Session 3: BANGLADESH’S ECONOMIC TRANSFORMATION

Tuesday, Dec 7, 2021 | 6:00pm – 7:45pm | Bangladesh Time (GMT+6)

Professor Selim Raihan
Professor, Department of Economics, Dhaka University & Executive Director, South Asian Network on Economic Modelling (SANEM)

Paper Title – Bangladesh’s Economic Transformation: Institutional Challenges

Abstract:

Bangladesh’s economic growth and development performance over the past few decades have been impressive. Despite these successes, the sustainability of Bangladesh’s development model, in which growth has been largely driven by a single sector (the RMG sector) and overseas remittances, faces serious questions, not least from the profound shock of the COVID-19 crisis, but also due to increasing pressures on the growth sectors and from a seeming inability to develop others. Paradoxically, the improvements in economic and social outcomes have not been accompanied by institutional development, and Bangladesh’s institutions remain weak, some rankings amongst the lowest in the world. In the face of such weak institutions and economic pressures, the challenge that Bangladesh faces in plotting a new and sustainable development path is daunting. Our analysis shows that there are four generic institutional features in Bangladesh: the supremacy of the ‘deals environment’ over coordinated industrial policy, the supremacy of ‘pockets’ of functional informal institutions over weak formal institutions, the challenges of effective regulation, and the challenges of state capacity. This paper tries to understand the causal connections that link economic and social outcomes to these institutional features, their proximate causes, and the deep factors, such as political economy, that underly them.