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16th European Conference on Modern South Asian Studies 
Panel No. 51
Panel Title: The Political Economy of Bangladesh
Subject: Economics and Political Economy
Convenor: Dr. Willem van der Geest
Convenor's e-mail address: w.vandergeest@eias.org
Panel Abstract
This panel will review the development dilemma's facing Bangladesh into the 21st century. These may be identified under several headings: state versus market; external versus internal resources for development, authoritarian versus participatory governance and, lastly, accelerated versus sustainable growth . The daily struggle for scarce resources (land, water, credit, skills and employment opportunities) has implied that policy interventions to resolve one dilemma have often led to regressive reactions in other domains. This may undermine a consistent and coherent approach in resolving these dilemma's and realising equitable growth.
The upward growth trend since 1995 appears not to be predicated on resolving several key problems, including financial sector mismanagement, rent seeking, authoritarian governance, the virtual absence of a rule of law, the physical and environmental limits to growth. This panel will examine some of these challenges faced by Bangladesh from an interdisciplinary political economy perspective.
Paper Abstracts
Paper Giver 1: Syeda Sharmin Absar
Paper 1 Title: Experiences of Industrial Work and Urban Living: Narratives of Women Garment Workers of Bangladesh
Paper Abstract: Women played a prominent role in the process by which countries industrialised and they continue to do so today in developing countries. Faced with the rising cost of production, particularly due to high wages, labour-intensive industries are relocating to developing countries. In a new international division of labour, low-skilled, low-paying jobs are being moved to developing countries, to be performed predominantly by women. Stimulated by government concessions and prodded by increasing demand from abroad, the garment industry in Bangladesh saw spectacular growth through the 1980s. The New Industrial Policy of 1982, which gave state backing to export-oriented economic growth, helped to formalise aspects of earlier IMF/World Bank aid conditionalities in Bangladesh by further liberalising industrial policies, promoting private sector participation, easing investment sanctioning procedures and opening up the economy to international trade.
Bangladesh presently exports Ready-Made Garment (RMG) to about 30 countries around the world. The RMG sector is a 100 percent export- oriented industry. Women form over 60 per cent of production workers in the Ready-Made Garment (RMG) Sector factories. More women, whether pushed by poverty or pulled by opportunity, are working outside home particularly in the RMG sector. The exodus of women to work in urban areas, leaving homes and families, is a relatively recent development. Traditionally, the men left for work outside their own villages and women were expected to stay at home. This picture is fast changing as women are migrating to urban areas for work in the manufacturing sector. What does this movement mean? This paper will attempt to present the experiences of industrial work and urban living through the narratives of women garment workers of Bangladesh.
Paper Giver 2: Peter Reeves
Paper 2 Title: The Development of Export-Oriented Shrimp Aquaculture in Bangladesh: a preliminary assessment of moves to more intensive production in southeastern Bangladesh
Paper Abstract: This paper comes from a current project on the development of export-oriented aquaculture in Bangladesh and the consequences of this development for the organisation of the industry. The research pays particular attention to the organisation of work and labour and its relationship to networks of political and economic control within the industry. The industry, which is a major earner of foreign exchange for Bangladesh, comprises a range of separate but increasingly integrated set of activities. These include the wild collection and controlled production of breeding stock, the increasingly intensive production of mature shrimp, their processing and packaging, and the international marketing of the final product.
In Bangladesh, the controlled cultivation of fish and crustacea using extensive methods in tidal flow areas, ponds, tanks, canals, beels, paddy fields and enclosures has been practised for centuries. These traditional or extensive methods (bhasabadha) are polycultural and are carried on usually without any additional inputs other than the fry or fingerlings that are obtained from natural sources. From the 1980s more intensive forms of shrimp production have developed which involve higher stocking densities, greater use of supplemental feed and, in the most intensive farms, daily exchanges of water and use of aeration equipment. These farms can reach production levels over 10t/ha/crop compared with less than 500kg/ha/crop in extensive farms. In South Asia these more intensive forms of aquaculture production for export have expanded most rapidly in the Indian states of Andhra Pradesh, Karnataka, Tamilnadu and Orissa. Production in Bangladesh has also increased but is moving more slowly into more intensive forms of production. Today, Bangladesh ranks seventh in the world as a producer of cultured shrimp.
The modern export-oriented Bangladesh aquaculture sector is largely the product of the recent growth of demand in European, American and Japanese markets for high quality and hygienically produced prawn. The two main centres of production in Bangladesh are Khulna/ Satkhira/Bagerhat (KSB) in the southwest and Cox's Bazar in the southeast. Production in both regions takes place in land-based enclosures (ghers or ghonas), which may be owned or leased out by local and/or city-based landowners. The KSB region includes the Sundarbans mangrove forest and both brackishwater and freshwater shrimp production is carried out. It is the main centre of marine shrimp production, particularly black tiger prawn (Penaeus monodon, or bagda chingri) and white shrimp (P. indicus). Cox's Bazar consists of a mix of small-scale agriculture, marine and inland fishing, and salt and aquaculture production. The bulk of original mangrove forest in the region (Chokoria Sundarbans) has been cleared for shrimp farms and other uses.
The vast majority of investors in this industry are small-scale by world standards. The largest investments are in dedicated processing plants and hatcheries located in Khulna, Chittagong, and Cox's Bazar. Other investments in ice plants and transport serve other industries in addition to shrimp. Shrimp farms themselves are more locale-specific and are controlled by a range of stakeholders including small farmers, city-based investors, and larger local landlords. The industry is largely in the hands of non-fisher capital, a small proportion of which is foreign capital. Despite favourable investment rules, foreign capital appears reluctant to invest in processing. Consequently, at present the bulk of investment in shrimp farms and trading networks is domestically generated. However, the industry is subject to considerable control from global governance structures and from the operation of international buyer-driven commodity chains.
The paper will review the local economic, social and environmental effects of the industry in the two main production centres, with particular emphasis on the southeast region. It will also address the question of the social, economic and environmental sustainability of the industry under the pressures generated by the moves to more intensive production.
Paper Giver 3: Momtaz Uddin Ahmed
Paper 3 Title: Industrial Development in Bangladesh: A Critical Analysis from Historical and Political Economy Perspectives
Paper Abstract: The paper makes a critical analysis of the Industrial policy-making process in Bangladesh highlighting three important aspects: (i). historical evolution of the industrial policies under British imperialism and Pakistani subjugation during pre- liberation period;
( ii). frequent shifts and changes in the policies and strategies during post-liberation period under the varying ideological convictions of the different regimes in power; and
(iii). fostering a private sector-led industrial growth in a market economy paradigm under the IMF/ World Bank sponsored Structural Adjustment Programme.
The main purpose is to show that the efforts at industrial development pursued by successive Governments in Bangladesh have been guided and moulded by external pressures and conflicting internal ideological convictions of different Governments in power rather than by pragmatic considerations of the existing resource endowments and long-term strategic visions. As a result, even after considerably long period of planning and policy making for industrial development Bangladesh could achieve very little to show in terms of progress achieved in industrialization. A significant reorientation and redirection of industrial policy making is thus suggested reflecting current socio-economic and environmental realities and the dynamics of globalisation.
Paper Giver 4: Shantanu Majumder
Paper 4 Title: Problems and Prospects of Civil Society in Bangladesh
Paper Abstract: Bangladesh is a country where democracy is struggling to get on its feet. It is also seeking to establish a sustainable socio-economic development base. Because of colonial rule, and post-independence military dictatorships, the country was never on the right track to build an effective civil society, which is the first and foremost precondition to the existence of a powerful and meaningful democracy. The author has researched on several issues, such as liberation war of Bangladesh, military interventions in politics, and militarization process of the state and society in Bangladesh, ethnic problems in the South-eastern parts of the country. These case studies show that (1) in the absence of an effective civil society, state always plays a dominating role over society; (2) the state machinery has been heavily engaged in political issues instead of giving due importance to the social agenda; (3) the third sector, i.e. civil society is unable to play its appropriate role of bargaining, negotiating, and pressure-creating (if necessary) in the pro-people public policy making process. This paper will try to identify the anti-democratic elements within the Bangladesh state system, weaknesses of the societal organizations, and identify strategies to strengthen sectors of the civil society.
Paper Giver 5: Mobasser Monem
Paper 5 Title: The Politics of Privatisation in Bangladesh
Paper Abstract: In spite of huge public sector losses every year, successive Bangladeshi regimes often vacillated on the privatisation front. Throughout the period under review (1975-99) implementation of privatisation programme was generally lagging behind because of successive regimes' tactical politics and considerations to maintain a politically suitable strategy and pace on the privatisation front. Forgoing long-term economic gains, successive regimes had deliberately designed and executed to privatisation programme to reward and promote the interests of key groups whose support was necessary in order to maintain them in power. It is interesting to note that successive governments responded to the demands of a group on the basis of their calculations of relative political importance of that group to the regime at that particular point of time. Therefore, the course of privatisation in Bangladesh was a complex one. Sometimes privatisation was excessively fast, sometimes unexpectedly slow, and at other times surviving only as rhetoric in policy action plans of the governments. We argue that privatisation and private sector development crusade was fought out more on political grounds than on rational economic grounds. The tactical political considerations overrode the economic pragmatism throughout the period under consideration. This paper shows that not only has privatisation been shaped by politics, it has also shaped the politics of Bangladesh to a considerable degree. In fact, in any given country, privatisation always evolves and operates within its distinctive political logic and environment. In Bangladesh, this environment is dominated by five important sets of actors: politicians, business interests, bureaucrats, organised workers, and foreign aid donors. This paper provides explanations as to why and how the economic goals of privatisation tended to become secondary to extra-economic factors by examining the interplay of politics and these related actors. The paper argues that privatisation was undertaken more to serve the needs of the ruling politicians for political gain than to address market or government failures, or to conform to ideological predilections.
Paper Giver 6:AHM. Mustain Billah & MD.Abdul Aziz Khan
Paper 6 Title:Gas Resource Depletion and its Implication for Economic Sustainability of Bangladesh
Paper Abstract:Gas resource in Bangladesh is the current hot issue that deserves considerable discussion. There are various opinions regarding the reserve of this resource. It is officially reported that the gas reserve in Bangladesh is around 10 trillion cubic feet (Tcf) that plays a very vital role in economic development of the country. This is because gas is used as the main source of inputs for generating power and producing fertilizer. During the last decade the demand for fertilizer increased by twenty times. In order to meet the growing demand for the fertilizer the gas production also increased from 150 MMCFD to 600 MMCFD. A similar trend of demand is found for the power sector as well. This is quite obvious that the stock of depletable resource like gas will be exhausted sooner or later. In order to sustain the economic growth two issues need urgent attention- to invest some of the resource rent in alternative sectors and to ascertain amount to be invested. The study attempts to examine the effects of resource depletion on sustainable consumption for maintaining better standard of living. The application of two rules Hotelling and Hartwick's provides a condition for maintaining constant consumption through investing resource rents. A model for estimating gas resource depletion of Bangladesh is developed and used to make necessary adjustment with both sectoral and national GDP that would reflect the effects of natural gas depletion.
In estimating natural gas depletion two sets of prices were used for comparison. Due to variation of prices the depletion trend is also vary substantially. The resource value was appreciating over the decade when it was estimated at an official price.
The estimated Thai gas price represented border price. The use of this price demonstrated a value of real resource depletion. The trend of resource depletion using border price showed that it was very erratic over time. In both the cases of official and border price the resource depletion trend found to be negative till 1995, indicating that resource value was appreciating. But the alarming situation was found from 1995 onward where at border price the value of resource depletion was positive with high depletion in 1996. This analysis clearly stated that the trend of resource depletion is very fast signifying the unsustainability of the economy.
The finding of the trend of resource depletion has some implications that can affect the trade off between current and future resource rents. Future rents will decline, if the current stock of resources is extracted quite excessively. The current level of depletion would be high and can be expected to remain so, if circumstances persist. Declining future rents can be caused either from decreasing real prices, increasing extraction cost or declining quantity of the resource stock. This can be explained as the high depletions of natural gas in the late 1990s.
The trend of the Adjusted Gross Domestic Product (AGDP) was appreciating when the resource valued at an official price. This signifies that the real value of resource was undermined inducing more resource to be extracted. The similar trend of AGDP appreciation was found only for the year 1986-87 and few years in early 1990 -91 and 1993-94 when the resource valued at a boarder price. But after 1996 under both the prices the trend of AGDP was declining indicating the unsustainability of economy. The urgent attention is needed for reflecting the standard price of the resource and investing some of the resource rent in alternative sectors to protect the gas based downstream industries for sustaining the economy.
Paper Giver 7: Willem van der Geest
Paper 7 Title: Defaults but no Reforms-- What's next for Bangladesh Financial Sector Reform?
Paper Abstract: Bangladesh presents an interesting case of lax and inadequate financial supervision and regulation over a long period of time -- the last two decades -- without having caused a major threat of systemic risk to the financial sector as a whole. It is argued by officials in charge of financial sector management, that the policy regime has been changed by the present government (Sheikh Hasina/ Mr Kibria 1996-date) towards one of improved monitoring and reporting as well as high-quality of supervision, leading to sound new credit allocation and a reduction of systemic risks. High-profile measures include the appointment of non-executive directors to nationalised and private banks as well as forcing the resignation of those bank directors who have financial interests in other companies. These measures aim, amongst other objectives, to stop the insidious practices of insider-lending.
However, the records show that previous government (Begum Khaleda/Saifur Rahman 1991-1996) also set out to improve the health of the financial sector. However, they were forced to back down in view of the opposition of major industrialists as well as large defaulters. These debtors maintained that the credit squeeze would imply a major decline of industrial investment and of growth in general. Although the levels of supervision were improved, impending elections (in 1995) meant that debt collection was never enforced. Large defaulters continued to do business freely and of the many multi-million dollar defaulters not one has faced bankruptcy or a single day of imprisonment. Is default but no reform sustainable -- or will Bangladesh at some point face a financial crash? What are the long term developmental costs of default but no reform -- is it sustainable? Is the political economy of 'defaults but no reforms' the same in 2001 as it was in 1995?
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