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(Abstract: Bangladesh has the potentials for take-off. Many of the preconditions
are already met. Among these are the very high investment-GDP ratio, extensive
network of road and telecommunication, reawakening of manufacturing sectors
along with readymade garments as the lead sector. However, the major limiting
factor is the lack of quest for take-off by the political authority, i.e., the vision
and mission for take-off. It badly needs ‘good governance’. The paper attempts
to identify Bangladesh’s position as regards take-off of its economy and
highlights the need for a development paradigm shift and the need for setting a
revised strategic vision for the country. It also emphasizes the necessity for
resetting the country’s strategic mission for development.)
1. Introduction:
Despite facing ample challenges as encountered by most developing
countries of the world, Bangladesh economy should have consistently
been prepared for take-off. There are quite a number of glaring failures
but the commendable successes it has attained during the last one and a
half decade in macro management of the economy have formed a ground
for take-off, which may pave the way for resolving many of the critical
development problems such as poverty, illiteracy, unemployment and low
productivity within a foreseeable future. This is not an artificial attempt to
altering pessimism into expectation of false hope, rather to help build, on
what has already been attained, a foundation for what ought to be done
next. It is rather some sort of confidence building based on some positive
change that has already taken place in the economy.
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Without going into the debate of the soundness of Rostow’s stage thesis,
the concept ‘take-off’ has been deliberately chosen in the present article to
express an emphatic drive that a developing country needs in setting
dynamism in its economy for a sustained development. The prerequisites
for ‘transition’ and the ground setting needed for ‘take-off’ have been
conceived as prompt and timely actions needed for a desperate nation
aspiring quick development of the country.
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Rostow contends that the beginnings of take-off in most countries can be traced
back to a particular sharp stimulus, which has taken many different forms, such
as technological innovation or more obviously a political revolution, e.g.,
Germany in 1848, the Meiji restoration in Japan in 1868, China in 1949, and
Indian independence in 1947. Rostow is at pains to emphasize that there is no
one single pattern or sequence for take-off. Thus, there is no need for developing
countries today to recapitulate the course of events in, say, Great Britain, Russia
or America. The crucial requirement is that the preconditions for take-off are
met. Otherwise the take-off, whatever form it takes, will be abortive. Investment
must be over 10 percent of national income; one or more leading sectors must
emerge; and there must exist or emerge a political, social and institutional
framework, which exploits the impulse to expansion. Examples are given of
extensive railway building in Argentina before 1914, and in India, China and
Canada before 1895, failing to initiate take-off because the full transition from a
traditional society had not been made.
The main economic requirement for transition phase, the preconditions for
take-off, Rostow says, is that the level of investment should be raised to 10
percent of national income to ensure self-sustaining growth. The main
direction of this investment must be in transport and other social overhead
capital to build up society’s infrastructure. The preconditions of a rise in the
investment ratio consist of a willingness of people to lend risk capital, the
availability of men willing and able to be entrepreneurs and to innovate, and
the willingness of the society at large to operate an economic system geared
to the factory and the principle of the division of labour. On the social front,
a new elite must emerge to fabricate the industrial society and supercede the
authority in the land-based elite of the traditional society. The new elite must
channel surplus product from agriculture to industry, and there must be a
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24.5
30.0
24.3
24.2
beginning of the 1990s.
23.4
23.0
23.1
23.1
25
22.2
24
21.6
20.7
20.0
25.0
19.1
18.4
17.9
As % of GDP
17.3
16.9
showing a declining trend in the last two fiscal years (Ministry of Finance,
March 2008). Where is the problem? Is it due to the lack of political
leadership and/ or the lack of governance or something else?
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Exp-GDP Ratio
8
Expenditure-GDP maintains 6
4
ADP-GDP Ratio
19 97/9 8
19 99/0 0
20 01/0 2
20 03/0 4
20 05/0 6
20 07/0 8
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40.0
30.0 (Fig-3). The ratio has had
20.0
10.0
a constant upward
0.0
movement from 60% in
1990/91
1991/92
1992/93
1993/94
1994/95
1995/96
1996/97
1997/98
1998/99
1999/00
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
FY2000-01 to 73.5% in
Revenue-Exp Ratio FY05-06 with a
subsequent deterioration
in FY06-07 and FY07-08 (Ministry of Finance, March 2008).
20.0
15.0
in terms of increase in both 10.0
5.0
export and imports as percentage 0.0
1990/91
1992/93
1994/95
1996/97
1998/99
2000/01
2002/03
2004/05
2006/07
100.0
71.4
70.0
69.9
68.4
68.5
68.8
67.7
66.3
59.1
56.2
55.8
80.0
49.1
60.0
drop in the export-import ratio
In %
40.0
20.0 due to political turmoil in FY 05-
0.0 06. It seems that the country has
1990/91
1992/93
1994/95
1996/97
1998/99
2000/01
2002/03
2004/05
2006/07
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0.0
Trade C/A Capital Financial Overall
during Jul-Dec’08
-500.0 Jul-Dec'07
-1000.0
Balance Balance Account Account Balance
Jul-Dec'08 compared to Jul-
-1500.0 Dec’07 due to
-2000.0
higher trade deficit
-2500.0
during Jul-Dec’08
compared to Jul-Dec’07 (Fig-5).
The Budget Deficit varied between 3.4 – 6.0% of GDP during the past
one and half decade covering three election regimes and the present care-
taker government (Fig-6). Budget deficit tended to be contained by each
elected regime in the beginning of their getting into power but
deteriorated in the terminal years of their offices. We observe a
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Fig-6 further shows that financing budget deficit through bank borrowing
was never very
significant (i.e., Fig-6: Financing Budget Deficit by Bank
Borrowing
not more than
1.5% of GDP)
3.6
6.0
2.8
1.5
1.5
4.0 1.2
As % of GDP
1.1
1.0
until FY05-06,
0.9
0.9
0.9
0.8
0.6
0.6
0.2
0.2
-0.3
0.0
1
2.0
0.0
but it soared -2.0
during the last -4.0
-3.4
-3.8
-3.7
2002/03 -4.2
2003/04 -4.2
2006/07 -4.2
-6.0
2004/05 -4.4
2005/06 -4.5
1991/92 -4.7
1994/95 -4.6
1995/96 -4.7
1998/99 -4.6
2001/02 -4.7
2007/08 -4.8
2000/01 -5.1
two fiscal years
1993/94-5.8
1990/91-6.0
1999/00-6.1
-8.0
1992/93
1996/97
1997/98
FY2006-07 and
FY07-08
Budget deficit Bank borrowing
(Ministry of
Finance, 2008). This is one of the major causes of recent inflation, others
being price hike in world foods items and internal shortage of food supply
due to floods and cyclone Sidr.
8.19
10
6.75
5.64
5.48
from 17.31% in 8
In %
6
1980-81 to 29.77 % 4
in 2006-07, of which 2
the contribution of 0
1992-
1997-
2001-
2002-
2003-
2004-
2005-
2006-
2001
96
02
03
04
05
06
07
manufacturing
sector is 17.79 %. Growth Rate
The estimated
growth of manufacturing was 11.19% in FY06-07 compared to 5.64%
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during 1997-2001 and 5.48%, 6.75%, 7.01% and 8.19% during FY01-02,
FY02-03, FY03-04 and FY04-05, respectively (Fig-7a) (Ministry of
Finance, 2007).
In %
8
in 1999-00 to 10.28 % in 6
4
2006-07, while that of the 2
0
medium and large scale sub
1999/00
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
sector went up from 4.4%
to 11.56% during the same Small & Cottage Medium& Large
period.
700
600
government inherited an 500
460
FDI
400 280
economy with an FDI of only 300 190 180
268
200 79
US$79 million, which soared 100
0
52
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
100000
(Ministry of Finance, 2008).
59370
51720
In Crore Tk.
80000
45840
40150
37010
33990
30560
60000
24750
1997-98
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
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In Million US$
1927
2000 1539
imports. Import of capital 1500 1211
786
goods increased from US$ 582 1000
333 285 294 314 482
562 568
500
million in FY2001-02 to 0
1996-97
1997-98
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
US$1539 million in FY2005-06
and US$ 1927 million in
FY2006-07 (Fig-10) (Ministry Import of Capital Good
of Finance, 2008).
943.7
811.67
804.94
766.32
770.28
710.61
800
its sustainability by
Index
600
177.43
144.92
118.06
110.6
92.38
98.07
400
84.13
86.45
45.16
200
vulnerable situation 0
created by post-MFA
1995-96
1996-97
1997-98
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
phase-out. Considering
its further growth Textiles Readymade Garments
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8.24
7.97
7.98
7.92
10
6.85
6.56
6.21
6.08
within the country
5.61
5.9
8 5.5
In (%)
6.63
6.51
6.27
5.98
5.96
4
5.37
5.23
5.27
5.26
process is still on 4.87
4.42
2
with the growth 0
1996-97
1997-98
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
pattern of transport
and communication
sector compared to Grow th of Transport Sector GDP Grow th Rate
GDP growth as
noticed in Fig-12. The transport and communication sector achieved a
growth rate of 8.24% in FY2006-07, which was 7.98% in previous
year (Ministry of Finance, March 2008).
significantly to the 0
1999/00
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
improvement of balance
of payments. It has a Remittances
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All these call for a management concept, which is more than a concept
of economic management, comprising factors not only of economic
but also the non-economic factors of social, political and cultural
concerns. That means, we need to develop a development
management framework having key variables capable to capture the
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Employment
Nutrition
Quality education (particularly primary, secondary and vocational
levels with strong emphasis on girls’ education)
Local governance
Maternal health
Sanitation and Safe water
Criminal justice
Monitoring
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This is neither sure nor spelt out anywhere in the PRSP that the vision of
the Pro-Poor Growth would lead to take off of the economy within a
specific target period. Nor is anything said about the fulfillment of
necessary conditions of the take-off anywhere in the PRSP document.
That means Bangladesh should have a revised vision with a target period
of take-off that fits with the strategy for pro-poor growth. Without such a
vision, the country may suffer from shortage of self-esteem and resources
sufficient enough to work for an accelerated reduction of poverty.
Thus without a desperate vision of take-off, the country may not achieve
even a moderate growth rate thereby keeping the goal of accelerated
poverty reduction unrealized. Any way, Bangladesh needs a vision, a
dream to march forward, a target to reach desperately somewhere on and
above a soft target of accelerated poverty reduction.
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5.1.3 Motivating people to work for raising the prestige of the nation
The country needs dreamers who have dreams with our country and
motivate the nation to dream and work for it transforming it into a
prestigious nation. The dreamers have to be honest in thinking and
practice and be examples for others. The human development process of
the country should have a built-in mechanism to create dreamers of such
requisite quality so that we can have continuously these visionaries across
generations.
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Take-off
Macroeconomic framework
building strategies
Medium-term
Block I Block II Block III Block IV
Four Ensuring Boosting Devising Effective Ensuring
Strategic higher Critical Sectors Safety Nets & Targeted Social
Blocks Investment for for Take-off Programs for poverty Development
Accelerated eradication
Growth
DM Implementation
Four Promoting Good Governance
Supporting
Strategies Providing Service Delivery
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managers. Thus, any strategic planning for a nation must involve the
politicians in order to have the vision of the economy owned and
implemented by them. For the same reason, they must be an integral part
of any strategic planning process. It is noted that the vision of the
economy should be a common one shared and owned by each citizen of
the country. The politicians should be able to motivate the nation
accordingly.
REFERENCES
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