An earthquake can reveal the weakest points of a building via visible cracks that appear after the tremors have subsided. Similarly, the exogenous shocks faced by an economy, from time to time, can also reveal the weak links of a society/economy which otherwise may not have become apparent. Every dark cloud has a silver lining.
As per World Bank data (2021), poverty rate increased and economic growth decelerated in Bangladesh during the Covid-19 pandemic. A closer inspection of these cracks in the economy can point to the weak areas in the socio-economic pillars of Bangladesh. Hence, we have a unique opportunity to identify and address the gaps in the economy made visible by the pandemic.
Although the standard medications for a recession – expansionary fiscal and monetary policy – are being applied in Bangladesh, we should remember these are only temporary solutions which can smoothen short-run fluctuations at the cost of higher inflation. In the long-run, to achieve sustainable and inclusive socio-economic development, the foundations of the economy – such as governance, education, infrastructure, and other institutions – need to be strengthened.
Long-term sustainable socio-economic development cannot be achieved without a quality and inclusive education system. If the children of the wealthy have access to better education and the poor have access to sub-standard education or no education, then inequality will persist in the long-run. Hence, it is of utmost importance, that the government provides access to high quality education for all citizens. A good education system will ensure that the society/economy constantly receive a steady supply of sound, intelligent, and wholesome human beings/workforce who will ultimately lead the society/economy forward.
Similarly, a free market economy, which Bangladesh mostly is, cannot thrive without proper infrastructure and institutions that ensure law, order, and justice. Although these are standard prescriptions of economic theory, they are largely overlooked in op-eds, debates, and discussions. The socio-economic development of Bangladesh can reach its true potential only if the proper infrastructure and strong institutions, which in turn ensure social and political stability, are in place.
Ultimately, all of the above prescribed policies hinge upon good governance; this is the foundation of all foundations upon which socio-economic development takes place and thrives. Good governance will ensure that the money meant for the poor will reach the poor and do not end up in off-shore accounts of corrupt politicians. Good governance will ensure that the COVID recovery stimulus packages also reach small-medium enterprises and not only the politically well-connected ones. And good governance can only be ensured if competent, honest, and sincere human-beings are placed in leadership/political positions. This, the author believes, is the most important policy prescription for sustainable socio-economic development which, if applied, will catalyze all the other factors. Otherwise, poor governance will severely limit all our efforts towards a better Bangladesh.
Nabeel Iqbal, lecturer at School of Business and Economics, North South University