Bangladesh's development over the decades is neither a miracle nor a paradox, but rather a natural consequence of the people's entrepreneurial aspirations, according to economists and civil society members.
They argued now the focus should not be on the so-called "Bangladesh Paradox" or how the country achieved growth despite weak institutions. Instead, the question should be why institutional capacity hasn't improved adequately alongside development.
At the launching of the book 'Fifty Years of Bangladesh: Economy, Politics, Society and Culture' at the Centre for Policy Dialogue (CPD) office in Dhaka on Thursday, the analysts also identified the debt default crisis in the banking sector as a central issue in governance.
The event featured both in-person and virtual participation from some of the book's chapter authors. Prominent economist Rehman Sobhan co-editor the book.
He said the book tried to identify both Bangladesh's possibilities and the challenges it faces.
Professor Sobhan expressed disappointment that Bangladesh's democratic progress, especially after the free and fair elections of 1991-1996, hasn't been sustained. He recalled the initial promise of a stable political system with a two-party contest and caretaker governments.
"Now look at Bangladesh today," he said. "The party that once fought for a caretaker government has itself abandoned the system."
Professor Sobhan argued that this has led to a situation where recent elections have not been truly contested.
The economist pointed out that Bangladesh emerged from a democratic struggle, but soon after independence, lost its way and fell under military rule. He described the overthrow of Ershad and the restoration of democracy as Bangladesh's "second birth."
Professor Sobhan believes Bangladesh is still engaged in the same democratic struggle that led to its birth 50 years ago.
Key institutions
dysfunctional
Prof Rehman Sobhan said the country now does not have any functional institutions -- ranging from the judiciary and the Election Commission to financial institutions and the Anti-Corruption Commission.
"All of these are dysfunctional," he said.
While talking about the functionality of the justice system, Professor Sobhan asked, "Does it provide equal justice for everyone? If you go to the police to file a case, will they treat everyone the same way?"
He similarly underlined the issue of inequality in the banking system. "Who gets loan rescheduling, who gets loan write-offs, and who can continue defaulting?" he questioned.
Professor Sobhan noted the emergence of new power structures over the past 50 years, with a stiff acceleration in the last 25 years. "A new and powerful class has emerged, particularly in the financial sector, along with another influential force in the RMG [ready-made garment] sector," he said. "These groups are impacting governance and politics."
"We are progressing economically, but there are gaps and continuing weaknesses in our institutions," Professor Sobhan commented.
Terming strengthening institutions as a key challenge ahead for the nation, CPD Distinguished Fellow Professor Mustafizur Rahman said, "The first generation's challenges have been addressed effectively. Now, strengthening institutions is the second-generation challenge."
"If it is not done properly, Bangladesh risks falling into the middle-income trap, making its growth unsustainable," he warned.
Debt crisis at the heart of
governance issues
Prof Rehman Sobhan identified the debt default crisis in the banking system as a central issue in governance. "The default loan culture has led to an advanced stage of deterioration in the banking system," he said.
According to Professor Sobhan, the problem was identified even during a study conducted at the end of Ziaur Rahman's rule, when default rates in Shilpa Bank and Shilpa Rin Sangstha were as high as 80-85 per cent.
"This issue of default loans has now become a serious structural crisis," he said.
Shifting focus from politics
to economy
In her introductory remarks, Dr Rounaq Jahan, co-editor of the book and member of the CPD board of trustees, compared the book to a similar one published in 1996 that predicted Bangladesh's political improvement.
"There was not as much ambition about the economy then," she said. "Now, there is frustration with politics, while the economy is in good shape."
Dr Jahan acknowledged that change has both positive and negative aspects, and said progress often comes at a cost.
Zahid Hussain, former lead economist at the World Bank Dhaka office, reviewed the book and noted that Bangladesh's experience is one of both growth and setbacks.
He called for a critical examination of why institutional reforms have not kept pace with economic development and urged for self-reflection and proactive measures to maintain growth.
He said the "Bangladesh Paradox" is not a paradox at all, but rather a case of natural development.
BRAC Chairperson Dr Hossain Zillur Rahman pointed not only to economic drivers but also to the resilience and tenacity of people in overcoming challenges.
However, he warned against a shift towards exclusionary perspectives, noting potential negative consequences for the economy and political fronts.
He said policy and political voices in making economic decisions are in a disappearing mode now.
Dr Rahman observed that the country's economy is now stuck in a 'low-cost-labour trap'.
Unpacking the 'development paradox'
Former World Bank Group lead private sector specialist Syed Akhtar Mahmood argued that the country's development is neither miraculous nor paradoxical, but rather a classic case.
Highlighting factors like increased crop production, improved rural roads and remittance inflows, he said those played key roles in the development of Bangladesh.
However, Dhaka University economics teacher and also the Executive Director of SANEM Professor Selim Raihan challenged the notion of the 'Bangladesh Paradox' -- the idea of economic growth with weak institutions and governance.
He proposed an alternative hypothesis, arguing that informal arrangements, despite weak formal institutions, have actually facilitated economic growth.
Professor Selim Raihan identified two key institutional features of Bangladesh's success: a "deals environment" that prevails over coordinated industrial policy, and pockets of functional informal institutions that compensate for weak formal institutions.
However, he cautioned that the benefits of these informal institutions are diminishing as the country needs to take steps to strengthen its formal institutions.
Dr Rizwanul Islam, former a special advisor with the ILO's employment sector in Geneva, dismissed the notion of a miracle behind Bangladesh's economic growth. He said it was labour that played a crucial role in achieving GDP growth.
With the help of highly productive rice seed, he said, the agricultural sector played a big role in the high gross domestic product growth.
Prothom Alo Editor Matiur Rahman shed light on the collaborative efforts of both the government and the market. He stressed the importance of coordination among regulators in driving the nation's progress.
Economics teacher MM Akash examined the issue of growing income and social inequality in Bangladesh.
He presented data spanning four decades (from the 1980s to 2016) on inequality, poverty and human development.
The data shows a decline in both rural and urban poverty, but a rise in income inequality. This, in turn, has led to disparities in human development, especially in areas like nutrition, health and education.
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