"We should take immediate measures to work towards building an equitable international economic system against the backdrop of the economic disaster that has recently occurred in the world. … As a result of the global inflation, the cost of development planning for the developing countries has increased manifold. Their power to utilise their own resources has also diminished. Countries that are already suffering from huge unemployment problems have been compelled to cut down on their far minor development plans. … Only the recognition of interdependence is capable of giving a logical solution to the current problem. Immediate and concerted efforts are needed to overcome the current disaster." Anyone unaware of the global economic situation prevailing in the mid-1970s might assume that these are prudent guidelines to overcome the current global economic crisis from a contemporary statesman. Of course, these guidelines are fitting for any economy, developing and developed alike, aspiring to overcome the obstacles created first by the pandemic-induced economic slowdown, and then further exacerbated by the Russo-Ukrainian war. But you will be certainly impressed to know that these words of wisdom were pronounced by Bangladesh's Father of the Nation Bangabandhu Sheikh Mujibur Rahman in his historic speech at the UN General Assembly almost 50 years ago (on September 25, 1974). Like today, the world economy was also facing a lot of challenges then. And such a deep understanding of the strengths and weaknesses of the domestic economy as well as sensitivity to global economic realities were well-known traits of Bangabandhu as a leader.
Indeed, he was both a local and global leader with so much of hands-on experiences. No doubt, he is so fondly remembered by Nobel laureate Professor Amartya Sen as a Bishwabandhu (friend of the world) for his unequivocal commitment to human rights including freedom to life and liberty. In addition to his bias towards economic freedom ensuring equality of opportunities for the downtrodden, he was also humane and inclusive. Also, he was not against freedom of religion, but never allowed abuse of religion in politics. His pledges for just and equitable social order meant elimination of all kinds of inequality and championship of freedom for participatory political, social, and economic engagements. That's why his ideas of inclusive social and economic development still remain relevant in today's turbulent time. The contemporary world can certainly draw inspiration from his campaign for freedom of all kinds for the peasants, workers and the downtrodden of the world. Let us look into how he fought for the freedom of the have-nots during his entire political journey and simultaneously raising voices against the unjust world economy standing on the way of attaining justice and equitable distribution of wealth and opportunities by many, not a few, in both local and global contexts.
Certainly, the amazing story of rising Bangladesh from ashes to prosperity is yet to be told. In the 1970s, Bangladesh was a war-torn and newly independent country. We were facing the mountainous challenge of pulling the country out of the ashes of war and getting it up and running on the path to prosperity. The situation was especially challenging because the world economic order was also in a disarray due to geopolitical tensions between the opposing geo-political blocks. In particular, the higher inflation due to sudden rise in energy and food prices, depreciation of Taka against pound-sterling and shadow of acute food insecurity put Bangladesh into a very tight corner. The nasty food diplomacy of the US government instigated by Pakistan further worsened the security situation in Bangladesh when the US PL-480 programme was suddenly stopped raising a very flimsy ground. Nature, too. was not kind to Bangladesh either. The subsequent floods for more than a couple of years created serious food deficit at the wake of the devastating war of liberation in 1971 when agriculture in Bangladesh suffered the most. However, despite all these odds, Bangladesh moved on. It was not easy particularly after the brutal killing of Bangabandhu in August 1975. In fact, the Atma (spirit) of Bangladesh was killed on that cruel night. Yet, real Bangladesh stood on its feet and has been marching on towards the goal of achieving prosperity as dreamt by Bangabandhu.
Five decades later, against so many challenges, Bangladesh has now become a role model of inclusive and sustainable development. We are soon to become a developing country. Despite our success in transition to the status of a developing country from that of an LDC, we still have major obstacles on our path to materialising our socio-economic potential. Income inequality, the low pace of employment generation, social instabilities, lack of good governance, deep rooted corruption and above all negative effects of climate change are major challenges that require careful addressing. And on top of these, there are some relatively newer challenges created due to the COVID-19 pandemic. In addition, the global supply chain disruptions because of the war in Europe fueling the reemergence of deeper geopolitical cleavage' has been adding more fuel to the sources of instability with huge consequences for globalised economies like ours. Thanks to the prudent policy leadership from Bangabandhu, we managed to overcome all the challenges and started an amazing macroeconomic journey in the early 1970s. It is Bangabandhu who changed the mindset of this nation and made us believe in our inner strengths to overcome the macroeconomic challenges. And we are fortunate enough to have his daughter our Honorable Prime Minister Sheikh Hasina to guide us amid the current tumultuous geopolitical situation. She is focused on target and multi-faceted in her inclusive economic campaign without destabilising the global geopolitical architecture. She just follows the footprints of Bangabandhu following his dictum of 'friendship to all, malice to none'. Bangladesh indeed has benefited greatly from this legacy of prudent leadership from Bangabandhu to Sheikh Hasina.
As Bangladesh is celebrating its fifty-third Independence Day, the country is facing a plethora of macroeconomic challenges, most of which have originated from global supply chain disruptions (especially the rising prices of fuel and fertilisers). In the context of the massive influx of liquidity in the form of incentives to cope with the pandemic, and then the supply chain disruptions caused by the European war, the Federal reserve bank of the US and most other central banks raised their policy rates. This inevitably has resulted in a devaluation of almost all other currencies. Bangladesh has also depreciated its currency by about 25 per cent against US dollar. Consequently, imported inflation has gone through a sudden hike and is yet to be under control. Safeguarding the citizens (especially those belonging to lower-income households and reliant on the informal sector) is the most critical challenge for Bangladesh policymakers now. Costs of development projects have also gone up by 25-27 per cent due to the depreciation of the Bangladesh Taka. Therefore, maintaining the pace of consumption and import-based growth has become almost impossible. Given this context, we must once again look up to Bangabandhu's economic policies to guide us out of this tumultuous situation. Because safeguarding the poor and the marginalsed amidst challenging times was the topmost priority of the economic policies during Bangabandhu's tenure as the premier of Bangladesh. So has been the case with the present leadership who too has prioritised the poor and disadvantaged to get more from the social security support of the state.
Professor Rehman Sobhan, in a recent article has pointed out seven key features of Bangabandhu's economic policies that make his economic thoughts and aspirations further relevant to the current macroeconomic context of Bangladesh. These are:
l Bangabandhu identified rampant corruption as the biggest obstacle on the way of Bangladesh's journey towards prosperity and social justice. Today's policymakers also need to emphasise regulatory discipline (especially in the financial sector). This will boost people's confidence in the financial system and in turn- safeguard the economy amid the global crisis.
l During the early days of Bangladesh, Bangabandhu emphasised on channelling finance for the agricultural sector and cottage and small industries with the intention of invigorating the domestic economy. In alignment with that vision, Bangladesh Bank has been leading an inclusive finance campaign for almost one and a half decades. This inclusive financing campaign needs to be further bolstered. This would on the one hand- enhance employment and investment opportunities, and on the other hand- bolster domestic demand.
l Enhancing the rights and living conditions of the workers always held an important place in Bangabandhu's policy statements. Today's policymakers could also attempt to channel public funds with the intention of making the workers equity partners in the enterprises where they work.
l Bangabandhu's Tebhaga vision intended to ensure a fair share of the yields for agricultural wage workers and sharecroppers. In today's Bangladesh, wage workers and sharecroppers till a larger share of the cropland. Therefore, the government should pilot experimental models (like Tebhaga) that could serve as a productivity-enhancing incentive.
l The Second Revolution envisaged by Bangabandhu emphasised rural cooperatives for participatory development and equitable sharing of benefits/incomes. In contemporary rural Bangladesh, such cooperatives, if nurtured and guided prudently, could provide small-holding farmers with their much-needed comparative advantage in supply chain management and market access.
l Bangabandhu prioritised investment in humans above all. Bangladesh is still benefiting from Bangabandhu's initiatives in the fields of family planning and primary education. Today's policymakers must also consider investing extensively in the education and health sector. Education sector investments need to focus on developing human resources in the context of the fourth industrial revolution. This will equip the citizens to earn a better living and become more resilient to current and future economic shocks. Similarly, enhanced health sector investments would reduce out-of-pocket health expenditures and ensure better economic resilience for households.
l A strong stand against elitist politics and economic policies favouring the richer people was at the core of Bangabandhu's political philosophy. Policymakers must also adhere to the same standards and oppose the role wealth is playing in Bangladesh's politics and economy.
I am fully on board with Professor Rehman Sobhan who has formulated the above policy directions soaked in the deeper thoughts of Bangabandhu. He worked with him so closely that his ideas ought to be coloured by Bangabandhu's thinking. However, it is also true that the world has changed substantially. Bangabandhu would have recalibrated his economic strategy as well if he were still alive. Of course, the core thinking of Bangabandhu on just and equitable social order should remain as the guiding principle for today's policy makers.
Dr Atiur Rahman is an eminent economist and former Governor of Bangladesh Bank. [email protected]
© 2024 - All Rights with The Financial Express