Why macro success needs micro transformation

Highlights:

• Macroeconomic debates overshadow pressing human and social issues
• Data fails to capture hunger, unemployment, and poverty realities
• Remittance growth masks migrant worker deaths and human sacrifices
• Economic investments must consider equity, environment, and gender impacts
• Development requires institutional reforms ensuring transparency and accountability
• True progress combines macro growth with micro-level human development

In the contemporary world, macroeconomic issues get a lot of attention – whether in global contexts or in the domestic arena. Globally, the focus is prominently on such macroeconomic issues as US tariffs and their impacts on global trade, the sluggish global economic growth, or the strategies of different regional economic alliances. Left behind in this domain are the perils of increasing global joblessness and its impacts on human lives, the expansion of hunger in different parts of the world and the fear of famine, and the deaths of hundreds of migrating people while crossing seas and oceans.

The economic arena of Bangladesh is no exception to this trend. Macroeconomic issues dominate our economic discourse and events. With the US tariff hikes on Bangladeshi exports, the discussion centres around the probable impacts of such tariffs on our exports, particularly on exports of readymade garments. The news media is full of reports and stories on remittances from the Middle-East, the country's balance of payments situation, the banking sector reforms etc. 

Right at this moment, the economic debates and discussions revolve around the issue of LDC graduation of Bangladesh and its timing- next year or 2032. Economists, experts and the business leaders are providing their well-thought observations and advice on these topics. Our development partners are not falling behind either. They are informing us of their projections on the probable future economic growth rates of the country.  

Because of the fast-changing macroeconomic scenario of Bangladesh, a series of events has also been taking place. There are seminars on investments and talks on innovative initiatives by young entrepreneurs all around. Discussions are being held on defaulting loans, banking sector reforms and the private sector issues. Roundtable discussions are taking place around economic trends and their future scenarios.

It is thus clear that most of the economic discussion and the events that we have been observing around us are very much at the macro level. They mainly focus on such complex topics as foreign exchange reserves, trade deficits, foreign direct investments. They also embrace the issues of numbers and data. These are undoubtedly important and they are critical in understanding the macroeconomic trends of Bangladesh as well as its economic achievements of and challenges. They are equally important for formulating policies and strategies, resource mobilisation, and monitoring and evaluation of the macroeconomic situation of the country.

If public institutions have to work for human welfare at the micro-level, they will have to contain some pre-determined policies, uphold and pursue some specific values – for example, belief in equal human rights, equity in service delivery, ensuring the rule of law.

The human cost of underdevelopment

But the problem is behind all these, where are the human faces, where are the tales of their lives? Do these macroeconomic analyses and aggregate numbers reflect the impacts on the everyday life of an average person? Do we get a sense of micro realities from those macro concepts, numbers and data? Do the macroeconomic analyses reveal the fact that nowadays 88% of people in the low-income brackets cannot have two full meals of rice a day? They have to eat a loaf of bread or biscuits for one of their daily normal meals. Or how do the 2.7 million people, who are currently unemployed, maintain their families? Or, the 3 million people, who are feared to be falling into the poverty trap, will survive? No, the macroeconomic analyses do not tell us anything about any of those micro realities. They tell us everything, but the human lives behind those analyses and numbers. 

For example, the macroeconomic analysis tells us that the food inflation has come down a bit, but the prices of non-food items have gone up. Yet, this information does not tell us enough about how the daily lives of common people are being affected. This year, the production of paddy has been satisfactory, there have been substantial amounts of rice imports by Bangladesh, the government has been undertaking open market sale of rice regularly, yet the retail prices of rice have not been declining.  As a result, common people have been going for food austerity, which would affect their nutrition, particularly that of children. 

Is there reliable data about poverty?

A host of information and macroeconomic data are available on labour markets of Bangladesh and on the country's unemployment rate. We infer from all that data that people are jobless. Yet, in rural areas, a common complaint is that there is a labour shortage in agriculture. With three meals, breakfasts and tiffin, and daily wage, the income of an agricultural labourer in rural areas may come to about Tk1,000 per day. Yet, it is quite difficult to find agricultural workers in the countryside. Therefore, there must be a gap between macroeconomic numbers and data and microeconomic realities. 

The remittance earnings of Bangladesh have now exceeded $30 billion. Are we aware of the human sacrifices behind this macro success? Between 2015 and 2022, every year, bodies of 3,500 Bangladeshi migrant workers have come back home. They were employed in the Middle-East. In fact, over the past decade, the deaths of Bangladeshi migrant workers in the Middle-East have doubled and during this period, a total of 38,000 bodies of Bangladeshi migrant workers have reached home. Thus, the question, which has become increasingly relevant, is whether Bangladesh has been running after remittances at the cost of human lives. 

At the micro-level, focus should also be on equity and equality. In certain areas, equality has to be pursued, such as citizens' rights, treatment in the eyes of law. But in other areas, equity needs to be upheld, such as service-delivery, or tax incidence. Under no circumstances, discrimination is acceptable – between men and women, between regions, or among socio-economic groups

Cost of development

In fact, discourses on macroeconomic topics and events on macroeconomic issues mask human realities.  As a result, we are unable to know the impacts of the macroeconomy on the lives of people and the macroeconomic success stories become alienated from people's realities. But in the ultimate analysis, development is for people – people should be at the centre of development. Therefore, the macroeconomic perspectives must be linked with the realities of people's lives. Of course, macroeconomic stability must be ensured, but not at the cost of destabilising the lives of people. 

Secondly, in the macroeconomic discourse or economic events, the quantitative analyses get the centre-stage. Often the whole discussion centres around as to how many billion dollars' worth of foreign direct investments are coming to Bangladesh, or how much foreign aid will be provided to the country's health sector. Or, how much foreign exchange Bangladesh would lose because of new US tariffs? All these quantitative assessments are definitely important to our macroeconomic scenario, but attention should also be given to the qualitative aspects at the micro level.

For example, the amount of the foreign direct investment is of importance, no doubt, but it is equally important to look for the environmental damage which that investment might cause. If there are environmental damages, they may adversely affect agriculture, may pose health risks for different groups of people, may enhance the possibilities of floods causing loss of lives and assets, or may engender the livelihoods of people. One must also look into whether such investments would accelerate automation, which may result in job losses.  When health sector investments are made, a relevant consideration may be whether the resources would be channelled towards the rural primary mother-child health care centres, or will they be spent on secondary health services in urban areas? Furthermore, investments may be women-friendly, in terms of job creation for them, enhancing their access to health services provided, or they may be gender-blind. In terms of voice and autonomy, it is also crucial to look into whether at the micro level, the people have their voice in investment decisions to ensure equity in access to services and quality of services provided. The voice of the people in investment decisions ensures transparency, and accountability of those responsible for those initiatives. Their views are also critical for the monitoring and evaluation of those projects. 

At the micro-level, focus should also be on equity and equality. In certain areas, equality has to be pursued, such as citizens' rights, treatment in the eyes of law. But in other areas, equity needs to be upheld, such as service-delivery, or tax incidence. Under no circumstances, discrimination is acceptable – between men and women, between regions, or among socio-economic groups.

Quantity and quality

If we are preoccupied with quantitative expansion of the economy, we may attain quantitative progress at the macro-level, but that does not guarantee qualitative achievements at the micro-level. This is because the notion 'progress' implies quantitative expansions of any positive trait, for example, expansion of national income; or quantitative reduction of anything negative, for example, reduction in child mortality. Development, on the other hand, represents a combination of quantitative expansion at the macro level with micro-level qualitative transformations. Thus, a quantitative expansion of national income is progress, but when an equitable distribution of income accompanies that expansion, we have development. It is therefore absolutely necessary to ensure micro-level qualitative transformations along with macroeconomic quantitative expansions 

Thirdly, there is a tendency to focus excessively on economic progress, but less on institutional transformations. If resources disbursed from the macro level are to contribute to the micro-level human well-being, institutional reforms have to be emphasised along with financial resources. Ensure human development in a county requires its institutions to be efficient, equitable and effective. In order to provide effective services to the people, public institutions have to be efficient. In inefficient institutional structures, focus is lost, corruption creeps in, and vested interests become deep-tooted. Under such circumstances, it becomes immaterial how much quantitative resources are funnelled down to the micro-level, they are not spent for people's welfare.

If public institutions have to work for human welfare at the micro-level, they will have to contain some pre-determined policies, uphold and pursue some specific values – for example, belief in equal human rights, equity in service delivery, ensuring the rule of law. Without these, sustainable people-centric development is not possible. People associated with public administration must have personal and collective commitment to public service, selflessness, and readiness for changing outlooks and mentalities. It is a difficult transformation, no doubt, but is not impossible.

If public institutions are to be effective, a structure of transparency and accountability must be established. Institutional transparency requires credible and robust data., which are to be treated as public assets. The notion of accountability is critical for an effective institution. A public official must carry out his or her responsibilities according to organisational norms and values, set rules and regulations, institutional disciplines and the code of conduct.  He or she would be responsible for his or her actions and would account for his or her every conduct. One way of ensuring transparency and accountability is to conduct regular institutional monitoring and evaluation of its activities.

Today, Bangladesh aspires for a social reconstruction. Such reconstruction is not only about the economy, not to speak of the macroeconomy alone. It is about social, political and cultural reconstruction. Furthermore, this aspired reconstruction is not only quantitative, but also qualitative. It is not only about resources, but also about institutions. The issue of reforms is thus relevant – but that must go beyond macroeconomic horizons and has to take place at the micro-level too.

Selim Jahan is former director, Human Development Report Office, UNDP