Mukti

Leaders

Posted in democracy, governance, institutions, politics by jrahman on August 30, 2015

If only we had the right leader….

If only Bangabandhu (or Zia) had lived….  

If only we had a Mahathir….  

I am sure you can finish the sentence with all sorts of claims about how Bangladesh would have been, or could still be, a much better place with better leadership.  Never mind the fact that all things considered, Bangladesh might actually have done more-than-okay.  To many of our chattering classes, we’re doomed because we haven’t been blessed with the right leader.

How much does leadership matter?

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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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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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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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Shariahnomics 2 – Islamic finance during the crisis

Posted in economics, institutions, micro by jrahman on March 18, 2013

I discussed the theory of Islamic finance in the last post on this subject.  Here is a nice summary of the difference between Islamic and conventional banks’ approaches to risk.

Risk Sharing and Risk Transfer

The above is from work done by Maher Hasan and Jemma Dridi, two IMF economists, on how Islamic banks performed during the global financial crisis (and the period leading up to it).  In a 2010 working paper, they use bank level data from 120 Islamic and conventional banks from eight countries* over the period 2007-10 to explore why Islamic banks might have performed differently during the crisis. 

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সাতকাহন

Seven trashes collected by the senses.

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সাতকাহন

Seven trashes collected by the senses.

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সাতকাহন

Seven trashes collected by the senses.

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Shariahnomics — Islamic finance

Posted in economics, institutions, micro by jrahman on February 5, 2013

In the last half decade of Hosni Mubarak’s rule, the Egyptian economy grew by healthy 5-7% a year.  Economic growth dipped to less than 2% a year after the revolution.  Currently, Egypt is on the brink of economic meltdown, and is negotiating an IMF rescue package.  The IMF package will probably involve tax reforms, privatisation, trade liberalisation, removal of subsidies, you know, the standard Washington Consensus neoliberalism.  The Muslim Brotherhood run government of Egypt does not particularly want to do any of these things.  As I speculated over a year ago, economic problems are giving anti-Brotherhood factions a political opening.

But this post is not about Egypt.

Islam is the solution — the Muslim Brotherhood used to say.  It will be interesting to see whether someone issues a fatwa declaring the IMF package as ‘Islamic’ or Shariah-consistent.  But as far as I can tell, the two things most commonly associated with Islamic economics — zakat and Islamic finance — have very little to say about Egypt’s current problems.

I’ll do a separate post or two about the origin of Islamic economics.  And there will be a post on zakat.  Over the fold, some thoughts on Islamic finance from the perspective of a mainstream economist (who may or may not be a believer).

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সাতকাহন

Seven trashes collected by the senses.

(more…)

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