New Delhi: Bangladesh has just seen the change of government in a difficult way. In the midst of the ongoing tumult and lawlessness the common citizen suffers.
Bangladesh was prospering
Same Bangladesh was on the trajectory of growth and economic prosperity till yesterday. The economic prosperity of a country determines many social welfare indicators. Isn't it what matters the most to the general public of almost every country in the world? For instance, a daily wage worker most often stays occupied with how he can make ends meet and provide for his family. With economic growth and prosperity which brings in new and more employment opportunities, the chances of moving ahead of just making ends meet arises. This very chance accelerates the growth cycle bringing in more prosperity for the ones who once couldn't think beyond “roti, kapda and makaan”.
Now the question is what leads to such economic prosperity? There are several factors responsible for it which are interdependent cards in the house of cards. One major error of judgement or misplacement can bring the whole thing crumbling down. Economic growth is primarily dependent on capital expenditure by the government and private entities from within the country and overseas. Such expenditure trickles down to infrastructure development, leading to employment to people and improving their standard of living.
Navigation by leadership
All this begins with the navigation provided by the leadership of that country in terms of initiatives and policies. First, the foundational work of the state attracts private investments and helps maintain it. Second, the law and order provides safety and security which incentivises people to invest in real estate, establish new businesses and venture into new endeavours. Thirdly, it also builds strategic partnerships with like-minded countries to further its development process and bolster her security.
It implies the collapse of the basic political system can have several adverse impacts on the country. In the recent past, we have witnessed many such examples in our neighbourhood. Starting with the downfall of Pakistan due to excessive control of the military to the overthrowing of a democratic government by the military Junta in Myanmar and the massive protests by the people against the government in Sri Lanka which was driven by economic crisis. The most recent addition to this list is Bangladesh which was far ahead of these countries and was developing at a very fast pace. Infact, the country has been one of the fastest growing economies in her category.
Highest FDI
According to the World Bank's Global Investment Competitiveness Report 2020, Bangladesh received the highest foreign direct investment (FDI) in the Asia-Pacific region in 2020, in terms of percentage of GDP. Bangladesh received $3.67 billion in FDI, which accounted for 1.6% of its GDP. This was the highest ratio of FDI to GDP among all Asia-Pacific countries. However, in terms of absolute value, China received the highest FDI in the Asia-Pacific region in 2020, followed by India and Singapore.
High potential
The huge investment amidst Covid-19 pandemic clearly indicates that Bangladesh showed high potential for growth and return on investment. However, the current turmoil and political unrest in the country will certainly decelerate the country’s growth and development process. Political chaos has led to economic disruption, social instability, humanitarian concerns and political polarisation. A micro view of these problems highlight destruction of infrastructure, loss of businesses leading to missing of business opportunities, migration and so on.
Among these the loss of infrastructure which is cost intensive and takes most time to complete, can be detrimental to the economy of distressed nation.
Firstly, key infrastructures such as transportation, utilities, and communication systems are essential for efficient business operations.
Loss of these can disrupt supply chains, delay production, and hinder the delivery of goods and services. Thus, reducing the overall domestic productivity.
Repairing damaged infrastructure
Secondly, replacing or repairing damaged infrastructure often requires substantial financial investment. Thus if the unrest in a country leads to damage or destruction of infrastructure, there will be wide ranging implications. First and foremost the running businesses might face higher operational costs due to disruption or non availability of supply chains. There will be need to find alternative solutions. The spiralling effect of increased operational costs will translate into job losses, thereby increasing unemployment and poverty. It will further lead to reduced purchasing power and decline in demand which will further lead to more business closures and layoffs. All of this creates a vicious cycle of unemployment and poverty.
Low economic growth
Thirdly, regions with inadequate or damaged infrastructure may become less attractive to investors and businesses, leading to decreased economic growth and lower competitiveness on a national or global scale. This will certainly make the development process less inclusive and increase disparity among the population categorising them into haves and have nots.
Infrastructure: Critical component
Overall, infrastructure is a critical component of economic stability and growth, and its loss can have far-reaching effects on the economy. Prolonged infrastructure disruptions can lead to decreased economic activity, lower consumer spending, and reduced investment, potentially leading to a broader economic downturn.
To navigate through this situation the damage to the established infrastructure projects as well as to the ongoing infrastructure projects should be thoroughly mapped and analysed to develop a sustainable strategy for such projects. The withdrawal of investments and outsourced work from across the globe should be prevented to ensure viability of government finances. It is essential not just for Bangladesh but countries all across the world to continue engaging with Bangladesh business as hitherto fore . As most countries are already battling inflationary pressure, war and instability in different regions. Political unrest is adding on to it's woes by supply chain disruptions.
No to violence
Bangladesh for one needs to take note from other countries in the Indian subcontinent as to learn, how ignorance of democratic processes has led to a free fall of the country into military rules, unsustainable debts and humanitarian crises. It is in the interest of all that the violence should stop and peace should prevail at the earliest. To achieve that, the first step is to maintain rule of law and the administrative functioning. Situation must normalise at the earliest.--Written by Dr Naresh Bana and Shivanshi Shukla
About the Authors:
Dr Naresh Bana: Dr Naresh Bana is an international Public Private Partnership (PPP) consultant and ‘Subject Matter Expert’ (SME) with Government of India owned entity NHLML. He is a contributor to United Nations Economic Commission for Europe (UNECE) policy planning effort. Dr Bana is a civil engineer and was awarded PhD for his work analysing suitability of Swiss Challenge Approach (SCA). He is Fellow and Members of a number of organisations. Dr Bana has published many papers and blogs in reputed papers/journals. He is Vice-Chairman of Indo Sri Lanka Chamber of Commerce and Industry (ISCCI) based in Noida, India.
Shivanshi Shukla: Shivanshi Shukla is a graduate from Delhi School of Journalism and now pursuing public policy. She is currently interning with ISCCI.
