Economists on Monday identified growing income inequality as one of the major challenges for Bangladesh to achieve the goal of becoming a developed country by 2041.
Good governance is one of the important instruments to ensure the benefits of economic growth for all, they said at the closing session of the BIDS Research Almanac, 2019.
The event was organised by Bangladesh Institute of Development Studies at the Lake Shore Hotel in the capital.
‘Bangladesh has a success story in achieving economic growth although there is a controversy over the rate of the growth. We have developed … but inequality is growing,’ said former advisor to International Labour Organisation Rizwanul Islam.
‘In 1972, Bangladesh was poor but it was not treated as a country of inequality. But despite achieving remarkable economic development we are now treated as a country of inequality,’ he said.
Rizwanul showed that the income inequality was increasing and it remained constant with the Gini coefficient staying at 0.48 since 2016 whereas it was 0.36 in 1973.
The value above 0.5 is said to pose high risks of social unrest.
A recent World Bank report showed that Bangladesh saw a marked gap between eastern and western divisions in poverty reduction, leaving people of certain geographic locations out.
Rizwanul suggested a structural transformation towards a mature economy by using alternative pathways to ensure a more equitable growth and better jobs for better life.
He said that sustaining the growth and averting the middle-income trap were other major challenges for Bangladesh.
He also identified low level of foreign direct investment, slow rate of poverty reduction and job creation as other important challenges for the country.
The government would have to ensure quality education for the poor people as the issue is related with inequality and poverty, Rizwanul said.
According to Zahid Hussain, former lead economist of the World Bank country office, there are two important instruments for development – one is growth and the other is governance.
He said that development of infrastructures and human capital, macroeconomic stability and strong economic resilience were must for economic growth.
. . . To ensure the equitable growth good governance is needed, Zahid said.
He said that pessimist people thought that there was instability in the economy as the government and ruling party had squeezed other people’s space for taking part in the country’s development process.
On the other hand, he added, optimists view that the present political stability hass created a huge opportunity for the country’s development.
Planning minister MA Mannan said that the word ‘growth’ had become an ‘entertaining’ term and another word ‘disparity’ was being increasingly discussed of late.
‘I think the word ‘disparity’ may put a ‘shadow’ on growth as people are not getting required benefits from the economic growth,’ the minister observed.
He commented that benefits should go to the people who were generating the growth but it was not ensured due to many types of distortions.
Due to distortions flight of capital is taking place and the government has scope to work on these issues, Mannan further observed.
There is a unit for measuring growth but not for measuring governance, the minister said while talking about governance.
‘Who will give space to whom? People are the authority to give space. In democracy winners take all and we are the winner. People gave us the space,’ Mannan said.
The minister expressed doubt about Bangladesh becoming a developed country, saying that there were some insurmountable issues in the way for Bangladesh to become a developed country.
Policy Research Institute chairman Zaidi Sattar emphasised diversification of exports for achieving a sustainable economy saying that there were more than 1,400 export products beyond readymade garment but exports of the products were not increasing as high protection duty made local market more profitable.
‘We have the potential and high growth is possible but we need to change the strategy,’ he said.
Binayak Sen, research director of BIDS, also emphasises good governance, saying that the main focus should be on building the capacity to bounce back if the country’s economy fell in any trouble.
He said that the rate of default loan is high in the country and the practice should not be continued, he commented.
KAS Murdhid, director general of BIDS, said that some policy changes were must to ensure macro-economic stability.
He, too, put emphasis on export diversification, saying that the government should ensure facility to all export sectors similar to the RMG sector.
Want stories like this in your inbox?
Sign up to exclusive daily email
More Stories from Country