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UNU-WIDER Resilient People, Fragile Governance: Bangladesh Achieving Middle-Income Status (Part 2)

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A teenager wears torn rubber boots in a muddy local market in Bac Ha, Viet Nam. As of 2005 figures, half the world population—more than 3 billion people–is estimated to live on less than USD 2.50 a day. Bac Ha, Viet Nam. UN Photo/Kibae Park.

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Resilient People, Fragile Governance: Bangladesh Achieving Middle-Income Status (Part 2)

Lucy Scott

Part 1 of this article, which appeared in last month’s issue, discussed the ‘Bangladesh Paradox’ that Bangladesh has made economic and social strides forwards despite having weak governance. For Bangladesh to achieve its goal of middle-income country status by 2021 governance will have to improve.

Growth is outstripping infrastructure supply

The government has to tackle the rising power deficit. One example is the Coal Policy which has been delayed for years as leaders decide whether, and how, to tap into known reserves after the negative environmental impacts resulting from an existing operational coal mine. Meanwhile alternative sources of energy have not been developed (though recently Bangladesh is reported to have signed an agreement with Russia to build two nuclear power plants).

Bangladesh also needs to accelerate its infrastructure investment, not least to adapt to climate change. But weak governance and corruption bedevil such investments. The construction of the US$3 billion Padma Bridge—a key to promote economic development in the south-west of the country—has been beset by concerns over corruption, though it is only at the tendering stage. Bangladesh is making progress on governance. Over the last five years it has risen up the corruption perception index of Transparency International, but progress is slow.

Rising inequality

Bangladesh is entering a phase of rapidly rising inequality. In its 2005 Poverty Reduction Strategy Paper (PRSP) the government notes that particularly worrying is the increasing gap between the poorest and the rest of society. The west is lagging behind the east and investments in infrastructure, such as the Padma Bridge, are important to ensure geographically balanced development.

Redistribution of wealth through effective taxation is an essential component of the social contract between the state and its citizens. The government is starting to address this, such as through two tax ‘funfairs’ held at the end of 2010 where people went to voluntarily pay their income tax, but this needs to be a priority. Bangladesh’s tax to GDP ratio is a mere 9 per cent, one of the lowest in the world.

Urbanization is also an increasingly important agenda. With around 15 million people, the capital Dhaka is already one of the world’s mega cities. Natural increase and the sustained movement of people to towns and cities will lead to their continued expansion. And the urban areas will need to adapt to climate change in ways that protect poor people as much as the cities and towns themselves.

Governance is highly centralized

The reduction of urban poverty poses different political challenges to rural poverty reduction. NGOs are less willing to invest in areas where there is no legal claim over the land and projects are less suitable to delivering services at such scale. Reducing urban congestion and urban poverty requires strengthening local and municipal governments and making them more accountable to their citizens. Successive governments though have been unwilling to do this. The winning of Dhaka’s mayoral position by the opposition party in 1994 was seen as a major contributor to decline of the ruling Bangladesh Nationalist Party, who lost power in the next election. A recent UNU-WIDER working paper by Nicola Banks explores further the urban poverty issue in South Asia.

It is not just in urban areas where the decentralization of power has been limited. In 2009 the country had the first Upazila Parishad (sub-district) elections since 1990. However, a revision to the Upazila Parishad Act means that elected officials at this level of government have to act according to the advice of their member of parliament. This undermines any intentions to devolve authority.

Governance remains weak. Good governance, including effective, decentralized institutions and an ability to deliver basic services and infrastructure improvements are essential both for continued economic growth and poverty reduction and to enable Bangladesh to adapt to changes in climate.

Responding to climate change requires strong governance

The environment is undeniably important to the development of Bangladesh and the lives of people there. Increasingly, international attention on the country is focused on climate change. Bangladesh’s National Adaptation Plan of Action (NAPA) notes that much of the future vulnerability due to climate change will not necessarily add any new climate hazards beyond cyclones, flooding and drought, but will enhance the frequency and intensity of these. Predictions of greater storm activity and rising sea levels will have knock-on effects, including on food security through the salination of crop land as well as migration.

An image of Bangladesh as helpless in the face of nature though does not do justice to its development achievements so far, particularly in terms of disaster risk reduction. It also diverts attention away from key governance challenges which are central for the country to adapt to changes in climate.

The precise changes in climate which will occur in particular areas of the country are uncertain. Clearly there are many obstacles to successful adaptation. Technical fixes comprise one component of adaptation. Research by the Bangladesh International Rice Institute into salt-tolerant and flood-tolerant varieties are examples of this. ‘Climate proofing’ of infrastructure is another. However, equally important are ensuring that institutions have the flexibility, information and resources to respond effectively to changes in local conditions. To be resilient a nation needs strong governance.

Lucy Scott is a UNU-WIDER Research Associate. Working papers on the Bangladesh development experience will be published in 2012, under the UNU-WIDER ReCom project. As mentioned above, working paper from the project on aid and urban poverty reduction in South Asia, by Nicola Banks, has recently been published.

WIDER Angle newsletter
December 2011
ISSN 1238-9544



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