Mukti

Who’s the best?

Posted in AL, army, BNP, development, economics, history, macro by jrahman on March 11, 2012

Notice (12 March, 0610 BDT): charts have gone funny, and will be updated in the next 48 hours.

Updated (13 March, 1001 BDT): charts have been fixed.

With yet another confrontation looming between Bangladesh’s two major political parties, I thought it would be interesting to see how they compare against each other.  There are, of course, many ways of doing this.  I am going to do this by looking at four indicators: GDP per capita growth, manufacturing output growth, inflation, and foreign aid-to-GDP ratio.

Why these indicators?  Simply because I have good data handy for these metrics.  But they still tell us a good deal.  Growth in GDP per capita is a standard measure of welfare.  Manufacturing growth is associated with strong employment in the ‘modern’ sectors of the economy – by and large a good thing.  Inflation is self-evidently important.  Reliance on foreign aid is clearly something we can do without.  And improvements in these economic indicators, over time and across countries, are highly correlated with decline in poverty and rise in living standards.

Nonetheless, they miss out a lot.  For example, I don’t have up-to-date data on inequality.  Further, these economic indicators don’t tell us anything about governance or civil liberties.  A government might preside over fast growth and rapid fall in infant mortality, but could also gag the media, and be extremely corrupt.  Nor do I have any time series on crime statistics – arguably, maintaining law and order is a government’s first priority.  And I am not even sure how one could quantify foreign policy success or failure.

Therefore, the rankings presented below should be taken with a grain of salt.

I am also going to ignore the governments of the first decade.  While a good old fashioned Mujib-Zia food fight is enjoyed by all, given the impacts of the Liberation War, I don’t think the 1970s is comparable with the subsequent decades.

So the comparison is between six governments – Ershad, first Khaleda, first Hasina, second Khaleda, 1/11 regime, and second Hasina – over the four categories.  In each category, the best performing government gets five points, while the worst one gets zero.  Add all up, and we get the final tally.

The worst government of the past three decades turns out to be, with zero points, the Ershad regime.  This shouldn’t come as surprise to anyone who knows anything about economic history of Bangladesh.  But evidently, few people know anything about economic history, because if I had a cent for everytime I hear ‘things were great under Ershad’, I’d be in the 1%.

And the winners?  Read on.

GDP per capita growth

 

 

 

 

 

 

 

 

 

Let’s start with GDP per capita. As the chart shows, the current government, in the two financial years (2010 and 2011), have seen 5% growth a year – better than anyone else. Interestingly, each government has done better than the previous one, with Ershad being the worst with 1.2% growth a year.

Just to put these numbers into context, with Ershad-style growth, it would take 60 years for per capita income to double. With the current government’s pace, it takes only 14.

So, SH2 starts the tally with five points.

Manufacturing growth

 

 

 

 

 

 

 

 

 

Our second indicator is growth in manufacturing.  Industrialisation is essential for poverty reduction and human development.  As the chart shows, both KZ governments and the current government have recorded strong manufacturing growth, while the first Hasina government and the Ershad regime had seen far weaker pace of industrialization. 

The first KZ government thus gets five points.

Foreign aid to GDP ratio

 

 

 

 

 

 

 

 

 

Our next indicator is the reliance on foreign aid.  In the latest financial year that I have data for (2010), foreign debt was only 2.2% of GDP – the lowest ever, giving the current government five points.  In contrast, in 1990, the Ershad regime left office with foreign aid being 6% of the GDP – much worse than any of the other governments.

Growth in GDP deflator

 

 

 

 

 

 

 

 

 

Our final indicator is inflation – measured by growth in GDP deflator.  With 9% annual inflation, the Ershad regime continues to perform worst.  The best, with 3.3%, is the first Hasina government.

Final tally

So, Ershad has done worst in all four indicators.  The current government has come ahead in two criteria, while the two 1990s governments top the other two.  The following table adds up the total points.  With 16 points, the current government comes out on top.

  GDP/cap Mftg Aid Inflation Total
HME

0

0

0

0

0

KZ1

1

5

1

4

11

SH1

2

1

2

5

10

KZ2

3

3

4

3

13

CTG

4

2

3

1

10

SH2

5

4

5

2

16

Now, before the Awami supporters start celebrating, a major word of caution.  This government’s term is far from over.  And my data run to no later than 2011 financial year (that is, 30 June 2011).  Given the serious risks, there is a good chance that by the end of the government’s term, the points will look quite different.  But yes, in the government’s first couple of years in office, the economy performed remarkably well.

Abstracting from the work-in-progress that is this government, who’s the best?  The first Khaleda government performed strongly in industrialization and inflation, but fell short in GDP per capita growth and foreign aid front.  The first Hasina government was very strong in keeping inflation down, but not so great on the other fronts.  The 1/11 regime kept the economy ticking, but fell short in industrialization and inflation. I am somewhat surprised to see that the first Khaleda government performing slightly better than the first Hasina government — the conventional wisdom has it the other way around. 

But more surprising is the result that, with a generally balanced performance on all four counts, it’s the second Khaleda government that actually comes out as the best of the lot.

Isn’t that remarkable?  Perceived to be the most corrupt, or worst performing in terms of governance, and yet when one looks at the data, BNP’s record in office between 2001 and 2006 actually turns out to be better than any other government to have completed its rule in the past three decades. 

If only perceptions were based on facts, not propaganda.

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14 Responses

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  1. dhakashohor said, on March 12, 2012 at 6:02 am

    Can’t see any of the graphics for some reason.

    Isn’t another way of reading this simply to say that Bangladeshi economy is a growth machine that is expanding despite, instead of because of, government policy making?

    Not that I’m a Ron Paul loving, free banking Austrian or anything…

    • jrahman said, on March 13, 2012 at 11:33 am

      That could also be true. In which case, flip the title — who’s the least bad? And just imagine how bad Ershad was that he screwed up this growth machine in a way that two decades of Hasina-Khaleda fight couldn’t.

    • tacit said, on March 13, 2012 at 9:58 pm

      “Not that I’m a Ron Paul loving, free banking Austrian or anything”

      And I had such high hopes for you, DS. 🙂

  2. fugstar said, on March 13, 2012 at 9:33 pm

    Price mayhem and economic non performance can be contributed by the opposition, making the end result a coproduction of the two.

    And it doesnt seem symetrical either.

    Towards the end of an elected BNP government is usually when prices seem to shoot up and become a particularly heavy political demand.

    Would love to see reliable plots of stuff like:
    Land disputes lodged
    Agricultural health
    International Developmentia segmented by country of developmention
    Intensity of dokhol events

    • jrahman said, on March 16, 2012 at 10:25 am

      I am not sure the opposition activities have all that much impact on the economy. See here:

      https://jrahman.wordpress.com/2010/06/27/hartals-dont-matter/

      There is a strong literature of political business cycle that predicts that as governments facing re-election spends money to buy votes, inflation rises. Perhaps that’s what’s happening towards the end of BNP terms. The first Hasina government is the notable exception to this.

      I’ll see what I can gather for your wishlist.

  3. kgazi said, on March 14, 2012 at 8:52 am

    Who was the most good, or who was the least bad, has no correlation whatsoever with these data. Why? Because the core govt policy remained the same under all these regimes. Govt policy remained constant. Black money whitening, govt corruption, graft, monetary & fiscal policy all were constant. (In fact it has been the same since 1971, due to bankruptcy of true economic mastery) ! Therefore the regime had no impact on the data.
    What did affect the economy was the “industrial” uprise of Garments spiking in 1989, see “GDP per capita” spiked from 0 to 3 in 1989 during Ershad, when the garment industry was beginning to mushroom. Despite all his negative misdeeds etc, Ershad was actually the first regime to EMPOWER womenfolk into mass industrial employment thru Garments. And it was the wave of that Industrialization that has driven the nation to 5% GDP.

    The political regimes have been & continue to be a farce, without them the GDP would grow much higher, the only growth the SH regimes have supplied has been division, boycott, disgrace, and decline of national esteem.

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  6. Diganta said, on March 27, 2012 at 12:17 am

    I actually wanted to see one more dimension to this. The Pakistan regime. The well-known myth is that Bangladesh (i.e. East Pakistan those days), was doing not good during those days. Can you take that into consideration and update your study? Or for that matter, can you pour some lights into economic performance of East Pakistan?

    • jrahman said, on March 27, 2012 at 8:48 am

      I’ll add an East Pakistan comparison to my list of future posts. 🙂

  7. BNP and the history wars « Mukti said, on June 11, 2012 at 6:44 am

    […] as good as AL’s, if not better, when it comes to the economy is something reflected in the data.  And one could make a similar case for non-economic matters too.  Curiously, the author […]

  8. Compared to what? « Mukti said, on June 27, 2012 at 5:17 pm

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  9. […] performances under successive governments — a more detailed and updated version of this exercise. This is the first part of that series, focussing on real GDP per capita — an oft-used proxy […]

  10. […] development performances under successive governments — a more detailed and updated version of this exercise. This is the first part of that series, focussing on real GDP per capita — an oft-used proxy for […]


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