Syed Abu Hasnath from Boston, USA | January 24, 2020 00:00:00
In a span of four years, Palgrave/ Macmillan published two books on economic development in Bangladesh: the first book by Professor Azizur Rahman Khan (2015) and the second book is under review.
The country's remarkable (and unexpected) success in economic growth and social development in recent decades may have provided the publisher the needed impetus to publish two consecutive books which cover more or less the same subject.
The following discussion attempts to review the contribution of Quibria's book - how it extends the discourse of development in Bangladesh - by identifying policy responses with "efficiency and probity." The book also demonstrates a "fast - forward" view and makes an original - and significant - contribution to the development of literature.
Therefore, a book of note is a synopsis of Khan's book, The Economy of Bangladesh: A Quarter Century of Development. The book was published in 2015 covering information between 1985 and 2013. It describes the growth and structural changes in the Bangladesh economy -specifically changes in agriculture, industry, trade, and employment during this period. The book also shares oft - noted views on how the economy "made some improvement in social indicators while at the same time it continues to suffer from increasing inequality."
While Khan provides a detailed analysis of several aspects of the economy, he does not address the contemporary issues of financial mismanagement - including banking fraud and share market scams - that overwhelmingly benefits a handful of well-connected elites at the expense of powerless masses, leaving economic progress and inclusive development behind.
The second book under review is by a professor of international development, Dr. M. G. Quibria at Morgan State University in Maryland. He has a number of books, documents, and seminal papers on development - including a ground-breaking piece on Governance that appeared in Kyklos 2006 - to his credit. The objective of this book is laid out in preface as follows:
This book is an attempt … to dissect and analse the confronting dynamics of the country and examine possibilities that lie ahead … identified some salient risks and challenges that may shroud the prospects of the economic and social transformation of the country." (p. vii)
There is a brief introduction (Chapter I) to the state of Bangladeshi economy at the time of independence in 1971: Bangladesh remained one of the poorest countries in the world with little or no growth over two and a half decades. From there the narrative tells us how a war-wreaked economy becomes the fifth ranked, fastest-growing economies in the world - with a 7.3 per cent growth in the FY 2018 - behind Ethiopia, Rwanda, Bhutan, and India. Besides the high rate of economic growth, Bangladesh flourished in health and educational development, a transformation that is comparable to the levels of the Meiji transition in late nineteenth century Japan (p.6).
Chapter II contains a concise description of political development in Bangladesh since independence, which is provided as a prologue to the analysis of the state of the economy in terms of growth and structural change over the last half century. The principal argument-the four drivers of development and the potential risks and challenges for long-term economic prosperity of Bangladesh - is presented in Chapter III. The drivers are (1) the emergence of a readymade garment industry; (2) the start of manpower export abroad; (3) the growth of agriculture; and (4) the rise of nongovernmental organisations (NGOs).
The following chapter identifies the trifecta of major risks which could derail Bangladesh's upward trajectory in becoming a higher middle-income country by 2031. The risks include (1) the rise of robotics in manufacturing; (2) an uncertain political and global landscape; and (3) the threat of climate change and periodic natural disasters (p. 95). The trifecta of risks are further elaborated with detailed explanations. Below is a synopsis:
n The future of readymade garments (RMG) in Bangladesh is constrained
The author anticipates that robotics and artificial intelligence (AI) will permeate wide segments of industry, including RMG sector, all over the newly industrialised countries. Bangladesh may not be able to keep pace with the world of accelerated technological change. The future of the garment industry in Bangladesh faces enormous challenges.
n The shrinking future of migrant remittances Migrant remittance is the second largest source of foreign exchange earnings (approximately $15+ billion in 2018) after textiles and garments. At the end of 2018, around 800,000 people were working in Gulf states (including Saudi Arabia, United Arab Emirates and Oman) including Southeast Asia (Malaysia and Singapore). The author states that Saudi Arabia stopped issuing visas in 2008, which has later been reinstated in 2017, mainly to females for domestic help - a category exempted from … the Saudisation programme (p. 61). Thousands of Bangladeshi migrant workers, legal and illegal, are deported; many female workers are abused in Saudi Arabia and male workers mistreated.
n The third risk relates to agriculture
The author notes that Bangladeshi agriculture has done a remarkable job of feeding the expanding population; however, continuous future expansion is not assured. Problems of agriculture in Bangladesh, such as the scarcity of arable land supply and adverse impact of climate change, including flooding, drought, and saltwater intrusion.
n The uncertain future of NGOs in Bangladesh
The author believes Bangladesh is prospering from the commitment of the government, increased rural income, and NGOs' efforts to reach the underprivileged people who fail to benefit from economic growth. BRAC Bangladesh, the world's largest NGO, is most famous for its non-formal primary education programme. However, the future of NGOs in Bangladesh is uncertain due to 'ebbs and flows' relations between the NGOs and the government and possible decline in donor finance due to graduation of Bangladesh to the developing country status.
RISKS AND CHALLENGES: The following discussion shows the author's apprehension of risks and challenges for Bangladesh:
The readymade garment industry is going to meet potential challenges with automation in the workforce. The author notes:
As wages move up and … more efficient machines of automation come on stream, there is likely to reach on inflection point that may mark the end of the country's comparative advantage in low - value - added RMG (p.91)
However, the recent decline in garment exports from Bangladesh-down by 7.5 per cent between January 2019 and September 2019 - is largely due to (a) steep competition from Vietnam, Myanmar, India, and Ethiopia; (b) lower prices in the US and EU (European Union) markets; (c) rising production costs; and (d) excessive pressure from the two workplace safety regulatory bodies: Accord (EU) and Alliance (US). The RMG exporters of Bangladesh also blames the appreciation of the local currency (Taka).
Critics say however, currency devaluation could help boost exports but raises the cost of imports. Since Bangladesh's exports are less than 75 per cent of imports, currency devaluation will lead to a net loss of revenue. Moreover, the process hurts fixed income groups and devalues real wages. Hence, the process is considered to be a two-edged sword.
The migrant remittances driver is a crucial means of survival for their families and the second largest source of foreign income. The bad news is that more than 112,000 Bangladeshi workers were deported from abroad in 2019 (FE January 10, 2020). Of that total, some 62,000 workers were deported from the Gulf States while Saudi Arabia alone sent back 75,000 Bangladeshis as part of their policy to give their citizens more employment opportunities, known as Nitaqat, or the Saudisation programme (p. 61).
Agriculture helped Bangladesh "to transform the economy from a state of being chronically food deficit to food adequacy (p. 67)." The factors behind this rapid transformation includes subsidised delivery of seed, fertiliser, water, rural infrastructure, and extension services.
The author argues that food self-sufficiency has been the subject of major controversy for it is expensive and wastes the benefits from the principles of comparative advantage (p. 72). There are other issues involving agriculture; land being fixed, agricultural output is thus subject to the principles of diminishing productivity. Moreover, a lion's share of the benefits of agricultural growth goes to rice mill-owners, hoarders, and middlemen. Moreover, farmers are frustrated by low paddy prices and in some extreme cases, farmers set their paddy fields on fire.
The last risk relates to the future of NGOs. While NGOs have been a positive force in national development, the financial capacity of their organisations are likely to erode because of the shrinking donor contributions for NGOs. The author notes: the availability of external grant resources will gradually wane with economic growth. Others say twenty-first century's economic policy is dominated by a neo-liberal market economy that discourages philanthropy.
The financial sector - including banking and stock markets - is beset with many problems (p. 22). The sector is riddled with non- performing loans (NPLs) as well as well as marred by widespread corruption in the disbursement of loans and advances. In cases of the stock market, insiders unfairly access information to manipulate the markets. These various types of financial scams result in siphoning off billions of dollars by fraud. A large chunk of this illegal money gets laundered abroad. And although financial mismanagement is not considered a permanent risk for the economy, the author meticulously deals with the subject.
The book is well written and refreshing. The author's analyses of contemporary economic development in Bangladesh keeps a neat balance between "prosperity" and "risks." The key arguments of the book - four drivers of development - may not be novel but no author has presented this so elegantly before. His brief presentation of economic history and politics are precise and sobering.
The author takes what could be written in volumes and condenses it into one slim accessible book. The text is clear and lucid. Each chapter begins with an abstract and ends with caveats, a conclusion, notes, and references. The Conclusion chapter glues the argument together and "provides observation of political, social, institutional challenges for the country going forward" (p.117).
In short, this is an important book which it is hoped to be read by academics as well as policy makers. It is very nicely presented and easy to follow and clearly argued. It is also very balanced, non-ideological, and practical, focused on the main ideas.
Syed Abu Hasnath was a faculty at BUET for a decade (1972-1982) and taught Comparative Economics and International Development for another two decades (1988-2008) at Boston University, Massachusetts, USA
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Bangladesh Road to Long-term Economic Prosperity:
Risk and Challenges
by M. G. Quibria
Switzerland: Palgrave/Macmillan 2019
ISBN978 - 3 - 030 - 11586 - 9
Reviewed by Syed Abu Hasnath
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