Mukti

Illiberal development

Posted in democracy, development, economics, governance, institutions, politics by jrahman on June 15, 2015

A few years ago, Vietnam was the rage among the Bangladeshi chatteratis who hobnobbed in the development circle.  Look how they have forged ahead under a strong, patriotic leadership, while we languish behind because of our corrupt, venal political class — that was the refrain.  Of course, anyone who knew anything reasonably detailed about both countries would have their eyebrows raised by that.  I have vague recollection of writing something for Zafar Sobhan on this, but can’t find any link anywhere.

In any case, who cares about facts in Bangladesh?

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Books

Some time ago, there was a facebook meme about 10 books:

List 10 books that have stayed with you in some way. Don’t take more than a few minutes and do not think too hard. They do not have to be the great works of literature, just the ones that have affected you in some way. Tag 10 friends and me so I can see your list.

Over the fold, for archival purposes, are two lists — one general, the other economics related.

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Ideas that went nowhere…..

Posted in development, economics, labour, macro, micro, political economy by jrahman on January 12, 2015

….. because life got in the way.

Okay, that’s a bit melodramatic.  Let’s start again.  It used to be the case that to have a professional career as an economist in America, you needed a PhD.  That’s changing a lot.  There’s a general glut of PhDs.  And organisations such as the IMF are now more interested in people with practical experiences than half a decade or more of often impractical academic training.  In any case, outside America, PhDs were always for those who wanted to pursue an academic career.  So, other than the vanity of being addressed as Dr Rahman, I’ve never really seen much return from doing a PhD.

And yet, every now and then, I think about the ideas over the fold and wonder what might have been.

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Madrassa attitudes

Posted in development, economics, Islamists, politics by jrahman on December 26, 2014

Like much else, Bangladeshi discourse about madrassas usually shed more heat than light, revealing the biases and attitudes of the so-called experts who see in madrassa teachers and students either footsoldiers of terror or the vanguard of the coming revolution.  Niaz Asadullah, a British-trained development economist is a rare exception.  With his longtime collaborator Nazmul Chaudhury of the World Bank, he has published a series of papers on the subject.   I’d encourage the interested reader to follow up from Dr Asadullah’s page.  Over the fold, let me hightlight this paper.

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Demographic transition in Bangladesh

Posted in development, economic history, economics, labour by jrahman on March 19, 2014

Like a match box full of sticks —that’s how the Farmgate over bridge was once described to me.  It was the early 1990s, when six or so million people lived in Dhaka, while Bangladesh’s population was around 110 million.  I can’t think of any match box that, once full, can pack in a significant rise in the number of sticks, and yet, Bangladesh has somehow found room for extra people.  In the two decades since my visiting friend saw the teeming multitudes of Farmgate, the country’s population has risen to 150 million, and depending on how one counts, Dhaka is home to 15 or more million people.

The headcount, however, does not quite capture the fact that Bangladesh is going through a demographic transition. A transition that is perhaps as remarkable as, and probably related to the Bangladesh paradox.  As Chart 1 shows, over the past three decades, population growth has slowed significantly and the fertility rate (the number of children each woman bears on average) has declined markably.  Given the fertility rate is already close to the replacement rate of around 2%, it is quite possible that population growth may well slow even further from current 1% a year.

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Missing the mark about feeling good

Posted in development, economic history, economics by jrahman on February 18, 2014

Professor MA Taslim of Dhaka University is my favourite commentator on Bangladesh economy.  I would readily recommend most of his Off the mark columns.  However, even the great have an off day once a while, and Prof Taslim definitely missed the mark with this piece about Bangladesh’s development record.

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The East African diary

Posted in development, economics, travel, Uncategorized by jrahman on December 22, 2013

Notes from a trip (with some specifics omitted).

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Decoding The Bangladesh Paradox — A Research Agenda

Posted in development, economic history, economics, institutions, labour, macro, political economy, trade by jrahman on December 2, 2013

The macroeconomic fact is, in the last decade, under all three governments, per capita GDP have grown by around 4½ per cent a year. At that rate, average real (that is, inflation-adjusted) income doubles in 16 years. …. This is impressive stuff, for which every recent government deserves some credit.

That’s the conclusion from the post on real GDP per capita growth under different governments. Of course, real GDP per capita is a means to the end, not the end in itself. What we really care more about is the standard of living that higher real GDP per capita entails —that is, it’s the development record, and not just the growth, under different governments that we want to know.

This, however, raises two questions. First, how do we attribute to any particular government the growth and development record when policies under any particular government are likely to have long term consequences? And second, how do we explain the Bangladesh Paradox:

The belief that growth brings development with it—the “Washington consensus”—is often criticised on the basis that some countries have had good growth but little poverty reduction. Bangladesh embodies the inverse of that: it has had disproportionate poverty reduction for its amount of growth.

That quote is from a November 2012 Economist article. That article, and accompanying editorial, had a go at explaining the paradox. Joseph Allchin had a crack more recently at the NY Times. The suspects are usual: garments, remittance, NGOs. But we economists are a parsimonious lot, or so we like to think. We would like to know exactly what contribution each of these factors made, what was the channel through which the factors affected growth and development, what role, if any, did government policy play, and what all that means for future.

I haven’t seen a comprehensive analysis of the Bangladesh Paradox. And no, I am not going to provide the answer in this post. Rather, over the fold is a research agenda on how to analyse the Paradox.

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Rajan and Zingales (2006) — reasons to be optimistic about Bangladesh

Posted in development, economics, political economy by jrahman on December 1, 2013

Raghuram Rajan is as close to a Bollywood star an economist is ever likely to be.  He may have saved the Indian rupee from a collapse by simply showing up to work — okay, that’s a slight embellishment, but only just (see here for a more nuanced take).  Before that, way back in 2006, he said that the global financial system was at risk of being in considerable trouble — that’s the closest to predicting the global financial crisis anyone has ever been.  Months before that celebrated paper, he wrote a paper with his Chicago colleague Luigi Zingales that may give us some reasons to be optimistic about Bangladesh.

To be sure, Bangladesh is never mentioned in The persistence of underdevelopment: institutions, human capital, or constituencies? — not even once.  But their neat little model doesn have some strong relevance for the present day Bangladesh (and no — this post has nothing to do with the current political crisis).

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Governance reform in a patron-client democracy

Posted in democracy, development, economics, institutions, politics by jrahman on November 17, 2013

Some time ago, I wrote about Prof Mushtaq Khan’s take on democracy in a country-like-Bangladesh.  He describes the reality quite depressingly well:

What political factions seek is not the construction of a coalition that can mobilize votes to allow a transparent renegotiation of taxes and subsidies, but a coalition that can mobilize organizational power at the lowest cost to the faction leader, to achieve a redistribution of assets and incomes using a combination of legal, quasi-legal, or even illegal methods. The organizational power of the faction is then used either directly to capture state power or to force an accommodation in the form of payoffs from the factions who are currently controlling the state. The faction’s access to economic resources either in the form of revenue or in the power to grab valuable economic resources legally or otherwise is then used to benefit faction members all the way down the pyramid, though the payoffs may be very unequal for different levels of the faction.

While factions may use generalized arguments based on class, region, or interest in its public discourse, no-one in society is under any illusion that the faction is out to look after itself at the least cost in terms of paying off voters and others who need to be mobilized occasionally. When factions do not deliver on these generalized aims, broader social constituencies may grumble but they do not really expect anyone to deliver on the publicly stated general social goals. However, if factions cannot deliver acceptable payoffs to faction members, the leaders are likely to get into serious trouble. Factions rarely fear a general public revolt, given that no other political organization can deliver what the public wants. What factions actually fear is that their sub-factions may be bribed away by other factions and that the coalition may crumble. Indeed, this often happens and accounts for the frequent changes of government in developing countries that usually lead to no discernible changes in government policies, but do lead to different sets of individuals making money in turn. Given the opportunistic nature of factional membership and the shifting offers and counter-offers made by different factional leaders, it is possible to explain the extreme volatility in the factional politics of developing countries in a context where government policies are often remarkably constant.

The question then is, how does a country like Bangladesh escape this patron-client democracy?  Khan’s implicit message is that one needs an important capitalist sector for there to be functioning democracy. But there is nothing in Khan’s story about the dynamics that produces the capitalist sector.

Turns out that Khan believes government has a role to play in kicking off that capitalist transformation.  It’s just that his prescription for reform is quite different from the traditional Washington Consensus stuff.

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