Should the 40-year-old RMG industry still receive subsidies from the government? Why is the government providing mobile telephony services (Teletalk) when there are several private mobile companies?
How long should the electronics industry be given protection?
Who benefited from the support packages provided by the government during Covid?
These were among the questions raised by economist Syed Akhtar Mahmood as he analysed the present situation of public food distribution, trade liberalisation and private sector economy in the light of the past.
At a session of the annual conference of the Bangladesh Institute of Development Studies (BIDS) on Thursday, he explained the transformation of the country's trade and industrialisation policies in the five decades since independence to see when major reforms were initiated and how far those were effective.
A former lead private sector specialist at the World Bank, Akhtar Mahmood in his paper "Debates, Dialogues and Decisions: A Historical Look at Policy Making in Bangladesh" used the quote of economist Johan Maynard Keynes, "The master-economist must study the present in the light of the past for the purposes of the future" to justify his analysis of the present in the light of the past.
He cited studies that revealed how state-funded food rationing was found ineffective by the late 1980s in reaching the poor, and asked if the Covid-19 responses could reach the targeted ones.
He noted that although substantial reforms in industrial regulations took place in the second half of the 1980s, the pace of trade liberalisation was modest. Despite concerns about how trade liberalisation and tariff structure rationalisation in the late 1980s will impact the industry, substantial reforms happened in the first half of the 1990s, which had substantial positive impact in the long run, Akhtar Mahood pointed out.
He recalled the ups and downs in foreign exchange during the 1990s – reserves rising to over six months' imports in 1994-95 and dropping to less than two months' imports in 2001. He also pointed out that many fears did not materialise when the taka officially entered the floating rate regime in May 2003.
Against this historical background, Akhtar Mahmood posed the questions in the contexts of the current exchange rate volatility: What are the costs of a rigid pricing policy? What are the risks of liberalising prices? And, how do you balance the two?
It should be discussed now if the government should move away from the rigid interest rate policy and let market forces determine the exchange rate, he stressed.
With reference to trade liberation and protectionism, the private sector analyst asked if the country's private sector is still at a nascent state and needs protection amid debates that protection dilutes incentives for the industry to be more efficient and competitive.
These issues, along with whether the government should be involved in economic activities or, if poor people always benefit from programmes intended to help them, need to be discussed now in the light of past successes and failures, Akhtar Mahmood felt.