THE POLITICAL ECONOMY OF BANGLADESH
Bangladesh has been exposed to two decades of economic reforms which have been Untiringly promoted by the World Bank. The underlying philosophical premise of the reforms has been the need to downsize the role of the state in economic management whilst enhancing the role of the market in guiding economic choices. As a result of these reforms Bangladesh has today attained a largely liberalized import regime, a much reduced public sector, very limited input subsidies for the agricultural sector and in the
area of manufacturing a much reduced public sector where virtually no new investment has taken place in the last 15 years. In the financial sector interest rates have been largely left to the banks, where the presence of the private sector has been substantially expanded and directed credit has been largely eliminated.
However, in the interim period, at least over the last decade, the World Bank’s own philosophy has been undergoing some change starting from its President James Wolfensohn and percolating down to its World Development Report (WDR). The 2001 WDR on poverty was thus a rather different document from the 1990 document. The Bank is now much less categorical on the issues of import liberalization, privatization and
de-subsidization and is willing to recognize that reforms in these areas may have created some problems for those affected by the reforms. How far this flexibility in the Bank’s philosophical posture is reflected in the country strategies and programmers merits investigation.
The deligitimisation of the state:
This incapacity to restore sovereignty to Bangladesh’s policymaking process has contributed to the erosion in the credibility and authority of the state. In the eyes of the public the state had some years ago surrendered its policymaking prerogative to the donors and was seen to be more accountable to the donors than it was to parliament or the voters. Today, as the influence of the donors has eroded the state is seen to have lost its moorings, remains directionless and has limited capacity to deliver either on its own commitments to the electorate or to honor its obligations to its external partners. Such a rudderless state is progressively delegitimizing itself in the eyes of its citizens, who mostly see the machinery of the state as part of the problem rather than the solution to their daily concerns.
The changing face of the donors
My address today to the members of the Bangladesh Economic Association argues that this shift in the development philosophy of the international agencies is likely to be of little consequence to the course of the development process in Bangladesh. The move towards establishing greater ownership over the reforms though the preparation of a Poverty Reduction Strategy paper (PRSP) reflects little more than a cosmetic change in
the thinking of the Bank in Bangladesh or much of the Third World. PRSPs, as they have emerged in practice, have basically been built around the core of structural adjustment reforms (SAR) which have been imposed by the Bank on economically vulnerable countries across the world. These reforms have now been made more palatable by the emphasis on poverty reduction, captured in the commitment of more resources for human development and safety net programmers to protect the poor from the consequence of reforms. The new conditionality which is presented to all Third World Finance Ministers demands that they should come to the annual Aid Group consultations with a PRSP which incorporates all the Bank/IMF policy reforms they had already imposed on these countries over the last decade.
The crisis in governance;
The erosion in the legitimacy of the state originates in the crisis in governance which has been perpetuated over successive regimes. This crisis manifests itself in the breakdown in law and order, the non-performance of the administration and the dysfunctional nature of our parliamentary democracy. their duty, have now effectively commoditized themselves and offer whatever services the complainant or law breakers are willing to pay for. The subordinated nature of the lower judiciary fails to guarantee to legal rights of the victims of partisan law enforcement. It is no accident that successive regimes have reneged on their commitment to separate the judiciary from the executive. in the same way, the administration, has also been parochialised and commoditized to a point where it has effectively become dysfunctional. Successive regimes, have sought to patronize those in the administration who they think will be serviceable to the interests of
the Party in power or the ambitions of particular political individuals. Conversely, those officers deemed to be linked to the outgoing regime are marginalized, persecuted and even removed from the service. This culture of partisanship has now infected the bureaucracy to the point where professional advancement is declined from performance or integrity and is increasingly linked to political identity and the extent of patronage In the eyes of the citizens of Bangladesh the state is itself the source of the breakdown in law and order. The patronization by successive governments of a criminal class, who have become instrumental to the functioning of our principal political parties has brought the machinery of law enforcement into contempt. The law enforcement agencies lack the authority to enforce the law so they now only act in the service of the ruling party, in gross violation of human rights or the preservation of democratic norms. In such circumstances, law enforcement agencies, knowing that there is no premium on doing accessed by an officer. This parochicalised administrative culture has encouraged rank opportunism, protected corruption as well as incompetence and jeopardized the careers of committed professionals. The bureaucracy is now divided and consumed with insecurity to a point where there is neither continuity nor the application of norms in the discharge of administrative responsibility. As a consequence the Public Services Commission, once directed by people of recognized administrative authority and integrity, has now become an instrument of political patronage and jobbery. Most agencies, engaged in delivery of goods and services or exercising regulatory functions, have now created a private market for discharging their public responsibilities. The days when bureaucrat were driven by a sense of public mission, built on expectations of professional recognition and advancement, remain in distant memory. In such circumstances the administrative system is rarely capable of implementing any poling and is largely seen as an agency for rent seeking from the helpless citizens.
State failure in health care;
Such a debased administrative culture has led to state failure in the delivery of virtually every public service ranging from the nationalized banks, to the ports, power, gas, water supplies and postal agencies. The health care and education services have degenerated to a point where it is a misnomer to term them as a public service. In everything from hospital beds, to clean sheets, basic diet, bandages or medicines, to the delivery of a bedpan, payment has to be made to a public service provider. Doctors and nurses are
overworked and underpaid so that have taken compensatory refuge in private practice whilst remaining in public service. This often ends up in a conflict of interest. Advancement is now politicized so that the politics of the Bangladesh Medical Association has now become no less confrontational than in the conventional political arena.
The declining influence of the donors and its consequences
In Bangladesh today, we are therefore, caught up within a peculiar paradox. The lead agency attempting to influence our policy agendas now lacks the conviction to sustain its inherited strategies but remains disinclined to open its mind to a genuine dialogue with domestic constituencies to promote a more creative agenda for change. Instead, the Bank and other donors are bringing in new elements into the development discourse extending
from human rights, judicial reform, anti-corruption and local self government, along with its standard package of reforms, which is at least 20 years old. However, since aid commitments to Bangladesh have remained stagnant for the last decade, the share of aid in relation to both GDP and the development budget has steadily declined. Thus, today aid disbursements are around 60% of remittances to Bangladesh by our overseas migrant workers. This declining contribution of aid to our development effort has consequently reduced the leverage of the donors in enforcing change in our policy direction or governance. The declining influence of our donors on the policy agenda has done little to encourage successive regimes to initiate a more indigenous process of policy reform, drawing upon domestic expertise backed by a political consensus. We are therefore left with a policy package which has already lost its political legitimacy at the global level and has largely failed to realize its primary mission, either in Bangladesh or in most countries, where it has been in operation. This hiatus in Bangladesh’s policymaking process has left us in a state of limbo. Our policymaker are incongruously still arguing for a reform agenda, which has gone out of fashion at the global level, in which they themselves no longer believe, and which has done little to transform Bangladesh.
The crisis in the education sector;
The education system has been commoditized and devalued at the primary and secondary level even as we invest a growing share of the budget in this sector. Our institutions of higher learning have not so much become politicized as criminalized. What passes for student politics is really the patronization of gangs of armed businessmen who use the campus for commercial advancement and extortion in return for military services rendered to the major political parties. This small section of commoditized musclemen, patronized by the ruling party, rule the campus while those who serve the opposition become fugitives from the law until they join the ruling party and obtain protection from the law enforcement agencies. political confrontation which has paralyzed our parliamentary institutions. Whilst Parliament rather than walk out at the least provocation. A dysfunctional parliament, in turn, reflects a malfunctioning political system, where political policies are become depoliticized and are increasingly being used to pursue private agendas rather than implement political commitments. The ascendance of money and muscle in our political life has transformed the electoral process into a rich man’s game where fire power has become common currency in the service of politics.
area of manufacturing a much reduced public sector where virtually no new investment has taken place in the last 15 years. In the financial sector interest rates have been largely left to the banks, where the presence of the private sector has been substantially expanded and directed credit has been largely eliminated.
However, in the interim period, at least over the last decade, the World Bank’s own philosophy has been undergoing some change starting from its President James Wolfensohn and percolating down to its World Development Report (WDR). The 2001 WDR on poverty was thus a rather different document from the 1990 document. The Bank is now much less categorical on the issues of import liberalization, privatization and
de-subsidization and is willing to recognize that reforms in these areas may have created some problems for those affected by the reforms. How far this flexibility in the Bank’s philosophical posture is reflected in the country strategies and programmers merits investigation.
The deligitimisation of the state:
This incapacity to restore sovereignty to Bangladesh’s policymaking process has contributed to the erosion in the credibility and authority of the state. In the eyes of the public the state had some years ago surrendered its policymaking prerogative to the donors and was seen to be more accountable to the donors than it was to parliament or the voters. Today, as the influence of the donors has eroded the state is seen to have lost its moorings, remains directionless and has limited capacity to deliver either on its own commitments to the electorate or to honor its obligations to its external partners. Such a rudderless state is progressively delegitimizing itself in the eyes of its citizens, who mostly see the machinery of the state as part of the problem rather than the solution to their daily concerns.
The changing face of the donors
My address today to the members of the Bangladesh Economic Association argues that this shift in the development philosophy of the international agencies is likely to be of little consequence to the course of the development process in Bangladesh. The move towards establishing greater ownership over the reforms though the preparation of a Poverty Reduction Strategy paper (PRSP) reflects little more than a cosmetic change in
the thinking of the Bank in Bangladesh or much of the Third World. PRSPs, as they have emerged in practice, have basically been built around the core of structural adjustment reforms (SAR) which have been imposed by the Bank on economically vulnerable countries across the world. These reforms have now been made more palatable by the emphasis on poverty reduction, captured in the commitment of more resources for human development and safety net programmers to protect the poor from the consequence of reforms. The new conditionality which is presented to all Third World Finance Ministers demands that they should come to the annual Aid Group consultations with a PRSP which incorporates all the Bank/IMF policy reforms they had already imposed on these countries over the last decade.
The crisis in governance;
The erosion in the legitimacy of the state originates in the crisis in governance which has been perpetuated over successive regimes. This crisis manifests itself in the breakdown in law and order, the non-performance of the administration and the dysfunctional nature of our parliamentary democracy. their duty, have now effectively commoditized themselves and offer whatever services the complainant or law breakers are willing to pay for. The subordinated nature of the lower judiciary fails to guarantee to legal rights of the victims of partisan law enforcement. It is no accident that successive regimes have reneged on their commitment to separate the judiciary from the executive. in the same way, the administration, has also been parochialised and commoditized to a point where it has effectively become dysfunctional. Successive regimes, have sought to patronize those in the administration who they think will be serviceable to the interests of
the Party in power or the ambitions of particular political individuals. Conversely, those officers deemed to be linked to the outgoing regime are marginalized, persecuted and even removed from the service. This culture of partisanship has now infected the bureaucracy to the point where professional advancement is declined from performance or integrity and is increasingly linked to political identity and the extent of patronage In the eyes of the citizens of Bangladesh the state is itself the source of the breakdown in law and order. The patronization by successive governments of a criminal class, who have become instrumental to the functioning of our principal political parties has brought the machinery of law enforcement into contempt. The law enforcement agencies lack the authority to enforce the law so they now only act in the service of the ruling party, in gross violation of human rights or the preservation of democratic norms. In such circumstances, law enforcement agencies, knowing that there is no premium on doing accessed by an officer. This parochicalised administrative culture has encouraged rank opportunism, protected corruption as well as incompetence and jeopardized the careers of committed professionals. The bureaucracy is now divided and consumed with insecurity to a point where there is neither continuity nor the application of norms in the discharge of administrative responsibility. As a consequence the Public Services Commission, once directed by people of recognized administrative authority and integrity, has now become an instrument of political patronage and jobbery. Most agencies, engaged in delivery of goods and services or exercising regulatory functions, have now created a private market for discharging their public responsibilities. The days when bureaucrat were driven by a sense of public mission, built on expectations of professional recognition and advancement, remain in distant memory. In such circumstances the administrative system is rarely capable of implementing any poling and is largely seen as an agency for rent seeking from the helpless citizens.
State failure in health care;
Such a debased administrative culture has led to state failure in the delivery of virtually every public service ranging from the nationalized banks, to the ports, power, gas, water supplies and postal agencies. The health care and education services have degenerated to a point where it is a misnomer to term them as a public service. In everything from hospital beds, to clean sheets, basic diet, bandages or medicines, to the delivery of a bedpan, payment has to be made to a public service provider. Doctors and nurses are
overworked and underpaid so that have taken compensatory refuge in private practice whilst remaining in public service. This often ends up in a conflict of interest. Advancement is now politicized so that the politics of the Bangladesh Medical Association has now become no less confrontational than in the conventional political arena.
The declining influence of the donors and its consequences
In Bangladesh today, we are therefore, caught up within a peculiar paradox. The lead agency attempting to influence our policy agendas now lacks the conviction to sustain its inherited strategies but remains disinclined to open its mind to a genuine dialogue with domestic constituencies to promote a more creative agenda for change. Instead, the Bank and other donors are bringing in new elements into the development discourse extending
from human rights, judicial reform, anti-corruption and local self government, along with its standard package of reforms, which is at least 20 years old. However, since aid commitments to Bangladesh have remained stagnant for the last decade, the share of aid in relation to both GDP and the development budget has steadily declined. Thus, today aid disbursements are around 60% of remittances to Bangladesh by our overseas migrant workers. This declining contribution of aid to our development effort has consequently reduced the leverage of the donors in enforcing change in our policy direction or governance. The declining influence of our donors on the policy agenda has done little to encourage successive regimes to initiate a more indigenous process of policy reform, drawing upon domestic expertise backed by a political consensus. We are therefore left with a policy package which has already lost its political legitimacy at the global level and has largely failed to realize its primary mission, either in Bangladesh or in most countries, where it has been in operation. This hiatus in Bangladesh’s policymaking process has left us in a state of limbo. Our policymaker are incongruously still arguing for a reform agenda, which has gone out of fashion at the global level, in which they themselves no longer believe, and which has done little to transform Bangladesh.
The crisis in the education sector;
The education system has been commoditized and devalued at the primary and secondary level even as we invest a growing share of the budget in this sector. Our institutions of higher learning have not so much become politicized as criminalized. What passes for student politics is really the patronization of gangs of armed businessmen who use the campus for commercial advancement and extortion in return for military services rendered to the major political parties. This small section of commoditized musclemen, patronized by the ruling party, rule the campus while those who serve the opposition become fugitives from the law until they join the ruling party and obtain protection from the law enforcement agencies. political confrontation which has paralyzed our parliamentary institutions. Whilst Parliament rather than walk out at the least provocation. A dysfunctional parliament, in turn, reflects a malfunctioning political system, where political policies are become depoliticized and are increasingly being used to pursue private agendas rather than implement political commitments. The ascendance of money and muscle in our political life has transformed the electoral process into a rich man’s game where fire power has become common currency in the service of politics.
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