Published in The Independent on Wednesday, 4 June 2014.
Political Stability and Economic Growth
Enayet Rasul Bhuiyan
In a seminar on Saturday, the Information Minister, Hasanul Haque Inu, stressed the point that political stability is essential for 8 per cent economic growth. He also went on to say how last year’s political turmoil undermined the economy’s growth prospects seriously and how such political instability–continuing– would hazard Bangladesh in acquiring the necessary annual economic growth rate to climb to a middle income country status by the targeted date. Of course, the Minister who is hardly popular among those who are opposed to the incumbents in power in Bangladesh today and even others critical of views and suggestions that seem to reflect the government’s stand, they would understandably or pathologically tend to consider the Minister’s contention as a partisan one aimed to promote his government’s objectives.
But can we say the same about the Centre for Policy Dialogue (CPD)? The CPD is a highly respected leading think-tank of the country. It is particularly esteemed for its objective and unemotional analysis of the national economy, for calling a spade a spade without hesitation. Thus, when the CPD also makes observations in an analysis of the Bangladesh economy during 2013-14 that rhyme with what the Minister said, can we then dismiss off the same so easily or as a politically motivated one ? The answer hardly needs an explanation ; it is self-explanatory.
Not only the CPD, other well-known local and international think tanks, plus our main chamber bodies, and even the World Bank, the Asian Development Bank and other international organizations who engage in analyses of the Bangladesh economy, they have repeatedly pointed out the imperative of establishing long lasting political stability in the context of Bangladesh for this country to economically grow and develop at a faster pace to successfully overcome its remaining problems of poverty and underdevelopment.
Underinvestment in its economy has been Bangladesh’s big economic problem in varying degrees for decades. But notwithstanding the same, our economy has been showing remarkable resilience and capacity for moving forward in recent years. The growth momentum appeared so strong that all indications were the economy was headed to achieve its highest growth rate ever of some 7 plus per cent in the outgoing fiscal year. That this did not happen and growth slumped significantly in the end, was seen linked directly to the worst man-made and politically induced troubles all through in 2013 particularly from the appearance of conditions that virtually brought all kinds of economic activities to a halt or near to a halt in the last quarter of that year.
The economy has not adequately recovered from the very bad battering it received last year. Its lingering problem of less than the desired amount of investment has now reached an almost crisis proportion in the current year with the rate of investment dropping very worryingly. As it was highlighted in the CPD analysis, the predicament is mainly due to investors’ lack of confidence . It is not that the traditional bottlenecks posed by government’s inconsistent policies, non-availability of enabling infrastructures, paucity of financial resources for borrowing, obstructive bureaucracy, insufficient energy supplies, etc., these are creating stronger disincentives for investments. In fact, these problems have been sorted out considerably in different degrees. What then is acting so powerfully to discourage investment decisions?
Anybody with a sensible bird’s-eye view of the investment scenario would likely not fail to note that the investment train remains largely derailed from potential investors feeling not confident about getting not even break-even returns from their investments not to speak about decent profits. It is open secret that many of our resourceful persons are seriously thinking of relocating their businesses to other countries. Even our finance minister recently pointed to large scale flight of resources from Bangladesh to other countries because their owners are no more confident about gainful business opportunities in Bangladesh as they fear that the present lull in the fighting between the main political forces could soon be over and start up again shattering all prospects of even economic recovery not to speak of regaining any growth momentum. Thus, due to these valid fears, investors are shying away from going through new investment decisions.
The United Nations Development Programme (UNDP) in 2005 conducted a study on the impact of hartal and related violence on the Bangladesh economy. According to it, in between 1947 and 1958 period, the average number of hartals per year including local hartals was 1.5 days.
But over the years the average number of hartals have prolonged beyond imagination. For example, in the year 1999-2000 at least 110 days of hartals were observed, Moreover, since the year 2001 to 2013 hundreds of days have been observed as hartals days and most of these hartals were very brutal, destructive and devastating in nature.
According to the UNDP estimate, hartal on an average, took away 4.5 per cent of gross domestic product (GDP) per annum during the 1991-2000 period. No doubt this figure has exceeded to more than 10 per cent per annum on the recent occasions of hartals, blockades, etc. According to Computable General Equilibrium (CGE) model statistics, a day of hartal eats up approximately US$ 1.0 billion of the country’s GDP.
Thus, it is more than high time for the political quarters and all other stakeholders in the country to start hard thinking on the political stability issue. After last year’s all record surpassing bouts of hartals, blockades, etc., nobody should be wishy washy about the issue anymore. They must come together and raise a clamour for decisive change in the mind sets of the political quarters who again and again resort to such political programmes which have been turning only worse and worse as the events of 2013 showed.
All the signs are showing again that the type of forced work stoppages, violence and loss of productivity that we witnessed in the last year could return sooner than later and who knows probably with even greater ferocity. The leaders of the unofficial main opposition party, the BNP, have been reiterating in public meetings and press conferences that they are getting ready for a mass upsurge to unseat the government or force it to accept its demands. If they go through with their threats, then the economy is going to be bedevilled again with the kind of situation that developed in the closing phase of last year. Some analysts foresee that another big fight between the incumbents in power and the BNP is a surety and the same could plunge the country into a civil war type of condition with devastating fall outs of the same on the country’s economy which has had barely time to recover from the consequences of the last such upheaval. Another political super storm blowing over would simply push the economy over the brink, they say.
What the future beholds cannot be said with guarantee. But responsible quarters are expected to gird up their loins and engage in real proactive measures to be able to head off such a storm or, more significantly, be able to cope with it once it breaks. In this matter, the government and the ruling party must take the initiative. They should introduce legislation to successfully discourage hartals and related activities.
It is not suggested that hartals, blockades, etc., should be banned outright. But the same can be sought to be regulated so that their worst effects can be avoided. For example, laws can be made and enforced so that those who would seek to ‘force’ people to heed their calls for hartal and apply ‘violence’ to that end, such activities would become cognizable offences and the offenders tried and subjected to punishment depending on the nature and seriousness of their crimes on these grounds. Of course if people on their own spontaneously heed such hartal calls and observe them peacefully and non-violently without feeling any coercion, then they should be allowed to retain their legal and democratic rights to do so.
We believe our people have suffered so much and paid terrible prices for political instability that they would gladly embrace anything that would hedge them from reappearance of the circumstances that lead to such woes. Thus, the question of their disliking such legislation does not arise.
If anyone cares to conduct an opinion survey among people on the issue, the respondents to it are overwhelmingly likely to say that they are not for an end to politics but they are definitely not for the way the same is conducted in their name by forcing people not to go to work, by violently paralysing their movements so that even patients also sometimes cannot reach hospitals during emergencies or even taking their lives and torching their properties for non-compliance with orders from political bosses.
The all important thing to realize is great economic opportunities are knocking at our doors that come once in a lifetime maybe. We can exploit these opportunities and take our national life to a much higher level of existence in all respects only by establishing political stability on a lasting basis.
The writer is Associate Editor of theindependent
e-mail : enayet.bhuiyan@theindependentbd.com/ enayetrasul7114@gmail.com