Published on The Daily Star
Bangladesh At 40: Looking Back And Moving Forward-part II
Nationalism was identified as a pillar of our nationhood because our founding fathers recognised that liberation was tied up with our struggle to establish our national identity as distinct from Pakistan. Our founders were also conscious about asserting our identity vis a vis India, our friend and neighbour, who had played such a critical role through their support of our liberation struggle. However, in the day to day affairs of nation building the issue of nationalism is more concerned with the need to recapture autonomy over our political as well as policy choices. Our founders were aware that their Pakistani rulers had surrendered autonomy over policymaking, in large measure, to international development partners on whom we had become heavily dependent for both military and economic aid. However, in a fast globalising world policy choices available to a least developed country such as Bangladesh are severely constrained. Regrettably, successive regimes in Bangladesh have made little effort to design our policies and restructure our economy so as to enhance our flexibility in coping with the challenges of globalisation.
In the last two decades the maximum influence over Bangladesh’s decision making process has vested with our principal aid donors who have attempted to influence the terms on which we globalise ourselves. This leverage was inherited from an era when our aid dependence in the 1980’s exceeded 10% of GDP. We were then dependent on aid to finance our entire development budget and part of our current budget. Particular bilateral aid donors and multilateral institutions such as the World Bank used this dependence to influence our policies towards a more market oriented, private sector based, development strategy. Donor pressure has compelled us to liberalise our imports at a faster pace than was even demanded by the WTO. This has threatened the sustainability of a large number of small and medium sized industries serving our domestic market as well as inhibited the growth and diversification of our manufacturing sector.
Today, Bangladesh is much less aid dependent with aid accounting for around 2% of our GDP. However, donors still remain a force in influencing our policy directions, particularly in areas such as infrastructure development where Bangladesh remains seriously deficient. The $3.2 billion of aid committed to finance the Padma Bridge has empowered donors to exercise a high degree of leverage over the governance of this project. In practice, in this day and age our donors simply do not provide enough resources to compel a government to take up positions which are likely to be politically unacceptable. Today, Bangladesh’s global trade deficit is largely financed by migrant remittances which contribute six times the foreign exchange provided by aid. If any class of people need to be propitiated it is our migrants whose enormous contribution to keeping our balance of payments healthy remains inadequately recognised.
In the last decade Bangladesh has moved from being an aid dependent to a trade dependent country. At the time of liberation in 1971, Bangladesh’s export volume was around $500 million. Today, it is apparently $25 billion, a fifty-fold increase. Whilst we originally remained dependant on export of jute and jute goods, today 80% of our exports are centred around readymade garments (RMG) with over 75% of our exports directed to the markets of North America and the European Union (EU). In recent years the United States and the EU have begun to use political considerations in determining the degree of market access offered to any country. Governments in Bangladesh have thus remained sensitive to these extraneous political influences.
This high trade dependence is fortunately changing as new markets for our RMG exports are being located in Asia and most recently in India. Now that India has provided duty free access to all the major categories of garments where Bangladesh enjoys competitive advantage its large market provides significant opportunities for our exporters. The gradual withdrawal of China, the world’s leading RMG exporter, from the low cost range of products, due to rising wages and high end export opportunities, has established the prospect of unlimited growth for our RMG sector. However, it remains unwise to rely exclusively on RMG exports and we need to aggressively follow up on the diversification of our export base where a range of products from leather exports to shipbuilding and other products provide enormous opportunities of export growth.
Our most proximate neighbour, India, has now emerged as a global economic power with an import market worth $350 billion. It is projected to grow into the world’s third largest economy after China and the USA within the next 2 decades. It is now much sought after by all the major economic powers and has been recognised by its East Asia neighbours as a major partner in the emergence of Asia as a dominant player in the global economy over the next 50 years.
India is not only one of our major trading partners but is also an upper riparian to Bangladesh as the source of 58 of our principal rivers. Given Bangladesh’s Indian-centric geography, our increasing economic links and the extraordinary economic opportunities becoming available to Bangladesh now that India has, after all these years, finally provided us with duty free access for our exports, we need to develop a strategic vision for defining our relations with India. This relationship is too important to be kept hostage to the shifting sands of our party politics. Designing such a strategy demands a process of public consultation and would eventually need to be backed by all political parties so that India-Bangladesh relations are addressed as a national rather than a party issue.
India apart, Bangladesh is also a neighbour to China which is currently our largest source of imports. China has, today, emerged as the world’s largest trading power and is already overtaking the US as the world’s largest economy. Over the next two decades, China is projected to emerge as the leading economic force in the global economy. This provides extraordinary opportunities for Bangladesh which now commands a position of proximity to two of the world’s largest and most dynamic economies. Rather than obsess ourselves with apprehensions of domination by our large neighbours we should have enough self-confidence in our competitiveness, professional capacities and negotiating skills to build relationships of mutual benefit with them.
In the prevailing circumstances, Bangladesh’s assertion of nationalism must lie in re-establishing our sovereignty over our policy direction. Now that aid accounts for less then 2% of our GDP it should not be too difficult to recapture our policy autonomy. However, influence over public policy is not today just exercised by donors. Powerful domestic corporate players and special interest groups have now begun to exercise their influence over particular areas of policy, as regards such issues as malfeasance in the stock market and condoning debt default. A democratic state needs to insulate itself from such anti-democratic forces.
Such assertion of nationalism, whether in policy making, relations with our neighbours, in exploiting our natural resources, or in challenging special interests at home, demands political maturity and courage backed by a stronger capacity for professional work. Courage and professionalism in policy making can be sustained through a willingness to reach out to as well as motivate Bangladesh’s highly skilled indigenous professional community to develop policy alternatives to guide the country and to then explain these policy options to the public. To sustain any such assertion of sovereignty we would also need to build a domestic political consensus which would strengthen the capacity of the government to challenge the tradition of external hegemony over our policy choices.