Shaping Bangladesh's technology policy

Standard economic theory suggests that for developing countries far away from the fast-expanding technological frontiers, "catch-up growth" is the only viable option to secure long-run growth. According to this view, no matter how poor a country is, if it adopts the best practices of the rich countries, it will eventually be just as well-off as its forerunners. The reasoning sounds beautiful in theory but finds almost no support in the data. Analyzing 60 years of statistics, economists Paul Johnson and Chris Papageorgiou find little evidence that poor countries are nowhere near the stage of catching up to their richest peers, and unless something changes, most poor countries are destined to stay poor.
Among the many factors that contribute to the long-term economic growth and convergence between poor and rich countries, capital, technology and productivity are the most powerful of them. Capital includes both physical capital and human capital, while technology has numerous dimensions. The interaction of capital and technology is expected to boost productivity, in positive ways.
Often the main barrier to development in developing countries is policy failure. What matters most is government giving high priority to strategic interventions in key sectors. Take, for example, Bangladesh's successful population-control programme. From a fertility rate of nearly 7 per woman at the time of the country's independence in 1971, within a generation, the fertility rate dropped below 3 children per woman. Such a remarkable feat was only observed in Japan, while it took western European countries more than 100 years to cut their fertility by more than half. Another successful example of targeted policies is the introduction of bonded warehouses combined with "back-to-back" LCs in Bangladesh's garment sector. Bonded warehouses allow duty-free import of raw materials, while back-to-back LCs enable financing of these imports against export orders. This policy combination proved a remarkable catalyst for Bangladesh's strong presence in the global apparel value chain.
These experiences illustrate an important point: targeted government policies and strategic interventions in key sectors can drive significant development, even with limited resources. However, the approach to technological advancement and economic growth can vary significantly between countries.
When considering what kind of technology policy is relevant for countries like Bangladesh, it's best to look at what Hong Kong, Taiwan, South Korea, and Thailand did. These are four comparators, each with different approaches to technological development. Hong Kong focused on becoming a financial hub, utilizing its unique position as a gateway to China and developing advanced financial technologies. Taiwan built a strong semiconductor industry, investing heavily in research and development and fostering close ties between academia and industry. South Korea pursued an export-oriented industrialization strategy, with the government actively supporting large conglomerates (chaebols) in developing cutting-edge technologies in electronics, shipbuilding, and automobiles. Thailand, on the other hand, focused on becoming a manufacturing hub, attracting foreign investment in sectors like automotive and electronics while also developing its agricultural technology to boost productivity in its vital farming sector.
These countries grew fast and were still continuing to grow. They have shown the capacity to generate their own technology at various levels. South Korea, in particular, showed remarkable innovation. In the 1960s, Korea was sending people to Pakistan to find out how the country was growing. Interestingly, Bangladesh had a better schooling system in the 1960s than it does now. For example, Dhaka University was a well-recognized model of higher education in all of South Asia. This historical context is important when considering Bangladesh's potential for technological development.
When thinking about technology policy, it's important to consider the scale at which Bangladesh can effectively use indigenous technology. While some countries engage in large-scale, high-tech projects, Bangladesh needs to carefully consider its resources and immediate needs. For instance, India has developed its own space programme, including building rockets for satellite launches. India's success in building these rockets at a fraction of the cost of those in developed countries raises interesting questions for Bangladesh. Should Bangladesh aim to develop such technologies independently, or would it be more efficient to collaborate with countries like India? Could Bangladesh purchase rockets or satellite-launch services from India at favourable rates, allowing it to benefit from space technology without the massive investment in rocket development? These are the kinds of strategic questions Bangladesh must consider in forming its technology policy.
The China model, often referred to in discussions of rapid economic development, goes beyond just long-term planning. It involves several key elements that Bangladesh might consider. The model includes strong government direction in economic planning, including the identification and support of key industries. It also involves large investments in infrastructure, which provides the foundation for technological adoption and innovation. China has focused heavily on manufacturing and becoming an integral part of global supply chains. The country has also pursued strategic acquisition of foreign technology through joint ventures and technology- transfer agreements. Moreover, China has invested heavily in education, particularly in STEM fields, and has created special economic zones to attract foreign investment and technology.
While adopting this model wholesale might not be suitable for Bangladesh, certain elements could be adapted to fit Bangladesh's unique circumstances and democratic system. The success of ICDDRB (International Centre for Diarrhoeal Disease Research, Bangladesh) offers valuable insights. Its success stems from stable funding without interference and collaboration between domestic and international researchers to produce high-quality research. It presents a natural experiment demonstrating that high-quality research institutions can be established in Bangladesh. By following the ICDDRB model, with appropriate modifications, similar institutions could be established in other sectors of the economy.
The Indian Institute of Science (IIS) provides another interesting case study. In its first thirty years after inception, it had produced virtually nothing. This illustrates the challenges of establishing productive research institutions, even in larger economies. The "three I's of India"- inertia, incompetence, and intrigue - often hinder the fourth 'I', intelligence. This underscores the importance of maintaining quality and dedication for any institute to thrive. Even the most famous Indian scientists can be incredibly petty about hiring practices, leave policies, and office allocation, which is strange and counterproductive.
Bangladesh has its own success stories in technology development, particularly in the realm of social technology. Microfinance worked remarkably well for Bangladesh. The whole NGO movement, including organisations like BRAC, Grameen Bank, Proshika, and Asha, has been amazingly successful. These are clear examples of indigenously grown technology in the sense that this is social technology that Bangladesh has generated in response to Bangladeshi problems. This approach of problem-driven innovation, focusing on local issues, could be a model for future technological development in other sectors.
When considering whether social technology requires the same scale as scientific technology, it's important to recognize that whatever Bangladesh does, it needs to find a forum to make it visible. Muhammad Yunus is a great example of this, gaining international recognition through platforms like the CBS 60 Minutes show. This visibility can attract resources and collaborations that further drive technological development.
In developing a technology policy, Bangladesh may need to decide whether to cooperate more closely with India or China. The China model is probably better as it has a long-term perspective, which is important for long-term technological development. However, this doesn't mean blindly copying China's approach, but rather learning from its long-term planning and adapting it to Bangladesh's unique circumstances.
A country's technology policy should be multifaceted, building upon existing successes while exploring new frontiers. A primary focus should be on further developing social technology, an area where Bangladesh has already demonstrated remarkable innovation through microfinance initiatives and the work of NGOs like BRAC and Grameen Bank. These successes in addressing local social challenges through innovative approaches can serve as a model for tackling other pressing issues.
Agriculture presents another crucial area for technological advancement. By adopting modern farming technologies and practices, Bangladesh has the potential to significantly reduce its productivity gap with more developed nations. This not only addresses food-security concerns but also has the potential to boost exports and rural incomes. This is consistent with the findings of economists Tasso Adamopoulos and Diego Restuccia, who have shown that by adopting modern technologies and eliminating wasteful government policies, the developing world can reduce 80 per cent of the farm-productivity gap with rich countries.
Education must be at the heart of any long-term technology policy. Building on Bangladesh's historical strengths and taking cues from successful models like Vietnam's focus on early childhood education and STEM fields, Bangladesh should invest heavily in improving the quality of instruction at all levels. This not only prepares the workforce for future technological challenges but also lays the groundwork for homegrown innovation.
When considering investment criteria for technology initiatives, several factors should be prioritized. Local relevance is paramount - technologies that address specific Bangladeshi problems should be given precedence. Export potential is another crucial factor, focusing on areas that can boost the country's competitiveness in global markets. Scalability should also be considered, favouring technologies that can be efficiently expanded to create broader impact.
The time horizon for these technology initiatives should be strategically structured. In the short term (1-3 years), the focus should be on adopting and adapting existing technologies to address immediate needs. The medium term (3-7 years) should see a shift towards developing indigenous capabilities in priority sectors. The long-term vision (7-15 years) should aim for innovation leadership in selected niche areas where Bangladesh can potentially excel on the global stage.
To effectively implement this policy, several key strategies should be employed. Establishing economic attachés in all Bangladeshi consulates can help track global technological developments and provide updated information about new technologies and commodities relevant to Bangladesh's development. Creating special economic zones can attract foreign investment and facilitate technology transfer. Expanding on the success of the garment sector, similar targeted policies could serve as a template for other industries. The most challenging aspect of this approach is that it requires a long-run vision-a comprehensive, sustained commitment inspired by successful models like China's long-term planning approach. Research institutions must receive stable funding and maintain autonomy to preserve the quality of their work and attract top talent. Without this long-term perspective, even the best-designed technology initiatives will falter.
In conclusion, the main challenge for developing countries like Bangladesh is to apply lessons from successful economies in ways that capitalize on their strengths and address their specific needs, while maintaining a focus on long-term goals. By strategically investing in key areas such as social technology, agriculture, and education, and by adopting a well-structured, multi-faceted approach to technological development, Bangladesh can pave the way for sustainable economic growth and innovation leadership in select sectors.

Syed Abul Basher is an economist and independent researcher. syed.basher@gmail.com. Salim Rashid is professor emeritus at University of Illinois Urbana-Champaign.