Editorial
ADB warning on economy
Law and order essential to economic growth
The warning issued yesterday by Toru Shibuichi, Bangladesh country director for the Asian Development Bank, with regard to the nation's economic fortunes was nothing we have not heard before. However, as we enter the new year and one more voice is added to what is rapidly attaining the status of a general consensus, it is to be hoped that the government will finally begin to listen to the prescriptions of the experts -- both Bangladeshi and foreign -- for the economic development of the country.Mr Shibuichi's prescription for Bangladesh's economic development echoed what economists and policy analysts within the country have been saying for some time. The macroeconomic health of the country is good, he said at a press briefing, and Bangladesh has made good progress in enacting much-needed reform in a number of sectors. The principal problem with the economy, however, is that non-economic factors are holding back economic progress. Mr Shibuichi specifically cited the negative impact the law and order situation has had and is likely to continue to have on the economy. To this, we would like to add the prevalence of corruption at all levels of the administration, poor infrastructure, and lack of an independent judiciary as other non-economic reasons the Bangladesh economy has not performed as well as its economic indicators would suggest it is capable of. The government is to be commended for some of the reforms it has enacted. The banking sector reforms that the government has instituted and the monetary policy that it has followed, in particular, have by and large been successful in improving the country's economic outlook. However, the non-economic factors mentioned above still hold back the economy and keep it from maximising its potential. The deterioration in law and order scares away investment and the extortion that businesses have to pay increases the cost of doing business to prohibitive levels. The lack of a functioning judiciary means that there is no workable mechanism for the enforcement of contract rights and the adjudication and settlement of disputes which are essential to smooth economic development. Finally, the poor infrastructure and widespread corruption also raise the cost of doing business in Bangladesh. It is for these reasons investors are unwilling to invest in the economy and entrepreneurs are hesitant to start ventures. If the government is serious about economic development -- and we see no reason to believe that it is not -- then it must focus on these non-economic factors in the coming year.
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