Understanding Growth and Poverty: Is There a South Asian Development Model?
The Institute of Microfinance (InM) organized a special seminar titled “Understanding Growth and Poverty: Is There a South Asian Development Model?” at PKSF auditorium, PKSF Bhaban, on September 6, 2008. Prof. Abhijit Sen, member (status of a Union Minister of State), Planning Commission, Government of India, chaired the seminar. Prof. Wahiduddin Mahmud, Chairman, InM and Prof. Siddiq R. Osmani, Professor of the University of Ulster, UK, were the keynote speakers. Prof. M.A. Baqui Khalilly, Executive Director of InM also spoke in the seminar.
Key note Speech:
Professor S R Osmani: In his paper, Prof. Osmani categorized the South Asian’s economic growth pattern into three phases: the early phase 1952-67, the middle phase 1968-81 and the final phase that has been continuing since 1982. He observed that the region witnessed growth in the first and last phases, but had a dismal decade in the middle phase for which blame goes to undue political and military interventions, and oil and food price hike. He expressed his concern over the declining public investment and struggling agriculture in South Asian countries, including Bangladesh, despite the second fastest economic growth achieved by the region after East Asia. Professor Osmani said that the service sector growth in this sub-continent has increased because of the failure of the manufacturing sector in absorbing the increased labor force in the respective states.
Professor Wahiduddin Mahmud: South Asia’s economies are growing despite obstacles like poor infrastructure, inadequate foreign investment and the lack of good governance. Most South Asian countries have achieved six percent plus growth of gross domestic product (GDP) over the last few years. But many people consider this growth as miracle. Nevertheless, South Asia has a big deficiency in the functioning of the governments due to deficiency in political governance.
Prof Mahmud pointed that South Asian countries have their own model of democracy by sharing a common trait that ruling parties in these countries like to patronize a vested interest group. Therefore, development in South Asian countries will, however, depend on whether people’s expectations are finally materialized or vested interest group continues to rule people. In this context, Bangladesh is no exception. Prof. Mahmud noted that despite the weak governance, Bangladesh has achieved a better economic growth because of public low-cost health services and education, awareness regarding democracy and development, active role of press community, and private sector development entities particularly the non-governmental organizations (NGOs). However, in the South Asian countries, along with the acceleration of economic growth, the inequality in the distribution of the benefits of growth has widened, leading to poor performance of the poverty alleviation projects.
Targeting of industry-led growth by ignoring its traditional labor-intensive agriculture sector has also failed to produce benefit. In developing a common development model for the South Asian region Professor Mahmud noticed that the states only discuss the economic cooperation for development leaving out many other issues (i.e. community based development, women empowerment through education, health and safety net for human development) that are also important factors for the development of this region.
Comments of the Chair:
Prof. Abhijit Sen pointed out that the South Asian region, with very limited trade lineages, has witnessed weak delivery in intra and inter-country physical and human infrastructures. It has the lowest growth in education and physical infrastructure, which are needed for accelerating the economic growth. These countries have very poor trade linkage which is one of the major impediments to further economic growth. Prof. Sen also criticized ‘SAFTA’ as a so called treaty since it does not result in any significant benefit. He pointed that the land distribution problem as a major hindrance in addition to the current oil and food crisis situation in the South Asian region.
In the open discussion, Mr. Abdus Sattar Mondal from Bangladesh Agricultural University mentioned the problem of heavy influence of subsidies in the sustainability of the South Asian economies, citing the example of India. Mr. Akter Mahmud from The World Bank expressed concern about the investment climate of Bangladesh since the gross investment has been on the declining track.
Prof. Wahid Uddin Mahmud concluded the floor discussion saying that the question is now whether it is possible for the South Asian counties to achieve a growth equivalent to East Asia.
The seminar identified some broad policy recommendations for a better development model for the South Asian region. The key areas of recommendations as specified were:
- Increasing the economic co-operation for improving the trade linkage.
- Infrastructural improvement for private sector development complemented with large public investment.
- Social development through investment in health and education, and increasing women empowerment through increasing school enrollment for the women.
- Community based social organization is needed for increasing concerns of the mass people about different social activity.
- Commitment of local elected members to the society.
- Political stability for encouraging foreign direct investment.