Development Strategies and Macro Policies

Course No. DS-4201 Course Title: Development Policy and Planning

Submitted to:
Umme Habiba
Assistant Professor
Development Studies Discipline
Khulna University

Submitted By
Group No. 3
172105
172107
172109
172113
172116
172121
172124
172140
172145

4th Year 1st Term

Development Studies Discipline
Khulna University

Submission Date- 20/12/2020

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 Table of Content

Definitions……………………………………………………………... 2
(172140)

Development policy actors …………………………………………... 2

(172113)

Policy as a process ………………………….………………………… 5

(172107)

Policy Tools…………………………………………….……………... 9
(172105)

Macroeconomic Policy ……….……………………………………… 10

(172121)

Macro-economic Policy in Covid-19…….…………………………… 12

(172124)

Development Finance ……………………………………………….... 14

(172116)

Development Policy Reforms ………………………………………… 18

(172145)

Development Outcome in Bangladesh.………………………......…….19

(172107)

Reference ………………………………………………………………... 31

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NATIONAL DEVELOPMENT
National development refers to the ability of a nation to improve the lives of its citizens.
Measures of improvement may be material, such as an increase in the gross domestic product, or
social, such as literacy rates and availability of healthcare.
Governments draw up national development plans and policies based on the perceived needs of
their citizens. Many include an emphasis on reducing poverty, affordable and available housing
and community development. The goal of all national development is to improve the lives of the
citizens in question within the context of a growing economy and an emphasis on the good of the
community as a whole.

DEVELOPMENT POLICY
Development policy refers to activities that aim to reduce poverty, implement fundamental rights
and promote sustainable development globally. (Ministry of Foreign Affairs Finland)

DEVELOPMENT POLICY ACTORS

Development Policy Actors are any individual or group that is directly or indirectly, formally or
informally, affiliated with or affected by the policy process at any stage. (Margaret A. Shannon)

Policy actors can be briefly described in the following terms- (Crozier and Friedberg, 1977,
pp. 55-56):
1. Actors rarely define clear, explicit or coherent objectives. They change them as they go along,
if only because the unanticipated consequences of their own actions and those of other actors in
the domain of policy compel them to readjust their objectives or re-evaluate their positions. What
was a means to an end at one moment becomes an end in itself at another, and vice versa.

2. Although it may sometimes appear erratic, actors’ behavior always has a meaning and a logic
of its own which the analyst tries to decipher. Instead of being necessarily rational in relation to
predetermined objectives, it is sometimes quite reasonable given the constraints and
opportunities afforded by a given situation. According to a subjective appraisal of the
institutional context and of the other actors’ strategies, the actor adapts behavior so as to be able
to participate in and learn the rules of the ‘game’ of a policy and be acknowledged socially by

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the other actors involved. This leads to sometimes strange coalitions or alliances, for example
between a company responsible for producing moderate levels of pollution and environmental
protection organizations, which join forces in order to protest against a company producing high
levels of pollution; or around an issue like wind farms where local residents, nature protection
groups and tourist businesses band together (cf. Carter, 2001, p. 281).

3. An actor’s ‘strategic instinct’ (to borrow the expression used by Crozier and Friedberg, 1977)
is characterized by two complementary aspects. On the one hand, an actor tends to go on the
offensive when taking advantage of opportunities to improve a position and further immediate
interests (direct intervention on the substantive components of policy).

THE POLICY ACTORS

❖ Governments
Government is the one of the main policy actors for a country. Common governmental
actors or institutions which make foreign policy decisions include: the head of state (such
as a president) or head of government (such as a prime minister), cabinet, or minister.
❖ Non-Governmental Organization (NGO)
Non-governmental organizations (NGOs) play a prominent role in global social
governance. The news is full of specific examples of how these actors advocate for,
contribute to, and monitor different global social policies in issue areas as diverse as
education, labor, health, and humanitarian relief. A coalition of NGOs has, for instance,
initiated the Right to Education Project that aims at mobilizing support and advocating
for a meaningful interpretation and implementation of the right to education on a global
scale. The Cooperative for Assistance and Relief Everywhere (CARE) has been
delivering food, hygiene, and clothing packages to meet some of the basic needs of the
people.
❖ Civil Society Organizations and Communities
Today global decision-making is more far-reaching than ever before. Because so many
crucial areas of life are affected, all sectors naturally want to be part of this decision-
making - including civil society. This issue of Alliance addresses the question of how

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 civil society engages in the global political arena. This article starts by looking at why
civil society should be engaged, why this engagement is controversial, what form
engagement has actually taken, and how effective it has been so far.
❖ United Nation
The UN and other key intergovernmental institutions, such as the World Bank or IMF,
play an integral role in the funding, development of policy and practice, policy actors,
building of the logistical architecture and in program implementation. While impossible
to track the voluminous developments across these actors they are the central institutions
in the system, and it is necessary to keep abreast of major events, key
announcements/decisions and publications.
❖ Businessmen and Individuals
As we know the world ruling system’s name is Capitalism. So, businessman or capitalists
are the also the main concerning issues as development policy actors. Individuals like
noble prize winner for example Dr. Muhammad Yunus, or other personality like Fazle
Hasan Abed, or sometimes politicians.

Conceptual framework of the four dimensions of power of Policy actors

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The Policy as Process
Public policy refers to the actions taken by government — its decisions that are intended to solve
problems and improve the quality of life for its citizens. At the federal level, public policies are
enacted to regulate industry and business, to protect citizens at home and abroad, to aid state and
city governments and people such as the poor through funding programs, and to encourage social
goals. The policy-making process is ongoing, messy and generally without a definitive beginning
or end, political science scholar Susan J. Buck explains. However, those involved in the process
do tend to follow a general procedure, broken down into the following phases.

1. Issue Identification and Agenda Building

The first step of the policy process involves issues being turned into agenda items for
policymaking bodies. An issue can be broadly defined as a circumstance of reality not meeting a
constituency’s expectations. The power of the group in question can affect whether an issue
moves onto the policy agenda. For example, a problem encountered by a major political
campaign donor can move a given issue more quickly onto the agenda than a problem
encountered by a small interest group without great political clout.
In other instances, issues can move into the public spotlight and be forced onto the policy agenda
by the amount of attention and public outcry they receive. The media can be particularly
effective in accomplishing this task.
In all of the aforementioned examples, issues have a high likelihood of becoming agenda items.
Issues must become agenda items for some policymaking body in order to enter the policy cycle.
These policymaking bodies may be a legislature, (e.g., a city council) or an administrative
agency, (e.g., a health department).
It is important to note, however, that not all issues that move onto policy agendas complete the
policy process to become laws. Indeed, agendas are subject to timing and can easily be displaced
by other issues when crises occur. For example, Obama’s planned policy to loosen restrictions on
coastal drilling was dropped after the BP oil spill occurred in the Gulf of Mexico. Those issues
that withstand any significant crisis, though, will move onto the next stage of the policy process,
formulation.

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2. Policy Formulation
Formulation is the second stage of the policy process and involves the proposal of solutions to
agenda issues. Formulation of policy consists of policymakers discussing and suggesting
approaches to correcting problems that have been raised as part of the agenda. Sometimes it is
necessary to choose from among multiple potential paths forward. The issue of traffic safety has
been solved by various policies throughout time.
The ultimate policy that is chosen to solve the issue at hand is dependent on two factors. First,
the policy must be a valid way of solving the issue in the most efficient and feasible way
possible. Effective formulation involves analysis and identification of alternatives to solving
issues. Secondly, policies must be politically feasible. This is usually accomplished through
majority building in a bargaining process. Policy formulation is, therefore, comprised of analysis
that identifies the most effective policies and political authorization.

3. Policy Adoption
Policy adoption is the third phase of the policy process in which policies are adopted by
government bodies for future implementation.

The Process of Adoption

Formulated policies have to be adopted by relevant institutions of government in order to be put
into effect. Adoption can be affected by the same factors that influence what issues move into the
earlier phase of agenda building. For instance, policies that address the changed circumstances
crises often bring can often be immediately adopted. Meanwhile, powerful interest groups can
use their political influence to determine what policies are adopted.

The media can also play a key role in policy adoption. When reporting and commentary is
unbiased it can provide a forum where debate over various cases for policy adoption takes place.
When the media displays a favorable bias, it can enhance a policy proposal ‘s likelihood of
adoption. On the other hand, an unfavorable media bias may undermine a policy proposal. Once
the relevant government bodies adopt policies, they move into the next phase of the policy
process, policy implementation.

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4. Policy Implementation
Policy implementation is the fourth phase of the policy cycle in which adopted policies are put
into effect.
How Policies are Implemented? The implementation of policy refers to actually enacting the
proposed solutions. Whether a given policy has been implemented successfully depends on three
major criteria:
A policy needs to be communicated from the creator (e.g., a local official, or the President) to the
relevant governing body within the bureaucracy that has the power to enact it. Thus, a policy
designed to enforce traffic safety by cutting down on the number of drunk drivers would be
passed down to law enforcement officials for implementation. When no existing agency has the
capabilities to carry out a given policy, new agencies must be established and staffed. This is
reflected most clearly in the “alphabet soup” agencies established by Franklin D. Roosevelt
under the New Deal.
Second, a policy needs to be communicated clearly and easy to interpret if it is to be
implemented effectively. Too much ambiguity in this stage can lead to involvement by the
judiciary that will force legislators to clarify their ends and means for policy implementation.
The judiciary may overrule the implementation of such policies.
Finally, the resources applied to implementation must integrate with existing processes and
agencies, without causing extensive disruption, competition, or conflict.

In addition to the aforementioned elements, policy implementation can further be complicated

when policies are passed down to agencies without a great deal of direction. Policy formulation
is often the result of compromise and symbolic uses of politics. Therefore, implementation
imposes a large amount of both discretion and confusion in agencies that administer policies.
In addition, bureaucratic incompetence, ineptitude, and scandals may complicate the policy
implementation process. The above issues with policy implementation have led some scholars to
conclude that new policy initiatives will either fail to get off the ground or will take considerable
time to be enacted. The most surprising aspect of the policy process may be that policies are
implemented at all.

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5. Policy Evaluation
Policies must be evaluated once in place, but still tend to become entrenched over time and often
do not receive any kind of evaluation.
Policies may be evaluated according to a number of standards. They may be informally
evaluated according to uncritical analysis, such as anecdotes and stories. Policies may also be
substantively evaluated through careful, honest feedback from those affected by the policies.
More formal research can provide empirical evidence regarding the effectiveness of policies.
Finally, scientific research provides both comparative and statistical evaluations of whether
policies produce clear causal results. Policy evaluation can take place at different times.
Administrators seeking to improve operations may assess policies as they are being
implemented. After policies have been implemented, they can be further evaluated to understand
their overall effectiveness.
In spite of the many ways policies may be evaluated, they are often not evaluated at all. Formal
and scientific research is time consuming, complicated to design and implement, and costly.
While more informal evaluations focused on feedback and anecdotes are more accessible, they
also tend to be contaminated with bias.

Challenges in Assessing Policies

Policies can be difficult to assess. Some policies aim to accomplish broad conceptual goals that
are subject to different interpretations. Healthy air quality, for example, can be difficult to define
in ways that will be universally accepted. Policies may also contain multiple objectives that may
not be compatible. For example, two of the objectives of the 1996 Telecommunications Act were
creating jobs and reducing cable rates. If sufficient amounts of revenues are not made, companies
must either cut jobs to maintain low rates or must raise rates to create more jobs. Policies that do
have compatible objectives can still be difficult to evaluate when only a few of the objectives are
accomplished. One person may deem the policy successful for accomplishing some of the
objectives, while another may deem the policy unsuccessful for not accomplishing all of the
objectives.

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POLICY FORMULATION TOOLS:
Working definition which draws upon Jenkins-Smith by defining a policy formulation tool as:
“A technique, scheme, device or operation (including – but not limited to – those developed in
the fields of economics, mathematics, statistics, computing, operations research and systems
dynamics), which can be used to collect, condense and make sense of different kinds of policy
relevant knowledge to perform some or all of the various inter-linked tasks of policy
formulation.”

A typology of policy formulation tools, linking tools to their potential use in different policy
formulation tasks:

Policy Formulation Task The Policy-Relevant Policy Tools

Information
Baseline information on • Environmental, social
Policy problem and economic indicators
• Survey data
• Statistical reports
• Stakeholder evidence
Problem Characterization
Evidence on problem • Geographical
and
causation and scale information systems
Problem Evaluation
• Maps
• Expert evidence

Articulation of values through • Brainstorming

participation • Boundary analysis
• Argumentation Mapping

Specification of Objectives Visions on different • Scenario Analysis

objectives, futures and
pathways

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 Comparison of potential
impacts of different options
Option Assessment
Assessment of past and future
trends
• Cost–benefit and Cost-
effectiveness analysis;
• Cost–utility analysis
• Multi-criteria analysis
• Risk–benefit analysis
• Risk assessment
Forecasting Tools-
• Time-series analyses or
• Statistical methods;
• Informed judgements
(e.g., Delphi technique)
• Computer simulations
• Economic forecasting
• Multi-agent simulation

Policy Design Evaluation of potential • Assessing the rationale

effectiveness of different • Government Intention
instruments or the idea of
policy mixes

MACROECONOMIC POLICY

Macroeconomics is a branch of economics that studies how an overall economy, the market or
other systems that operate on a large scale behaves. Macro Policy is policy which affects the
whole country or region. It is concerned with monetary, fiscal, trade and exchange rate
conditions as well as with economic growth, inflation and national employment levels. Main
government macroeconomics policies are:
❖ Fiscal Policy
Fiscal policy refers to changes in government expenditure and taxation. Government
expenditure, also called public expenditure, and taxation occur at two main levels –
national and local. Governments spend money on a variety of items including benefits

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 (for the retired, unemployed and disabled), education, health care, transport, defense and
interest on national debt.
A government sets out the amount it plans to spend and raise in tax revenue in a budget
statement. A budget deficit is when the government’s expenditure is higher than its
revenue. In this case, the government will have to borrow to finance some of its
expenditure. In contrast, a budget surplus occurs when government revenue is greater
than government expenditure. A balanced budget, which occurs less frequently, is when
government expenditure and revenue are equal. A government may deliberately alter its
expenditure or tax revenue to influence economic activity. If a government wants to raise
aggregate demand in order to increase economic growth and employment, it will
increase its expenditure and/or cut taxation by lowering tax rates, reducing the items
taxed or raising tax thresholds. For example, a government may cut income tax rates.
This will raise people’s disposable income, which will enable them to spend more.
Higher consumption is also likely to raise investment.
A government may implement a deflationary fiscal policy (also called a contractionary
fiscal policy) to reduce inflationary pressure. A cut in government expenditure on, for
instance, education would reduce aggregate demand. Such a reduction may lower the rise
in the general price level.

❖ Monetary Policy

Monetary policy includes changes in the money supply, the rate of interest and the
exchange rate, although some economists treat changes in the exchange rate as a separate
policy. The main monetary policy measure, currently used in most countries, is changes
in the rate of interest. A rise in the rate of interest helps implement a deflationary
monetary policy. It will be likely to reduce aggregate demand by lowering consumption
and investment. Households will spend less due to availability of less discretionary
income, expensive borrowing and greater incentive to save.

Firms will invest less as they will expect consumption to be lower. Also, the opportunity
cost of investment will have risen and borrowing will have become expensive. A higher
interest rate may also reduce aggregate demand by lowering net exports. Changes in the

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 money supply, as with changes in interest rates, are implemented by Central Banks on
behalf of governments. If the money supply is increased by the Bank printing more
money, buying back government bonds or encouraging commercial banks to lend more,
the aggregate demand increases. On the other hand, a decrease in the money supply
reduces aggregate demand.

❖ Supply-side Policies

Supply-side policies are policies designed to increase aggregate supply and hence
increase productive potential. Such policies seek to increase the quantity and quality of
resources and raise the efficiency of markets. These include improving education and
training, cutting direct taxes and benefits, reforming trade unions and privatization.
Improving education and training is designed to raise labour productivity.

The intention behind cutting direct taxes and benefits is to make work more attractive,
relative to living on benefits. If successful, this will make the unemployed search for
work more actively and will raise the labour force by encouraging more people
(including for instance married women and the disabled) to seek employment.
Reforming trade unions may make labour more productive and privatization may
increase productive capacity, if private sector firms invest more and work more
efficiently than state owned enterprises.

MACRO ECONOMIC POLICY IN THE TIME OF COVID-19

Relief measures policy

The goal of macroeconomic policy in the near term is not to stimulate the economy—which is
impossible, given the supply restricting containment measures—but rather to increase public
health care capacity, to support those affected by the public health measures, and to align
incentives to comply with social distancing.
1. Redirect public expenditures to health care: Emergency hospital space, ventilators,
protective medical equipment, medical personnel
2. Provide income support to people: Formal workers: extended unemployment and leave

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benefits. Informal and poor: General or targeted cash transfers.
3. Assist affected business: Wage subsidies, tax cuts, moratoriums on debt repayments, credit
lines.
4. Reduce stress on financial system: Interest rate cuts, reduced reserve requirements, lower
rates/longer maturity on discount window.

Recovery measures policy

Recovery measures policy switch from crisis management to macroeconomic stimulus, helping
the economy to regain its pre-crisis pattern. when expansionary fiscal and monetary policy are
not likely to work): Avoid procyclicality, ensure continuity of public goods and services
(including health care!), maintain macroeconomic stability, and provide for the poor and
vulnerable.
International Cooperation
The COVID-19 pandemic is a truly global shock that motivates a coordinated global response.
As before, the first priority should be boosting health systems. Developing countries are likely
to find that at the very time they need to increase their budget allocations for health care and
income support, their revenues have decreased because of the recession and international
funding markets have dried up because of increased risk aversion. In this climate, many
developing countries will need to borrow from international financial institutions like the
International Monetary Fund (IMF) to avoid procyclical cuts to public expenditure (Hausmann
2020).
Unlike a global financial crisis, the COVID-19 pandemic carries unique epidemiological and
containment-related cross-country spillovers. First, there are positive externalities across
countries to reducing the number of infections through coordinated action, as COVID-19 does
not respect borders and second-wave infections are likely. Second, measures to contain the virus
—travel bans and quarantine measures—also hurt other countries connected through trade and
migration linkages. Coordination and financial support to affected developing countries are
needed so that they take account of both the positive and negative externalities of their actions
as they tackle the disease.

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 DEVELOPMENT FINANCE

Development finance is often granted to experienced builders and developers so that they can raise the
capital to turn their building ideas into a commercial reality. Specialist development finance lenders
will take the future value of the property into consideration when agreeing a loan. It’s a loan granted
for the development or refurbishment of residential, commercial or mixed-use properties.

CDFA is the nation’s largest organization dedicated exclusively to development finance

concerns and interests. Within our website, we have thousands of resources to help you master
development finance. Admittedly, it can be a daunting task to navigate the landscape of dozens
of financing tools. In fact, in a recent survey, CDFA asked development professionals why they
don’t use many of the tools available. The number one answer was the complexity of the
financing tools available.

Development finance requires programs and solutions to challenges that the local business,
industry, real estate and environment creates. As examples, we need unique financing
approaches to address environmentally contaminated land and specific solutions to unlocking
capital access in underserved markets and industries. Each of the problems that we seek to solve
in development require unique and targeted solutions.

There are dozens of terms within the development finance industry including debt, equity, loans,
bonds, credits, liabilities, remediation, guarantees, collateral, credit enhancement, venture/seed
capital, angels, short-term, long-term, incentives, and gap financing.

Ultimately, development finance aims to establish proactive approaches that leverage public
resources to solve the needs of business, industry, developers and investors.

Development finance work

Unlike a traditional mortgage lender that will consider the value of the property, a development
finance lender will take the value of the completed property into account.

Here’s how the process works:

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 • You submit an application which includes how much you paid for the site/ property, your
development or refurbishment costs, professional fees and build timescales
• You will be offered some terms from a lender based on this information and supporting
evidence
• Credit searches will be run on your existing finances, experiences and the development
location
• Once the loan has been approved there will be ongoing monitoring of your project

Breaking Down Development Finance:

The easiest way to understand the depth and breadth of development finance is to
compartmentalize tools into basic categories. We call this the “development finance spectrum.”
The development finance spectrum is a simple way of understanding the roll that specific tools
play in our marketplace and is graphically depicted below:

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Government projects are exactly what they sound like – roads, bridges, sewers, water facilities,
schools, airports, docks, parking garages, broadband, utilities, etc.
Established industry represents our industrial, office and retail sectors (depending on
location). Examples such as industrial parks, manufacturing, tech/research hubs and commercial
retail centers fall within this category.
Development and redevelopment consist of the projects that require major public resource
commitments to catalyze new private sector development. We see this throughout the country
with urban revitalization, rural rejuvenation, adaptive reuse, brownfield development and other
transformative projects that require significant public capital.
Small Business and Micro-Enterprises are pretty self-explanatory as well. These projects
represent our economic engine locally. Generally, a small business is defined as any company
with less than 500 employees and a micro-enterprise is any company with fewer than five
employees. There are approximately 30 million micro-enterprises in the U.S.
Entrepreneurs represents our future businesses. These are one-two person companies that are
working through the early stages of the business life cycle. Typically, entrepreneurs are not
ready for traditional financing and need a unique approach to help them find the working capital
needed to expand and grow.
The lighter bars that span the five project areas represent the general categories of the tools
available.
1. Bedrock Tools
This is the large debt market generally known as bonds and makes up the foundation of
all public finance in the U.S. Over 10,000 bonds are issued nationwide annually
representing infrastructure, housing, education, development, non-profits, healthcare and
manufacturing.

2. Targeted Tools
These tools target geographic areas through the use of tax increment finance, special
assessment districts, government assessment districts, project specific district tools and
tax abatements.

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 3. Investment Tools
These tools encourage private sector investment in projects and businesses through tools
such as tax credits and the EB-5 investor program.

4. Access to Capital Lending Tools

These tools, such as revolving loan funds, mezzanine funds, loan guarantees and
microenterprise, seed & venture capital financing programs, etc. represent the resources
for supporting small business access to capital on a broad scale.

5. Support Tools
Finally, support tools represent our large federal funding resources provided by the
federal government. There are over 175 federal programs to support economic
development.

Maybe you’re scratching your head right now because you don’t know how many of those tools
work. Don’t stress. We’re simply setting the stage here. The key to the development finance
spectrum is that we have specific projects that require a specific type of financing. Nothing
complex about that. When we break development finance down into its core components, we
can better articulate the best tool to use for each project.

In order for projects or businesses to use the tools outlined on the development finance
spectrum, they first must identify a qualified development finance agency to provide the
financing. There are many different types of development finance agencies depending on the
parameters of the project. Keep reading to learn about how development finance agencies work
and how you can find one.

Development Finance Tools:

There are dozens of tools in the development finance toolbox and CDFA has thousands of
resources available to unlock this potential. The CDFA website is designed to help you find
information about how these tools work and the types of projects that have successfully utilized
them. Check out all of our resources.

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 ✓ Online Resource Database (ORD)
✓ Resource Centers
✓ Federal Financing Clearinghouse
✓ State Financing Program Directory
✓ News & Headlines

While other ideas and strategies are most certainly under consideration in the development
finance world, time is short and creativity is essential if real progress is to be made toward the
SDGs. Failure to act will only exacerbate the gap between low- and middle-income countries in
the world, and leave far too many with no option but to reluctantly accept China’s overtures.

DEFINITION OF DEVELOPMENT POLICY REFORM

Reform (Latin: reformo) means the improvement or amendment of what is wrong, corrupt,
unsatisfactory, etc. The use of the word in this way emerges in the late 18th century and is
believed to originate from Christopher Wyvill's Association movement which identified
“Parliamentary Reform” as its primary aim.
Development policy refers to all political, economic and social measures taken by a donor
country to achieve sustainable improvements in living conditions in developing and transition
countries. Development policy is not a clearly defined field in its own right, however, since
trade policy and agricultural policy also include development policy-related aspects.
Development policy refers to activities that aim to reduce poverty, implement fundamental
rights and promote sustainable development globally. ... Coherence between the various policy
sectors is a key principle in development policy. Development cooperation is one way of
implementing development policy.
Development policy reforms is a process in which changes are made to the formal “rules of the
game” – including laws, regulations and institutions – to address a problem or achieve a goal
such as economic growth, environmental protection or poverty alleviation.

Why Development Policy Reform

It is important to distinguish 'policy change' from 'policy reform' as the terms are often used
interchangeably in the literature. Policy change refers to incremental shifts in existing

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structures, or new and innovative policies (Bennett and Howlett 1992). Reform usually refers to
a major policy change.
Policy reforms foster well-functioning institutions, laws and regulations to improve the business
climate and create a level playing field, unlock investment opportunities and ensure the
development of the private sector over the long term.
Development policy involves highlighting the social and economic effective of the various
options for reform, including outright elimination of the development policy, phased
elimination, changed policy design, and alternative measures. The analyst may also need to ask
what sorts of flanking measures might be considered as a palliative complement to the various
reform options. It is critically important to distinguish between the long-run and transitional
effects of policy reform.
In the long run, predicting the economic, environmental and social effects of removing a policy
ultimately involves modelling a hypothetical universe without the policy in place. As important
as this is, particularly given the emphasis given to long run desired impacts in the preceding
analysis, the more important issue for those considering policy reform is the transition from
development as usual to the reformed state.

Development Outcome in Bangladesh

Bangladesh has made remarkable progress in reducing poverty, supported by sustained

economic growth. Based on the international poverty line of $1.90 (using 2011 Purchasing
Power Parity exchange rate) a day, it reduced poverty from 43.8 percent in 1991 to 14.8 percent
by 2016.Life expectancy, literacy rates and per capita food production have increased
significantly. Progress has been underpinned by steady growth in GDP. Bangladesh reached the
lower middle-income country status in 2015. In 2018, Bangladesh fulfilled all three eligibility
criteria for graduation from the UN’s Least Developed Countries (LDC) list for the first time
and is on track for graduation in 2024.Sustained economic growth has created an increased
demand for energy, transport and urbanization. Insufficient planning and investment have
resulted in severe infrastructure bottlenecks, congestion and pollution. To become an upper-
middle income economy, continued sound macroeconomic management, financial sector
stability, structural reforms, investment in human capital, higher female labor force

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 participation, and global integration will be important. Improving infrastructure as well as the
business climate would allow new productive sectors to develop and generate quality
employment.
This is a fascinating economy to look at when building your contextual awareness in
development economics. Bangladesh is emerging from a low-income to lower-middle income
status but is it too dependent on the heavily subsidized Ready-Made Garment (RMG) sector.
Bangladesh is considered a lower middle-income country by the World Bank and moved into
middle-income status in 2015. Bangladesh is one of the fastest-growing countries in the world
and as such, we can identify some of the benefits and costs from such a rapid pace of expansion.
The country has made significant progress in reducing extreme poverty and their per capita
income might soon overtake that of India. But a severe infrastructure gap means that it cannot
meet many of the sustainable development goals.

Strong growth helps cut extreme poverty:

The government’s Vision 2041 seeks to eliminate extreme poverty and secure upper middle-

income country status by 2031 and achieve high income country status by 2041.

Here are twenty key

development

indicators for

Bangladesh.

1)Foreign Direct
Investment (FDI)
remains low at less
than 1 percent of GDP

2)ILO estimates
56.6% of population aged 15+ are in labour force in 2018; the female participation rate is only
33.2%.

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 3)More than one-third
of under five children
that are stunted and
underweight are at risk
of failing to reach their
developmental
potential, thereby
having long-term
effects on academic
achievement and
economic productivity.

Export patterns:
Bangladesh is the 54th
largest export economy
in the world and the
123rd most complex
economy according to
the Economic
Complexity Index (drawing on data for 2017). A hugely key aspect of their economy is the
heavy dependence on the readymade garment industry (RMG) which now accounts for the vast
majority of their exports of goods.
A country has a revealed comparative advantage in a product if the product’s share in the
country’s exports is greater than the share of the product’s total exports in global exports.
Bangladesh clearly has a revealed comparative advantage in articles of apparel such as tee shirts
and trousers. But it does not yet have comparative advantage in the production of intermediate
goods used in the production of more complex final goods.

21
 The low level of complexity in the economy means that their garment sector has few linkages to
other more complex manufacturing industries and this – over the medium term – will hold back
the potential to reach significantly higher per capita incomes.

Remittances
Bangladesh is another example of a country that has been increasingly reliant on net inflows of
remittances. Remittances in Bangladesh decreased to 1963.94 USD Million in August from
2598.21 USD Million in July of 2020. In 2018, they climbed above $15 billion. Remittances in
Bangladesh averaged 1275.82 USD Million from 2012 until 2020, reaching an all-time high of
2598.21 USD Million in July of 2020 and a record low of 856.87 USD Million in September of
2017.
The Gulf countries, especially Saudi Arabia are the single largest source of remittances to
Bangladesh, but they are cracking down on foreign workers to curb unemployment among their
citizens so this flow of remittance income may decline in the years to come. Bangladesh has a
very young labour force and cannot always create the new jobs needed to absorb well over a
million young people entering the labour market each year. On average, more than half a
million Bangladeshi workers go abroad annually as a part of a diaspora.

Education
Over the last
decade,
Bangladesh has
made notable
progress in
expanding access
to education. In a
country of over 18
million primary
school students,
Bangladesh has
achieved near universal net primary enrollment, with approximately 98 percent of children of
primary school age enrolling in school. Bangladesh has also achieved gender parity in access to
education, and 50.9 percent of all enrolled students were girls in 2016.

22
Nonetheless, the quality of education in Bangladesh remains low. The most essential measure of
quality in a school system is whether its students are learning the foundational skill for all future
learning: reading. In Bangladesh most children are not acquiring basic reading fluency. A
USAID-funded assessment in spring 2018 found that 44 percent of students finish first grade
unable to read their first word, and 27 percent of third grade students cannot read with
comprehension. These poor learning outcomes contribute to grade repetition and dropout, and 20
percent of all students drop out before completing fifth grade. Poor literacy in the early grades
also inhibits Bangladesh’s economic growth, as the pipeline of youth workers lack the
foundational skills to be productive and engage in a knowledge-based economy.

To tackle these challenges, USAID supports the Government of Bangladesh to improve early
grade reading. To support
the acquisition of this
foundational skill, USAID
works in partnership with
the Ministry of Primary
and Mass Education to
enhance investments in
teacher training, teaching
and learning materials,
and community reading
camps to ensure that all
children learn to read in
their first years of
schooling. USAID also
co-chairs the Education
Local Consultative Group, which brings together 12 development partners to coordinate and
advocate for education.

23
Infrastructure
According to the CIA World Factbook, Bangladesh is served by a network of 201,182 kilometers
(125,014 miles) of primary and secondary roads, but only around 10 percent of them, or 19,112
kilometers (11,876 miles) are paved. In June 1998 the huge US$1 billion Jamuna Multipurpose
Bridge was completed, becoming the 12th-longest bridge in the world. The bridge connected for
the first time the eastern and western parts of Bangladesh. The completion of this project made
an important contribution to the development of the country's transportation network and
significantly boosted the quality and speed of passenger and freight transportation. The number
of privately-owned cars grew throughout the 1990s, albeit from a very low level (there were
40,000 private cars in 1994). Many cars are very old and in poor repair and produce high levels
of pollution on the congested roads of the capital and other major cities. Despite all the problems
with the roads and the often-outdated equipment, 66 percent of all freight and 73 percent of all
passengers are carried by roads; however, animal-driven carts are still a part of the national
landscape, as they provide the cheapest and most reliable transportation for people and goods in
most of the country's rural areas.
Bangladesh has a railway system of about 2,745 kilometers (1,706 miles), of which only 923
kilometers (573.5 miles) is a broad gauge (1.676-meter gauge) and the remaining 1,822
kilometers (1,132 miles) is narrow gauge (1.000-meter gauge), according to CIA estimates for
1998. Major links run from the largest Bangladeshi port, Chittagong, to Dhaka and further to the
north of the country; other links connect such centers as Khulna and Rajshahi. Historically, the
railway was built by the British colonial administration in 1884, running between Calcutta (now
India) and Khulna (now Bangladesh). Rail services were halted following the Indo-Pakistan war
in 1965. In the 1970s cargo trains resumed their services between the 2 countries. According to a
BBC report on 26 January 2001, the government of Bangladesh has expressed its interest in
"seriously studying the potential of linking the national railways with the proposed Trans-Asian
Railway Network." The Bangladeshi railway system remains a state-owned monopoly requiring
large
subsidies, as it is notorious for its poor management and a long-established tradition of ticketless
travel among the local population. In recent moves, the government began the privatization of
some railway services, including ticket reservation and in-service catering. Despite all
shortcomings, the railway remained an important mode of transportation, operating 3.7 billion

24
passenger-kilometers and carrying 3.76 million metric tons of goods in the 1998-99 financial
year.
The waterways are an important mode of transportation, especially to some remote areas of the
country, as no other mode of transportation is available during monsoon season. Bangladesh has
3 major seaports, at Chittagong, Dhaka, and Mongla, and several smaller ports. The largest and
most important port is Chittagong, situated around 200 kilometers (124 miles) southeast of
Dhaka. According to the EIU Country Report, in 2000 the Chittagong seaport handled around 80
percent of country's imports and 75 percent of exports, or 14.6 million metric tons of cargo and
420,850 containers. There have been several plans backed by private investors to set up 2

modern container terminals (in Chittagong and in Dhaka), but these plans have met opposition
from the labor unions. According to the U.S. Department of State, in 1998 the U.S.-based
company Stevedoring Services of America (SSA) signed a US$440 million contract to develop a
private container project, which includes the construction of 2 container terminals.
Currently, Bangladesh is putting considerable efforts into developing its aviation industry to
serve growing tourism and business needs. According to the CIA World Factbook, the country
has 16 airports with paved run-ways, including 2 international airports (Chittagong and Dhaka).
The largest, Zia International Airport at Dhaka, is capable of handling 25 million passengers and

25
1.2 million tons of cargo annually. Bangladeshi Biman Airline, the national air carrier, operates a
fleet of about 15 aircraft, including 3 Airbus 310-300s, flying to 25 international destinations and
serving several domestic routes. In the 1998-99 financial year it carried 1.22 million passengers
and 30,869 metric tons of cargo.

Power
Bangladesh belongs to the group of countries with the lowest commercial energy consumption
per head in the world. The CIA estimated that in 1999 the country produced 12.5 billion kWh,
85 percent of which was produced using gas, 7.0 percent was produced at hydroelectric power
plants, and around 8 percent by using liquid fuel. According to the EIU Country Profile, 85
percent of households in Bangladesh have no electricity and, in these places, where it is
delivered, 40 percent of the electricity generated is not paid for. The country experiences
regular electricity blackouts and shortages, and its poor reliability is often cited among factors
driving away foreign investors. The Bangladeshi government is willing to address the problem
but in general has not had enough resources to build new electric power generating plants. In a
recent trend, the Asian Bank of Development (ABD) approved a US$140 million loan to
construct a 450-mw gas-fired power station near Dhaka, scheduled for completion in 2003.

Transportation
Bangladesh is a country of a thousand rivers, large and small, and most of its territory is
regularly flooded during the monsoon season. This fact makes it extremely difficult and
expensive to build modern transportation and communication networks. The river boats and
ferries traditionally used for transportation are cheap, but slow and inefficient. The situation is
further complicated by the fact that the Bangladeshi government has sharply limited resources
not only for building new infrastructure but also for maintaining the existing one. From the
colonial era Bangladesh inherited underdeveloped and unevenly distributed infrastructure and
transportation networks. Poor and inefficient infrastructure undermined the economic
development in the country, and only recently has the government been able to address the
problem systematically and channel investments towards expanding its highways, railroads,
seaports, and airports. More recently, with international assistance the government has also
started to modernize its telecommunications infrastructure and introduce the Internet.

26
subsidies, as it is notorious for its poor management and a long-established tradition of
ticketless travel among the local population. In recent moves, the government began the
privatization of some railway services, including ticket reservation and in-service catering.
Despite all shortcomings, the railway remained an important mode of transportation, operating
3.7 billion passenger-kilometers and carrying 3.76 million metric tons of goods in the 1998-99
financial year. The waterways are an important mode of transportation, especially to some
remote areas of the country, as no other mode of transportation is available during monsoon
season. Bangladesh has 3 major seaports, at Chittagong, Dhaka, and Mongla, and several
smaller ports. The largest and most important port is Chittagong, situated around 200 kilometers
(124 miles) southeast of Dhaka. According to the EIU Country Report, in 2000 the Chittagong
seaport handled around 80 percent of country's imports and 75 percent of exports, or 14.6
million metric tons of cargo and 420,850 containers. There have been several plans backed by
private investors to set up 2 modern container terminals (in Chittagong and in Dhaka), but these
plans have met opposition from the labor unions. According to the U.S. Department of State, in
1998 the U.S.-based company Stevedoring Services of America (SSA) signed a US$440 million
contract to develop a private container project, which includes the construction of 2 container
terminals.
Telecommunication
Telecommunication services in Bangladesh are underdeveloped and provide one of the lowest
rates of telephone ownership per 1,000 inhabitants in the world. The largest company is the
Bangladesh Telegraph and Telephone Board (BTTB), which enjoyed a state monopoly until
1972, when private operators were allowed. As most of the telephone service uses outdated
analogue technology, the quality of telecommunication services is often poor and in need of
upgrades. In 2000 the country had a mere 490,000 telephone lines and 52,000 mobile phones
serving 129 million people. The government is aiming to provide telephone coverage of remote
towns and villages that until now have had no telephone connections. With international
assistance and increasing private investments, Bangladesh is upgrading its telecommunication
system, replacing analogue technology with digital, introducing the Internet and e-mail services,
and expanding cellular mobile services.

27
Padma:
The dream of the Padma Bridge has come into reality with its construction inauguration in
2015. The 6.15 km-long bridge is a multipurpose bridge across the Padma river. With the
installation of last span of the bridge, the full structure of the bridge has been visible this month.
With this we are on the verge of fulfillment of the construction. When completed it will be the
largest bridge in Bangladesh. After the operation, the Tk 30,193 crore bridge will contribute to
our communication, economy and industrialization.
The Economic Benefits of the Padma Bridge: Once constructed and in operation, the bridge
will directly connect capital Dhaka to 21 southern districts through road and railways. It will not
only benefit the Southern region but there will also be economic spillovers all over the country
as new jobs will be created because of better connectivity between both sides of the Padma
Bridge. Studies have predicted that the national GDP growth rate will increase by 1.2 percent. It
is also predicted by different sources that poverty rate will decrease by 1.9 annually. As the lack
of connectivity has left the south-western region as one of the least developed parts of the
country, the people are living below the poverty line. Because of the deveopment of both sides,
the poor people will be able to come out from their poverty. Better communication network will
also provide the farmers of this region to reach their crops with short travel time from these
districts to Dhaka. By this way the farmers will be benefited. The bridge will also encourage
local investors and foreign investors to invest. As there will be investment and industrialization,
more than 20 million unemployed are expected to employed. The govt will earn hundreds of
crores of Tk from tourism as modern cities will be built on the both sides of the bridge.
It is being seen clearly that the bridge is going to bring an unprecedented boost in economic
activities including farming, trade, growth of small and medium industries, tourism, export-
oriented manufacturing zones and industries parks. Special Economic Zones (SEPs) and
industrial parks will generate jobs opportunities for the local population. Centering the Padma
bridge there will be enormous industrialization and communication development on both sides
of the bridge that will help the wheel of the economy keep improving.

28
Agricultural
For most,
agriculture is a
means of food
security, but it is a
livelihood for a vast
population in
Bangladesh and a
means of reducing
poverty (accounting
for 90% of
reduction in poverty between 2005 and 2010 and fostering sustainable economic development.
It is a sector that is strategically favorable to Bangladesh given its location as the largest delta in
Asia, and most populated delta in the world.
In 2016, 70.63% and 59.6% of the total land was agricultural and arable respectively, indicating
that around 10% of the land was unsuitable for growing crops. Before the inception of the
country, agriculture has been a critical sector to overall productivity, accounting for more than
50% of GDP during 1960-1979. In 1991, the sector employed 69.61% of the employed which
has whittled down today to 39.07% in 2017, i.e. every 2 of 5 employed work in agriculture.
Bangladesh has come forward a long way from the past, with the RMG sector taking over as a
major contributor to GDP. However, agriculture continues to play a critical role in the country
and the world, with the promotion of sustainable agriculture stated in SDG 2 (No Hunger).

29
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