The Financial Express


Understanding economic dynamics from an in-depth perspective

Understanding economic dynamics from an in-depth perspective

Writing a book encompassing a period of five decades of socioeconomic development of a country like Bangladesh is a daunting task. The country has passed through ups and downs in its political history which of course influenced its economic performances. The book which is under review is a welcome addition to the literature on Bangladesh economy. The author Rashed Al Mahmud Titumir, a researcher, a teacher and a keen observer of development experiences of Bangladesh is eminently suitable for writing such a book. Bangladesh, after its independence in 1971, was termed by then US Secretary of State Henry Kissinger "a basket case". Some economists, especially those from the Scandinavian countries termed it "test case of development". The first one was a negative term meaning that Bangladesh would be a perpetually dependent poor country. The second one pointed out to the challenges the country faced. With a small land mass, little natural resources but a large population base, if such country can develop, then other poor countries can also develop taking Bangladesh as an example. The country has come a long way and has proved neither of the above terms as appropriate. The experiences of Bangladesh have been termed as "development surprise" by some, and "development paradox" by some and even "development conundrum".

 The author of the book under review is well aware of these terminologies. Taking these views into consideration, he tried to examine the state of the economy in the light of stability, transformability and sustainability conditions. For this, he examines the numbers, that is various statistics and narratives that is analyses and views in order to assess the "necessary" conditions like land, labour, capital and technology and "sufficient" conditions like political reality, power structure and institutional aspects. That is a reasonable framework. To achieve his goals, the author deals with the sectoral performances in agriculture, health, education, financial sector, poverty and inequality. Against this overall framework, the author brings in the effects of Covid-19 pandemic which jolted the whole international and national economic orders. That is a relevant approach incorporated in the book.

To my mind, the author attempted to bring out some "stylized facts" of Bangladesh development paradigm and its consequences. These "stylized facts" like factors of production, technology, institutions are useful to describe an economy as well as inter-country comparisons carried out by many economists. But in the aspect of necessary conditions, I did not get specific mention of "entrepreneurship" and "resilience" of the people (farmers, labourers, entrepreneurs, women). These are important driving forces for an economy to move forward. One has to remember that Bangladesh has already achieved one milestone, that is becoming a "lower middle income country" and another milestone to be achieved in 2024 is its becoming a developing country. Bangladesh aspires to become a developed country by 2041. Against this background, the author has provided the numbers and narratives in eight chapters.

In the first chapter, the author deals with data of growth estimates and other numbers. It is quite well known that there is a tendency of the government in power to overestimate growth, underestimate poverty and inflation rate. The inadequacy of data, doubts about reliability of data as well as long delays in publication of data by collection agencies, especially government organisations, are classic cases of Bangladesh, which the author has pointed out.

 In chapter two, the author deals with agricultural sector. This sector, despite its contributions to GDP of around 20 per cent only, for its importance for providing food security and engaging 50 per cent of population, it is a vital sector of the economy. The Green Revolution has brought in some technological progress in crop production, but after that no significant technological progress has taken place. The apathy of policy makers to provide resources for agricultural research, training, extension work and also weakness in marketing infrastructure, all have led to slow growth in this sector. Long time ago, Nobel Prize winner economist (1979) Theodore Schultz opined that Indian farmers are poor but efficient (Book: Transforming Traditional Agriculture, 1964). He meant that due to lack of capital investment and support to this sector, the poor/marginal farmers could not use the full potential of their human capacities as well as that of the soil. The author's analyses in the book under this sector is an eye opener for all.

 In chapter three, the manufacturing sector has been analysed. This sector is not performing on international standards, the author rightly points out. The large industries are not creating enough employment, not paying adequate wages to the labourers and not looking after the welfare of the workers. Preferential treatment of the government policies, fiscal incentives to these, especially in the RMG sector, are not helping these industries to be efficient and competitive. On the other hand, micro, small and medium enterprises (MSME) are not being given proper incentives by the government and financial institutions.

In chapter four, the financial sector has been dealt with. The plight of banks like default loan, slow disbursement, low coverage are classic problems. The lack of good governance of the banks, corruption and money laundering and regulatory weaknesses of the central bank could be elaborated in depth in this chapter.

In chapter five education sector has been analysed. The author rightly points out the low quality of education, low employability of educated persons, and lack of synergy among educational institutions, especially universities, and the business sector. That is the reason for the "paradox of labour market" - large number of educated youth on one hand, and lack of suitable candidates (as perceived by the employers) in the market on the other hand.

In chapter six, the health sector has been dealt with. In the wake of Covid-19 pandemic, the whole world has now realised the importance of health not only for survival but also for economic activities. Human beings are the means and goals of development, and health is the most important thing for healthy society and healthy manpower. The health system of Bangladesh is centralised and grossly inadequate.  The roles of public sector hospitals are negligible. People spend more than 60 per cent as out of pocket expenses for health, which is one of the highest in the world. There is serious weakness in the management of the health system in Bangladesh. A sizeable portion of health services has gone to the private sector creating heavy burden on the poor.

In chapter seven, the situation of poverty and inequality is analysed. This is one the dark sides of our development achievements. In macroeconomic indicators we see high per capita income, low inflation, high growth rate etc., but at the micro level (person and household), inequality and poverty has not been reduced, especially in the recent years. The distributional aspects are being ignored and both income inequality and wealth inequality are worsening. This was not intended by the dreamers and leaders of our country who led our independence in 1971. The author could give special focus on indigenous people, physically challenged people and nutritionally deficient mothers and children.

In the eighth chapter, the conclusions are given along with some views and recommendations on political settlement, growth, inequality, education, health, institutions which have been analysed in different chapters.

The remarkable thing dealt by the author is "politics". In fact, economic activities and for our existence as social animals, politics and political system are of utmost importance. No meaningful economic development will take place without inclusive political system and institutions. Proper political institutions, democratic norms, real freedom in broad terms (assembly, writing, speech, pursuing profession, business, interaction etc.) are both necessary and sufficient conditions. There are countries where people are obsessed with "growth only", economic growth has been achieved without democratic norms, and without people's participation. But these are only a few examples, not sustainable and not desirable. There may be lapses, shortcomings in practising democracy and good governance, but gradually these practices, with whatever weaknesses these may have, will lead to a society free from hunger and exploitation-- a society that is equitable, environment friendly, with sustainable development.

The author Rashed Titumir has done a commendable job in meshing numbers and narratives in a meaningful way to understand Bangladesh economy. The print quality, set up and presentation of the book is very good. This book is worth reading by the academicians, policy makers and practitioners. The book is useful for researchers and students of economists.

Dr Salehuddin Ahmed, Former Governor, Bangladesh Bank (Central Bank), Professor, Graduate School of Management, BRAC University.

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