Even in the very recent past under Sheikh Hasina's kleptocratic rule Bangladesh was hailed as a great success story for achieving rapid economic growth and raising millions of people out of poverty. A World Bank (WB) report published in October 2023 wrote "From being one of the poorest nations at birth in 1971, Bangladesh reached lower-middle income status in 2015. It is on track to graduate from the UN's Least Developed Countries (LDC) list in 2026"which a large section of the business community opposes arguing the country is not prepared for such graduation. Bangladesh under Hasina created a façade which looked like a developing-world success story.
The report then further lauding Bangladesh's economic achievements said, "Bangladesh has an inspiring story of growth and development, aspiring to be an upper-middle income country by 2031."Hasina expressed her ambition for Bangladesh to become a developed, prosperous, high-income country by 2041, showing her disconnect from the reality. Yet the International Monetary Fund (IMF) assured her government its continuing support to achieve this delusional aspiration.
As the Draft White Paper on the Economy published last November pointed out "the establishment embraced the 'Developmental State' philosophy of governance". The paper further adds, "The economic legitimacy behind the idea of the 'developmental sate' rested on the growth narrative with the Kuznets Curve playing the role of the pied piper (p.9)." The Kuznets Curve suggests that income inequality rises as a country first industrialises, then moves to the later stages of development.
Bangladesh has achieved, as claimed, an annual average growth rate of about 6,5 per cent over the last decade and a half. The quality of statistical information provided by the Bangladesh Bureau of Statistics (BBS) has always been of questionable quality, especially relating to GDP and human development indices. More importantly under Hasina all macroeconomic indicators had to be vetted by Hasina herself before being published.
But the World Bank (WB) and the IMF have given their seal of approval to those misleading growth figures providing legitimacy to the growth narratives. It was pointed out in the White Paper that it struggled to explain Bangladesh as one of the fasted growing countries in the world and concluded, "The excess growth paradox is a figment of statistical manipulation (p.8)." Further adding, "There is strong evidence that GDP growth has tended to be overstated irrespective of political regimes, but overstatement itself grew noticeably in the past decade (P.10)."
Some world leaders such as former British Prime Minister Rishi Sunak also praised Sheikh Hasina for her successful economic leadership and recognised her as an inspirational figure. He also termed Hasina as a role model for growth and a wonderful role model for his two daughters. In early February 2024, congratulating Hasina on her rigged election victory, Sunak wrote, "As you embark on a historic fifth term and reflect on Bangladesh's impressive development gains under your leadership in recent years, I am writing…to support Bangladesh's graduation from LDC status."
The Alfred Nobel Memorial Prize in Economic Sciences (officially known as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel) winning economist Amartya Sen in a letter to one of his friends in Bangladesh wrote, "remarkably enough, Bangladesh stood on its own, again with Mujib's inspiration, and flourished as an astonishing country. In all these achievements, the new leader Sheikh Hasina showed imagination and originality." He also claimed that he had been privileged to know Hasina well.
Commenting on Sheikh Mujibur Rahman, Sen wrote, " (He) showed the world many exceptional gifts, varying from splendid literary creativity to superb organisational excellence, earning a place of its own in the cluster of civilisations," But surprisingly in an interview with the Press Trust of India (PTI) early this month, Sen expressed his deep concerns the way post-Hasia interim government led by Professor Mohammad Yunus is running the country without mentioning how Hasina fled the country leaving behind a completely dysfunctional and wrecked state and economy for Yunus to deal with.
Many who have known Sheikh Mujibur Rahman and his daughter Hasina for a very long time, to be more precise much longer than Sen knew him and his daughter would challenge those assertions made on them by Sen. In the letter Sen made no mention of the famine of 1974 (he is considered as an academic expert on famine and I also understand that this famine does not feature in his list of famines) as well as Sheikh Mujibur Rahman rigging the 1973 election, turning the country into a one-party state in 1975, his Gestapo and storm troopers like outfits called Rakshi Bahini and Mujib Bahini killing thousands of political opponents and his daughter Hasina's thuggish rule over the country for 15 years.
In light of the WB report it can be argued that Bangladesh has turned into a developmental state under Hasina which in essence refers to countries that achieved late development compared to economies such as Japan, South Korea and China in Asia notwithstanding developed countries in Europe and Noth America.
State control of finance used to be the linchpin of the developmental state. As such the state became the substituted for a missing capital market. But the 1980s saw the emergence leading to the dominance of neoliberalism in the realm of economic policy formulation not only in developed countries but also in developing countries including developmental states. Neoliberalism as a doctrine views competition as the defining characteristic of human relations. Attempts to limit competition are treated as inimical to liberty. Neoliberalism, in fact, is an updated version of the classical liberal economic thought. Neoliberalism as it stands now is both a body of economic theory and a policy stance.
The neoliberal doctrinaire views eventually found their expression in what has been described as the "Washington Consensus" - a consensus reached between the WB, IMF and US Department of the Treasury. This has significant consequences for developing economies because policies included in the consensus contradict developing economies that embraced state dominated system 0f the 1950s and 1960s. It was also expected that the "Washington Consensus" would bring countries into the US crafted the rule based global order and incentivise them to adhere to those rules, or more precisely submit to US diktats.
The positive nod from the two multilateral organisations largely reflects that the Hasina regime was supposedly adhering to the path outlined in the "Wahington consensus" in pursuing the "trickle down" approach to economic growth. However, such an approach along with mega corruptions (mostly through graft, overblown project costs and other corrupt means) only succeeded in shifting income upward resulting in creating a new social class of billionaires where Hasina and her immediate and extended family members also belong. In fact, Hasina's regime was a pure kleptocracy under the veneer of a neo-liberal economic system.
Hasina and her family members' massive financial corruption and wealth accumulation within the country has been recently exposed by the authorities in Bangladesh. According to the Bangladesh media the Bangladesh Financial Intelligence Unit (BFIU) has frozen over Tk 6.35 billion from 124 bank accounts belonging to deposed Prime Minister Sheikh Hasina and her family members. This does not include billions of dollars laundered overseas by Hasina and her family members.
Furthermore, the Anti-Corruption Commission (ACC) has brought charges against ousted Hasina, her sister Rehana and their children in six cases involving the alleged abuse of power and irregularities surrounding the allocation of 60 katha of land in the new housing project in Dhaka's Purbachal.
The relatively high growth was largely achieved through mostly infrastructure investments comprising a very selected set of mega projects such as Padma bridge and Dhaka Metro etc. While such investments helped propel economic growth, these mega projects also opened opportunities for mega corruptions benefitting her cronies and her family members.
The Bangladesh Labour Force (BLF) Survey 2022 finds that close to 60 million people, accounting for 84.9 per cent of the total working population in Bangladesh are employed in the informal sector. It is also noteworthy that the report also points out that out of the total employed women in Bangladesh, 96.6 per cent are in informal employment. According to the Asian Development Bank (ADB) 18.7 per cent of the population lived below the national poverty line in 2022. Informal sectors in all countries are typically characterised by a high incidence of poverty and severe decent work deficits. It thrives mostly in a context of high unemployment, underemployment, poverty, gender inequality and precarious work.
Income inequality has been steadily increasing in Bangladesh, with the Gini coefficient, a measure of inequality, rising from 0.458 in 2010 to 0.50 in 2022. With rising income inequality coupled with stagnant to declining household income along with high levels of youth and graduate unemployment and very widespread underemployment clearly point out that whatever economic growth achieved under the Hasina regime cannot be considered as inclusive growth.
Bangladesh still remains a poor country with a weak civil society and unstable political landscape lacking clear commitments. Poverty and unemployment are prevalent, along with a lack of attention to gender and environmental issues.
In fact, to escape poverty and squalor and to financially support families in Bangladesh close to almost 10 million Bangladeshis are now living abroad. Annual remittances transferred to Bangladesh were $27 billion in 2024. Hasina's developmental state could not provide employment at home for these people, rather encouraged people to seek employment overseas quite often landing in countries with serious lack of human rights with no labour rights.
Hasina has left behind a terrible economic mess for the interim government to deal with it. But Hasina's departure is also an opportunity for renewal. Recent data published by the Bangladesh Bureau of Statistics reveal a bleak trajectory for the economy unravelling the country's claimed economic gains under the Hasina regime. Bangladesh has gone from "an economic miracle" to needing help from the International Monetary Fund (IMF). To address the economic challenges, Bangladesh will need to build enhanced state capacity and reorient its economic policy approach by focusing on a new phase of structural transformation.
muhammad.mahmood47@gmail.com
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