Abstract:
Durable progress in poverty alleviation—the overarching
objective of economic reform in Bangladesh—requires an
acceleration in the rate of economic growth to around 6-72 in
the medium-to-long run. This report takes the v i e w that higher
growth and employment generation can be eventually sustained
only through increased investment led by a more vibrant and
dynamic private sector, complemented by public investment in
social and physical infrastructure to help create an enabling
environment for such activity. The GOB has effected a
successful stabilization of the economy and must n o w
increasingly focus on implementing structural reforms needed to
bring about this increase in investment. Its first priority
should be to raise the level of public investment through a
drastic overhaul of project execution and aid utilization
procedures and the reform of key public enterprises responsible
for important investment projects. The acceleration in public
investment w o u l d lead to an increase in import demand which
must be offset by higher exports. Hence, the G O B’s second
priority should be to restore export competitiveness through
reforms of urban labor markets and a continued commitment to
flexible exchange rate policies. The experience of other
reforming countries indicate that higher public investment and
enhanced external competitiveness are not sufficient to bring
about the ne e d ed private sector response. Private investors
need to be convinced of the G o v e r n m e n t’s resolve in pursuing
reform efforts. Hence, the G O B’s third priority should be to
clearly articulate its vision for the future and seek
widespread support for its policy agenda, while accelerating
the implementation of reforms in the areas of trade policy,
privatization and financial sector restructuring. Bangladesh
will not be able to attain externally competitive growth and a
rapid reduction in poverty wi t h o u t accelerated human resource
d e v e lopment. Therefore, the G O B’s reform agenda emphasizes the
need to improve the quality and coverage of the education
system as well as health and family planning services, while
expanding social safety net programs serving vulnerable groups
in the population.
