Abstract
Much of the recent growth and development in Bangladesh has been narrowly based; it has been primarily propelled by what is labeled in this study as the four drivers of development: ready-made garments; international migration and remittances: agriculture; and nongovernmental organizations. While these drivers have served the economy well in the past, their robustness is likely to be challenged in the future. This chapter identifies a trifecta of major risks, which are exogenous to the government and largely beyond its ability to manipulate. These are rooted, first, in the rapid changing technology in robotics and artificial intelligence; second, in the evolving global political and economic environment; and third, in climate change and natural disasters. Going forward, for sustained growth, the country needs to further diversify, which will require addressing various social, political, policy, and institutional challenges facing the economy, including poor governance, inadequate physical infrastructure, skill and educational bottlenecks, demographic burden, dwindling social capital, and lack of transformational leadership.
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Notes
- 1.
World Bank, in its Growth Report, highlights 13 miracle economies that achieved sustained growth rate in the post-World War period, but several of them have yet to reach the status of high-income countries—such as Brazil, Thailand, and Malaysia (World Bank 2008).
- 2.
The middle-income trap is the condition in which a country’s growth slows after reaching the middle-income level. Middle-income countries are said to be squeezed between the low-wage poor countries that dominate in mature industries with their low wages and the rich countries that dominate in new industries based on rapid technological change. See Felipe et al. (2014).
- 3.
Mckinsey, in a recent series of reports, has analyzed the impact of automation across countries. The institute suggests that half of human work can be automated by currently demonstrated technology. However, it notes that the pace and extent of automation would be determined by the ongoing development of technological capabilities, the cost of technology, competition with labor including skills, and supply and demand dynamics (Mckinsey Global Institute 2017; Mckinsey Global Institute 2015).
- 4.
This section draws extensively from USAID (2015) and Government of Bangladesh and FAO (2011), which use data from many different sources such as the Ministry of Agriculture; Food and Agricultural Organization; World Food Program; Food Planning and Monitoring Unit; and the Ministry of Disaster Management and relief. Unless otherwise stated, data in this section are drawn from these sources, as cited in the reports.
- 5.
The reason for this imbalance in the use of fertilizer is that poor farmers are often unable to procure and apply balanced inputs for crop production. In addition, farmers no longer use crop residue and cow dung for enriching the soil. These days, crop residues are increasingly being used for households, rather than leaving them in the field as compost; and cow dung is mostly used as fuel, rather than fertilizer (Government of Bangladesh and FAO 2011).
- 6.
A moral hazard issue exists here: There is an expectation that if a state-owned bank becomes insolvent or a large part of the assets goes bad, the government would bail out the bank and inject new capital.
- 7.
Transparency International has produced a Corruption Perceptions Index (CPI) since 1995. The CPI views corruption as the abuse of public power for private benefit. Since 2012, the CPI has ranked 176 countries “on a scale from 100 (very clean) to 0 (highly corrupt)”. In prior years, the scale ran from 10 to 0. The 2012 CPI draws on 13 different surveys and assessments from 12 different institutions. The 13 surveys/assessments are either opinion surveys of business people or performance assessments from risk agencies and international organizations (Quibria 2015).
- 8.
The WGI dataset—which is based on the polls of experts and surveys of businesspeople and general citizens—is an amalgam of governance data from a wide variety of sources. The WGI compile and summarize information from 30-plus data sources of four different types: (i) surveys of households and firms (nine data sources, including the Afrobarometer surveys, Gallup World Poll, and Global Competitiveness Report survey); (ii) commercial business information providers (four data sources, including the Economist Intelligence Unit, Global Insight, Political Risk Services); (iii) nongovernmental organizations (nine data sources, including Global Integrity, Freedom House, Reporters Without Borders); and (iv) public sector organizations (eight data sources, including the CPIA assessments of World Bank and regional development banks, the EBRD Transition Report, French Ministry of Finance Institutional Profiles Database).
- 9.
In his Politics as a Vocation, Max Weber argued that a nation-state can be defined by its monopoly over legitimate use of violence against residents of its territory. However, this monopoly must be acquired through a process of legitimation (Weber 1946).
- 10.
Citing the Daily Star , Khan (2017) noted that in 2014, Beximco, one of the politically connected business groups asked for a rescheduling of its nonperforming loans, amounting to $700 million. Restructuring of $130 million was immediately granted by Sonali Bank and $240 million by Janata Bank. Not only was Beximco granted a two-year grace period but also 2–3 percent interest rate reduction. Another nine politically connected business groups were also granted loan-rescheduling equivalent to $1.8 billion.
- 11.
This draws on Barkat-e-Khuda and Quibria (2015).
- 12.
Political tribalism does not have to be based on ethnic fragmentation.
For a recent book on political tribalism in the United States, see Chua (2018) who describes how American society has become increasingly fragmented into tribes, and its democracy into “an engine of zero-sum tribalism”.
- 13.
Durability is a double-edge sword. In a good leader, it represents continuity and credibility of policies, leading to a virtuous cycle of higher savings, higher investments, and higher growth. In a bad leader, it may mean perpetuation of bad policies, wastage of resources (both natural and fiscal), leading to a spiral of corruption and cronyism and economic stagnation—or, even worse, economic decline. An interesting short account on the decline of Zimbabwe is found in Power (2003).
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Quibria, M.G. (2019). Risks and Challenges. In: Bangladesh's Road to Long-term Economic Prosperity. Palgrave Pivot, Cham. https://doi.org/10.1007/978-3-030-11587-6_4
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