Higher economic growth: How to make it happen?

There is no reason why Bangladesh cannot achieve a higher growth rate than its current one. Bangladesh is still in the low-income group and is aspiring to enter the low-end of the middle-income group by 2021. Bangladesh's economic competitiveness is improving, as the country's ranking in the Global Competitiveness Index (GCI) went up by one notch this year due to sound macroeconomic environment and moderate progress recorded by the market size, goods market efficiency, financial market development and primary education.
We have taken umbrage at the World Bank's Doing Business concept as some of the numbers reported are incorrect. But from a progressive point of view, one needs to take a liberal stand and look at ways of improving the areas, in which we did not score well.
Bangladesh's ranking in the GCI stood at 109th out of 144 economies this year against 110th among 148 economies last year. In the Global Competitiveness Report 2014-15 released by the Geneva-based World Economic Forum (WEF), the country's score improved marginally to 3.72 out of seven, compared with 3.71 last year.
 With this score, the country secured fifth position in the competitiveness index among South Asian countries. India topped the list in South Asia with a score of 4.21 and global ranking of 71st, followed by Sri Lanka which obtained a score of 4.19 and secured a global ranking of 73rd. Nepal, Bhutan and Pakistan scored 3.81, 3.80 and 3.42 respectively. Two South Asian countries - Afghanistan and the Maldives - were not covered by the WEF survey.
 The competitiveness gap between South Asian and Southeast Asian nations widens more than before, the report has revealed. The five largest Southeast Asian economies (ASEAN-5) all feature in the top half of the ranking.
China, which has improved its position by one place to 28th slot, leads the BRICS grouping, among which India has the least ranking. Russia is ranked 53rd, followed by South Africa (56) and Brazil (57). India's decline by 11 places to 71st, against the gains of the ASEAN 5 countries, suggests that the competitiveness divide between South and Southeast Asia is becoming more pronounced. Besides India, the WEF has said that some of the world's largest emerging market economies continue to face difficulties in improving competitiveness. These include Saudi Arabia (24th rank), Turkey (45), Mexico (61), Nigeria (127th), South Africa and Brazil - all of them have slipped in their rankings.
Country`s competitiveness: Bangladesh erased its negative branding-Kissinger termed it a bottomless basket-in the 2000s. The economy attained an average growth rate of 6.3 per cent in the early 2010 from mere 3.7 per cent in the 1980s. Meanwhile the economic system has been transformed into market capitalism. It is also endowed with some capitalistic brands like its position in the Goldman-Sachs's next eleven emerging economies and in the Coface's new ten emerging countries. Moreover, we are praised for our progress in some global indices and rankings. Our country, like other 47 least developed countries (LDCs), suffers from a vicious cycle of capital formation, low level of human capital, technological deficiency and macroeconomic instability.
Bangladesh could do much better if it could effectively implement structural reforms, develop, attract and retain talented people, constantly introduce new higher value-added products and services and focus more on public private partnership to execute development work. During the last four consecutive years Bangladesh's position in the global competitiveness table hovered between 108 and 118 and its score remained virtually unchanged. The variations in its positions had been mainly due to the increase and decrease in the number of countries included for assessment by the WEF.
How long could Bangladesh, an LDC, retain it in the wave of globalisation?
 Over 815 people were killed in 242 climate change events during 1993-2012 when the country faced losses to the tune of over $ 1.8 billion, which is equivalent to 1.16 per cent of GDP (gross domestic product). Bangladesh is followed by Vietnam and the Philippines in the index, developed by the think-tank Germanwatch. Even though Bangladesh had been ranked the fifth risky country prone to adverse climate change impacts during 1993-2012, it was not on the top 10 list as of last year, a new study says.  In the previous year's index for the 20-year period, Bangladesh ranked fourth. The CRI is a progressive-better index, the score of which was reported at 16.01 in 2006 and 19.67 in 2013 indicating a risk diminution that was mainly for high adaptation. On the other hand, our rank was 11 in the Happy Planet Index (HPI), 2012. The HPI is also a progressive-better index by the New Economic Foundation. Our peace level improved for a fall in the GPI (Global Peace Index) score from 2.118 to 2.106 during 2008-2013. However, it deteriorated by 0.8 per cent in South Asia and 12 per cent in the world over the same period. Moreover, the World Happiness Index (WHI) has shown a happiness loss in all South Asian countries except Bangladesh. The UN Sustainable Development Solutions Network prepares the WHI, a progressive-better index at a range of 0-10, taking GDP per capita, social support, healthy life expectancy, life choice freedom, generosity and corruption perception into account. We gained happiness for a rise in the WHI to 4.804 during 2010-12 from 4.473 during 2005-07. Gains in peace and happiness are our wealth but how long could an LDC retain it in the wave of globalisation? Meanwhile, our economy has stepped up from the LDCs' average in reducing some basic deficiencies. We moved out of 'extreme alarming' and 'alarming' levels of hunger. The Global Hunger Index (GHI) 2013 ranked us 58th least hunger-affected country in the world. Our progress is very satisfactory in poverty alleviation, primary education, child healthcare, maternal health and basic sanitation. Meanwhile, we have received a few awards from the United Nations and other international agencies. All these have created a base for human development. According to the Human Development Index (HDI) 2013, our score is higher than the LDCs' average. The United Nations Development Programme prepares this HDI as a progressive-better index at a range of 0-1 taking life expectancy, literacy rate and per capita income into account. Our HDI score increased from 0.494 to 0.558 during 2005-2013 that offered us a status of medium human developed country with the 142nd position in the world. Based on potential young human resources, the JP Morgan placed us in the Frontier Five. However, we are still far off the mark of turning our human resources into human capital.

Serious impediments to growth: The lack of adequate infrastructure facility, corruption and inefficient bureaucracy among other issues are identified as most problematic factors for doing business in Bangladesh, according to a report on global competitiveness.
Bangladesh has seen positive changes in seven areas including infrastructure, macroeconomic stability, higher education, goods market efficiency, financial market sophistication, market size and innovation, the report has said.
Major deterioration was noticed in institutions, health and primary education, labour market efficiency and technological readiness among others.
The most problematic factors for doing business are inadequate infrastructure, corruption, inefficient government bureaucracy, government instability, access to financing, policy instability, inadequately-educated workforce, crime and theft, tax regulations, inflation, foreign currency regulations, tax rates, poor work ethic in national labour force, insufficient capacity to innovate, poor public health and restrictive labour regulations, it has said.
 In the last six years infrastructure has fallen in the 'worst' category due to limited road transport, even though electricity supply has improved significantly. Look at the four-lane Dhaka-Chittagong highway which has remained a dream for long. It is felt that infrastructure uplift should be focused on for development of the supply chain. A significant deterioration was seen in key indicators on government and public institutions during the last two years. Government efforts to combat corruption and bribery were largely ineffective.
While noting improved macro-economic management and a leap in financial market development, business-government relationship has fallen short of creating an adequately enabling business environment. We endorse the economists' call for access to public utilities and credit at an affordable rate of interest. While we offer opportunities for investment, we must underpin it through raising our competitiveness levels.
Bangladesh's business competitiveness had been stuck at the 'lower' level for the last several years and could not enter the upper level. It is like moving up and down a slippery slope. One year we go up by one notch or two, another year we slip. It remains an uphill task to better our previous standing in terms of global competitiveness. All this is because in the vital areas we are largely stuck up.
It is difficult to know how seriously the policymakers here are taking the GCI, which assesses the competitiveness landscape of a large number of countries providing insight into the drivers of their productivity and prosperity. The latest global competitiveness index published by the WEF is the 35th one of its kind and it has laid emphasis on innovation and skills as the key drivers of economic growth. Bangladesh, according to the assessment made by the GCR, has made some improvement in areas of infrastructure, macroeconomic stability, higher education and training, efficiency level in commodity market, sensitivity of the financial market and innovativeness during the period under review. But its performance in some areas, including health and primary education, labour market efficiency and financial market sensitiveness, has showed signs of deterioration.
The top factors are considered to be the most important problematic ones for doing business for a long period. There is a lack of enough efforts to reduce the extent of adversities caused by these factors, which have topped the list since 2006.  However, entrepreneurs foresee better economic prospects in 2014.
The table (Pillars of performance) has highlighted the score that Bangladesh gets for 29 of the 114 parameters and juxtaposes them with the average for the world. The scale runs from 1-7 with 7 being the best and 1 the lowest.
What are the key takeaways from this table? First, we need to appreciate that Bangladesh has done better than average on several scores or close to the average, especially in the area of macro-economic management and health and primary education.
Second, contrary to perception, the government has not been quite an inhibiting factor relative to the average in the world even though this does come high in the list of grievances. Therefore, economic reforms have brought about substantial changes in the way in which we function.
Third, infrastructure is a major lacuna in our growth story and clearly, the emphasis has to be on bringing about rapid development to sustain growth. Infrastructure constraints might act as a roadblock to an expected positive economic growth outlook for Bangladesh unless measures are taken to deal with the problems. Importance should be going on implementing infrastructure projects on priority basis. Port capacity should be expanded in line with the GDP (gross domestic product) estimates. Without addressing major infrastructure and trade facilitation deficiencies, the economic growth of Bangladesh might have to be compromised.
Fourth, corporations also need to do something about governance standards, both in the way they operate as well as the conduct of their boards. Fifth, there is still a lot to be done on the social front (not provided in this table since the elements have absolute numbers and not scores). Education system needs improvement and the government should continue to channel efforts here. There have been some moves made on financial inclusion, but this needs to be expanded to ensure equitable growth. This can be related to the fact that our reform process has been largely driven by focusing on productive sectors i.e. industry and services.
The government as well as everybody should work together with the private sector to do everything, as flourishing of the private sector means boosting revenue income and increasing expenditure capacity of the public sector for welfare of the people. But this requires change of the mindset. The factors that are standing in the way of raising the level of the country's ability to compete at the global level better are many in numbers and very much known to all concerned. In fact, the number of negative factors, which are political, economic and societal in nature, is more than that of many other countries. There are hurdles that can be removed or effectively reduced, if the authorities mean business and deploy sufficient time and money. But graft and poor governance have been identified, time and again, as major obstacles to achieving that objective. Despite repeated calls from businesses and civil society, the country's political leadership has utterly failed to build strong national institutions to ensure transparency, accountability and fair play at all levels of national life. The failure is apparently deliberate to gain narrow political and economic advantages of the people who remain in power from time to time. To improve the country's position in competitiveness ranking, needs urgent reforms in areas such as public services, public sector, financial sector, corporate governance sector and environment and social issues.
Steps that are needed to be considered for becoming one of the most competitive nations: The following considerations can be empirically extracted to be implemented in Bangladesh so that we can become one of the most powerful nations in terms of global competitiveness:
* Government should be honest and sincere in drawing up their plans and policies.
* Develop infrastructure up to the standard.
* Establish good governance that encompasses transparency, accountability and the rule of law to prevent crime and corruption and ensure distributive justice for progress towards sustainable development.
* Environment of regional innovation needs public policies to support them during the initial stages when they are getting established, thus generating structures of governance linking the academy, companies, and governments.
* Make the best possible framework for promoting local people's participation in governance and development process as well as for articulation of local needs and mobilisation of local resources.
* Selective interventions for promotion of these structures are needed.
* The local governments must be firmly involved with the centres of innovation in implementation of their agenda.
* The area where policies are developed must be separated from the area where they are executed (politicians are not necessarily good managers).
* The management of the centres must be carried out by professional management personnel in professional management structures. The managers must be trained on business administration (not on research or teaching-professors are not necessarily good managers).
* People in Bangladesh may be encouraged to develop appropriate technologies that are indigenous in nature. Research should be carried out to further develop and improve these technologies.
* A systemic approach must be promoted from the political environment to improve communication among all the associates. The quality policies, the information systems, and sharing strategic plans among the actors are some of the instruments that can be employed to achieve this goal.
* Mechanisms to evaluate impacts of the centres and a clear commitment with management that defines short, medium and long-term goals in accordance with the goals of the regional and national governments must be established. Public support for these must be directly tied to fulfillment of the above-mentioned commitments.
* The innovation environment must generate ties with local companies in general and with the social local actors where the centre is located.
* The regional centres of innovation are dynamic structures where the generation of ties with other actors of the national innovation system must be promoted.
* Human resource development must be enlightened. Development of communication skill and a constructive attitude is essential.
* The creation of public-private alliances must be encouraged.
* Strategic leadership at the regional and local levels is necessary.
* Strengthen linkages among research, extension, technology and education.
Finally, to be successful in business today, when capital, goods, talent and knowledge move quickly around the world, we need to treat global markets as a single market, building global value chains that integrate the world's best resources. It is important to generate innovative environment. It is also essential that the government becomes involved as a catalyst for interaction among stakeholders, particularly in regards to the mechanisms that lead to a closer relationship between academia and businesses, the promotion of the best intellectual property management practices at universities and technical institutions and actions that create good governance. It cannot be said that economic arena of sustainable development is really very advanced in comparison to outcomes found in this arena in developed countries. The major barriers to improving economic arena appear to lie in economic, social and cultural norms and the influence of the norms on them.
Some serious efforts need to be put in, since we need to leverage the high economic growth that we have attained to become more competitive or else we will lose out to other nations, when it comes to attracting investment. We should refrain from getting into a denial mode and bring about improvements. In fact, on the positive side, we can take pride in remaining attractive despite these failings. Clearly, bringing about these improvements will take Bangladesh to another level. The current government has it in its veins to do so and one does hope to see this rank improve substantially in the next three to four years.
 The writer is A.I.C, Inspector of Colleges, Bangladesh University of Professionals (BUP), Mirpur Cantonment.
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