Democracy not the only condition for economic dev: Adviser Wahiduddin

Democracy alone does not guarantee development. When beneficiary business groups influence economic policy, building a welfare-oriented state becomes difficult, said Planning Adviser Wahiduddin Mahmud.

He added that although an investment-friendly environment can be created through administrative reforms, its effectiveness depends on existing behavioural norms within the business–bureaucracy nexus.

He made the remarks at the opening session of the Bangladesh Institute of Development Studies (Bids) Annual Development Conference. The two-day conference began today (7 December) at the Tourism Building auditorium in Agargaon. The session was moderated by Bids Director General Prof A K Enamul Haque.

The adviser said creating an enabling environment for investment and trade does not depend solely on the government. If an unhealthy alliance emerges between business and bureaucracy, it cannot be dismantled merely through administrative reform, rules or legislation.

Referring to the experience of World Bank-driven structural reforms in the 1980s and 1990s, Prof Wahiduddin Mahmud said that when new regulations are applied without a proper understanding, they may instead create scope for rent-seeking and illicit income.

Ultimately, political will plays a decisive role in reducing illegal earnings. The adviser said that even if the law is sound, if the behavioural environment does not support it, the law itself can increase rent-seeking. In Bangladesh, most bribes benefit both sides, and most of them are "speed money", so no one complains.

"The reforms we refer to – an elected parliament, an accountable government, an independent judiciary, an anti-corruption commission, free media and active citizenship – these are all prerequisites for democracy. But the quality of democracy ultimately depends on political behaviour and political culture, and that does not change overnight."

Citing the United States, he said that after the First World War American society was plagued by widespread corruption and mafia influence. Their transition to a disciplined, institutional democracy within just twenty years was the result of cultural change.

Democracy is not the only condition for economic development

The adviser said that successful countries with different political systems share a common trait: strict accountability across all layers of the administration. This must be accompanied by a sense of responsibility, which is essentially ethical behaviour.

When China began market reforms in the 1980s, significant reforms were introduced within the Communist Party itself.

Vietnam followed a similar path. He noted that when Vietnam embarked on market liberalisation, its regulatory framework, laws and financial discipline were far from ready. Interestingly, entrepreneurs themselves discussed and agreed on how to conduct business properly, prevent defaults and maintain market discipline.

Wahiduddin Mahmud said democracy is not the only condition for economic development. Global experience shows that economic progress is possible under democratic systems, military rule or one-party government. Singapore, Malaysia, South Korea, Taiwan, Vietnam and China have all experienced sustained high growth for twenty to thirty years under different political arrangements.

How inclusive development can be achieved in Bangladesh

Citing various economic theories, the former professor said income distribution ultimately depends on the political and social empowerment of different groups.

He said that weaknesses in Bangladesh's education system, high dropout rates, youth unemployment and young people's involvement in cadre-based politics are interconnected problems.

He added that how a fair and equality-oriented society can be achieved within a democratic system and a market economy is not part of the July Charter or the Consensus Commission discussions. Consensus is naturally impossible on such issues. This is where policy choices are made, from which ideological differences—right, left, centre-left and centre-right—emerge. So this cannot be a matter of consensus. Instead, it can be hoped that party manifestos will contain clear commitments to a fair economic and social order.

Social protection programme: the initiative that stalled

The adviser said Bangladesh has many social protection programmes, but about 50% of their beneficiaries are not genuine – ghost beneficiaries, fake lists and ineligible recipients.

Donor agencies have long been pressing for a central social protection registry to determine who will be added or removed, which is a long-term task.

There are administrators at the upazila and union levels, but local development cannot proceed without local elected representatives. As a result, plans to strengthen social protection have not advanced significantly.