Although debt-driven infrastructure development through giving contracts to foreign firms, expansion of exports through incentives, growth of domestic firms through protection, and alleged cronyism have increased Bangladesh's gross domestic product (GDP), there have been questions about sustainability and equitability. Hence, urgency arises to rethink and strategise the development approach so that a sustainable growth path is crafted and the wealth created is distributed in a fair and impartial manner. Although corruption is often cited as an issue, the root of the problem is far more profound. It's worth noting that labour is no longer abundant in Bangladesh. Instead, graduate unemployment is rampant, offering challenges to leverage this massive degree-holding youth group to drive economic growth. Hence, there may be a need for fresh theorisation of wealth creation out of the latent potential of millions of educated youths in a country that has inherited development wisdom, policy, and institutional framework for a low-skilled labour-centric economy.
In a natural resource-poor country, strategising equitable and sustainable economic growth hinges on developing and empowering human competence to create and share economic value. As the human role in work and productivity has been changing due to technological progression, conventional strategies based on adopting imported technologies, incentives, infrastructure advancement, and investment in education have been weakening. On the other hand, new opportunities for creating wealth and addressing sustainability issues are surfacing due to the unfolding of technology dynamics. Hence, strategising sustainable and equitable economic growth demands deep knowledge about changing wealth creation dynamics from human labour, knowledge, ideas, and natural resources. Hence, what it takes to strategise sustainable and equitable economic growth demands revisiting conventional economic growth approaches.
TECHNOLOGY IMPORTS AND SUBSIDY-DRIVEN FARMING: Bangladesh followed the policies of liberalising import of farming technologies and offering subsidies for expanding farming outputs, like many less developed countries. Although such an approach increased production, the cost of production and local value addition have remained an issue. As a result, the net income of farmers has not been growing. On the other hand, as the local value addition has not increased, the cost of production has been increasing due to the growing price of the inputs. For example, despite lower labour costs, the cost of local production of eggs has been far higher than imported cost.
On the other hand, due to the policy, local value addition in farming has only been achieved through natural resources and labour. As a result, agriculture has not grown as an area to produce economic outputs through locally produced knowledge and ideas. Addressing this issue is a core challenge for increasing local value, reducing the cost of production, and creating job opportunities for graduates, which must be the focus of strategising sustainable growth in farming.
IMPORT SUBSTITUTION: Soon after the end of the colonial rules, Bangladesh, like many less developed countries, adopted import substitution as a strategy to develop industrial economy. Hence, they offered protection through tax-differential and other incentives. Despite initial success, this strategy has reached a non-sustainable state due to the decreasing role of local input and increasing capital machinery costs. To find a sustainable path, the focus should be on creating a market of locally produced ideas to improve the quality and reduce the cost of whatever Bangladesh produces now. Unfortunately, conventional development literature does not offer a solution to this urgency.
EXPORT-ORIENTED MANUFACTURING: TRUE, Bangladesh's labour-centric export-oriented manufacturing, notably in ready-made garments, has borne fruits. However, due to the eroding value addition caused by technological progression, export-oriented manufacturing faces sustainability issues. How to increase local value addition through knowledge and ideas is a burning issue.
FOREIGN DIRECT INVESTMENT: Foreign direct investment for serving the domestic market demands repatriating profit. Besides, in some cases, those producers should be paid in foreign currency. As the local value addition is only through labour, which has been eroding, Bangladesh's ability to pay foreign producers for domestic consumption has already crossed the limit. On the other hand, the wage differential and the availability of infrastructure are no longer sufficient to attract foreign direct investment for export.
ENTREPRENEURSHIP, STARTUP, AND INNOVATION: Once it was thought that offering risk capital, promoting ideas, and making advancements in infrastructure would lead to creating an industrial economy through scaling up startups. Unfortunately, despite consuming more than one billion dollars in venture capital funds from foreign and local investors and the Bangladesh government, there has been no sign of materialising this hope.
INVESTING IN HUMAN CAPITAL: One of the widely accepted development theories is that there is a strong positive correlation between economic growth and human capital development. However, the growing unemployment of graduates and the decreasing wage gap between primary school dropouts and university graduates have raised serious questions in this regard.
PROCESSING OF LOCALLY PRODUCED RAW MATERIALS: Due to the technology import-centric development approach, labour-based value addition in locally produced raw materials like jute and hide has been suffering from the loss of strength to deliver profitable output in the global trade.
IT SERVICE AND HIGH-TECH MANUFACTURING: Despite the public investment of more than two billion dollars over the last 15 years, Bangladesh's IT service export and high-tech manufacturing are still in an embryonic stage. Corruption could be one issue; however, that is not all. Due to the global competition and decreasing value addition through labour, Bangladesh's current approach of selling time or working hours at a meagre rate does not offer a sustainable path to scale up the IT service and high-tech manufacturing.
The question has been about the missing links. As explained, conventional economic development theories for driving economic growth through improving infrastructure, offering tax differentials, liberalising technology import, offering incentives, investing in education, lowering bank interest, streamlining bureaucratic procedures, keeping wages low, condoning environmental degradation, depreciating currency, pursuing import substitution, and attracting foreign direct investment are no longer sustainable. Hence, although we approach economists to strategise economic growth, their theories and tools are losing efficacy due to technology dynamics.
The core challenge of crafting a sustainable and equitable growth path for Bangladesh has been to empower the country to create economic value, whether in agriculture or high-tech, through comprehending changing wealth creation dynamics due to technology progression.
M. Rokonuzzaman, Ph.D is academic, researcher and activist on technology,
innovation and policy. zaman.rokon.bd@gmail.com