Inadequate spending on human capital, institutional inefficiency and poor performances in many areas of investment could hamper Bangladesh's long-term growth, economists warned on Saturday.
Hailing the country's steady macroeconomic progress in recent years, they said the economy needed much more to achieve the higher growth target before becoming an upper middle income nation.
On failure to address these challenges properly in the era of the fourth industrial revolution, the economy might fall into the lower middle-income country trap like many potential economies, they feared.
To avoid such an unpleasant economic trap, they suggested strategies giving utmost priority to human capital development, institutional efficiency and quick service delivery for the investors.
They made the suggestions at the second session of the 4th Bangladesh Economists' Forum (BEF) conference held at a city hotel on the day.
Chairman of Palli Karma-Sahayak Foundation (PKSF) Dr Qazi Kholiquzzaman Ahmad moderated the session.
Speaking about the investment climate required for an upper middle income Bangladesh, former Bangladesh Bank governor Dr Atiur Rahman hailed the macroeconomic performances making it one of the fastest growing economies of the world.
Despite steady growth in many socioeconomic areas, he said the challenges remained in the areas of employment generation, clean energy, export diversification, financial stability and investment.
"I think the investment in education and skills will be the areas which could lead us to sustainable growth," he said.
He said the investment-GDP ratio needs to be 36 per cent to be on the upper middle income growth trajectory but it stuck around 31 per cent. "This is another area we need to give our attention to."
For attracting more investment in the coming days, he suggested improving areas of land registration, enforcing contracts and regulatory efficiency.
Senior economist of Policy Research Institute of Bangladesh (PRI), a local think-tank, Dr Ashikur Rahman said nearly 87 countries are stuck between US$ 5,000 and US$ 10,000 per capita income for a very long time. Only a few countries made the transition.
"That means achieving what we want to achieve is very difficult, not easy," he said.
Highlighting the importance of efficient institutions to support long-term growth, he said institutions promote innovation and more competitions.
"Why can't we transplant good institutions that work in South Korea? The answer lies with the organisations. If institutions support innovation, dominantly the organisations that can survive with innovation will emerge and perpetually they will try to protect these institutions in the long run," he said.
"On the other hand, if institutions promote rent-seeking and trade barriers, the organisations that benefit from that will dominantly capture the market and over time they will stop all the reforms that will try to change the rule of the game," he added.
Former director of IFAD Dr Mohiuddin Alamgir recommended adoption of a holistic approach to human capital development with three independent streams of education - general, technical and special high-tech.
"Make technical education the central pillar of human capital development," he added.
Senior research fellow of Bangladesh Institute of Development Studies (BIDS) Minhaj Mahmud said the future education strategy for human capital development should begin with a greater focus on early childhood to develop cognitive skills.
"What is important is that the education policies should be aligned with and be an integral part of the development strategy," he added.
BIDS senior research fellow Dr Nazneen Ahmed said quitting investment from business is very tough in the present context of the economy. "I think, we should have a good exit policy for businesses," she said.
She also laid emphasis on efficient management for human capital development.
BIDS distinguished fellow Dr M Asaduzzaman, among others, also spoke at the event.
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