GDP shares of industry and services have increased and that of agriculture has fallen, created more jobs in industry and services where productivity and incomes tend to be higher. Real wages, economy-wide and especially in agriculture, increased. Along with greater employment in higher income jobs and rising real wages, poverty reduction also benefitted from the inflow of massive amounts of foreign remittances. These not only financed the direct consumption of poor families who received remittances, collectively the massive volume of remittance inflows supported the creation of considerable non-farm employment and income opportunities in rural areas. The spread of micro-credits helped lower poverty by facilitating asset creation for the poor and smoothing their consumption pattern.  Finally, social protection benefits also supported poverty reduction, although major reforms are needed to improve the effectiveness of social protection programmes.

Moving forward, a major challenge is to implement the National Social Security Strategy (NSSS) that was adopted in 2015. Commensurately, the allocation for social protection excluding civil service pensions must be increased to at least 2.0 per cent of GDP by FY2020.

SUSTAINABLE DEVELOPMENT: Owing to its deltaic geographical formation and high population density, Bangladesh is highly vulnerable to natural disasters and climate change. The PP2021 sought to initiate a comprehensive long-term approach to address environmental degradation and climate change through a mixture of laws, regulations, policies, and programmes. The PP2021 recognised that unless these constraints were integrated properly with the development strategy, the sustainability of development will be threatened. The implementation approach consisted of laws, regulations, and the adoption of various programmes to improve environmental protection and adapt to climate change. Technical assistance and support from development partners were sought to help with the adaptation programmes. The review of progress yields a mixed picture. Strategic thinking improved with the integration of the sustainable development agenda in the national plans, especially with the formulation of the long-term Bangladesh Delta Plan 2100. Small-scale adaptation programmes provided important examples of success at the local level but needed to be scaled up.

The sustainable development agenda is clearly a complex and long-term challenge. Issues and constraints include inadequate funding, absence of incentive policies for sustainable development, lack of a green growth strategy, inadequacies of institution and institutional coordination. These issues are systematically addressed in the government's newly formulated Delta Plan 2100 and in the relevant background studies done for PP2041. The implementation of the Delta Plan is of highest priority that will be a game changer in terms of lowering the vulnerability of Bangladesh to climate change and strengthening the sustainability of development. The background papers on green growth strategy under PP2041 and Environmental Fiscal Reforms along GED's 2012 study 'Bangladesh Climate Public Expenditure and Institutional Review' provide detailed recommendations for policy and institutional reforms related to mainstreaming environmental economic issues in budget management and national planning.  Implementation of these reforms will strongly improve the long-term prospects for sustainable development.

GOVERNANCE AND INSTITUTION: Attaining the milestones of 'Vision 2021' -articulated under PP2021-critically depends on addressing key governance challenges, namely, deficiencies in public administration capacity, shortcomings in economic management, and troubling malfeasance affecting performance across almost all segments of public administration. The PP2021 recognised most of these issues and the 6th and 7th Plans articulated specific interventions to address those concerns. In particular, they have tried to address deficiencies in governance by facilitating capacity development and investing in sound institutions ensuring voice and accountability.

The strategy for institutional development under PP2021 rests on four key pillars: strengthening the civil service, promoting devolution to local governments, strengthening public-private partnerships in public services, and reforming planning and budgetary processes. A quick policy review of the 6th and 7th Plan, reveals that the government did adopt strategies and policies which are better tuned to meet contemporary challenges, so that it can effectively maintain the progress envisioned in 'Vision 2021' document. The plans took a focused approach to develop strong institutions in order to substantially improve performance in strategic areas that are central for achievement of overall development goals. These critical areas for intervention include: public administration capacity, judiciary, financial sector, and local government.

Despite all efforts, institutional development is a painstakingly slow process. Policy initiatives are underway in all these areas but a big push is needed to strengthen the underlying institutions.   The strengthening of the financial sector is an immediate priority and with a strong political will, this can be achieved. Similarly, decentralisation should be possible as the administrative arrangements in terms of elected local governments are in place. These now need to be boosted and made more effective through legally mandated responsibilities and accountabilities and sharing of revenues based on a well-thought-out fiscal decentralisation programme. 

Regarding governance, international comparisons show that Bangladesh's performance improved in four out of the six indicators used: reducing corruption, improving the rule of law, improving the economic regulatory environment and improving political stability and avoiding the threat of terrorism. Additionally, Bangladesh also scored well on macroeconomic management. These are important areas of progress that Bangladesh can build upon as it pushes ahead with its journey to upper middle-income status. The other two areas, government effectiveness and voice and accountability, require careful review and attention with additional efforts to improve performance.

Dr. Shamsul Alam is Member (Senior Secretary), General Economics Division (GED), Bangladesh Planning Commission.

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