Lessons from Argentina: Ensuring good governance, building institutions

The other day this scribe was reading an article in the Economist about Argentina and it made us wonder about Bangladesh. Although these two countries are worlds apart, this scribe would like to emphasise that there are valuable lessons that we can learn from the decline of Argentina and try to develop strategies to avoid a similar fate.
At the start of the Twentieth Century, Argentina was a booming economy. At that time it was one of the richest nations in the world and its GDP (gross domestic product) per head far outstripped that of France and Germany. Fertile agricultural land, favourable climate, modern (contextually speaking) democracy, an educated population and a dance that would evoke sensuality like none other, made it a choice of destination for talented people at that time.
Sadly, Argentina is a complete wreck now.  Although the GDP of Argentina (PPP) is twice that of Bangladesh, Argentina's decline has much to offer for a nascent democracy with immense potential as in Bangladesh. The causes for Argentina's decline are manifold. They include: bad luck, incompetent governance, weak institutions and the curse of populism.  
Although there is not much one could do against bad luck, it could be argued that the leaders of Argentina had failed to diversify their economy. So, when bad luck did hit Argentina, they did not have a contingency plan. Thus, the first lesson for Bangladesh is: strategic planning. The garment industry is one of the biggest contributors to our GDP. The lynchpin for its success is the low cost of labour in Bangladesh. This puts the industry in a precarious position, because, the moment labour costs increase or technological advances allow workers elsewhere to be more competitive, the industry will become unsustainable. In order to remain competitive, the garment industry must change its strategy.
A friend of mine has informed me that the productivity of Bangladeshi garment workers (the number of specific stitches per person against the number of stitches that person is expected to complete in a given time) ranges from 45 to 60 per cent. This is appalling, even though we have been involved in this industry for a far longer time than them. Garmentalists (garment industrialists) do not seem to realise that their profits are intrinsically linked to the well-being of their labour force. If the labour force is motivated, then they will be more productive; meaning, more profits for the garmentalists.
One way to motivate employees is to provide them with better prospects. Implementing some rudimentary language, organisational and design training, etc., could provide immense dividends for the garmentalists, because it would motivate the employees and enable them to be more productive in the use of their newly-learnt skills, thus generating a higher income for everyone. Furthermore, once such programmes are developed, the marginal cost of training an additional worker would be very low. This means garmentalists would be able to significantly increase their profits in the medium term, if they are willing to make some targeted investments in their labour force.
Furthermore, most of the products that are available from the garment sector are basic goods. This means that there is no customer loyalty or brand recognition. The moment someone offers better prices to the buyers, they will stop buying from the garmentalists. The most effective ways to ensure one's long-term survival and protect one's margins is to move up the value chain. If the garmentalists take the service of local designers and successfully create their own brands, they would be immensely successful in the long run.
The other advantage of investing in human capital is that it would stimulate the growth of supporting industries, such as design industry, and engender innovation, such as the innovation of new machinery and business methods. Thus, as we move up the value chain, we will invariably diversify our economy and make it more robust.
Good governance is the second lesson for Bangladesh. Argentineans have had really bad luck in relation to their leaders. They have been saddled with more than their fair share of economically inept populist leaders, such as Christina Fernández, Juan and Eva Perón. The populist and short-sighted policies of Argentina's rulers have been the primary reason that it has been at the centre of a number of emerging-market crises.
Bangladesh has had its fair share of crises. The most recent crisis, during the winter of 2013-14, demonstrates the fragility of our nascent democracy. Forget about economic competitiveness, the primary concerns of the political parties were the sentencing of Abdul Quader Mollah and sabotaging the election at immense human and economic cost.
The current administration has made significant improvements in the lives of the people, has heavily invested in infrastructure projects and power projects and realised many things. However, the fact that they had to rely on political skulduggery to remain in power indicates shortcomings in the way they have conducted their previous administration.
This scribe has been informed that the people of Bangladesh wanted to see a change in the constitution of the administration in the most recent election. Apparently, this is because the people regularly vacillate between two diametrically opposed political camps. This scribe thinks this is complete rubbish. People may have been indoctrinated in a specific party, but if the majority wanted a change in the government, it must reflect some degree of displeasure with the incumbent. If a visionary leader can "convince" the people that he/she is truly concerned about their well-being and their future, the people will surely appreciate such a leader. If the current administration hopes to remain in power, without resorting to political skulduggery, for an extended period of time, they must try to emulate the administration of Mr Lee Kuan Yew of Singapore. Discussions about the lessons that we can learn from Singapore are outside the purview of this piece. However, one can catch more flies with honey than with vinegar.
The art of good governance is to ensure that the governed perceive that the governors are fighting to fill the pockets and the bellies of the governed, even though some resources may be horizontally or vertically displaced in the process. This perception will only arise if the political elite show due respect to the rule of law and share some of the wealth that they have acquired with the people through transparent distributive policies. People respond more positively to incentives and threat of punishments, than to outright coercion. However, the governors have to keep in mind that the people will only respond positively to the carrot and stick approach, if the carrots do not disappear through the chain of command and the sticks are applied consistently without any apparent favouritism.
Governance is intrinsically linked with the development of public institutions. From Argentina we can learn the pitfalls of having weak institutions. According to the Economist, the current plight of Argentina arises to a great extent from the failure of its leaders to develop strong institutions, such as the judiciary, the army and the police, which could safeguard its democracy; political parties that are not driven by personalities and are determined to build and share wealth with the people, and independent institutions that can provide an unbiased analysis of the state of the economy and the impact of government policies on the economy.
"Quis custodiet ipsos custodes?" - is a famous Latin phrase, which means: "Who guards the guards?" Since it is very difficult to ensure that the governors are following the laws that they are meant to uphold, democracies have developed the concept of separation of power. Although this concept does not provide a panacea, it does protect the people from egregious abuse of power. If a state fails to develop strong independent institutions, then the guards who were meant to protect others will be able to do whatever they please which might not always be in the best interest of the people.
Argentina is a case in point. Political meddling has completely destroyed the credibility of its statistical office which is essential for measuring the impact of various policies, and identifying the weaknesses of existing policies, so that they can be addressed. Furthermore, close relationship between the judiciary and the executive branch has severely undermined the credibility of the judiciary. Lack of strong institutions bred complacency in the branches of the government of Argentina, which ultimately led to political instability, economic turmoil, poverty and chaos.
The importance of having strong institutions is the third lesson we can learn from Argentina. The current administration of Bangladesh has taken some admirable initiatives in relation to the rule of law, but there is a marked disparity in relation to the enforcement of those initiatives.
The police and the security forces have been the tool of major abuses on numerous occasions in the short history of independent Bangladesh. Thus, we need to make sure that the security forces adhere to the rules that they have been sworn in to enforce. Furthermore, we need to encourage the executive branch to restrain from exercising its influence on the judiciary and other public institutions, because, that would severely impair the prospects of Bangladesh to be an independent and self-sustaining nation in the future. If the political leaders and highly educated professionals do not respect and obey the laws and rules that they have been sworn in to uphold, then it would be difficult to expect an illiterate person to respect and obey the law.
One of the most effective ways to create strong institutions is to encourage the freedom of speech. In order to facilitate development and promote innovation, we "must" allow people to voice their concerns and opinions, albeit in a way that does not undermine the stature and the position of the issue that is the subject of discussion. Before we can learn from our mistakes, we have to identify our problems. And in order to solve those problems, we have to be able to discuss and analyse those issues first.
We should not suppress discussions on any issue. Discussions and debates are essential for a healthy and vibrant democracy, because it encourages people to think about their decisions. If more people start to think before they act, then we would be able to save our resources, because we would be less inclined to engage in ill-conceived activities.
Finally, Argentina also teaches us the importance of creating strong political parties that are not built around personalities and influences. We have to acknowledge the debt that we owe to Bangabandhu, and we should never forget the sacrifices he made for the independence movement. However, we should also be mindful that the Father of the Nation was not a saint. Like all human beings he had foibles. The fact that he has been able to inspire millions of people to stand up against brutal oppressors and sacrifice their lives for a better future for their fellow countrymen despite his limitations, is a testimony to his greatness.
The ultimate vindication of Bangabandhu's contribution and sacrifice would be a self-sufficient Bangladesh which does not have to rely on other nations to resolve its internal issues. Our objective should be to encourage all talented people who have the capability, tenacity and the vision to help us realise Bangabandhu's vision to play an active role in political discourse of Bangladesh.
Prime Minister Sheikh Hasina is one of the most creative and far-sighted leaders of Bangladesh. If Hasina would like to be remembered as a politician who changed the course of development in Bangladesh and ushered in an era of unprecedented growth and prosperity, then it would be in her interest to ensure that Bangladesh does not follow in the footsteps of Argentina.
mr.kazi.rahman@gmail.com