For years Bangladesh was hailed as an economic miracle. Sheikh Hasina, who ruled it autocratically from 2009 until August this year, insisted she was the brains behind the growth. Official statistics gave these claims legitimacy: in the decade before the pandemic the economy grew by 7% annually, a rate comparable with China’s. Yet this narrative has now been upended. A student-led uprising has toppled Sheikh Hasina. And a new white paper, published earlier this month, has shredded her economic legacy.
The report concludes that Bangladesh’s development story has been “hyped up” and that it is underpinned by “cooked-up” gdp figures. The 385-page study was written by a committee of experts whom the interim government (led by Muhammad Yunus, a microcredit pioneer) tasked with examining all aspects of Bangladesh’s economy. Using work from the World Bank that measures economic activity by examining the intensity of lights at night-time, the report calculates new estimates for growth. It finds that the real rate of expansion in 2018-19 may have been around 3%, not the roughly 7% claimed by official statistics. The report accuses politicians of manipulating gdp estimates for “domestic and external propaganda”.
The most egregious findings, however, concern corruption. The report estimates that between 2009 and 2023 around $234bn was siphoned out of Bangladesh. On an annual basis, that amounts to roughly 3.4% of gdp today. These “illicit financial outflows” include money earned from different activities, ranging from stockmarket scams to drug-trafficking. According to the report, much of the graft came from big infrastructure projects. It claims politicians, bureaucrats, businessmen and “wheeler-dealers of different types” were involved.
Tales of corruption are not new to Bangladesh. But never before has it been so widespread and pervasive, says Debapriya Bhattacharya, head of the committee that wrote the white paper. Years of deep political dysfunction have allowed the scourge to take root, he says.
All this makes fixing things tricky—especially as the interim government is relying on the help of the very officials who were part of the previous regime to implement its planned reforms. The report’s prescriptions include setting up independent statistical and economic commissions.
But there are many more urgent things to do. Inflation is running high and investment has collapsed due to months of political uncertainty. On December 11th the Asian Development Bank slashed its growth forecast for the country. The World Bank has said that half of all non-poor rural households are at risk of falling back into poverty. If Bangladesh corrects all this while rebuilding its institutions, that would be the real miracle.
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For years Bangladesh was hailed as an economic miracle. Sheikh Hasina, who ruled it autocratically from 2009 until August this year, insisted she was the brains behind the growth. Official statistics gave these claims legitimacy: in the decade before the pandemic the economy grew by 7% annually, a rate comparable with China’s. Yet this narrative has now been upended. A student-led uprising has toppled Sheikh Hasina. And a new white paper, published earlier this month, has shredded her economic legacy.
The report concludes that Bangladesh’s development story has been “hyped up” and that it is underpinned by “cooked-up” gdp figures. The 385-page study was written by a committee of experts whom the interim government (led by Muhammad Yunus, a microcredit pioneer) tasked with examining all aspects of Bangladesh’s economy. Using work from the World Bank that measures economic activity by examining the intensity of lights at night-time, the report calculates new estimates for growth. It finds that the real rate of expansion in 2018-19 may have been around 3%, not the roughly 7% claimed by official statistics. The report accuses politicians of manipulating gdp estimates for “domestic and external propaganda”.
The most egregious findings, however, concern corruption. The report estimates that between 2009 and 2023 around $234bn was siphoned out of Bangladesh. On an annual basis, that amounts to roughly 3.4% of gdp today. These “illicit financial outflows” include money earned from different activities, ranging from stockmarket scams to drug-trafficking. According to the report, much of the graft came from big infrastructure projects. It claims politicians, bureaucrats, businessmen and “wheeler-dealers of different types” were involved.
Tales of corruption are not new to Bangladesh. But never before has it been so widespread and pervasive, says Debapriya Bhattacharya, head of the committee that wrote the white paper. Years of deep political dysfunction have allowed the scourge to take root, he says.
All this makes fixing things tricky—especially as the interim government is relying on the help of the very officials who were part of the previous regime to implement its planned reforms. The report’s prescriptions include setting up independent statistical and economic commissions.
But there are many more urgent things to do. Inflation is running high and investment has collapsed due to months of political uncertainty. On December 11th the Asian Development Bank slashed its growth forecast for the country. The World Bank has said that half of all non-poor rural households are at risk of falling back into poverty. If Bangladesh corrects all this while rebuilding its institutions, that would be the real miracle.
Doesn’t china also fail the nighttime light test?