The Economic Challenges of Bangladesh

The Economic Challenges of Bangladesh→ AK Monaw-war Uddin Ahmad

Every conscious citizen has a natural tendency to ask what have been the major failures of the economy in the last year and what challenges it would face this year. An objective and scientific analysis of the recent economic performance is the first prerequisite for the formulation of correct and effective policies to deal with the major challenges of the near future. While the underlying long term economic, social and political factors are of crucial importance in judging the performance of an economy and designing long term policies and strategies, the citizen’s short term perception does have great economic and political significance. We should, therefore, have a fresh look at our economy from this short term perspective.

The time honoured question is: what is the best yardstick to judge the performance of Bangladesh economy in 2010? There is a broad consensus that the size of real GDP and its growth rate are the best indicators of the overall performance of an economy. Every year when the annual budget is placed before the parliament, our elected representatives get involved in heated debate regarding the rate of economic growth in the last year and the probable rate of economic growth in the coming year. This is undoubtedly the most crucial debate in the honourable parliament. Whereas the rate of growth has been a little less than 6 per cent in the last year it is expected by many that this year it is going to be a little more than the 6 per cent. Evidently, the performance of the economy this year is expected to be better than that of the last year.

So, what is the basis of this argument? The citizen’s perception is that the economy is going to experience a better agricultural and industrial performance this year compared to last year. The parliamentary debate is based

on simple statistics of national income accounting. Unless one has clear understanding of the distinction between...