Calibrating development to become bold
Tuesday, 28 August 2007
Qazi Azad writes
A big nation in a small country, like Bangladesh, has to believe that comparative advantage for production is a misnomer. It can only be part of wrong education, which would keep a country like ours nearly stagnated in poverty with low growth. For its own economic welfare and safety, this nation should believe firmly that there is nothing called permanent comparative advantage and that it can be modified and altered through calculated steps.
A 10 per cent annual economic growth in this country that has a gross domestic product (GDP) of about $70 billion will generate an additional national wealth of $7.0 billion. On dividing it equitably among its 140 million people, the per capita income will increase by $ 50. If the consumer price index rises within the same time by a galloping 7.0 per cent, the actual gain of individuals from this growth will be no more than 3.0 per cent.
In reality, Bangladesh economy reportedly grew at an average rate of 6.0 per cent during 200-05. The finding of the Bangladesh Bureau of Statistics (BBS), as revealed at a recent seminar arranged by the Bangladesh Institute of Development Studies (BIDS), is that the impact of this growth was more than anulled by a galloping increase in the consumer price index for the lowest 50 per cent of households of this country. In spite of the apparently high economic growth, they have suffered an erosion of their purchasing power. The war on poverty has thus clearly progressed hopelessly. It has not brought forth the slightest economic emancipation of those for whom development should mean nothing but reduction of privation.
That a 6.0 per cent average annual GDP growth through half a decade, attained by utilizing our so-called comparative advantage prominently in the ready-made garments (RMG) sector, leather and footwear industry, shrimp farming and agriculture, which has not delivered the poor half of our population from poverty, has conveyed that relying solely on the present comparative advantage for industrialization would be fatal for us. We have to alter it through dedicated efforts. Its message is also that we should acquire a new set of comparative advantage for augmenting our national income through production and export of better goods and offering improved and expanded quality services.
Politically, we may not like Israel. But our economic situation and other realities, like the acute land scarcity and the very high population density, suggest that we accept it as a perfect role model. As a land, that country is nothing more than an arid desert. But as an economy, it is prosperous. Planned management of its social sectors, keeping its national limitations and requirements in sight, has enabled Israel to convert its economy into a powerful growth center. The country is not self-sufficient in all respects. But its economy presently generates huge wealth, which is not only enough to finance a powerful military machine to confront all Arabs around but also to meet its domestic demands for many consumer products through generous import.
We can follow its last example without pains if we are ready to take pains for organizing our social sectors, like health and education, law and order, in a more planned way and conspicuously robustly-with less lip service and more efforts to significantly enhance the value for money, which this poor nation commits annually through its budget. Instead of being based on populism, as our approaches in these sectors have been for long, our policies on education and health should be totally welfare-oriented. A high quality of both should be our aim. In this respect, the private and public institutions-schools, colleges, universities and hospitals, should be under very strict superintendence for ensuring the value for money, spent by the state and parents for education of our young citizens and by patients and their relatives on treatment in local hospitals.
Whichever authorities made separately responsible for the superintending tasks in these areas should be also made accountable by law, with a provision for facing also personal liabilities, for every detected major lapse in the performance of their duties. The superintending authorities or individuals may be paid additional allowances, commensurate with the demand of their tasks, devotion to duties as expected of and the personal risks to be involved. The provision for extra payment as charge allowance or technical pay for certain demanding jobs was previously there. It was undone in this country long ago, which took off or substantially reduced the motivation and the recognition element that induced individuals holding such jobs to have pride in and work earnestly for proving their superiority. The provision may be restored to retrieve the atmosphere that previously motivated superintending authorities to assert themselves in the interest of better performance of their organizational responsibilities.
While planning the future, the authorities concerned should appreciate that they are basically laying the foundation of an industrial society, which would gradually reduce the emphasis on self-sufficiency in agriculture and rely more on import of many agro-products for meeting the domestic demands. The land available for raising products, like onion, garlic, oil seeds, lentils and other varieties of pulse, has continued to shrink. Hoping to remain or become self-sufficient in any of them at this stage or in the future and working on any project for being self-sufficient in any or all of them is bound to prove futile. It is indicated by the growing reality of progressive land shortage for raising those crops, due partly to enhanced intensity of the paddy crop and partly to high lands being increasingly taken over by the housing sector in the rural areas.
A stage may come within a few decades when we may have to rely even more on rice and wheat imports, unless another green revolution of a higher order that would pose a lesser threat to the environment, takes place in the intervening time. This frightening possibility should motivate us to work right from now for evolving fast a predominantly efficient industrial society that would deliver us from poverty. In spite of the great requirement for a big change in the area, it is a fact that the resources available to it do not permit the government to devote enough attention to research and development (R&D) activities that are most useful and rewarding work for rapid and hugely profitable industrialization. The private sector here is yet to grow strong and sensitive enough to involve itself in R&D. The government should take note of the limitations imposed by the prevailing circumstances and should evolve a strategy to meaningfully and increasingly involve the well-known local academic institutions and research bodies with the private industrial establishments and interested business houses in R&D activities.
An immensely creative mind or a set of such minds should be engaged for formulating such a strategy. Business organizations, research bodies and academic institutions should be brought together to jointly pave the path under this strategy for this country's emergence as a prosperous, efficient and progressive industrial society.
If the present caretaker government can afford to create the legacy of having such a strategy in place, the future history will credit it profusely for laying the seed for fast economic growth of this country. The whole world in that case will also re-evaluate the prospect of this country with a fresh look at its potentials.
A big nation in a small country, like Bangladesh, has to believe that comparative advantage for production is a misnomer. It can only be part of wrong education, which would keep a country like ours nearly stagnated in poverty with low growth. For its own economic welfare and safety, this nation should believe firmly that there is nothing called permanent comparative advantage and that it can be modified and altered through calculated steps.
A 10 per cent annual economic growth in this country that has a gross domestic product (GDP) of about $70 billion will generate an additional national wealth of $7.0 billion. On dividing it equitably among its 140 million people, the per capita income will increase by $ 50. If the consumer price index rises within the same time by a galloping 7.0 per cent, the actual gain of individuals from this growth will be no more than 3.0 per cent.
In reality, Bangladesh economy reportedly grew at an average rate of 6.0 per cent during 200-05. The finding of the Bangladesh Bureau of Statistics (BBS), as revealed at a recent seminar arranged by the Bangladesh Institute of Development Studies (BIDS), is that the impact of this growth was more than anulled by a galloping increase in the consumer price index for the lowest 50 per cent of households of this country. In spite of the apparently high economic growth, they have suffered an erosion of their purchasing power. The war on poverty has thus clearly progressed hopelessly. It has not brought forth the slightest economic emancipation of those for whom development should mean nothing but reduction of privation.
That a 6.0 per cent average annual GDP growth through half a decade, attained by utilizing our so-called comparative advantage prominently in the ready-made garments (RMG) sector, leather and footwear industry, shrimp farming and agriculture, which has not delivered the poor half of our population from poverty, has conveyed that relying solely on the present comparative advantage for industrialization would be fatal for us. We have to alter it through dedicated efforts. Its message is also that we should acquire a new set of comparative advantage for augmenting our national income through production and export of better goods and offering improved and expanded quality services.
Politically, we may not like Israel. But our economic situation and other realities, like the acute land scarcity and the very high population density, suggest that we accept it as a perfect role model. As a land, that country is nothing more than an arid desert. But as an economy, it is prosperous. Planned management of its social sectors, keeping its national limitations and requirements in sight, has enabled Israel to convert its economy into a powerful growth center. The country is not self-sufficient in all respects. But its economy presently generates huge wealth, which is not only enough to finance a powerful military machine to confront all Arabs around but also to meet its domestic demands for many consumer products through generous import.
We can follow its last example without pains if we are ready to take pains for organizing our social sectors, like health and education, law and order, in a more planned way and conspicuously robustly-with less lip service and more efforts to significantly enhance the value for money, which this poor nation commits annually through its budget. Instead of being based on populism, as our approaches in these sectors have been for long, our policies on education and health should be totally welfare-oriented. A high quality of both should be our aim. In this respect, the private and public institutions-schools, colleges, universities and hospitals, should be under very strict superintendence for ensuring the value for money, spent by the state and parents for education of our young citizens and by patients and their relatives on treatment in local hospitals.
Whichever authorities made separately responsible for the superintending tasks in these areas should be also made accountable by law, with a provision for facing also personal liabilities, for every detected major lapse in the performance of their duties. The superintending authorities or individuals may be paid additional allowances, commensurate with the demand of their tasks, devotion to duties as expected of and the personal risks to be involved. The provision for extra payment as charge allowance or technical pay for certain demanding jobs was previously there. It was undone in this country long ago, which took off or substantially reduced the motivation and the recognition element that induced individuals holding such jobs to have pride in and work earnestly for proving their superiority. The provision may be restored to retrieve the atmosphere that previously motivated superintending authorities to assert themselves in the interest of better performance of their organizational responsibilities.
While planning the future, the authorities concerned should appreciate that they are basically laying the foundation of an industrial society, which would gradually reduce the emphasis on self-sufficiency in agriculture and rely more on import of many agro-products for meeting the domestic demands. The land available for raising products, like onion, garlic, oil seeds, lentils and other varieties of pulse, has continued to shrink. Hoping to remain or become self-sufficient in any of them at this stage or in the future and working on any project for being self-sufficient in any or all of them is bound to prove futile. It is indicated by the growing reality of progressive land shortage for raising those crops, due partly to enhanced intensity of the paddy crop and partly to high lands being increasingly taken over by the housing sector in the rural areas.
A stage may come within a few decades when we may have to rely even more on rice and wheat imports, unless another green revolution of a higher order that would pose a lesser threat to the environment, takes place in the intervening time. This frightening possibility should motivate us to work right from now for evolving fast a predominantly efficient industrial society that would deliver us from poverty. In spite of the great requirement for a big change in the area, it is a fact that the resources available to it do not permit the government to devote enough attention to research and development (R&D) activities that are most useful and rewarding work for rapid and hugely profitable industrialization. The private sector here is yet to grow strong and sensitive enough to involve itself in R&D. The government should take note of the limitations imposed by the prevailing circumstances and should evolve a strategy to meaningfully and increasingly involve the well-known local academic institutions and research bodies with the private industrial establishments and interested business houses in R&D activities.
An immensely creative mind or a set of such minds should be engaged for formulating such a strategy. Business organizations, research bodies and academic institutions should be brought together to jointly pave the path under this strategy for this country's emergence as a prosperous, efficient and progressive industrial society.
If the present caretaker government can afford to create the legacy of having such a strategy in place, the future history will credit it profusely for laying the seed for fast economic growth of this country. The whole world in that case will also re-evaluate the prospect of this country with a fresh look at its potentials.